<PAGE>
Exhibit (a)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
at
$8.45 Net Per Share
and
All Outstanding Shares of Series A Convertible Preferred Stock
at
$105.625 Net Per Share
and
All Outstanding Warrants to Purchase Shares of Common Stock
at
$8.45 Net Per Warrant Less the Exercise Price of Such Warrant
of
PSC INC.
by
MOHAWK ACQUISITION CORP.
a wholly owned subsidiary of
MOHAWK CORP.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JULY 17, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO THE TERMS OF AN AGREEMENT AND PLAN OF
MERGER, DATED AS OF JUNE 5, 2000 (THE "MERGER AGREEMENT"), AMONG MOHAWK CORP.
("PARENT"), MOHAWK ACQUISITION CORP. ("PURCHASER") AND PSC INC. ("PSC").
THE BOARD OF DIRECTORS OF PSC HAS DETERMINED THAT THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING EACH OF THE OFFER AND THE
MERGER (EACH AS DEFINED HEREIN), ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
HOLDERS OF SECURITIES, HAS APPROVED, ADOPTED AND DECLARED ADVISABLE THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING EACH OF THE
OFFER AND THE MERGER, AND HAS RESOLVED TO RECOMMEND THAT THE HOLDERS OF
SECURITIES ACCEPT THE OFFER AND TENDER THEIR SECURITIES PURSUANT TO THE OFFER.
---------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT
LEAST THE NUMBER OF SHARES OF COMMON STOCK, SHARES OF SERIES A CONVERTIBLE
PREFERRED STOCK AND WARRANTS (DETERMINED AS IF SHARES OF SERIES A CONVERTIBLE
PREFERRED STOCK AND WARRANTS HAVE BEEN CONVERTED INTO OR EXERCISED FOR SHARES
OF COMMON STOCK) THAT, WHEN ADDED TO SECURITIES ALREADY OWNED BY PARENT,
PURCHASER AND THEIR SUBSIDIARIES, SHALL CONSTITUTE TWO-THIRDS OF THE THEN
OUTSTANDING SHARES OF COMMON STOCK ON A FULLY DILUTED BASIS (INCLUDING ALL
SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION OF ANY CONVERTIBLE
SECURITIES OR UPON THE EXERCISE OF ANY OPTIONS, WARRANTS OR RIGHTS (OTHER THAN
THE RIGHTS ISSUED PURSUANT TO THE RIGHTS AGREEMENT, DATED AS OF DECEMBER 30,
1997, AS AMENDED, BETWEEN PSC AND CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AS
RIGHTS AGENT)), (ii) ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, HAVING EXPIRED OR BEEN
TERMINATED PRIOR TO THE EXPIRATION OF THE OFFER AND (iii) PURCHASER HAVING
OBTAINED SUFFICIENT FINANCING PRIOR TO THE EXPIRATION OF THE OFFER TO ENABLE IT
TO PURCHASE THE SECURITIES TO BE PURCHASED BY IT AND TO PAY FEES AND EXPENSES
OF THE OFFER AND THE MERGER. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTION 13, WHICH SETS
FORTH IN FULL THE CONDITIONS TO THE OFFER.
---------------
IMPORTANT
Any person desiring to tender all or any portion of such person's Securities
should either (i) complete and sign the accompanying Letter of Transmittal (or
a manually signed facsimile) in accordance with the instructions in the Letter
of Transmittal and mail or deliver it together with the certificate(s)
evidencing tendered Securities, and any other required documents, to the
Depositary or tender such Securities pursuant to the procedure for book-entry
transfer described in Section 3 or (ii) request such person's broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
such person. Any person whose Securities are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
such broker, dealer, commercial bank, trust company or other nominee if such
person desires to tender such Securities.
A person who desires to tender Securities and whose certificates evidencing
such Securities are not immediately available, or who cannot comply with the
procedure for book-entry transfer on a timely basis, may tender such Securities
by following the procedure for guaranteed delivery described in Section 3.
Questions or requests for assistance may be directed to the Information
Agent or Dealer Manager at their addresses and telephone numbers described on
the back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
also be obtained from the Information Agent, the Dealer Manager or from
brokers, dealers, commercial banks or trust companies.
The Dealer Manager for the Offer is:
Chase Securities Inc.
June 19, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY OF THE OFFER...................................................... ii
INTRODUCTION.............................................................. 1
1.Terms of the Offer; Expiration Date.................................... 3
2.Acceptance for Payment and Payment for Securities...................... 5
3.Procedures for Accepting the Offer and Tendering Securities............ 6
4.Withdrawal Rights...................................................... 8
5.Certain U.S. Federal Income Tax Consequences........................... 9
6.Price Range of Securities; Dividends................................... 10
7. Possible Effects of the Offer on the Market for Securities, Nasdaq
Listing, Margin Regulations and Exchange Act Registration............. 10
8.Certain Information About PSC.......................................... 11
9.Certain Information About Purchaser and Parent......................... 13
10.Financing of the Offer and the Merger.................................. 14
11.Background of the Offer; Contacts with PSC; the Merger Agreement; Other
Agreements............................................................... 16
12.Purpose of the Offer; Plans for PSC After the Offer and the Merger..... 30
13.Certain Conditions of the Offer........................................ 32
14.Certain Legal Matters and Regulatory Approvals......................... 34
15.Fees and Expenses; Persons Retained.................................... 36
16.Miscellaneous.......................................................... 36
</TABLE>
SCHEDULES
<TABLE>
<C> <S> <C>
Schedule I. Information Concerning the Directors and Executive
Officers of Parent and Purchaser
Schedule II. New York Business Corporation Law Section 910. Right
of Shareholder to Receive Payment for Shares Upon
Merger or Consolidation, or Sale, Lease, Exchange or
Other Disposition of Assets or Share Exchange, and
Section 623. Procedure to Enforce Shareholder's
Right to Receive Payment for Shares
</TABLE>
<PAGE>
SUMMARY OF THE OFFER
This summary of the offer highlights selected information from this offer to
purchase and may not contain all of the information that is important to you.
To better understand our offer to shareholders of PSC Inc. ("PSC") and for a
complete description of the legal terms of the offer, you should read this
entire offer to purchase carefully, as well as those additional documents to
which we have referred you. Questions or requests for assistance may be
directed to the Information Agent or the Dealer Manager at their addresses and
telephone numbers listed on the last page of this offer to purchase.
Principal Terms of the Mohawk Corp. ("Parent"), a newly formed,
Offer: privately owned corporation, through its wholly
owned subsidiary Mohawk Acquisition Corp.
("Purchaser"), is offering to purchase (i) all
the shares of Common Stock (including the
associated preferred share purchase rights) of
PSC that are issued and outstanding for $8.45 per
share, (ii) all the shares of Series A
Convertible Preferred Stock of PSC that are
issued and outstanding for $105.625 per share,
(iii) the warrant, exercisable prior to September
10, 2001, evidencing rights to purchase an
aggregate of 180,000 shares of Common Stock, at a
price of $0.45 for each underlying share of
Common Stock represented by the warrant and (iv)
the warrants exercisable prior to July 12, 2006,
evidencing rights to purchase an aggregate of
975,000 shares of Common Stock, at a price of
$3.20 for each underlying share of Common Stock
represented by each warrant, net to you in cash,
upon the terms and subject to the conditions
contained in this offer to purchase and in the
related letter of transmittal. The shares of
Common Stock, shares of Series A Convertible
Preferred Stock and warrants are collectively
referred to in this offer to purchase as
"Securities".
The offer is the first step in our plan to
acquire all of the outstanding Securities, as
provided in our merger agreement with PSC. If the
offer is successful, we will acquire any
remaining shares of PSC Common Stock for $8.45
per share in cash and any remaining shares of
Series A Convertible Preferred Stock for $105.625
per share in cash in a later merger. Shareholders
of PSC who do not tender their Securities in the
offer may have appraisal rights in the merger.
Board Recommendation: The Board of Directors of PSC has:
. determined that each of the offer and merger
is fair to, and in the best interests of, the
holders of Securities;
. approved, adopted and declared advisable the
merger agreement, the offer and the merger;
and
. resolved to recommend that holders of
Securities accept the offer and tender their
Securities in the offer.
Conditions to the Offer: Purchaser is not required to complete the offer
unless:
. There are validly tendered and not withdrawn
prior to the expiration of the offer at least
the number of Securities, that
ii
<PAGE>
when added to the Securities already owned by
us, constitutes a minimum of two-thirds of the
outstanding common shares of PSC on a fully
diluted basis;
. any applicable waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act has
expired or been terminated prior to the
expiration of the offer; and
. Purchaser has obtained sufficient financing to
enable it to purchase the Securities and to
pay the fees and expenses of the offer and the
merger.
See Section 13, which describes in full the
conditions to the offer.
Source of Funds: We intend to obtain all necessary funds to
purchase the Securities from the following
sources:
. financing from financial institutions; and
. capital investments in Parent from existing
shareholders of Parent and third party
investors.
For a more detailed description of the financing
of the offer and merger, see Section 10.
Expiration of Offer: The initial offering period of the offer will
expire at 12:00 midnight, New York City time, on
Monday, July 17, 2000, unless we extend the
offer. We do not intend to have a subsequent
offering period.
Extension of Offer: We may, without the consent of PSC, extend the
expiration of the offer as follows:
. in five business day increments, if, at the
scheduled expiration of the offer, any of the
conditions to our obligation to accept for
payment, and to pay for, the Securities are
not satisfied or waived, although we may not
extend the offer for more than ten business
days in total if all the conditions to the
offer are satisfied or waived other than the
condition relating to the receipt of
sufficient financing;
. if, at the scheduled expiration of the offer,
any rule, regulation or interpretation of the
Securities and Exchange Commission or its
staff requires the offer to be extended; or
. on one or more occasions, for an aggregate
period of not more than 10 business days
beyond the latest applicable date that the
offer may otherwise be extended, if, as of
such date, all of the conditions to our
obligation to accept Securities for payment
are satisfied or waived, but the number of
Securities validly tendered and not withdrawn
pursuant to the offer equals two-thirds or
more of the outstanding shares of Common Stock
on a fully diluted basis, but less than 90% of
the outstanding shares of Common Stock or
Series A Convertible Preferred Stock.
iii
<PAGE>
During any extension of the offer, all Securities
previously tendered and not withdrawn will remain
subject to the offer and subject to your right to
withdraw any tendered Securities. See Section 4.
If we decide to extend the offer, we will issue a
press release giving the new expiration date no
later than 9:00 a.m., New York City time, on the
first business day after the previously scheduled
expiration date of the offer.
Procedure for Accepting the If you wish to accept the offer, this is what
Offer you must do:
and Tendering Securities:
. If you are a record holder (i.e., a stock
certificate has been issued to you), you must
complete and sign the enclosed letter of
transmittal and send it with your stock
certificate to the depositary for the offer or
follow the procedures described in this offer
to purchase for book-entry transfer. These
materials must reach the depositary before the
offer expires.
. If you are a record holder but your stock
certificate is not available or you cannot
deliver it to the depositary before the offer
expires, you may be able to tender your shares
using the enclosed notice of guaranteed
delivery. Please call our information agent,
Innisfree M&A Incorporated, at 1-888-750-5834
for assistance.
. If you hold your Securities through a broker
or bank, you should contact your broker or
bank and give instructions that your
Securities should be tendered.
For a detailed description of the procedure for
tendering Securities, see Section 3.
Withdrawal Rights: You may withdraw any tender of Securities at any
time prior to the expiration of the offer, and,
unless we have previously accepted them pursuant
to the offer, you may also withdraw any tender of
Securities at any time after August 17, 2000. See
Section 4.
Withdrawal Procedure: In order to effectively withdraw your tender of
Securities, the depositary must timely receive
from you a written or facsimile transmission
notice of withdrawal before the offer expires. If
you tendered by giving instructions to a broker
or bank, you must instruct the broker or bank to
arrange for the withdrawal of your Securities.
See Section 4.
Fairness Opinion: Raymond James & Associates, Inc. has delivered to
the PSC Board of Directors its opinion that, as
of June 5, 2000, and based upon and subject to
certain matters, the consideration to be received
by the holders of PSC Common Stock pursuant to
each of the offer and the merger is fair from a
financial point of view. A copy of the written
opinion, which sets forth the assumptions made,
matters
iv
<PAGE>
considered and limits on the scope of review
undertaken, is included as Annex A in PSC's
Solicitation/Recommendation Statement on Schedule
14D-9, which is being mailed to you at the same
time as this offer to purchase. We encourage you
to read this opinion carefully and in its
entirety.
Market Value of Securities: On June 5, 2000, the last full trading day before
we announced our offer to purchase all the
Securities that are issued and outstanding, the
last reported closing price per share of Common
Stock was $6.06.
Effect of Not Tendering: If you decide not to tender your Securities but
the offer is nevertheless successfully completed,
untendered shares of Common Stock or Series A
Convertible Preferred Stock will be cancelled in
a subsequent merger and you will receive the same
consideration for your shares that you would have
received if you had tendered into the offer. Any
warrants not tendered will remain outstanding
following the merger.
Additional Information: Any questions or requests for additional
information or assistance may be directed to the
Information Agent or the Dealer Manager at their
addresses and telephone numbers on the last page
of this offer to purchase.
v
<PAGE>
To: All Holders of Common Stock,
Series A Convertible Preferred
Stock and Warrants of PSC Inc.
INTRODUCTION
Mohawk Acquisition Corp., a New York corporation ("Purchaser") and a wholly
owned subsidiary of Mohawk Corp., a newly formed, privately owned Delaware
corporation ("Parent"), hereby offers to purchase (i) all outstanding shares of
common stock, par value $0.01 per share ("Common Stock"), of PSC Inc., a New
York corporation ("PSC"), including the associated preferred share purchase
rights (the "Rights") issued pursuant to the Rights Agreement, dated as of
December 30, 1997, as amended (the "Rights Agreement"), between PSC and
ChaseMellon Shareholder Services, L.L.C., as rights agent, at a purchase price
of $8.45 per share, (ii) all outstanding shares of Series A Convertible
Preferred Stock, par value $0.01 per share ("Preferred Stock"), of PSC, at a
purchase price of $105.625 per share, and (iii) the warrant exercisable prior
to September 10, 2001, evidencing rights to purchase an aggregate of 180,000
shares of Common Stock at a price of $8.00 per share, at a purchase price of
$0.45 per underlying share of Common Stock, and the warrants exercisable prior
to July 12, 2006, evidencing rights to purchase an aggregate of 975,000 shares
of Common Stock at a price of $5.25 per share, at a purchase price of $3.20 per
underlying share of Common Stock (the "Warrants" and, collectively with the
Common Stock and Preferred Stock, the "Securities"), in each case net to the
seller in cash, upon the terms and subject to the conditions described in this
Offer to Purchase and in the related Letters of Transmittal for the Common
Stock, Preferred Stock and Warrants, as applicable, (which together constitute
the "Offer"). See Section 9 for additional information concerning Parent and
Purchaser.
Tendering holders of Securities ("Securityholders") will not be obligated to
pay brokerage fees or commissions or, except as described in Instruction 6 of
the Letter of Transmittal, stock transfer taxes on the purchase of Securities
in the Offer. However, if a tendering Securityholder fails to complete and sign
the Substitute Form W-9 that is included in the Letter of Transmittal, the
Securityholder may be subject to a required back-up U.S. federal income tax
withholding of 31% of the gross proceeds payable to the Securityholder. See
Section 5. Purchaser will pay all charges and expenses of Chase Securities Inc.
("Chase Securities" or the "Dealer Manager"), ChaseMellon Shareholder Services,
L.L.C. (the "Depositary") and Innisfree M&A Incorporated (the "Information
Agent") incurred in connection with the Offer. See Section 15.
The board of directors of PSC (the "Board") has determined that the Merger
Agreement (as defined herein) and the transactions contemplated thereby,
including each of the Offer and the Merger (as defined herein), are fair to,
and in the best interests of, the Securityholders, has approved, adopted and
declared advisable the Merger Agreement and the transactions contemplated
thereby, including each of the Offer and the Merger, and has resolved to
recommend that Securityholders accept the Offer and tender their Securities
pursuant to the Offer.
Raymond James & Associates, Inc. ("Raymond James") has delivered to the
Board its written opinion that, as of June 5, 2000, and based upon and subject
to certain matters, the consideration to be received by the holders of Common
Stock pursuant to each of the Offer and the Merger is fair to such holders from
a financial point of view. A copy of the written opinion of Raymond James,
which sets forth the assumptions made, matters considered and limits on the
scope of review undertaken, is contained in Annex A of PSC's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which has been filed with the Securities and Exchange Commission (the "SEC") in
connection with the Offer and which is being mailed to each Securityholder
concurrently with this Offer to Purchase. Parent and Purchaser encourage each
Securityholder to read this opinion carefully in its entirety.
The Offer is conditioned upon, among other things, (i) there having been
validly tendered and not withdrawn prior to the expiration of the Offer at
least the number of shares of Common Stock, shares of Preferred Stock and
Warrants (determined as if shares of Preferred Stock and Warrants have been
<PAGE>
converted into or exercised for shares of Common Stock) that, when added to
Securities already owned by Parent, Purchaser and their subsidiaries, shall
constitute two-thirds of the then outstanding shares of Common Stock on a fully
diluted basis (including all shares of Common Stock issuable upon the
conversion of any convertible securities or upon the exercise of any options,
warrants or rights (other than the Rights) (the "Minimum Condition"), (ii) any
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), having expired or been terminated
prior to the expiration of the Offer (the "HSR Condition") and (iii) Purchaser
having obtained sufficient financing immediately prior to the expiration of the
Offer to enable it to purchase the Securities to be purchased by it and to pay
fees and expenses of the Offer and Merger (the "Financing Condition"). The
Offer is also subject to certain other conditions contained in this Offer to
Purchase. See Section 13, which sets forth in full the conditions to the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 5, 2000 (the "Merger Agreement"), among Parent, Purchaser and PSC.
The Merger Agreement provides that, among other things, as promptly as
practicable after the purchase of Securities pursuant to the Offer and subject
to the conditions set forth in the Merger Agreement and in accordance with the
Business Corporation Law of the State of New York ("New York Law"), Purchaser
will be merged with and into PSC (the "Merger"). As a result of the Merger, PSC
will continue as the surviving corporation (the "Surviving Corporation") and
will become a wholly owned subsidiary of Parent. At the effective time of the
Merger (the "Effective Time"), (i) each outstanding share of Common Stock
(other than shares held by Parent or Purchaser or any direct or indirect wholly
owned subsidiary of Parent or PSC or in the treasury of PSC and other than
shares held by shareholders who shall have demanded and perfected appraisal
rights under New York Law) will be canceled and converted automatically into
the right to receive $8.45 in cash, and (ii) each outstanding share of
Preferred Stock (other than shares held by Parent or Purchaser or any direct or
indirect wholly owned subsidiary of Parent or PSC or in the treasury of PSC and
other than shares held by shareholders who shall have demanded and perfected
appraisal rights under New York Law) will be canceled and converted
automatically into the right to receive $105.625 in cash, or in each case any
higher price that may be paid in the Offer, without interest (the "Merger
Consideration"). Any outstanding Warrants will remain outstanding until the
earlier of their exercise or expiration pursuant to the terms thereof, and each
holder of a Warrant will be entitled to receive upon the presentation for
surrender thereof, an amount in cash equal to the product of (x) $8.45 (or any
higher price per share of Common Stock that may be paid in the Offer) less the
exercise price of such Warrant multiplied by (y) the number of shares of Common
Stock for which such Warrant was exercisable immediately prior to the Effective
Time, without interest. PSC shareholders who demand and fully perfect appraisal
rights under New York Law may be entitled to receive, in connection with the
Merger, cash for the fair value of their shares of Common Stock and Preferred
Stock as determined pursuant to the procedures prescribed by New York Law. See
Section 12. The Merger Agreement is more fully described in Section 11. Certain
federal income tax consequences of the sale of Securities in the Offer and the
Merger are described in Section 5.
Approval of the Merger requires the affirmative vote of holders of two-
thirds of the outstanding shares of Common Stock (including the right of the
Preferred Stock to vote on an as-converted basis). Consequently, if Purchaser
acquires pursuant to the Offer at least the number of shares of Common Stock,
shares of Preferred Stock and Warrants (determined as if shares of Preferred
Stock and Warrants have been converted into or exercised for shares of Common
Stock) that, when added to Securities already owned by Parent, Purchaser and
their subsidiaries, shall constitute two-thirds of the then outstanding shares
of Common Stock on a fully diluted basis (including all shares of Common Stock
issuable upon the conversion of any convertible securities or upon the exercise
of any options, warrants or rights (other than the Rights)), then Purchaser
will have sufficient voting power to approve and adopt the Merger Agreement and
the Merger without the vote of any other shareholder.
Under New York Law, if Purchaser acquires at least 90% of the outstanding
shares of Common Stock and at least 90% of the outstanding shares of Preferred
Stock, Purchaser will be able to approve and adopt the Merger Agreement and the
Merger without a vote of PSC's shareholders. In such event, Parent, Purchaser
and PSC have agreed to take all necessary and appropriate action to cause the
Merger to become effective.
2
<PAGE>
As an inducement to Parent and Purchaser to enter into the Merger Agreement,
Parent, Purchaser and certain shareholders of PSC are parties to a Stockholders
Agreement, dated as of June 5, 2000 (the "Stockholders Agreement"), pursuant to
which such shareholders (i) agreed to tender their shares of Common Stock
pursuant to the Offer and (ii) grant Parent and each of its officers an
irrevocable proxy to vote such shares as Parent deems appropriate with respect
to matters relating to the Merger Agreement and the transactions contemplated
thereby. Such shareholders own either of record or beneficially shares of
Common Stock representing approximately 6.47% of the shares of Common Stock
outstanding on a fully diluted basis. The Stockholders Agreement is more fully
described in Section 11.
PSC has advised Purchaser that as of June 5, 2000, 12,034,866 shares of
Common Stock and 110,000 shares of Preferred Stock were issued and outstanding.
In addition, PSC has advised Parent that as of June 5, 2000, 3,033,104 shares
of Common Stock are reserved for future issuance pursuant to, or upon exercise
of, outstanding options, 1,375,000 shares of Common Stock are reserved for
issuance upon the conversion of shares of Preferred Stock, and 1,155,000 shares
of Common Stock are reserved for issuance upon the exercise of Warrants. As a
result, as of such date, the Minimum Condition would be satisfied if Purchaser
acquired shares of Common Stock, shares of Preferred Stock and Warrants that,
after conversion of the Preferred Stock and exercise of the Warrants, would
constitute 11,731,981 shares of Common Stock. If all shares of Preferred Stock
are converted to shares of Common Stock, Purchaser could cause the Merger to
become effective in accordance with New York Law, without a meeting of PSC's
shareholders, if Purchaser acquired shares of Common Stock (including shares
issued upon conversion of the Preferred Stock) and Warrants that, after
exercise of the Warrants, would constitute 15,838,173 shares of Common Stock.
If the Preferred Stock is not converted to Common Stock, Purchaser could cause
the Merger to become effective without a meeting of PSC's shareholders if
Purchaser acquires shares of Common Stock and Warrants that, after exercise of
the Warrants, would constitute at least 14,600,673 shares of Common Stock, and
also acquires at least 99,000 shares of Preferred Stock.
The Offer is conditioned upon the fulfillment of the conditions described in
Section 13. The Offer will expire at 12:00 midnight, New York City time, on
Monday, July 17, 2000, unless the Offer is extended.
This Offer to Purchase and the related Letter of Transmittal contain
important information which Securityholders should read carefully before they
make any decision with respect to the Offer.
1. Terms of the Offer; Expiration Date.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Securities
validly tendered (and not withdrawn in accordance with the procedures described
in Section 4) on or prior to the Expiration Date. "Expiration Date" means 12:00
midnight, New York City time, on Monday, July 17, 2000, unless and until
Purchaser (subject to the terms and conditions of the Merger Agreement) shall
have extended the period during which the Offer is open, in which case
"Expiration Date" will mean the latest time and date at which the Offer, as it
may be extended by Purchaser, shall expire.
The Offer is subject to the conditions described in Section 13, including
the satisfaction of the Minimum Condition, the HSR Condition and the Financing
Condition. Subject to the applicable rules and regulations of the SEC and the
terms and conditions of the Merger Agreement, Purchaser expressly reserves the
right to waive any condition at its sole discretion. Purchaser also expressly
reserves the right to increase the price per Security payable in the Offer and
to make any other changes in the terms and conditions of the Offer; provided,
however, that Purchaser may not decrease the price per Security payable in the
Offer, reduce the maximum number of Securities to be purchased in the Offer or
modify in any manner adverse to the Securityholders or add conditions to the
Offer in addition to those described in Section 13.
Under the Merger Agreement, Purchaser may, without the consent of PSC,
extend the Offer in increments of no more than five business days each beyond
the scheduled expiration date, if, at the scheduled expiration of
3
<PAGE>
the Offer, any of the conditions to Purchaser's obligation to accept Securities
for payment shall not be satisfied or waived, provided that Purchaser may not
so extend the Offer for more than 10 business days in total if all of the
conditions set forth in Section 13 other than the Financing Condition have been
satisfied or waived. In addition, Purchaser may extend the Offer for any period
required by any rule, regulation or interpretation of the SEC or its staff
applicable to the Offer. Purchaser may also extend the Offer for an aggregate
period of not more than 10 business days beyond the latest applicable date that
would otherwise be permitted if, as of such date, all of the conditions to
Purchaser's obligations to accept Securities for payment are satisfied or
waived, but the number of Securities validly tendered and not withdrawn
pursuant to the Offer exceeds the Minimum Condition, but is less than 90% of
the outstanding shares of Common Stock or 90% of the outstanding shares of
Preferred Stock; provided, however, that if Purchaser extends the Offer
pursuant to this sentence, notwithstanding anything to the contrary in the
Merger Agreement, Purchaser's obligation to accept Securities for payment shall
thereafter be conditioned only upon the satisfaction or waiver of (i) the
Minimum Condition and (ii) the conditions set forth in clauses (b) (to the
extent the applicable law is enacted, promulgated, amended, issued or deemed
applicable on or after the date of such extension), (g) and (h) of Section 13.
During any such extension, all Securities previously tendered shall remain
subject to the Offer and subject to the right of a tendering Securityholder to
withdraw such Securityholder's Securities. See Section 4. Under no
circumstances will interest be paid on the purchase price for tendered
Securities, whether or not the Offer is extended. Any extension of the Offer
may be effected by Purchaser providing oral or written notice of the extension
to the Depositary.
Purchaser will pay for all Securities validly tendered and not withdrawn
promptly following the acceptance of Securities for payment pursuant to the
Offer. Purchaser expressly reserves the right (but subject to the terms and
conditions of the Merger Agreement and applicable rules of the SEC) (i) to
delay payment for Securities in order to comply in whole or in part with
applicable laws (any such delay will be effected in compliance with Rule 14e-
1(c) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which requires Purchaser to pay for the Securities or to return tendered
Securities promptly after the termination or withdrawal of the Offer), (ii) to
extend or terminate the Offer and not to accept for payment or pay for any
Securities not previously accepted for payment or paid for, if any of the
conditions described in Section 13 have not been satisfied or waived, and (iii)
to amend the Offer or to waive any conditions to the Offer in accordance with
the provisions of the Merger Agreement, in each case by giving oral or written
notice of such delay, termination, waiver or amendment to the Depositary and by
making public announcement thereof.
Any such extension, delay, termination, waiver or amendment of the Offer
will be followed as promptly as practicable by a public announcement thereof.
In the case of an extension, the announcement will be made no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Subject to applicable law (including Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act, which require that material changes
be promptly disseminated to shareholders in a manner reasonably designed to
inform them of such changes) and without limiting the manner in which Purchaser
may choose to make any public announcement, Purchaser will have no obligation
to publish, advertise or otherwise communicate any such public announcement
other than by issuing a press release to the Dow Jones News Service or the
Public Relations Newswire.
If Purchaser makes a material change to the terms of the Offer or the
information concerning the Offer, or if Purchaser waives a material condition
of the Offer, Purchaser will extend the Offer and disseminate additional tender
offer materials to the extent required by Rules l4d-4(c), l4d-6(d) and 14e-1
under the Exchange Act. The minimum period during which a tender offer must
remain open following material changes in the terms of the offer, other than a
change in price or a change in percentage of securities sought, depends upon
the facts and circumstances, including the materiality of the changes. In the
SEC's view, an offer should remain open for a minimum of five business days
from the date the material change is first published, sent or given to
shareholders, and, if material changes are made with respect to information
that approaches the significance of price and the percentage of securities
sought, a minimum of ten business days may be required
4
<PAGE>
to allow for adequate dissemination and investor response. With respect to a
change in price, a minimum ten business day period from the date of the change
is generally required to allow for adequate dissemination to shareholders.
Accordingly, if, prior to the Expiration Date, Purchaser decreases the number
of Securities being sought (which requires the consent of PSC), increases the
consideration offered in the Offer, or decreases the consideration offered in
the Offer (which requires the consent of PSC) and if the Offer is scheduled to
expire at any time earlier than the period ending on the tenth business day
from the date that notice of the increase or decrease is first published, sent
or given to holders of Securities, Purchaser will extend the Offer at least
until the expiration of that period of ten business days. For purposes of the
Offer, a "business day" means any day on which the principal offices of the SEC
in Washington, D.C. are open to accept filings, or, in the case of determining
a date when any payment is due, any day on which banks are not required or
authorized to close in The City of New York, and consists of the time period
from 12:01 a.m. through 12:00 midnight, New York City time.
PSC has provided Purchaser with its shareholder list and security position
listings, including the most recent list of names, addresses and security
positions of non-objecting beneficial owners in the possession of PSC, for the
purpose of disseminating the Offer to holders of Securities. Purchaser will
mail this Offer to Purchase and the related Letter of Transmittal to record
Securityholders whose names appear on PSC's shareholder list and Purchaser will
furnish the materials, for subsequent transmittal to beneficial owners of
Securities, to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the shareholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing.
2. Acceptance for Payment and Payment for Securities.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of the Offer as so
extended or amended), Purchaser will accept for payment all Securities validly
tendered (and not properly withdrawn in accordance with Section 4) prior to the
Expiration Date promptly after the Expiration Date. Purchaser shall pay for all
Securities validly tendered and not withdrawn promptly following the acceptance
of Securities for payment pursuant to the Offer. Subject to applicable rules
and regulations of the SEC and the terms of the Merger Agreement, Purchaser
reserves the right to delay acceptance of or payment for Securities in order to
comply with applicable laws. See Sections 1 and 14.
In all cases, Purchaser will pay for Securities tendered and accepted for
payment pursuant to the Offer only after timely receipt by the Depositary of
(i) the certificates evidencing such Securities (the "Share Certificates") or
timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of
such Securities into the Depositary's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedures described in
Section 3, (ii) the Letter of Transmittal (or a manually signed facsimile),
properly completed and duly executed, with any required signature guarantees or
an Agent's Message (as defined below), in connection with the book-entry
transfer and (iii) any other documents required under the Letter of
Transmittal.
"Agent's Message" means a message, transmitted by the Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of the Book-
Entry Confirmation which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Securities that are the subject of the Book-
Entry Confirmation, that the participant has received and agrees to be bound by
the Letter of Transmittal and that Purchaser may enforce that agreement against
the participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Securities validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of its acceptance for payment of such Securities pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Securities purchased pursuant to the Offer will
5
<PAGE>
be made by deposit of the purchase price therefor with the Depositary, which
will act as agent for tendering Securityholders whose Securities have been
accepted for payment for the purpose of receiving payments from Purchaser and
transmitting the payments to validly tendering Securityholders. Under no
circumstances will Purchaser pay interest on the purchase price for Securities
regardless of any delay in making such payment.
If Purchaser does not purchase any Securities pursuant to the Offer, or if
Share Certificates are submitted evidencing more Securities than are tendered,
Share Certificates representing unpurchased Securities will be returned,
without expense to the tendering Securityholder (or, in the case of Securities
tendered by book-entry transfer into the Depositary's account at a Book-Entry
Transfer Facility pursuant to the procedure described in Section 3, the
Securities will be credited to an account maintained at such Book-Entry
Transfer Facility), as promptly as practicable following the expiration or
termination of the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates, the right to purchase all or
any portion of the Securities tendered in the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering Securityholders to receive
payment for Securities validly tendered and accepted for payment pursuant to
the Offer.
3. Procedures for Accepting the Offer and Tendering Securities.
Valid Tender of Securities. In order for a Securityholder to validly tender
Securities in the Offer, the Depositary must receive the Letter of Transmittal
(or a manually signed facsimile), properly completed and duly executed,
together with any required signature guarantees or, in the case of a book-entry
transfer, an Agent's Message, and any other documents required by the Letter of
Transmittal, at one of its addresses described on the back cover of this Offer
to Purchase. In addition, either (i) the Share Certificates evidencing the
tendered Securities must be received by the Depositary at such address or the
Securities must be tendered pursuant to the procedure for book-entry transfer
described below and the Depositary must receive a Book-Entry Confirmation
(including an Agent's Message if the Securityholder has not delivered a Letter
of Transmittal), in each case prior to the Expiration Date, or (ii) the
tendering Securityholder must comply with the guaranteed delivery procedures
described below.
The method of delivery of Share Certificates and all other required
documents, including delivery through the Book-Entry Transfer Facility, is at
the option and sole risk of the Securityholder, and the delivery will be deemed
made only when actually received by the Depositary. If delivery is by mail,
Purchaser recommends registered mail with return receipt requested, including
proper insurance. In all cases sufficient time to ensure timely delivery should
be allowed.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Securities at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the system of the Book-Entry
Transfer Facility may make a book-entry delivery of Securities by causing the
Book-Entry Transfer Facility to transfer such Securities into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
Securities may be effected through book-entry transfer at the Book-Entry
Transfer Facility, the Letter of Transmittal (or a manually signed facsimile),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message, and any other required documents, must, in
any case, be received by the Depositary at one of its addresses described on
the back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering Securityholder must comply with the guaranteed delivery procedure
described below. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Depositary.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Security Transfer Agent Medallion
Signature Program, or by any other "eligible guarantor
6
<PAGE>
institution," as such term is defined in Rule 17Ad-15 under the Exchange Act
(each of the foregoing being referred to as an "Eligible Institution"), except
in cases where Securities are tendered (i) by a registered Securityholder who
has not completed either the box entitled "Special Payment Instructions" or the
box entitled "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. If a Share Certificate is
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made, or a Share Certificate not accepted
for payment or not tendered is to be returned, to a person other than the
registered holder(s), then the Share Certificate must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appears on the Share Certificate, with the
signature(s) on such Share Certificate or stock powers guaranteed by an
Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a Securityholder desires to tender Securities
pursuant to the Offer and such Securityholder's Share Certificates evidencing
such Securities are not immediately available or such Securityholder cannot
deliver the Share Certificates and all other required documents to the
Depositary prior to the Expiration Date, or such Securityholder cannot complete
the procedure for delivery by book-entry transfer on a timely basis, such
Securities may nevertheless be tendered, provided that all the following
conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received prior to the Expiration Date by the Depositary as provided below;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Securities, in proper form for transfer, in each case together
with the Letter of Transmittal (or a manually signed facsimile), properly
completed and duly executed, with any required signature guarantees or, in
the case of a book-entry transfer, an Agent's Message, and any other
documents required by the Letter of Transmittal are received by the
Depositary within three Nasdaq Stock Market ("Nasdaq") trading days after
the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or by
facsimile transmission to the Depositary and must include a guarantee by an
Eligible Institution in the form described in the form of Notice of Guaranteed
Delivery made available by Purchaser.
In all cases, payment for Securities tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of the Share Certificates evidencing such Securities, or a Book-Entry
Confirmation of the delivery of such Securities, and the Letter of Transmittal
(or a manually signed facsimile), properly completed and duly executed, with
any required signature guarantees or, in the case of a book-entry transfer, an
Agent's Message, and any other documents required by the Letter of Transmittal.
Determination of Validity. All questions as to the form of documents and the
validity, form, eligibility (including time of receipt) and acceptance for
payment of any tender of Securities will be determined by Purchaser, in its
sole discretion, which determination will be final and binding on all parties.
Purchaser reserves the absolute right to reject any and all tenders determined
by it not to be in proper form or the acceptance for payment of which may, in
the opinion of its counsel, be unlawful. Purchaser also reserves the absolute
right to waive any condition of the Offer to the extent permitted by applicable
law and the Merger Agreement or any defect or irregularity in the tender of any
Securities of any particular Securityholder, whether or not similar defects or
irregularities are waived in the case of other Securityholders. No tender of
Securities will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of Parent, Purchaser or any of
their respective affiliates or assigns, the Depositary, the Dealer Manager, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
7
<PAGE>
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
A tender of Securities pursuant to any of the procedures described above
will constitute the tendering Securityholder's acceptance of the terms and
conditions of the Offer, as well as the tendering Securityholder's
representation and warranty to Purchaser that (i) such Securityholder has the
full power and authority to tender, sell, assign and transfer the tendered
Securities (and any and all other Securities or other securities issued or
issuable in respect of such Securities), and (ii) when the same are accepted
for payment by Purchaser, Purchaser will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances
and not subject to any adverse claims.
The acceptance for payment by Purchaser of Securities pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering Securityholder and Purchaser upon the terms and subject to the
conditions of the Offer.
Appointment as Proxy. By executing the Letter of Transmittal as described
above, a tendering Securityholder irrevocably appoints designees of Purchaser
as such Securityholder's agents, attorneys-in-fact and proxies, each with full
power of substitution, in the manner described in the Letter of Transmittal, to
the full extent of such Securityholder's rights with respect to the Securities
tendered by such Securityholder and accepted for payment by Purchaser (and with
respect to any and all other Securities or other securities issued or issuable
in respect of such Securities on or after June 5, 2000). All such powers of
attorney and proxies will be considered irrevocable and coupled with an
interest in the tendered Securities. Such appointment will be effective when,
and only to the extent that, Purchaser accepts such Securities for payment.
Upon such acceptance for payment, all prior powers of attorney and proxies
given by such Securityholder with respect to such Securities (and such other
Securities and securities) will be revoked, without further action, and no
subsequent powers of attorney or proxies may be given nor any subsequent
written consent executed by such Securityholder (and, if given or executed,
will not be deemed to be effective) with respect thereto. Purchaser's designees
will, with respect to the Securities for which the appointment is effective, be
empowered to exercise all voting and other rights of such Securityholder as
they in their sole discretion may deem proper at any annual or special meeting
of PSC's shareholders or any adjournment or postponement, by written consent in
lieu of any such meeting or otherwise. Purchaser reserves the right to require
that, in order for Securities to be deemed validly tendered, immediately upon
payment for such Securities, Purchaser must be able to exercise full voting
rights with respect to such Securities (and such other Securities and
securities).
Under the "backup withholding" provisions of U.S. federal income tax law,
the Depositary may be required to withhold 31% of any payments of cash pursuant
to the Offer. To prevent backup federal income tax withholding with respect to
payment to certain Securityholders of the purchase price of Securities
purchased pursuant to the Offer, each such Securityholder must provide the
Depositary with such Securityholder's correct taxpayer identification number
and certify that such Securityholder is not subject to backup federal income
tax withholding by completing the Substitute Form W-9 in the Letter of
Transmittal. See Instruction 10 of the Letter of Transmittal.
4. Withdrawal Rights.
Tenders of Securities made pursuant to the Offer are irrevocable except that
such Securities may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the Offer, may
also be withdrawn at any time after Thursday, August 17, 2000. If Purchaser
extends the Offer, is delayed in its acceptance for payment of Securities or is
unable to accept Securities for payment pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may, nevertheless, on Purchaser's behalf, retain tendered Securities, and such
Securities may not be withdrawn except to the extent that tendering
Securityholders are entitled to withdrawal rights as described in this Section
4, subject to Rule 14e-1(c) under the Exchange Act. Any such delay will be by
an extension of the Offer to the extent required by law.
8
<PAGE>
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
described on the back cover page of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Securities to
be withdrawn, the number of Securities to be withdrawn and the name of the
registered Securityholder, if different from that of the person who tendered
such Securities. If Share Certificates evidencing Securities to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Securities have been tendered for the account of an
Eligible Institution. If Securities have been tendered pursuant to the
procedure for book-entry transfer as described in Section 3, any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Securities.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Parent, Purchaser or any
of their respective affiliates or assigns, the Depositary, the Dealer Manager,
the Information Agent or any other person will be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Withdrawals of Securities may not be rescinded. Any Securities properly
withdrawn will thereafter be deemed not to have been validly tendered for
purposes of the Offer. However, withdrawn Securities may be re-tendered at any
time prior to the Expiration Date by following one of the procedures described
in Section 3.
5. Certain U.S. Federal Income Tax Consequences.
The following is a summary of the principal federal income tax consequences
of the Offer and the Merger to holders whose Securities are purchased pursuant
to the Offer or whose Securities are converted into the right to receive cash
in the Merger (whether upon receipt of the Merger Consideration or pursuant to
the proper exercise of dissenter's rights). The discussion applies only to
Securityholders in whose hands Securities are capital assets (generally assets
held for investment) and may not apply to Securities received pursuant to the
exercise of employee stock options or otherwise as compensation, or to holders
of Securities who are not citizens or residents of the United States of
America.
The tax discussion described below is included for general information
purposes only and is based upon present law (which may be subject to change,
possibly on a retroactive basis). Because individual circumstances may differ,
each Securityholder should consult such Securityholder's own tax advisor to
determine the applicability of the rules discussed to such Securityholder and
the particular tax effects of the Offer and the Merger, including the
application and effect of state, local and other tax laws.
The receipt of the offer price and the receipt of cash pursuant to the
Merger (whether as Merger Consideration or pursuant to the proper exercise of
dissenter's rights) will be a taxable transaction for federal income tax
purposes (and also may be a taxable transaction under applicable state, local
and other income tax laws). In general, for federal income tax purposes, a
Securityholder will recognize gain or loss equal to the difference between such
holder's adjusted tax basis in the Securities sold pursuant to the Offer or
converted to cash in the Merger and the amount of cash received. Such gain or
loss generally will be capital gain or loss. Certain individual Securityholders
will be subject to tax on the net amount of such gain at a maximum rate of 20%
provided that the Securities were held for more than 12 months. Special rules
(and generally lower maximum rates) apply to individuals in lower tax brackets.
The deduction of capital losses is subject to certain limitations.
Securityholders should consult their own tax advisors in this regard.
Payments in connection with the Offer or the Merger may be subject to backup
withholding at a 31% rate. Backup withholding generally applies if a
Securityholder (i) fails to furnish such Securityholder's social security
number or taxpayer identification number ("TIN"), (ii) furnishes an incorrect
TIN, (iii) fails properly to report interest or dividends or (iv) under certain
circumstances, fails to provide a certified statement, signed
9
<PAGE>
under penalties of perjury, that the TIN provided is such Securityholder's
correct number and that such Securityholder is not subject to backup
withholding. Backup withholding is not an additional tax but merely an advance
payment, which may be refunded to the extent it results in an overpayment of
U.S. federal income tax. Certain persons, including corporations, non-U.S.
persons and financial institutions, generally, are exempt from backup
withholding. Certain penalties apply for failure to furnish correct information
and for failure to include the reportable payments in income. Each
Securityholder should consult with such Securityholder's own tax advisor as to
such Securityholder's qualifications for exemption from withholding and the
procedure for obtaining such exemption.
6. Price Range of Securities; Dividends.
The Common Stock is listed and principally traded on Nasdaq under the symbol
"PSCX". The Preferred Stock and Warrants are not listed or admitted for trading
on any securities exchange. The following table sets forth, for the quarters
indicated, the high and low sales prices per share of Common Stock on Nasdaq as
reported on the Dow Jones News Service. No dividends have been declared or paid
on the Securities during the quarters indicated.
Price Range of Securities
<TABLE>
<CAPTION>
High Low
------- ------
<S> <C> <C>
1998:
First Quarter............................................ $13.375 $9.125
Second Quarter........................................... 12.250 8.625
Third Quarter............................................ 9.375 6.000
Fourth Quarter........................................... 11.500 6.500
1999:
First Quarter............................................ $ 9.625 $7.375
Second Quarter........................................... 10.750 7.625
Third Quarter............................................ 10.250 6.875
Fourth Quarter........................................... 9.000 6.250
2000:
First Quarter............................................ $ 9.000 $4.250
Second Quarter (Through June 16, 2000)................... $ 8.094 $3.500
------- ------
</TABLE>
On June 5, 2000, the last full trading day prior to the announcement of the
execution of the Merger Agreement, the closing price per share of Common Stock
as reported on Nasdaq was $6.06. On June 16, 2000, the last full trading day
prior to the commencement of the Offer, the closing price per share of Common
Stock as reported on Nasdaq was $7.969.
Securityholders are urged to obtain a current market quotation for the
Common Stock.
7. Possible Effects of the Offer on the Market for Securities, Nasdaq Listing,
Margin Regulations and Exchange Act Registration.
Possible Effects of the Offer on the Market for the Securities. The purchase
of Securities in the Offer will reduce the number of shares of Common Stock
that might otherwise trade publicly and will reduce the number of holders of
shares of Common Stock, which could adversely affect the liquidity and market
value of the remaining shares of Common Stock held by the public. Purchaser
cannot predict whether the reduction in the number of shares of Common Stock
that might otherwise trade publicly would have an adverse or beneficial effect
on the market price for or marketability of the Common Stock or whether it
would cause future market prices to be greater or less than the price to be
paid in the Offer.
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<PAGE>
Nasdaq Listing. Depending upon the number of Securities purchased pursuant
to the Offer, the Common Stock may no longer meet the standards for continued
listing on Nasdaq. According to Nasdaq's published guidelines, the Common Stock
would not be eligible to be included for listing if, among other things, the
number of shares of Common Stock publicly held falls below 100,000, the number
of beneficial owners of Common Stock falls below 300 or the market value of
such publicly held shares of Common Stock is not at least $200,000. If, as a
result of the purchase of Securities pursuant to the Offer, the Merger or
otherwise, the Common Stock no longer meets the requirements of Nasdaq for
continued listing, the listing of the Common Stock will be discontinued. In
such event, the market for the Common Stock would be adversely affected. In the
event the Common Stock were no longer eligible for listing on Nasdaq,
quotations might still be available from other sources. The extent of the
public market for the Common Stock and the availability of such quotations
would, however, depend upon the number of holders of such Common Stock
remaining at such time, the interest in maintaining a market in such Common
Stock on the part of securities firms, the possible termination of registration
of such Common Stock under the Exchange Act as described below and other
factors.
Purchaser intends to cause the delisting of the Common Stock by Nasdaq
following consummation of the Offer.
Exchange Act Registration. The Common Stock is currently registered under
the Exchange Act. The purchase of the Securities pursuant to the Offer may
result in the Common Stock becoming eligible for deregistration under the
Exchange Act. Such registration may be terminated upon application by PSC to
the SEC if the Common Stock is not listed on a "national securities exchange"
and there are fewer than 300 record holders. The termination of the
registration of the Common Stock under the Exchange Act would substantially
reduce the information required to be furnished by PSC to PSC shareholders and
to the SEC and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b), the requirement of
furnishing a proxy statement in connection with shareholders' meetings pursuant
to Section 13(a) or 14(c) of the Exchange Act and the related requirements of
an annual report, and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions, no longer applicable to PSC. In
addition, "affiliates" of PSC and persons holding "restricted securities" of
PSC may be deprived of the ability to dispose of such securities pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended. If
registration of the Common Stock under the Exchange Act was terminated, the
Common Stock would no longer be eligible for Nasdaq reporting. Purchaser
currently intends to seek to cause PSC to terminate the registration of the
Common Stock under the Exchange Act as soon after consummation of the Offer as
the requirements for termination of registration are met.
Margin Regulations. The Common Stock is currently a "margin security", as
such term is defined under the rules of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), which has the effect, among other
things, of allowing brokers to extend credit on the collateral of such
securities. Depending upon factors similar to those described above regarding
listing and market quotations, following the Offer it is possible that the
Common Stock might no longer constitute a "margin security" for purposes of the
margin regulations of the Federal Reserve Board, in which event the Common
Stock could no longer be used as collateral for loans made by brokers. In
addition, if registration of the Common Stock under the Exchange Act were
terminated, the Common Stock would no longer constitute a "margin security".
8. Certain Information About PSC.
The information concerning PSC contained in this Offer to Purchase,
including financial information, has been furnished to Purchaser by PSC or has
been taken from or based upon publicly available information. Neither Purchaser
nor Parent assumes any responsibility for the accuracy or completeness of this
information or for any failure by PSC to disclose events which may have
occurred or may affect the significance or accuracy of any such information but
which are unknown to Purchaser or Parent.
11
<PAGE>
General. PSC is a New York corporation with its principal executive offices
located at 675 Basket Road, Webster, New York 14580, and its telephone number
is (716) 265-1600. PSC was incorporated in New York in 1969 under the name
Photographic Sciences Corporation. On June 1, 1981, PSC made its initial public
offering of common stock, which trades under the symbol "PSCX". PSC designs,
manufactures and markets a broad line of laser and non-laser based handheld and
fixed position bar code scanners, two-dimensional image readers, wireless
portable data terminals, warehouse management software, bar code scan engines,
verifiers and automated carton dimensioning systems for the worldwide Automatic
Identification and Data Collection (AIDC) market. PSC's products are used to
identify, capture, process and transmit data. PSC has developed products for
AIDC at every stage of the product supply chain from raw material,
manufacturing and warehousing, to logistics, transportation, inventory
management and point-of-sale. PSC's products are used throughout the world in
automated data collection solutions in the food, general retail, health care,
manufacturing, warehousing, logistics, package handling and other industries.
Certain Projected Financial Data of PSC. Prior to entering into the Merger
Agreement, representatives of Parent and Purchaser conducted a due diligence
review of PSC and in connection with such review received certain projections
of PSC's future operating performance. PSC does not in the ordinary course
publicly disclose projections, and these projections were not prepared with a
view to public disclosure and are included herein only because they were
provided to Purchaser. PSC has advised Parent and Purchaser that its internal
financial forecasts (upon which these projections were partially based) are, in
general, prepared solely for internal use and capital budgeting and other
management decisions and are subjective in many respects and thus susceptible
to interpretations and periodic revision based on actual experience and
business developments. PSC has also advised Purchaser and Parent that these
projections were prepared by PSC's management based on numerous assumptions,
including, among others, assumptions made by management with respect to the
market for PSC's products, general business, economic, market and financial
conditions and other matters, including effective tax rates, interest rates and
amount of borrowings all of which are difficult to predict, many of which are
beyond PSC's control, and none of which were subject to approval of Parent or
Purchaser. Accordingly, no assurances can be given with respect to any such
assumptions. These projections do not give effect to the Offer or any
alterations Parent may make to PSC's operations or strategy after the
consummation of the Offer. The information described below is presented for the
limited purpose of giving Securityholders access to the material financial
projections prepared by PSC's management that were made available to Purchaser
and Parent in connection with the Merger Agreement and the Offer.
<TABLE>
<CAPTION>
Projected for Years
Ending December 31:
--------------------
2000 2001 2002
------ ------ ------
(in millions)
<S> <C> <C> <C>
Total Revenues........................................ $273.9 $274.7 $315.0
====== ====== ======
Gross Profit.......................................... $112.6 $116.9 $132.7
====== ====== ======
Operating Income...................................... $ 21.3 $ 19.6 $ 26.3
</TABLE>
Certain matters discussed herein, including but not limited to these
projections, are forward-looking statements that involve risks and
uncertainties. Forward-looking statements include those preceded by, followed
by or that include the words "believes", "expects", "anticipates" or similar
expressions and also the information described above under "Certain Projected
Financial Data of PSC". While presented with numerical specificity, these
projections were not prepared by PSC in the ordinary course and are based upon
a variety of estimates and hypothetical assumptions which may not be accurate,
may not be realized, and are also inherently subject to significant business,
economic and competitive uncertainties and contingencies, all of which are
difficult to predict, and most of which are beyond the control of PSC.
Accordingly, there can be no assurance that any of the projections will be
realized, and the actual results for the years ending December 31, 2000, 2001
and 2002 may vary materially from those shown above.
12
<PAGE>
In addition, these projections were not prepared in accordance with
generally accepted accounting principles, and neither PSC's nor Purchaser's
independent accountants have examined or compiled any of these projections or
expressed any conclusion or provided any other form of assurance with respect
to these projections and accordingly assume no responsibility for these
projections. These projections were prepared with a limited degree of precision
and were not prepared with a view to public disclosure or compliance with the
published guidelines of the SEC or the guidelines established by the American
Institute of Certified Public Accountants regarding projections, which would
require a more complete presentation of data than as shown above. The inclusion
of the projections herein should not be regarded as an indication that any of
Parent, Purchaser or PSC or their respective affiliates or representatives
considered or consider the projections to be a reliable prediction of future
events, and the projections should not be relied upon as such. None of Parent,
Purchaser or PSC or any of their respective affiliates or representatives has
made or makes any representation to any person regarding the ultimate
performance of PSC compared to the information contained in the projections,
and none of them intends to update or otherwise revise the projections to
reflect the occurrence of future events even in the event that any or all of
the assumptions underlying the projections are shown to be in error.
Available Information. PSC is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, files annual,
quarterly and special reports, proxy statements and other information with the
SEC. Holders of Securities may read and copy any reports, proxy statements and
other information at the public reference facilities maintained by the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, or at the
SEC's regional offices located at Seven World Trade Center, 13th Floor, New
York, New York 10048 and the Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Please call the SEC at 1-800-
SEC-0330 for further information on the public reference facilities.
Securityholders may also obtain copies of these materials by mail, upon payment
of the SEC's customary fees, by writing to its principal office at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. PSC's SEC filings are
also available on the Internet at http://www.sec.gov.
9. Certain Information About Purchaser and Parent.
General. Parent and Purchaser are newly incorporated Delaware and New York
corporations, respectively, organized in connection with the Offer and the
Merger and have not carried on any activities other than in connection with the
Offer and the Merger. Parent and Purchaser were formed by certain shareholders
of Welch Allyn Data Collection, Inc. ("WADC") for the purpose of acquiring PSC.
Shortly prior to the time that Purchaser will accept Securities for payment
pursuant to the Offer, it is anticipated that Parent will acquire the
outstanding capital stock of WADC in exchange for the issuance of capital stock
of Parent. WADC is the successor to the Data Collection Division of Welch
Allyn, Inc. which has been in existence since 1973. It acquired Hand Held
Products, Inc. in September 1999.
The principal offices of Parent and Purchaser are located at 4341 State
Street, P.O. Box 220, Skaneateles Falls, New York 13153-0220, and the telephone
number for both Parent and Purchaser is (315) 685-2949. Purchaser is a wholly
owned subsidiary of Parent.
Parent and Purchaser do not have any significant assets or liabilities nor
do they engage in activities other than those incident to their formation and
capitalization and the transactions contemplated by the Offer and the Merger.
Because Parent and Purchaser are newly formed and have minimal assets and
capitalization and no operating history, no meaningful financial information
regarding Parent or Purchaser is available.
The name, citizenship, business address, business telephone number,
principal occupation or employment, and five-year employment history of each of
the directors and executive officers of Parent and Purchaser and certain other
information are described in Schedule I hereto. Except as described in this
Offer to Purchase and in Schedule I hereto, none of Parent, Purchaser or, to
their knowledge, any of the persons listed on Schedule I have during the last
five years (i) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) been a party to any judicial or
administrative proceeding (except for matters that
13
<PAGE>
were dismissed without sanction or settlement) that resulted in a judgment,
decree or final order enjoining the person from future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws.
Except as described in this Offer to Purchase, (i) none of Parent, Purchaser
or, to their knowledge, any of the persons listed in Schedule I to this Offer
to Purchase or any associate or majority owned subsidiary of Parent or
Purchaser or any of the persons so listed, beneficially owns or has any right
to acquire any Securities and (ii) none of Parent, Purchaser or, to their
knowledge, any of the persons or entities referred to above nor any director,
executive officer or subsidiary of any of the foregoing has effected any
transaction in the Securities or any other equity securities of PSC during the
past 60 days. Welch Allyn, Inc., an affiliate of WADC, owns one share of Common
Stock. William Allyn, Chairman of the Board of Parent and Purchaser and
President and Chief Executive Officer of Welch Allyn, Inc., owns 100 shares of
Common Stock. Kevin R. Jost, President and a Director of Parent and Purchaser
and President and Chief Operating Officer of WADC, owns 500 shares of Common
Stock.
Except as described in this Offer to Purchase, no material agreement,
arrangement, understanding or relationship exists or is proposed between
Parent, Purchaser, or, to their knowledge, any of the persons listed in
Schedule I to this Offer to Purchase or any controlling persons of subsidiaries
of Parent or Purchaser and PSC or any of its executive officers, directors,
controlling persons or subsidiaries.
Except as provided in the Merger Agreement and as otherwise described in
this Offer to Purchase, none of Parent, Purchaser or, to their knowledge, any
of the persons listed in Schedule I to this Offer to Purchase, has any
agreement, arrangement, understanding or relationship, whether or not legally
enforceable, with any other person with respect to any securities of PSC,
including, but not limited to, the transfer or voting of such securities, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies, consents or
authorizations. Except as described in this Offer to Purchase, since June 5,
1998, none of Parent, Purchaser, or, to their knowledge, any of the persons
listed on Schedule I hereto, has had any transaction with PSC or any of its
executive officers, directors or affiliates that is required to be reported
under the rules and regulations of the SEC applicable to the Offer. Except as
described in this Offer to Purchase, since June 5, 1998, there have been no
negotiations, transactions or material contacts between any of Parent,
Purchaser, or any of their respective subsidiaries or, to the knowledge of
Parent and Purchaser, any of the persons listed in Schedule I, on the one hand,
and PSC or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer for or other acquisition of any
class of PSC's securities, an election of PSC's directors or a sale or other
transfer of a material amount of assets of PSC.
10. Financing of the Offer and the Merger.
The Offer is subject to the Financing Condition. Parent estimates the total
amount of funds required by Purchaser to purchase all of the outstanding
Securities in the Offer and the Merger and to pay for the cancellation of
employee stock options will be approximately $118,500,000. In addition to
purchasing the outstanding Securities, it is anticipated that Parent will
refinance approximately $131,800,000 of existing debt owed by PSC, and will
also refinance approximately $5,400,000 of debt owed by WADC. The total amount
of funds required to consummate the Offer and the Merger, to refinance the
existing debt, to pay for the cancellation of employee stock options and to pay
related fees and expenses is estimated to be approximately $265,700,000.
Purchaser expects to obtain (i) $195,000,000 of such funds through a loan
facility provided by various external sources, bearing a market interest rate
(the "Debt Financing"), (ii) $65,000,000 of such funds by way of an equity
investment in Parent by existing investors of WADC and other third party
investors, which amount shall be invested in Purchaser by Parent, and (iii)
$5,700,000 from cash on hand.
14
<PAGE>
On June 9, 2000, Parent and Purchaser received a commitment letter from The
Chase Manhattan Bank and Chase Securities (collectively, "Chase") confirming
Chase's commitment, subject to the fulfillment of the conditions set forth in
such letter, to providing the Debt Financing. The commitment letter provides
that Parent, Purchaser or WADC will borrow up to $75,000,000 under a 5 1/2 year
revolving credit facility maturing on December 31, 2005 (the "Revolving
Facility") and Parent, Purchaser or WADC will borrow $150,000,000 under a 5 1/2
year term loan facility (the "Term Facility") maturing on December 31, 2005.
The commitment provides that the full amount of the Term Facility must be
borrowed in a single drawing at the time the Securities are paid for pursuant
to the Offer and that such Term Facility will mature on December 31, 2005, and
will amortize in quarterly installments of periodically increasing amounts
commencing on March 31, 2001 and ending on December 31, 2005. Interest on both
the Revolving Facility and the Term Facility will be charged at (i) either (a)
a eurodollar rate in respect of Eurodollar loans (a "Eurodollar Loan"), or (b)
the higher of (1) The Chase Manhattan Bank's prime rate and (2) the federal
funds effective rate from time to time plus 0.5%, plus (ii) an applicable
margin of (a) initially for 90 days, 2.25% per annum in the case of a
Eurodollar Loan and (b) thereafter, a percentage determined in accordance with
the pricing grid attached to the commitment letter. The Surviving Corporation
will use funds generated from its operations to repay its obligations under the
Debt Financing.
Purchaser can and will only use up to $45,000,000 of the Revolving Facility
for the purposes of acquiring Securities and options pursuant to the Offer and
the Merger. The remainder of the Revolving Facility is to be used for ongoing
working capital needs and general corporate purposes by the Surviving
Corporation.
The obligations of the borrower under the Revolving Facility and Term
Facility will be unconditionally guaranteed by each direct and indirect
domestic subsidiary of Parent (including, after the Merger and the anticipated
acquisition of the capital stock of WADC, WADC and the Surviving Corporation).
The obligations will be fully secured by a first priority lien in all the
tangible and intangible assets (including, without limitation, intellectual
property, real property and all of the capital stock of Parent, Purchaser and
WADC and each of their direct and indirect domestic subsidiaries and 65% of the
first-tier foreign subsidiaries of Parent, the Surviving Corporation and WADC
and their subsidiaries) of Parent, the Surviving Corporation and WADC and each
of their direct and indirect domestic subsidiaries.
Chase's commitment under its commitment letter is subject to the following
conditions: (a) no material adverse change in the business, operations,
property, condition (financial or otherwise) or prospects of WADC or PSC and
their respective subsidiaries, since December 31, 1999, shall have occurred or
be known to Chase; (b) Chase shall not become aware of any information
affecting WADC or PSC and their respective subsidiaries or the Offer or Merger
that is inconsistent in a material adverse manner with any information
disclosed prior to June 9, 2000; (c) a material disruption of or material
adverse change in financial, banking or capital market conditions that could
materially impair the syndication shall not have occurred; (d) Chase shall be
satisfied that there is no competing offering, placement or arrangement of any
debt securities or bank financing by or on behalf of Parent, Purchaser and WADC
or any of their respective subsidiaries; (e) the negotiation, execution and
delivery on or before August 31, 2000 of definitive documentation with respect
to the Revolving Facility and Term Facility to the satisfaction of Chase and
its counsel; (f) Chase's satisfaction as to the structure of the Merger and
other transactions and all related tax, legal, ERISA, environmental and
accounting matters; (g) Chase shall have received and be satisfied with the
unaudited interim consolidated financial statements of WADC and PSC for each
fiscal month after the most recent 2000 fiscal quarter for which financial
statements are available, and projections of Parent and its subsidiaries
(including WADC, PSC and their respective subsidiaries) for fiscal years 2000-
2006; and (h) Chase Securities Inc. shall be afforded a reasonable period to
syndicate the Revolving Facility and the Term Facility.
15
<PAGE>
The Debt Financing will be subject to the satisfaction of the following
conditions prior to August 31, 2000: (a) each of Parent, Purchaser, WADC, PSC
and their respective subsidiaries shall have executed and delivered
satisfactory definitive financing documentation with respect to the Revolving
Facility and Term Facility; (b) the borrower shall have received at least
$66,000,000 of new equity issued to investors acceptable to Chase; (c) Parent,
Purchaser and PSC shall have entered into the Merger Agreement and Chase shall
be satisfied with the terms of the Offer and the related transactions; (d) the
sources and funds for the transactions shall be as set forth on Schedule I to
the commitment letter and Parent's expenses and fees shall not exceed
$10,500,000; (e) there shall be no outstanding debt of Parent and its
subsidiaries as of the closing date other than the Revolving Facility and the
Term Facility; (f) Chase shall be satisfied that no material adverse change
shall have occurred in the business, operations, properties, assets, financial
condition or prospects of WADC and PSC and their respective subsidiaries; (g)
all material governmental and third party approvals and consents (including HSR
Act) shall have been obtained; (h) there shall be no pending or threatened
litigation or proceeding affecting or relating to the Merger or the Offer or
the financing thereof that could have a material adverse effect on the business
or result in the Merger being enjoined; (i) the consummation of the Merger and
the Offer and the financing thereof shall not violate any applicable law,
statute, rule or regulation, or conflict with or result in a default under any
material agreement of Parent and its subsidiaries (including WADC and PSC and
their respective subsidiaries); (j) Chase shall have received certain audited
and unaudited consolidated financial statements of WADC and PSC for the past
three years and unaudited consolidated financial statements for each fiscal
month after the most recent 2000 fiscal quarter for which financial statements
are available for WADC and PSC, a satisfactory pro forma consolidated balance
sheet of Parent and satisfactory projections of Parent and its subsidiaries for
fiscal years 2000-2006; (k) Chase shall have received the results of a recent
lien search in each relevant jurisdiction with respect to Parent and its
subsidiaries, and such search shall reveal no liens on any of their respective
assets; (l) Chase shall have received documentation relating to liens on real
property of Parent and its subsidiaries contemplated to be provided in respect
of the Revolving Facility and the Term Facility; (m) Chase shall have received
a satisfactory certification from the Chief Financial Officer of the borrower
as to the solvency of Parent, Purchaser or WADC and their subsidiaries; (n)
Chase shall be satisfied with the environmental liabilities to which Parent and
its subsidiaries may be subject after the Merger and, if necessary, has
received satisfactory environmental assessments with respect to real property
owned or leased by Parent and its subsidiaries; (o) Chase shall have received
such legal opinions, documents and other instruments as are customary for
transactions of this type; and (p) Chase shall have received all fees and
expenses required to be paid.
The making of each extension of credit will be conditioned upon the accuracy
of all representations and warranties in the credit documentation and there
being no default or event of default in existence at the time of, or after
giving effect to the making of, such extension of credit.
Neither Parent nor Purchaser is aware of any development that will make
obtaining the proceeds less likely than it was at the time of such commitment.
Except as described in this Offer to Purchaser, Parent and Purchaser have no
alternative financing plans with respect to the Offer.
The foregoing summary of the commitment letter, Revolving Facility and Term
Facility is qualified in its entirety by reference to the commitment letter
which is incorporated herein by reference, and a copy of which has been filed
as an Exhibit to the Schedule TO filed by Parent and Purchaser with the SEC in
connection with the Offer. The commitment letter may be examined and copies may
be obtained at the places described in Section 8.
11. Background of the Offer; Contacts with PSC; the Merger Agreement; Other
Agreements.
Background of the Offer; Contacts with PSC
The business relationship between WADC and PSC began in 1981 when WADC
entered into a relationship with PSC to design and manufacture bar code
verification products for PSC. In 1989, WADC and PSC entered into additional
agreements whereby WADC exclusively engineered and manufactured and PSC
exclusively sold and marketed the bar code verification products. Also, WADC
and PSC entered into a cross
16
<PAGE>
license agreement whereby WADC licensed certain intellectual property for use
in its products and PSC licensed certain intellectual property for use in its
products. From 1985 to 1996, WADC purchased laser-based bar code products from
PSC on an original equipment manufacturer basis for resale under the WADC name.
WADC also has sold and continues to sell to PSC other bar code products. Under
these agreements, WADC received payments from PSC in an aggregate amount of
approximately $1.8 million and $1.6 million during the years ended December 31,
1998 and 1999, respectively.
On February 23, 1999, WADC and PSC entered into a Non-Disclosure Agreement
so that discussions of a possible strategic relationship between the companies
could commence.
On March 5, 1999, executives of WADC and PSC met and undertook general
discussion of each other's business, including whether there might be
opportunities to work together on product development and other strategic
initiatives. The executives made brief mention of potential combination
structures.
On August 26, 1999 William F. Allyn, Chief Executive Officer, Kevin R. Jost,
President and Chief Operating Officer and Joseph M. Hennigan, Chief Financial
Officer of WADC, met with Robert Strandberg, Chief Executive Officer and
President of PSC, in Seneca Falls, New York to introduce and discuss the
possibility of WADC acquiring PSC.
On September 24, 1999, representatives of Chase Securities and Messrs. Jost
and Hennigan met with William J. Woodard, Chief Financial Officer of PSC, to
discuss a possible combination of WADC and PSC.
On October 5, 1999, Messrs. Allyn and Hennigan and Miles Smith, Jr. met with
Mr. Strandberg to discuss a possible combination between PSC and WADC. These
discussions were a continuation of the September 24, 1999 meeting with Mr.
Woodard.
On or about October 6, 1999, WADC and Chase Securities entered into an
agreement appointing Chase Securities as WADC's exclusive financial advisor
with respect to a possible business combination with PSC. WADC discussed with
Chase Securities the information provided by PSC during the initial
discussions.
On October 12, 1999, Messrs. Jost and Strandberg held a telephone conference
call to discuss the potential synergies of the combination of the two
companies.
On or about October 15, 1999, directors and officers of WADC met with Robert
Ehrlich, Chairman of the Board of PSC, and Mr. Strandberg to discuss the
combination of the companies. The discussions focused on the potential
acquisition of WADC by PSC.
On October 20, 1999 and again on October 22, 1999 Messrs. Allyn, Jost,
Hennigan, Peter Soderberg, Lew Allyn, Tom Wood and Kevin Cahill, executives of
Welch Allyn, Inc. met to discuss a potential combination.
On October 26, 1999, Messrs. Strandberg and Ehrlich met with Messrs. Allyn,
Smith, Hennigan and Jost to discuss the potential acquisition of WADC by PSC.
On November 2, 1999, Mr. Hennigan met with counsel from Shearman & Sterling
to outline potential terms and conditions of the combination.
On November 4, 1999, Mr. Hennigan, in a telephone conference call with Mr.
Strandberg, discussed issues and timing of a potential combination.
On November 15, 1999, financial executives of both companies met to discuss
potential synergies, issues and aspects of a potential combination. These
executives met again on December 2, 1999 to further discuss the same issues
with regard to the combined company.
17
<PAGE>
On December 16, 1999, the parties entered into an exclusivity agreement and
a confidentiality agreement in order to proceed with the exchange of
information necessary to conduct due diligence regarding the potential
combination.
On or about December 15, 1999, directors and executives of WADC met with
Messrs. Strandberg and Ehrlich to negotiate terms of PSC acquiring WADC.
During the month of January 2000, representatives of each of WADC and PSC
conducted due diligence on the information that was requested from the other
party. The information requested related to sales forecasts, fixed costs,
operating margins, balance sheet data, product development programs, legal and
other business records.
On January 19, 2000, the parties entered into a confidentiality and non-
waiver agreement in order to proceed with the further exchange of specific
information necessary to conduct due diligence regarding the potential
combination.
On January 31 and February 1, 2000, Messrs. Jost and Hennigan met with
Messrs. Strandberg and Woodard. Each team made presentations on its general
product development programs, sales channels and marketing and business plans.
On February 4, 2000, Messrs. Allyn, Jost and Hennigan met to discuss the
strategic rationale and potential synergies of the proposed acquisition. The
executives shared their views of the rationale in support of the proposed
combination.
On February 15, 2000, the exclusivity agreement between PSC and WADC dated
December 16, 1999, expired.
On February 23, 2000, directors and executives of WADC met with Messrs.
Ehrlich and Strandberg. At this meeting, the executives began a dialogue on a
possible purchase of PSC by WADC rather than a purchase of WADC by PSC. The
parties discussed various proposals and could not agree on a price per share of
Common Stock for PSC.
During the balance of February 2000, Messrs. Hennigan and Woodard conducted
various telephone conferences to further their discussions on the terms and
price per share of a possible acquisition of PSC. Some of these conference
calls included Messrs. Ehrlich and Strandberg.
On April 6, 2000, the executive teams from both parties met at PSC's Eugene,
Oregon facility to conduct on-site due diligence regarding PSC's operations,
forecasts, product development plans, overall cost structure, manufacturing
operations, management teams and competencies. The parties also entered into a
supplementary confidentiality and non-waiver agreement in order to continue
with the exchange of specific information necessary to conduct due diligence
regarding the potential combination.
During the month of April 2000, there were various meetings with executives
to discuss integration planning issues. These integration planning issues were
also discussed among executives of both companies at meetings held on May 2, 3,
5 and 24, 2000.
On or about May 1, 2000, the parties reached a preliminary agreement to
continue negotiation of a proposed transaction in which WADC would acquire PSC.
This was subject to certain contingencies, including negotiation and execution
of the Merger Agreement, execution of the Stockholders Agreement and receipt by
WADC of certain opinions of counsel regarding PSC's intellectual property.
Following such preliminary agreement, certain shareholders of WADC determined
that the acquisition of PSC should be accomplished through a newly formed
affiliate of WADC, namely Parent and Purchaser.
18
<PAGE>
Between May 15, 2000 and June 5, 2000, WADC, PSC and their respective
outside counsel held a number of conference telephone calls and meetings to
discuss and negotiate the key terms of the Merger Agreement and the
Stockholders Agreement.
On May 18, 19 and 26, 2000, Messrs. Hennigan and Woodard met with various
banking institutions to discuss the necessary financing to complete the
proposed acquisition.
Between May 15 and June 1, 2000, WADC management met with various key
employees of PSC to discuss their intentions to be employed by the combined
company. Management teams of both parties met to further discuss organizational
structure and combination issues.
On June 4, 2000, the WADC Board of Directors met for final consideration of
the acquisition. The WADC Board reviewed: (i) PSC's business plan, (ii) WADC's
financial models, (iii) potential business synergies to be realized by
combining the respective business of PSC and WADC, (iv) the presentation
prepared by Chase Securities and (v) a summary of the essential terms of the
Merger Agreement and the Stockholders Agreement.
On June 5, 2000, the PSC Board, based in part on (i) the recommendation of
the Special Committee of the Board and (ii) a presentation given and a fairness
opinion rendered by Raymond James, resolved to approve and authorize the
execution and delivery of the Merger Agreement. The Merger Agreement was
executed after the close of business on June 5, 2000. On June 6, 2000, prior to
the opening of the United States securities markets, PSC issued a press release
announcing the execution of the Merger Agreement and the cash tender offer
contemplated thereby.
The Merger Agreement
The following is a summary of certain provisions of the Merger Agreement.
This summary is qualified in its entirety by reference to the Merger Agreement,
which is incorporated herein by reference, and a copy of which has been filed
as an Exhibit to the Schedule TO. The Merger Agreement may be examined and
copies may be obtained at the places described in Section 8. Defined terms used
herein and not defined herein have the respective meanings assigned to those
terms in the Merger Agreement.
The Offer. The Merger Agreement provides that Purchaser shall commence the
Offer as promptly as reasonably practicable, but in no event later than ten
business days after the date of the Merger Agreement. Purchaser's obligation to
accept for payment Securities tendered pursuant to the Offer is subject to the
satisfaction of the Minimum Condition, the HSR Condition, the Financing
Condition and certain other conditions that are described in Section 13 hereof.
Purchaser expressly reserves the right to waive any such conditions, to
increase the price per Security to be paid in the Offer and to make any other
changes in the terms and conditions of the Offer; provided, however, that
Purchaser has agreed that no change in the Offer may be made which decreases
the price payable for the Securities in the Offer, which reduces the maximum
number of Securities to be purchased in the Offer or which imposes conditions
to the Offer in addition to those described in Section 13, and Purchaser shall
not, without the consent of PSC, waive or change the Minimum Condition, change
the scheduled expiration date (except as provided in the next sentence), or
change the form of consideration payable in the Offer. Under the Merger
Agreement Purchaser may, without the consent of PSC: (i) extend the Offer in
increments of no more than five business days each beyond the scheduled
expiration date, which shall initially be 20 business days following the
commencement of the Offer, if, at the scheduled expiration of the Offer, any of
the conditions to Purchaser's obligation to accept Securities for payment shall
not be satisfied or waived, provided that the Purchaser may not extend the
Offer pursuant to this clause (i) for more than 10 business days in total if
all of the conditions set forth in Section 13 other than the Financing
Condition have been satisfied or waived, (ii) extend the Offer for any period
required by any rule, regulation or interpretation of the SEC, or the staff
thereof, applicable to the Offer; or (iii) extend the Offer for an aggregate
period of not more than 10 business days beyond the latest applicable date that
would otherwise be permitted under clause (i) or (ii) of this sentence, if, as
of such date, all of the conditions to Purchaser's obligations to accept
Securities for payment are satisfied or waived, but the number of Securities
validly tendered and not
19
<PAGE>
withdrawn pursuant to the Offer exceeds the Minimum Condition, but less than
90% of the outstanding shares of Common Stock or 90% of the outstanding shares
of Preferred Stock; provided, however, that if Purchaser extends the Offer
pursuant to this clause (iii), notwithstanding anything to the contrary in the
Merger Agreement, Purchaser's obligation to accept Securities for payment shall
thereafter be conditioned only upon the satisfaction or waiver of (x) the
Minimum Condition and (y) the conditions set forth in clauses (iv)(b) (to the
extent the applicable law is enacted, promulgated, amended, issued or deemed
applicable on or after the date of such extension), (g) and (h) of the first
paragraph of Section 13. During any such extension, all Securities previously
tendered shall remain subject to the Offer and subject to the right of a
tendering securityholder to withdraw such holder's Securities.
Purchaser will pay for all Securities validly tendered and not withdrawn
promptly following the acceptance of Securities for payment pursuant to the
Offer, subject to the applicable rules of the SEC, the terms and conditions of
the Offer and compliance by Purchaser with applicable laws. Prior to or within
one business day following the expiration of the Offer, Parent will provide or
cause to be provided to Purchaser the funds necessary to purchase any
Securities that Purchaser becomes obligated to purchase in the Offer.
The Merger. The Merger Agreement provides that, at the Effective Time,
Purchaser will be merged with and into PSC. As a result of the Merger, the
separate corporate existence of Purchaser will cease and PSC will continue as
the Surviving Corporation and will become a wholly owned subsidiary of Parent.
At the Effective Time, (i) each share of Common Stock that remains issued and
outstanding (other than Dissenting Shares (see section entitled Appraisal
Rights) or shares of Common Stock held by Parent or Purchaser or any direct or
indirect wholly owned subsidiary of Parent or PSC or in the treasury of PSC)
will be canceled and converted automatically into the right to receive $8.45,
(ii) each share of Preferred Stock that remains issued and outstanding (other
than Dissenting Shares or shares of Preferred Stock held by Parent or Purchaser
or any direct or indirect wholly owned subsidiary of Parent or PSC or in the
treasury of PSC) will be canceled and converted automatically into the right to
receive $105.625, and (iii) any Warrants outstanding as of the Effective Time
shall remain outstanding until the earlier of their exercise or expiration
pursuant to their terms thereof, and after the Effective Time each holder of a
Warrant shall be entitled to receive an amount in cash equal to the product of
(x) $8.45 less the exercise price of such Warrant multiplied by (y) the number
of shares of Common Stock for which such Warrant was exercisable immediately
prior to the Effective Time.
Pursuant to the Merger Agreement, each share of Common Stock, par value
$0.01 per share, of Purchaser issued and outstanding immediately prior to the
Effective Time will be converted into and exchanged for one validly issued,
fully paid and non-assessable share of Common Stock, par value $0.01 per share,
of the Surviving Corporation.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of PSC immediately prior to the Effective
Time will be the initial officers of the Surviving Corporation. At the
Effective Time, the Certificate of Incorporation of Purchaser, as in effect
immediately prior to the Effective Time, will be the Certificate of
Incorporation of the Surviving Corporation. Until subsequently amended, unless
otherwise determined by Parent, at the Effective Time, the By-laws of
Purchaser, as in effect immediately prior to the Effective Time, will be the
By-laws of the Surviving Corporation.
Company Stock Plans and Company Stock Options. Effective as of the Effective
Time, PSC will take all necessary action to terminate its Company Stock Plans
and to cancel each Company Stock Option that is outstanding, vested and
unexercised as of that date. Each holder of a vested Company Stock Option that
is outstanding and unexercised at the Effective Time will be entitled to
receive immediately after the Effective Time an amount in cash equal to the
excess, if any, of (x) $8.45 over (y) the per share exercise price of such
Company Stock Option, multiplied by the number of shares of Common Stock
subject to such vested Company Stock Option. Company Stock Options that are not
vested at Effective Time will be cashed out at the price described in the
preceding sentence, immediately after the date or dates on which such options
become vested, subject to various conditions.
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Appraisal Rights. Shares of Common Stock and Preferred Stock outstanding
immediately prior to the Effective Time and held by a holder who has the right
to receive payment of the fair value of such holder's shares pursuant to
Section 910 of New York Law and has complied with the provisions of Section 623
of New York Law ("Dissenting Shares") will not be converted into a right to
receive the Merger Consideration unless such holder fails to perfect or
withdraws or otherwise loses such holder's right to appraisal. If after the
Effective Time such holder fails to perfect or withdraws or loses such holder's
right to appraisal, such shares shall be treated as if they had been converted
as of the Effective Time into a right to receive the Merger Consideration. PSC
will not, except with the prior written consent of Parent, make any payment
with respect to, or settle or offer to settle, any demands received by PSC for
appraisal of shares of Common Stock or Preferred Stock.
Shareholders' Meeting. Pursuant to the Merger Agreement, PSC will, if
required by applicable law in order to consummate the Merger, and in accordance
with applicable law and PSC's Certificate of Incorporation and By-laws, duly
call, give notice of, convene and hold an annual or special meeting of its
shareholders as promptly as practicable following acceptance for payment of
Securities in the Offer for the purpose of considering and taking action on the
Merger Agreement and the related transactions (the "Shareholders' Meeting").
Proxy Statement. The Merger Agreement provides that PSC will, if approval of
PSC's shareholders is required by applicable law to consummate the Merger, as
promptly as practicable following acceptance for payment of Securities pursuant
to the Offer, file a Proxy Statement with respect to the Shareholders' Meeting
with the SEC under the Exchange Act, and PSC, Parent and Purchaser will use
their reasonable efforts to have the Proxy Statement cleared by the SEC. Except
as required by the fiduciary duties of the Board, PSC has agreed to include in
the Proxy Statement, and not subsequently withdraw or modify in any manner
adverse to Parent or Purchaser, the recommendation of the Board that the
shareholders of PSC approve and adopt the Merger Agreement and the transactions
contemplated thereby and to use its reasonable efforts to obtain such approval
and adoption. Parent and Purchaser have agreed to cause all Securities then
owned by them and their subsidiaries to be voted in favor of approval and
adoption of the Merger Agreement and the transactions contemplated thereby. The
Merger Agreement provides that, in the event that Purchaser acquires at least
90% of the outstanding shares of Common Stock and 90% of the outstanding shares
of Preferred Stock, Parent, Purchaser and PSC will take all necessary and
appropriate action to cause the Merger to become effective, in accordance with
New York Law, as promptly as reasonably practicable after such acquisition,
without a meeting of PSC's shareholders.
Conduct of Business by PSC Pending the Merger. Pursuant to the Merger
Agreement, PSC has agreed that, between the date of the Merger Agreement and
the earliest to occur of (i) the date of termination of the Merger Agreement,
(ii) the date directors designated by Parent or Purchaser have been elected to
and constitute a majority of the Board or (iii) the Effective Time (except as
disclosed in the Merger Agreement), unless Parent and Purchaser otherwise agree
in writing, the businesses of PSC and its subsidiaries (the "Subsidiaries" and,
individually, a "Subsidiary") will be conducted only in, and PSC and the
Subsidiaries will not take any material action except in, the ordinary course
of business and in a manner consistent with past practice; and PSC will use all
reasonable efforts to preserve substantially intact the business organization
of PSC and the Subsidiaries, to keep available the services of the current
officers, employees and consultants of PSC and the Subsidiaries and to preserve
the current relationships of PSC and the Subsidiaries with customers, suppliers
and other persons with which PSC or any Subsidiary has significant business
relations. The Merger Agreement provides that, by way of amplification and not
limitation, except as contemplated in the Merger Agreement, neither PSC nor any
Subsidiary will, between the date of the Merger Agreement and the earliest to
occur of the (i) date of termination of the Merger Agreement, (ii) the date
directors designated by Parent or Purchaser have been elected to and constitute
a majority of the Board or (iii) the Effective Time, directly or indirectly,
do, or propose to do, any of the following, without Parent's and Purchaser's
prior written consent, which consent will not be unreasonably withheld: (a)
amend or otherwise change its Certificate of Incorporation or By-laws or
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equivalent organizational documents; (b) issue, sell, pledge, dispose of,
grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or
encumbrance of (1) any shares of any class of capital stock of PSC or any
Subsidiary, or any options, warrants, convertible securities or other rights of
any kind to acquire any shares of such capital stock, or any other ownership
interest (including, without limitation, any phantom interest), of PSC or any
Subsidiary (except for (A) the issuance of Common Stock pursuant to the 1995
Employee Stock Purchase Plan and the Directors Compensation Plan, (B) the
issuance of up to 4,809,673 shares of Common Stock upon exercise of stock
options and warrants outstanding on the date of the Merger Agreement (C) the
issuance of stock options, to employees hired subsequent to the date of the
Merger Agreement, exercisable for up to 50,000 shares of Common Stock under
PSC's 1994 Stock Option Plan, (D) the issuance of up to 1,375,000 shares of
Common Stock upon the conversion of the Preferred Stock and (E) transactions
between PSC and any Subsidiary or between Subsidiaries) or (2) any assets of
PSC or any Subsidiary, except in the ordinary course of business and in a
manner consistent with past practice; (c) declare, set aside, make or pay any
dividend or other distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock, except that wholly owned subsidiaries
of PSC may declare, set aside, make and pay dividends and other distributions
on their capital stock; (d) reclassify, combine, split, subdivide or redeem or
purchase or otherwise acquire, directly or indirectly, any of its capital
stock; (e) (1) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization or any
division or any significant amount of assets, except for purchases of inventory
in the ordinary course of business consistent with past practice and except in
the fulfillment of contracts in existence on the date of the Merger Agreement,
including Material Contracts, or entered into after the date of the Merger
Agreement without violation of any other provision of the Merger Agreement, (2)
incur any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise become responsible for, the
obligations of any person, or make any loans or advances or grant any security
interest in any of its assets except in the ordinary course of business and
consistent with past practice, (3) enter into any contract or agreement other
than in the ordinary course of business and consistent with past practice, (4)
authorize, or make any commitment with respect to, any single capital
expenditure which is in excess of $500,000 or capital expenditures which are,
in the aggregate, in excess of $2,000,000 for PSC and the Subsidiaries taken as
a whole, or (5) enter into or amend in any material respect any contract,
agreement, commitment or arrangement with respect to any of the matters set
forth in this subsection (e); (f) increase the compensation payable or to
become payable or the benefits provided to its directors, officers or
employees, except for increases in the ordinary course of business and
consistent with past practice in salaries or wages of employees of PSC or any
Subsidiary who are not directors, officers or key employees of PSC or any
Subsidiary or increases required under the Plans, or grant any severance or
termination pay (except to the extent required under Plans), or enter into any
employment or severance agreement with, any director, officer or other employee
of PSC or of any Subsidiary, or establish, adopt, enter into or amend any
collective bargaining, bonus, profit-sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer or employee,
except in each such case in the ordinary course of business and consistent with
past practices with respect to employees who are not directors, officers or key
employees of PSC or any Subsidiary; (g) take any action, other than reasonable
and usual actions in the ordinary course of business and consistent with past
practice, with respect to accounting policies or procedures; (h) make any
material tax election or settle or compromise any material United States
federal, state, local or other non-United States income tax liability; (i) pay,
discharge or satisfy any claim, liability or obligation (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of business and consistent
with past practice, of liabilities reflected or reserved against in the
consolidated balance sheet of PSC and its subsidiaries for the quarter ending
March 31, 2000 or subsequently incurred in the ordinary course of business and
consistent with past practice; (j) amend, modify or consent to the termination
of any material contracts, or amend, waive, modify or consent to the
termination of PSC's or any Subsidiary's rights thereunder and except as
permitted by subclause (k) below; (k) commence or settle any material Action,
except such Actions as have been specified pursuant to the Merger Agreement; or
(l) announce an intention, enter into any formal or informal agreement or
otherwise make a commitment, to do any of the foregoing.
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PSC Board Representation. The Merger Agreement provides that, promptly upon
the purchase of Securities pursuant to the Offer, and from time to time
thereafter, Purchaser will be entitled to designate up to such number of
directors, rounded to the nearest whole number, on the Board as will give
Purchaser representation on the Board equal to the product of the total number
of directors on the Board (giving effect to the directors elected pursuant to
this sentence), multiplied by the percentage that the aggregate number of
shares of Common Stock beneficially owned by Purchaser or any affiliate of
Purchaser following such purchase bears to the total number of shares of Common
Stock then outstanding (provided that such number of directors shall be reduced
in order to accommodate the Continuing Directors (as defined below), but not
below such number as would constitute a majority of the whole Board, determined
as if there are no vacancies on the Board), and PSC will, at such time,
promptly take all actions necessary to cause Purchaser's designees to be
elected as directors of PSC, including increasing the size of the Board or
securing the resignations of incumbent directors, or both. The Merger Agreement
also provides that, at such times, PSC will use its reasonable best efforts to
cause persons designated by Purchaser to constitute the same percentage as
persons designated by Purchaser will constitute of the Board of (i) each
committee of the Board, (ii) each board of directors of each Subsidiary, and
(iii) each committee of each such board, in each case only to the extent
permitted by applicable law. Notwithstanding the foregoing, until the Effective
Time, Parent, Purchaser and PSC shall cause three members of the Board to be
persons who were members of the Board as of the date of the Merger Agreement
(or who were nominated by such members) (the "Continuing Directors"), so long
as there are at least three such persons who are willing to serve as Continuing
Directors. Parent, Purchaser and PSC will cause the Continuing Directors to
constitute the same percentage as they constitute of the Board of (i) each
committee of the Board, (ii) each board of directors of each Subsidiary, and
(iii) each committee of each such board, in each case only to the extent
permitted by applicable law. Following the election of designees of Purchaser
and prior to the Effective Time, any amendment of the Merger Agreement or the
Certificate of Incorporation or By-laws of PSC, any termination of the Merger
Agreement by PSC, any extension by PSC of the time for the performance of any
of the obligations or other acts of Parent or Purchaser, or waiver of any of
PSC's rights under the Merger Agreement, will require the concurrence of a
majority of the Continuing Directors or their appointees.
Access to Information. Pursuant to the Merger Agreement, until the Effective
Time, PSC will, and will cause the Subsidiaries and the officers, directors,
employees, auditors and agents of PSC and the Subsidiaries to, afford the
officers, employees and agents of Parent and Purchaser and persons providing or
proposing to provide Parent or Purchaser with financing for the Merger and the
transactions contemplated by the Merger Agreement complete access at reasonable
times during normal business hours upon prior notice to the officers,
employees, agents, properties, offices, plants and other facilities, books and
records of PSC and each Subsidiary, and will furnish Parent and Purchaser and
persons providing or proposing to provide Parent or Purchaser with financing
for the Merger and the transactions contemplated by the Merger Agreement with
such financial, operating and other data and information as Parent and
Purchaser, through their officers, employees or agents, may reasonably request;
provided, however that PSC, Parent and Purchaser will use reasonable efforts to
limit the access in such a way so as to not unreasonably disrupt the operations
of the business of PSC and the Subsidiaries; and provided, further, that PSC
will have no obligation under this section with regard to the director elected
by the holders of the Preferred Stock voting separately as a class (the
"Preferred Director").
No Solicitation of Transactions. Prior to the earlier to occur of the date
of termination of the Merger Agreement or the Effective Time, PSC has agreed
that neither it nor any Subsidiary will, directly or indirectly, through any
officer, director, employee, agent or otherwise, (i) solicit, initiate or
knowingly encourage the submission of any Acquisition Proposal (as defined
below) (ii) participate in any discussions or negotiations regarding any
proposal that constitutes, or may reasonably be expected to lead to, an
Acquisition Proposal, or (iii) furnish to any person, any information with
respect to, or otherwise cooperate in any way with respect to, or assist or
participate in, facilitate or knowingly encourage, any proposal that
constitutes, or may reasonably be expected to lead to, an Acquisition Proposal;
provided, however, that PSC may, to the extent necessary to act in a manner
consistent with the fiduciary duties of the Board, as determined in good faith
by the Board after receiving the advice of outside counsel, in response to an
Acquisition Proposal that was not solicited by PSC
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and that the Board determines, in good faith after receiving the advice of
outside counsel and a financial advisor of recognized reputation, is reasonably
likely to lead to a Superior Proposal (as defined below), and subject to and in
compliance with the notification provisions set out below, (a) furnish
information with respect to PSC and the Subsidiaries to the person making such
Acquisition Proposal and its officers, employees and agents and persons
providing or proposing to provide it with financing for the Acquisition
Proposal pursuant to a customary confidentiality agreement with terms no less
favorable to PSC than those set forth in the confidentiality agreements entered
into with WADC and (b) participate in discussions or negotiations with such
persons regarding such Acquisition Proposal; and provided, further, that PSC
shall not be considered to be in breach of this section by virtue of any
actions of the Preferred Director contrary to this provision, if PSC has
informed all directors of their duties pursuant to the Merger Agreement.
Neither the Board nor any committee of the Board shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by the Board or any such committee of
the Merger Agreement, the Offer, the Merger or any other transaction
contemplated by the Merger Agreement, (ii) approve or recommend, or publicly
propose to approve or recommend, any Acquisition Proposal or (iii) enter into
any agreement with respect to any Acquisition Proposal (other than a
confidentiality agreement pursuant to subsection (a) of the foregoing
paragraph). In the event that, prior to the time of acceptance for payment of
Securities pursuant to the Offer, the Board determines in good faith that it is
necessary to act in a manner consistent with its fiduciary duties under
applicable law after receiving the advice of outside legal counsel, the Board
may withdraw or modify its approval or recommendation of the Offer, the Merger
or any other transaction contemplated by the Merger Agreement in order to
accept a Superior Proposal.
The Merger Agreement requires PSC to, and to direct or cause its directors,
officers, employees, representatives and agents to, immediately cease and cause
to be terminated any discussions or negotiations with any parties that may be
ongoing as of June 5, 2000 with respect to any Acquisition Proposal; provided,
however, that PSC shall not be considered to be in breach of this section by
virtue of any actions by the Preferred Director contrary to the terms of this
provision if PSC has informed all directors of their duties under the Merger
Agreement.
The Merger Agreement requires PSC to advise Parent orally (within one
business day) and in writing (as promptly as practicable afterwards) of: (i)
any Acquisition Proposal or any request for information with respect to any
Acquisition Proposal, the material terms and conditions of such Acquisition
Proposal or request and the identity of the person making such Acquisition
Proposal or request and (ii) any changes in any such Acquisition Proposal or
request.
PSC has agreed, except as necessary to act in a manner consistent with the
Board's fiduciary duties under applicable law after having received the advice
of outside legal counsel, not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which PSC is a
party.
Nothing contained in the Merger Agreement shall prohibit PSC from taking and
disclosing to its shareholders a position contemplated by Rules 14d-9 and 14e-
2(a) promulgated under the Exchange Act or from making any required disclosure
to its shareholders.
"Acquisition Proposal" means (i) any proposal or offer from any person
relating to any direct or indirect acquisition of (A) all or a substantial part
of the assets of PSC and the Subsidiaries, taken as a whole; or (b) securities
constituting over 20% of the outstanding shares of Common Stock on a fully
diluted basis; (ii) any tender offer or exchange offer, as defined pursuant to
the Exchange Act, that, if consummated, would result in any person beneficially
owning securities constituting over 20% of the outstanding shares of Common
Stock on a fully diluted basis; or (iii) any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving PSC or any Subsidiary and any other person other than PSC or any
Subsidiary, other than the transactions contemplated by the Merger Agreement.
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"Superior Proposal" means any Acquisition Proposal which the Board
determines, in its good faith judgment (after having received the advice of
Raymond James or another financial advisor of recognized reputation), to be
more favorable to PSC's shareholders than the Offer and the Merger and for
which financing, to the extent required, is then committed, subject to
customary financing conditions.
Employee Benefits Matters. Parent agrees to cause PSC and the Subsidiaries
and the Surviving Corporation and its subsidiaries, as the case may be, to
maintain from the earlier of the date directors designated by Parent or
Purchaser have been elected to and constitute a majority of the Board and the
Effective Time to the first anniversary of the Effective Time, the Plans as in
effect on the date of the Merger Agreement or to provide benefits to each
current employee of PSC and the Subsidiaries that are no less favorable in the
aggregate to such employees than those in effect on the date of the Merger
Agreement. From and after the earlier of the date directors designated by
Parent or Purchaser have been elected to and constitute a majority of the Board
and the Effective Time, Parent will cause PSC and the Subsidiaries and the
Surviving Corporation and its subsidiaries, as the case may be, to honor in
accordance with their terms, all contracts, agreements, arrangements, policies,
plans and commitments of PSC and the Subsidiaries as in effect on June 5, 2000
and as disclosed pursuant to the Merger Agreement, that are applicable to any
current or former employees or directors of PSC or any Subsidiary, including
any change of control provisions. Employees of PSC or any Subsidiary will
receive credit for purposes of eligibility to participate and vesting (but not
for benefit accruals) under any employee benefit plan, program or arrangement
established or maintained by the Surviving Corporation or any of its
subsidiaries for service accrued or deemed accrued prior to the Effective Time
with PSC or any Subsidiary; provided, however, that such crediting of service
will not operate to duplicate any benefit or the funding of any such benefit.
Parent and the Surviving Corporation will, after the Effective Time, have the
right to amend or terminate, in a manner consistent with the Merger Agreement,
any employee benefit plan or policy which is maintained by PSC or any
Subsidiary immediately prior to the Effective Time, and nothing in the Merger
Agreement will require Parent or the Surviving Corporation to maintain any
equity program for employees of PSC or any Subsidiary which is comparable to
the equity programs maintained for such employees immediately prior to the
Effective Time.
Directors' and Officers' Indemnification and Insurance. The Merger Agreement
provides that the By-laws of the Surviving Corporation will contain provisions
no less favorable with respect to indemnification than are set forth in Article
V of the By-laws of PSC, which provisions will not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would affect adversely the rights thereunder of individuals who, at
or prior to the Effective Time, were directors, officers, employees,
fiduciaries or agents of PSC, unless such modification will be required by law.
For a period of at least six years after the Effective Time, Parent will cause
the Certificate of Incorporation of the Surviving Corporation to continue to
include a provision substantially similar to Article 7 of the Restated
Certificate of Incorporation of PSC for the benefit of all directors of PSC
prior to the Effective Time.
The Merger Agreement provides that Parent shall cause the Surviving
Corporation, to the fullest extent permitted under applicable law or under the
Surviving Corporation's Certificate of Incorporation or By-laws, to indemnify
and hold harmless each present and former director, officer or employee of PSC
or any Subsidiary, and each executor or administrator of any of the foregoing
(collectively, the "Indemnified Parties") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, (i) arising out of or pertaining to the
transactions contemplated by the Merger Agreement or (ii) otherwise with
respect to claims arising from any acts, omissions or events occurring at or
prior to the Effective Time, to the same extent as provided in PSC's
Certificate of Incorporation or By-Laws or any applicable contract or agreement
as in effect on the date hereof, in each case for a period of six years after
June 5, 2000. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) any
counsel retained by the Indemnified Parties for any period after the Effective
Time shall be reasonably satisfactory to Parent and the Surviving Corporation,
(ii) after the Effective Time, Parent or the Surviving Corporation shall pay
the reasonable fees and expenses of such
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counsel, promptly after statements therefor are received, and (iii) Parent and
the Surviving Corporation will cooperate in the defense of any such matter;
provided, however, that none of PSC, Parent or the Surviving Corporation shall
be liable for any settlement effected without its written consent (which
consent shall not be unreasonably withheld); and provided, further, that, in
the event that any claim or claims for indemnification are asserted or made
within such six-year period, all rights to indemnification in respect of any
such claim or claims shall continue until the disposition of any and all such
claims.
The Surviving Corporation will maintain in effect for six years from the
Effective Time, if available, the current directors' and officers' liability
insurance policies maintained by PSC (provided that the Surviving Corporation
may substitute therefor policies of at least the same coverage containing terms
and conditions that are no less favorable) with respect to matters occurring
prior to the Effective Time; provided, however, that in no event will the
Surviving Corporation be required to expend more than an amount per year equal
to 150% of the highest annual premium paid in any prior year by PSC or the
Surviving Corporation for such insurance (which annual premium PSC represented
to be $218,750 as of the date of the Merger Agreement); provided, however, that
if the premium for such coverage exceeds such amount, the Surviving Corporation
will purchase a policy with the greatest coverage available for such amount.
Parent and the Surviving Corporation will honor and fulfill in all respects
the obligations of PSC pursuant to indemnification agreements with PSC's
directors and officers existing at or before the Effective Time and disclosed
in the Merger Agreement.
It has also been agreed that in the event PSC or the Surviving Corporation
or any of their respective successors or assigns (i) consolidates with or
merges into any other person and will not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then, and in each
such case, proper provision will be made so that the successors and assigns of
PSC or the Surviving Corporation, as the case may be, or at Parent's option,
Parent will assume the foregoing indemnity obligations
Further Action; Reasonable Efforts. The Merger Agreement provides that,
subject to its terms and conditions, each of PSC, Parent and Purchaser will (i)
make promptly and in any event within five business days after June 5, 2000,
its respective filings, and thereafter make any other required submissions,
under the HSR Act with respect to the Merger Agreement or the transactions
contemplated thereby and (ii) use its reasonable efforts to take, or cause to
be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Merger, and the transactions contemplated in
the Merger Agreement, including, without limitation, using its reasonable
efforts to obtain all Permits, consents, approvals, authorizations,
qualifications and orders of Governmental Authorities and parties to contracts
with PSC and the Subsidiaries as are necessary for the consummation of the
Merger and the transactions contemplated in the Merger Agreement and to fulfill
the conditions to the Offer and the Merger; provided that neither Parent nor
Purchaser will be required to take any action, including entering into a
consent decree, hold separate orders or other arrangements, that (i) requires
the divestiture of any assets of any of the Parent, Purchaser, PSC or any of
their respective subsidiaries or (ii) limits Parent's and Purchaser's freedom
of action with respect to, or its ability to retain, PSC and the Subsidiaries
or any portion thereof or any of Parent's or Purchaser's or their affiliates'
other assets or businesses. In case, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of the
Merger Agreement, the proper officers and directors of each party to the Merger
Agreement are required to use their reasonable best efforts to take all such
action.
The Merger Agreement also provides that each of PSC, Parent and Purchaser
will cooperate and use its reasonable best efforts to vigorously contest and
resist any Action, and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order (whether temporary, preliminary or
permanent) that is in effect and that restricts, prevents or prohibits
consummation of the Merger and the transactions contemplated in the Merger
Agreement including, without limitation, by vigorously pursuing all available
avenues of administrative and judicial appeal.
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Representations and Warranties. Pursuant to the Merger Agreement, PSC has
made various customary representations and warranties to Parent and Purchaser
with respect to its organization and qualification, capitalization, authority,
absence of conflicts, required filing and consents, permits and compliance, SEC
filings, the absence of certain changes, events or litigation, employee benefit
plans and other labor and employment matters, the offer documents, including
Schedule 14D-9 and Proxy Statement, property and leases, intellectual property,
Year 2000 compliance, taxes, environmental matters, amendment to the Rights
Agreements, Material Contracts, insurance and brokers. Parent and Purchaser
have made various customary representations and warranties to PSC with respect
to corporate organization, authority, absence of conflicts, required filings
and consents, financing, SEC filings, the Offer documents and brokers.
Conditions to the Merger. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
or waiver, at or prior to the Effective Time, of the following conditions: (i)
if and to the extent required by New York Law, the Merger Agreement and the
transactions contemplated in the Merger Agreement will have been adopted by the
affirmative vote of the shareholders of PSC; (ii) any waiting period (and any
extension) applicable to the consummation of the Merger under the HSR Act will
have expired or been terminated; (iii) no Governmental Authority will have
enacted, issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making
the acquisition of Securities by Parent or Purchaser or any affiliate of either
of them illegal or otherwise restricting, preventing or prohibiting
consummation of the Merger and the transactions contemplated by the Merger
Agreement; and (iv) Purchaser or its permitted assignee will have purchased all
Securities validly tendered and not withdrawn pursuant to the Offer; provided,
however, that this condition will not be applicable to the obligations of
Parent or Purchaser if, in breach of the Merger Agreement or the terms of the
Offer, Purchaser fails to purchase any Securities validly tendered and not
withdrawn pursuant to the Offer.
Termination. The Merger Agreement provides that it may be terminated and the
Merger and the transactions contemplated by the Merger Agreement may be
abandoned at any time prior to the Effective Time, notwithstanding any
requisite adoption of the Merger Agreement and the transactions contemplated in
the Merger Agreement by the shareholders of PSC (i) by mutual written consent
of each of Parent, Purchaser and PSC duly authorized by the Boards of Directors
of Parent, Purchaser and PSC; (ii) by either Parent, Purchaser or PSC if (a)
the Effective Time will not have occurred on or before December 31, 2000;
provided, however, that the right to terminate the Merger Agreement under this
subsection (ii) will not be available to any party whose failure to fulfill any
obligation under the Merger Agreement has been the cause of, or resulted in,
the failure of the Effective Time to occur on or before such date and provided
further that the Merger Agreement may not be terminated under (ii) (a) after
Purchaser accepts Securities for payment pursuant to the Offer, or (b) any
Governmental Authority will have enacted, issued, promulgated, enforced or
entered any injunction, order, decree or ruling (whether temporary, preliminary
or permanent) which has become final and nonappealable and has the effect of
making consummation of the Offer or the Merger illegal or otherwise preventing
or prohibiting consummation of the Offer or the Merger or the transactions
contemplated in the Merger Agreement; or (iii) by Parent if (a) due to an
occurrence or circumstance that is continuing and results in a failure to
satisfy any condition described in Section 13 hereto (but, if Parent will have
extended the Offer pursuant to subsection (iii) of the section entitled The
Offer, due only to the failure to satisfy any of the conditions described in
subsections (iv)(b) (to the extent the applicable Law is enacted, promulgated,
amended, issued or deemed applicable on or after the date of such extension),
(g) or (h) of Section 13), Purchaser will have (1) failed to commence the Offer
within 10 business days following the date of the Merger Agreement, (2)
terminated the Offer without having accepted any Securities for payment
thereunder or (3) failed to accept Securities for payment pursuant to the Offer
within 30 days (plus such number of business days as the Offer has been validly
extended) following the commencement of the Offer, unless such action or
inaction under 1, 2 or 3 will have been caused by or resulted from the failure
of Parent or Purchaser to perform, in any material respect, any of their
material covenants or agreements contained in the Merger Agreement, or the
material breach by Parent or Purchaser of any of their material representations
or warranties contained in the Merger Agreement or (b) prior to the acceptance
for payment of Securities pursuant to the Offer, the Board or any
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committee will have withdrawn or modified in a manner adverse to Parent or
Purchaser its approval or recommendation of the Merger Agreement, the Offer,
the Merger or any other transaction contemplated thereby, or will have
recommended or approved any Acquisition Proposal, or will have resolved to do
any of the foregoing; or (iv) by PSC, upon approval of the Board, if (a)
Purchaser will have (1) failed to commence the Offer within 10 business days
following the date of the Merger Agreement, (2) terminated the Offer without
having accepted any Securities for payment thereunder or (3) failed to accept
Securities for payment pursuant to the Offer within 30 days (plus such number
of business days as the Offer shall have been validly extended pursuant to the
Merger Agreement) following the commencement of the Offer, unless such action
or inaction under (1), (2) or (3) will have been caused by or resulted from the
failure of PSC to perform, in any material respect, any of its material
covenants or agreements contained in the Merger Agreement or the material
breach by PSC of any of its material representations or warranties contained in
the Merger Agreement or (b) prior to the acceptance for payment of Securities
pursuant to the Offer, the Board or any committee of the Board will have
withdrawn or modified in a manner adverse to Parent or Purchaser its approval
or recommendation of the Merger Agreement, the Offer, the Merger or any other
transaction, or will have recommended or approved any Acquisition Proposal, or
shall have resolved to do any of the foregoing in accordance with the Merger
Agreement, (c) Parent or Purchaser breaches or fails to perform in any material
respect any of their material representations, warranties or covenants
contained in the Merger Agreement, which breach or failure to perform cannot be
or has not been cured within 20 business days after the giving of written
notice to Purchaser of such breach or (d) Purchaser fails to obtain a
commitment on customary terms and conditions from a responsible financial
institution within four business days after the date of the Merger Agreement to
provide senior debt financing for the Transactions (which Purchaser has
satisfied by obtaining the commitment letter).
Effect of Termination. In the event of the termination of the Merger
Agreement in accordance with the termination provisions described above, the
Merger Agreement will forthwith become void, and there will be no liability on
the part of any party thereto, except (i) as described below under the
subsection entitled Fees and Expenses and (ii) nothing in the Merger Agreement
will relieve any party from liability for any breach prior to the date of such
termination, provided, however, that the confidentiality agreements between PSC
and WADC will survive any termination of the Merger Agreement.
Fees and Expenses. In the event that the Merger Agreement is terminated
pursuant to (i) provisions (iii)(b) or (iv)(b) outlined under Termination above
or (ii) provisions (ii) or (iii)(a) outlined under Termination above to the
extent that termination, the failure to commence or failure to accept any
Securities for payment, as set forth in such provisions (ii) or (iii)(a), as
the case may be, relates to (a) the intentional failure of PSC to perform, in
any material respect, the covenants outlined above under Conduct of Business by
PSC Pending the Merger, or (b) the failure of PSC to perform, in any material
respect, any of its material covenants or agreements contained in the Merger
Agreement other than those outlined under Conduct of Business by PSC Pending
the Merger, or (c) the material intentional breach by PSC of any of its
material representations or warranties contained in the Merger Agreement, then,
in any such event, PSC will pay Parent promptly (but in no event later than one
business day after termination) a fee of $3 million (the "Fee") and PSC will
reimburse Parent and Purchaser (not later than one business day after
submission of statements therefor) for all Reimbursable Expenses (defined
below) of Parent and Purchaser, which amount will be payable in immediately
available funds. In the event that the Merger Agreement is terminated pursuant
to the provisions described in (ii), (iii)(a) or (iv)(a) outlined under
Termination above for any reason other than as set forth above in (ii) of this
section Fees and Expenses, and in any such case an Acquisition Proposal has
been made prior to termination and the Minimum Condition has not been satisfied
at the time of termination, then (i) PSC will reimburse Parent and Purchaser
(not later than one business day after submission of statements therefor) for
all Reimbursable Expenses of Parent and Purchaser, which amount will be payable
in immediately available funds, and (ii) if an Acquisition Proposal is
consummated within 18 months after the date of termination of the Merger
Agreement, PSC will pay Parent promptly (but in no event later than one
business day after consummation) the Fee. Notwithstanding anything to the
contrary in this subsection, no Fee or Reimbursable Expenses will be payable to
Parent or Purchaser in the event the Merger Agreement is terminated pursuant to
(i) provisions (ii) or (iv)(a) outlined under Termination above, to the extent
that termination, the failure to
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commence or failure to accept any Securities for payment, as set forth in
provision (d)(i) outlined under Termination above, will relate to the failure
of either Parent or Purchaser to perform, in any material respect, any material
covenant or agreement contained in the Merger Agreement or the material breach
by Parent or Purchaser of any of their material representations or warranties
contained in the Merger Agreement, or (ii) the provision described in (iv)(c)
outlined under Termination above. Except as set forth in this subsection, all
costs and expenses incurred in connection with the Merger Agreement, the
Stockholders Agreement and the transactions contemplated in the Merger
Agreement will be paid by the party incurring such expenses, whether or not any
Merger or the transactions contemplated by the Merger Agreement are
consummated. "Reimbursable Expenses" means: (i) all out-of-pocket expenses and
fees of Parent and Purchaser in respect of commitment fees and other expenses
payable in connection with obtaining the senior debt financing for the
acquisition of PSC, provided that the aggregate amount of all such commitment
fees shall not exceed an amount equal to 1.75% of the aggregate principal
amount of such committed senior debt financing, and provided, further, that, in
the event that such acquisition does not occur and PSC shall be required, in
accordance with the terms and provisions of the Merger Agreement, to reimburse
Parent and Purchaser for all Reimbursable Expenses, Parent and Purchaser shall
use their reasonable efforts to reduce the amount of such commitment fees and
shall permit PSC to participate in their efforts to effect such reduction; (ii)
all other out-of-pocket expenses and fees of the senior debt financing referred
to in the immediately preceding subsection (i) payable by Parent and Purchaser
(provided that the expenses under the immediately preceding subsection (i) and
this subsection (ii) shall in no event cumulatively exceed 2% of the aggregate
principal amount of the aforementioned committed senior debt financing); (iii)
all out-of-pocket expenses and fees of Parent and Purchaser, other than in
respect of the senior debt financing referred to in the immediately preceding
subsections (i) and (ii), to the extent that the aggregate amount of all such
other expenses does not exceed $750,000. In the event that PSC will fail to pay
the Fee or any Reimbursable Expenses when due, the term "Reimbursable Expenses"
will be deemed to include the costs and expenses actually incurred or accrued
by Parent and Purchaser (including, without limitation, fees and expenses of
counsel) in connection with the collection under and enforcement of this
section, together with interest on such unpaid amounts, commencing on the date
that the respective amounts became due, at a rate equal to the rate of interest
publicly announced by Citibank, N.A., from time to time, in the City of New
York, as such bank's Base Rate plus 2%.
Stockholders Agreement
The following is a summary of certain provisions of the Stockholders
Agreement. This summary is qualified in its entirety by reference to the
Stockholders Agreement, which is incorporated herein by reference, and a copy
of which has been filed with the SEC as an exhibit to the Schedule TO. The
Stockholders Agreement may be examined and copies may be obtained at the places
described in Section 8.
As an inducement to Parent and Purchaser to enter into the Merger Agreement,
on June 5, 2000, Parent, Purchaser and certain shareholders of PSC executed the
Stockholders Agreement. The Stockholders Agreement provides that the
shareholders who are parties to the Stockholders Agreement (the "Stockholders")
agree to tender or cause to be tendered all of their respective shares of
Common Stock of which they are the record and beneficial owner. Pursuant to the
Stockholders Agreement, the Common Stock subject to the Stockholders Agreement
includes additional shares of Common Stock in the event a Stockholder becomes
the beneficial owner of any additional shares of Common Stock, and any
additional securities into which such shares may be converted or exchanged and
any additional securities issued in replacement of, or as a dividend or
distribution on, or otherwise in respect of, such shares of Common Stock. As of
June 5, 2000, the shares of Common Stock covered by the Stockholders Agreement
represented approximately 6.47% of the shares of Common Stock outstanding on a
fully diluted basis.
In the Stockholders Agreement, each of the Stockholders has granted an
irrevocable proxy to Parent and each of its officers, allowing Parent and such
officers to vote and otherwise act as Parent and each of its officers deems
appropriate (by written consent or otherwise), in its sole discretion, with
respect to such Stockholder's
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shares of Common Stock on the following matters: (i) the approval and adoption
of the Merger Agreement and approval of the Merger and all other transactions
contemplated by the Merger Agreement and the Stockholders Agreement; (ii) any
matter (including any Acquisition Proposal or Superior Proposal (each as
defined in the Merger Agreement)) that could result in any of the conditions to
PSC's obligations under the Merger Agreement not being fulfilled or that could
adversely affect the Merger Agreement, the Offer, the Merger or the
Stockholders Agreement; (iii) any other matter that would result in a breach of
any covenant, obligation, agreement, representation or warranty of PSC under
the Merger Agreement or of any of the Stockholders; and (iv) any other matter
necessary to the consummation of the transactions contemplated by the Merger
Agreement and considered and voted upon by the shareholders of PSC.
The Stockholders Agreement provides that between date of the Stockholders
Agreement and the date of termination of the Merger Agreement, Stockholders
shall not, directly or indirectly, (i) solicit, initiate or knowingly encourage
the submission of any Acquisition Proposal or (ii) participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to or otherwise cooperate in any way with respect to or assist,
participate in, facilitate or encourage any unsolicited proposal that may lead
to, an Acquisition Proposal. Each Stockholder has agreed immediately to cease
all discussions or negotiations of such Stockholder and such Stockholder's
directors, officers, affiliates, employees, agents, advisors or other
representatives with any person with respect to any Acquisition Proposal
existing as of June 5, 2000. To the extent that PSC is required under the terms
of the Merger Agreement, in the event an Acquisition Proposal is made, to
provide notice and information to Parent regarding such Acquisition Proposal
and has not separately provided such notice and information, each Stockholder
has agreed to advise Parent orally (within three business days) and in writing
(as promptly as practicable thereafter) of (i) any Acquisition Proposal or any
request for information with respect to any Acquisition Proposal of which such
Stockholder has actual knowledge, the material terms and conditions of such
Acquisition Proposal or request and the identity of the person making such
Acquisition Proposal or request to the extent of such Stockholder's actual
knowledge and (ii) any changes in any such Acquisition Proposal or request of
which such Stockholder has actual knowledge, in each case, except to the extent
the terms of such Acquisition Proposal prohibits such disclosure.
Each Stockholder's obligation to tender, and not withdraw, their shares of
Common Stock pursuant to the Offer will terminate on the expiration of the
Offer. The remaining provisions of the Stockholders Agreement will terminate
upon the earliest to occur of (i) the effective time of the Merger and (ii) the
termination of the Merger Agreement.
12. Purpose of the Offer; Plans for PSC After the Offer and the Merger.
Purpose of the Offer. The purpose of the Offer and the Merger is to acquire
control of, and the entire equity interest in, PSC. The Offer, as the first
step in the acquisition of PSC, is intended to facilitate the acquisition of
all of the Securities. The purpose of the Merger is to acquire all shares of
Common Stock and Preferred Stock not purchased in the Offer. Upon consummation
of the Merger, PSC will become a wholly owned subsidiary of Parent.
Statutory Requirements. Under New York Law, adoption of the Merger Agreement
by the Board and the adoption at a meeting of shareholders by two-thirds of the
votes of all outstanding shares entitled to vote at the shareholders meeting is
required to approve and adopt the Merger Agreement and the Merger. The Board
has determined that the Merger Agreement and the transactions contemplated
thereby, included each of the Offer and the Merger are fair to, and in the best
interests of, the Securityholders, has approved, adopted and declared advisable
the Merger Agreement and the transactions contemplated thereby, including each
of the Offer and the Merger and has resolved to recommend that Securityholders
accept the Offer and tender their Securities pursuant to the Offer. Unless the
Merger is consummated pursuant to the short-form merger provisions described
below, the only remaining required corporate action of PSC is the approval and
adoption of the Merger Agreement and the Merger by the affirmative vote of the
holders of at least two-thirds of the votes of
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all outstanding shares entitled to vote at the shareholders meeting. If the
Minimum Condition is satisfied, Purchaser will have sufficient voting power to
cause the approval and adoption of the Merger Agreement and the Merger without
the affirmative vote of any other shareholder.
In the Merger Agreement, PSC has agreed to duly call, give notice of,
convene and hold a special meeting of its shareholders as promptly as
practicable following consummation of the Offer for the purpose of considering
and taking action on the Merger Agreement and the Merger, if such action is
required by New York Law. In the Stockholders Agreement, a number of
shareholders of PSC, who own either of record or beneficially shares of Common
Stock representing approximately 6.47% of the shares of Common Stock
outstanding on a fully diluted basis, have agreed that all Securities owned by
them will be voted in favor of the approval and adoption of the Merger
Agreement and the Merger.
The Merger Agreement provides that, promptly upon the purchase of Securities
pursuant to the Offer, Purchaser will be entitled to designate representatives
to serve on the Board in proportion to Purchaser's ownership of Securities as
described in Section 10. Purchaser expects that such representation would
permit it to exert substantial influence over PSC's conduct of its business and
operations.
Short-Form Merger. Under New York Law, if Purchaser acquires, pursuant to
the Offer or otherwise, at least 90% of the then outstanding shares of Common
Stock and 90% of the then outstanding shares of Preferred Stock, Purchaser will
be able to approve the Merger without a vote of PSC's shareholders. In such
event, Purchaser and PSC have agreed in the Merger Agreement to take all
necessary and appropriate action to cause the Merger to become effective as
promptly as reasonably practicable after such acquisition, without a meeting of
PSC's shareholders.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, shareholders who have not
tendered their shares of Common Stock and shares of Preferred Stock may have
certain rights under New York Law to dissent from the Merger and demand
appraisal of, and to receive payment in cash of the fair value of, those
securities. Shareholders who perfect these rights by complying with the
procedures described in Section 623 of New York Law ("Section 623") will have
the "fair value" of their Securities (exclusive of any element of value arising
from the accomplishment or expectation of the Merger) determined by the New
York Supreme Court and will be entitled to receive a cash payment equal to such
fair value from the Surviving Corporation. In addition, any dissenting
shareholders would be entitled to receive payment of a fair rate of interest
from the date of consummation of the Merger on the amount determined to be the
fair value of their Securities. In Phelps v. Watson-Stillman Co., the New York
Supreme Court stated that the "net asset value" is not the sole test in
determining the fair value of the Securities.
Purchaser does not intend to object, assuming the proper procedures are
followed, to the exercise of appraisal rights by any shareholder and the demand
for appraisal of, and payment in cash for the fair value of, the Securities.
Parent intends, however, to cause the Surviving Corporation to argue in an
appraisal proceeding that, for purposes of such proceeding, the fair value of
each Security is less than or equal to the Merger Consideration. In this
regard, shareholders should be aware that opinions of investment banking firms
as to the fairness from a financial point of view (including Raymond James) are
not necessarily opinions as to "fair value" under Section 623.
The foregoing summary of the rights of dissenting shareholders under New
York Law does not purport to be a complete statement of the procedures to be
followed by shareholders desiring to exercise any dissenters' rights under New
York Law. The preservation and exercise of dissenters' rights require strict
adherence to the applicable provisions of New York Law. The text of Sections
910 and 623 of New York Law is attached to this Offer to Purchase at Schedule
II.
Going Private Transactions. The SEC has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger or another
business combination following the purchase of Securities pursuant to the Offer
in which Purchaser seeks to acquire the remaining Securities not held by Parent
or Purchaser. Purchaser believes that
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Rule 13e-3 will not be applicable to the Merger. Rule 13e-3 requires, among
other things, that certain financial information concerning PSC and certain
information relating to the fairness of the proposed transaction and the
consideration offered to minority shareholders in such transaction be filed
with the SEC and disclosed to shareholders prior to consummation of the
transaction.
Plans for PSC. In connection with the Offer, Purchaser has reviewed and will
continue to review various possible business strategies that it might consider
in the event that Purchaser acquires control of PSC, whether pursuant to the
Offer, the Merger or otherwise. Such changes could include, among other things,
changes in PSC's business, corporate structure, capitalization and management.
Shortly prior to the time that Purchaser will accept Securities for payment
pursuant to the Offer, it is anticipated that Parent will acquire the
outstanding capital stock of WADC in exchange for the issuance of capital stock
by Parent. Upon the acquisition of WADC by Parent, shareholders of WADC will
become shareholders of Parent. If the Offer and subsequent Merger were to be
successful, this would result in WADC and PSC both being wholly owned
subsidiaries of Parent. Pending the successful completion of these
transactions, Parent might consider a reorganization of the business, corporate
structure, management or assets of WADC and PSC and their subsidiaries in order
to provide for efficiencies that would be gained from such reorganization.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in (i) any
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, relocation of any operations of PSC or any of its subsidiaries,
(ii) any purchase, sale or transfer of a material amount of assets, involving
PSC or any of its subsidiaries, (iii) any material change in PSC's present
indebtedness, capitalization or dividend policy, (iv) any change in the present
board of directors or management of PSC, (v) any other material change in PSC's
corporate structure or business, (vi) any class of equity security of PSC being
delisted from a national stock exchange or ceasing to be authorized to be
quoted in an automated quotation system operated by a national securities
association, (vii) any class of equity securities of PSC becoming eligible for
termination of registration under Section 12(g)(4) of the Exchange Act, (viii)
the suspension of PSC's obligation to file reports under Section 15(d) of the
Act, (ix) the acquisition by any person of additional securities of PSC, or the
disposition of securities of PSC, or (x) any changes in PSC's Certificate of
Incorporation, By-laws or other governing instruments or other actions that
could impede the acquisition of control of PSC.
13. Certain Conditions of the Offer.
Notwithstanding any other provisions of the Offer, but subject to the terms
of the Merger Agreement, Purchaser shall not be required to accept for payment
any Securities tendered pursuant to the Offer, and may extend, terminate or
amend the Offer if (i) immediately prior to the expiration of the Offer, the
Minimum Condition will not have been satisfied or waived, (ii) immediately
prior to the expiration of the Offer, the Financing Condition will not have
been satisfied, (iii) any applicable waiting period under the HSR Act will not
have expired or been terminated prior to the expiration of the Offer, or (iv)
at any time on or after June 5, 2000 and prior to the first acceptance of
payment of Securities, any of the following conditions will exist and be
continuing: (a) there will have been instituted or be pending any litigation,
suit, claim, action, proceeding or investigation before any Governmental
Authority (as defined in the Merger Agreement) by a third party which has a
reasonable likelihood of success, (1) challenging or seeking to make illegal,
materially delay, or otherwise, directly or indirectly, restrain or prohibit or
make materially more costly, the making of the Offer, the acceptance for
payment of any Securities by Parent, Purchaser or any of their other
affiliates, or the consummation of any other transaction contemplated by the
Merger Agreement, or seeking to obtain damages in connection with any
transaction contemplated by the Merger Agreement that are material to PSC and
each subsidiary of PSC, taken as a whole; (2) seeking to prohibit or limit
materially the ownership or operation by PSC, Parent or any of their
subsidiaries of all or any of the material portion of the business or assets of
PSC and each of its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, or to compel PSC, Parent or any of their
subsidiaries as a result of the Merger Agreement or any of the transactions
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contemplated thereby, to dispose of or to hold separate all or any material
portion of the business or assets of PSC, Parent or any of their subsidiaries,
in each case, taken as a whole; (3) seeking to impose or confirm any limitation
on the ability of Parent, Purchaser or any other affiliate of Parent to
exercise effectively full rights of ownership of any Securities, including,
without limitation, the right to vote any Securities acquired by Purchaser
pursuant to the Offer or otherwise on all matters properly presented to PSC's
shareholders including, without limitation, the approval and adoption of the
Merger Agreement and any of the transactions contemplated thereby; (4) seeking
to require divestiture by Parent, Purchaser or any other affiliate of Parent of
any Securities; or (5) which otherwise would individually or in the aggregate
have a Material Adverse Effect (as defined in the Merger Agreement); (b) there
will have been any Law (as defined in the Merger Agreement) enacted,
promulgated, amended, issued or deemed applicable to (1) Purchaser, PSC or any
subsidiary or affiliate of Parent or PSC or (2) the Merger Agreement or the
transactions contemplated thereby, by any United States or non-United States
legislative body or Governmental Authority with appropriate jurisdiction, other
than the routine application of the waiting period provisions of the HSR Act to
the Offer, the Stockholders Agreement or the Merger, that is reasonably likely
to result, directly or indirectly, in any of the consequences referred to in
clauses (1) through (5) of subsection (a) above; (c) any Material Adverse
Effect will have occurred and be continuing; (d) (1) it will have been publicly
disclosed, or Purchaser will have otherwise learned, that beneficial ownership
(determined for the purposes of this paragraph as described in Rule 13d-3
promulgated under the Exchange Act) of Securities constituting 20% or more of
the then outstanding shares of Common Stock (assuming conversion or exercise of
such Securities) has been acquired by any person, other than Parent or any of
its affiliates, or (2) (A) the Board, or any committee, will have withdrawn or
modified, in a manner adverse to Parent or Purchaser the approval or
recommendation of the Offer, the Merger, the Merger Agreement, or approved or
recommended any Acquisition Proposal (as defined in the Merger Agreement) or
any other acquisition of Securities other than the Offer and the Merger or (B)
the Board, or any committee, will have resolved to do any of the foregoing; (e)
(1) any representation or warranty of PSC in the Merger Agreement that is
qualified as to materiality or Material Adverse Effect will not be true and
correct as of June 5, 2000 or as of such time or except to the extent such
representation or warranty expressly relates to an earlier date (in which case
of and as of such earlier date) which breach cannot be or has not been cured
within 20 business days after the giving of written notice to PSC of such
breach but in any event prior to the scheduled expiration date of the Offer; or
(2) any representation or warranty of PSC that is not so qualified as to
materiality or Material Adverse Effect shall not be true and correct in any
material respect as of June 5, 2000 or as of such time, except to the extent
such representation or warranty expressly relates to an earlier date (in which
case on and as of such earlier date), which breach cannot be or has not been
cured within 20 business days after the giving of written notice to PSC or such
breach but in any event prior to the scheduled expiration date of the Offer;
(f) PSC will have failed to perform, in any material respect, any obligation or
to comply, in any material respect, with any agreement or covenant of PSC to be
performed or complied with by it under the Merger Agreement or the shareholders
who are a party to the Stockholders Agreement shall have failed to perform in
any material respect, any obligation or to comply, in any material respect,
with any agreement or covenant to be performed or complied with by them under
the Stockholders Agreement, in each case, which failure cannot be or has not
been cured within 20 business days after the giving of written notice to PSC of
such failure but in any event prior to the scheduled expiration date of the
Offer; (g) the Merger Agreement will have been terminated in accordance with
its terms; or (h) Purchaser and PSC will have agreed that Purchaser will
terminate the Offer or postpone the acceptance for payment of Securities
thereunder; which, in the sole judgment of Purchaser in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
any of its affiliates) giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and subject to the conditions of the Merger Agreement may be asserted by
Purchaser or Parent regardless of the circumstances giving rise to any such
condition, except to the extent that the failure of the condition to be
satisfied has been caused by or resulted from an act or omission by Parent or
Purchaser in violation of the Merger Agreement or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion, subject to the terms of the Merger Agreement. The failure by Parent
or Purchaser at any time to exercise any of
33
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the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances
shall not be deemed a waiver with respect to any other facts and circumstances;
and each such right shall be deemed an ongoing right that may be asserted at
any time and from time to time so long as, with respect to the representations
and warranties of PSC set forth in the Merger Agreement or the obligations of
PSC under the provisions of the Merger Agreement described under the Merger
Agreement--Conduct of Business by PSC Pending the Merger in Section 11, the
facts and circumstances giving rise thereto are continuing (except with respect
to breaches that are not of a continuing nature and are not susceptible of
cure).
14. Certain Legal Matters and Regulatory Approvals.
General. Based upon Purchaser's review of publicly available information
regarding PSC and the review of information provided to Parent and Purchaser by
PSC and discussions between Purchaser's representatives and representatives of
PSC (see Section 11), neither Parent nor Purchaser is aware of (i) any license
or other regulatory permit that appears to be material to the business of PSC
or any of its subsidiaries, taken as a whole, which might be adversely affected
by Purchaser's acquisition of Securities pursuant to the Offer or (ii) except
as described below, of any approval or other action by any domestic (federal or
state) or foreign governmental authority which would be required prior to
Purchaser's acquisition of Securities pursuant to the Offer. Should any such
approval or other action be required, it is Purchaser's present intention to
seek such approval or action. Purchaser does not currently intend, however, to
delay the purchase of Securities tendered pursuant to the Offer pending the
outcome of any such action or the receipt of any such approval (subject to
Purchaser's right to decline to purchase Securities if any of the conditions in
Section 13 shall have occurred). There can be no assurance that any such
approval or other action, if needed, would be obtained without substantial
conditions or that adverse consequences might not result to the business of
PSC, Parent or Purchaser or that certain parts of the businesses of PSC, Parent
or Purchaser might not have to be disposed of or held separate or other
substantial conditions complied with in order to obtain such approval or other
action or in the event that such approval was not obtained or such other action
was not taken. Purchaser's obligation under the Offer to accept for payment and
pay for Securities is subject to certain conditions, including conditions
relating to the legal matters discussed in this Section 14. See Section 13 for
certain conditions of the Offer.
State Takeover Laws. PSC is incorporated under the laws of the State of New
York. In general, Section 912 of New York Law states that no New York
corporation shall engage in any "business combination" (defined to include
mergers and certain other transactions) with any "interested shareholder"
(generally a person who owns or has the right to acquire 20% or more of a
corporation's outstanding voting stock, or an affiliate or associate) for a
period of five years following the date such person became an interested
shareholder unless, among other things, prior to such date the board of
directors of the corporation approved either the business combination or the
transaction in which the interested shareholder became an interested
shareholder. On June 5, 2000, prior to the execution of the Merger Agreement,
the Board approved the Merger Agreement, including the Offer and the Merger,
and determined that the transactions are fair to, and in the best interests of,
the Securityholders. Accordingly, Section 912 is inapplicable to the Offer and
the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, shareholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987 in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State
of Indiana may, as a matter of corporate law and, in particular, with respect
to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of
a target corporation without the prior approval of the remaining shareholders.
The state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of shareholders in the state and
were incorporated there.
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PSC, directly or through its subsidiaries, conducts business in a number of
states throughout the United States, some of which have enacted takeover laws.
Purchaser does not know whether any of these laws will, by their terms, apply
to the Offer or the Merger and Purchaser has not complied with any such laws.
Should any person seek to apply any state takeover law, Purchaser will take
such action as it deems appropriate, which may include challenging the validity
or applicability of any such statute in appropriate court proceedings. In the
event it is asserted that one or more state takeover laws is applicable to the
Offer or the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser might be required to
file information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Securities tendered pursuant to the Offer, or be delayed in
continuing or consummating the Offer, and the Merger. In such case, Purchaser
will not be obligated to accept for payment any Securities tendered. See
Section 13.
Antitrust. Under the HSR Act and the rules and regulations that have been
issued by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. Purchaser's
acquisition of Securities pursuant to the Offer is subject to such
requirements. See Section 2.
Under the HSR Act, on June 12, 2000, Parent and Purchaser and PSC each filed
a Premerger Notification and Report Form in connection with the purchase of
Securities pursuant to the Offer with the Antitrust Division and the FTC. Under
the provisions of the HSR Act applicable to the Offer, the purchase of
Securities pursuant to the Offer may not be consummated until the expiration of
a 15-calendar day waiting period following the filing. Accordingly, the waiting
period under the HSR Act applicable to the purchase of Securities pursuant to
the Offer will expire at 11:59 p.m., New York City time, on June 27, 2000,
unless such waiting period is earlier terminated by the FTC and the Antitrust
Division or extended by a request from the FTC or the Antitrust Division for
additional information or documentary material prior to the expiration of the
waiting period. Pursuant to the HSR Act, Parent and Purchaser and PSC have
requested early termination of the waiting period applicable to the Offer.
There can be no assurance, however, that the 15-day HSR Act waiting period will
be terminated early. If either the FTC or the Antitrust Division were to
request additional information or documentary material from Parent, Purchaser
or PSC with respect to the Offer, the waiting period with respect to the Offer
would expire at 11:59 p.m., New York City time, on the tenth calendar day after
the date of substantial compliance with such request. Thereafter, the waiting
period could be extended only by court order. If the acquisition of Securities
is delayed pursuant to a request by the FTC or the Antitrust Division for
additional information or documentary material pursuant to the HSR Act, the
Offer may, but need not, be extended and, in any event, the purchase of and
payment for Securities will be deferred until 10 days after the request is
substantially complied with, unless the waiting period is sooner terminated by
the FTC and the Antitrust Division. Only one extension of such waiting period
pursuant to a request for additional information is authorized by the HSR Act
and the rules promulgated thereunder, except by court order. Any such extension
of the waiting period will not give rise to any withdrawal rights not otherwise
provided for by applicable law. See Section 4. It is a condition to the Offer
that the waiting period applicable under the HSR Act to the Offer expire or be
terminated. See Section 2 and Section 13.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's acquisition of
Securities pursuant to the Offer. At any time before or after the purchase of
Securities pursuant to the Offer, the FTC or the Antitrust Division could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Securities
pursuant to the Offer or seeking the divestiture of Securities purchased by
Purchaser or the divestiture of substantial assets of Parent, PSC or their
respective subsidiaries. Private parties and state attorneys general may also
bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of information available to Parent and
Purchaser relating to the businesses in which Parent, Purchaser, PSC and their
respective subsidiaries are engaged, Parent and Purchaser believe that the
Offer will not violate the antitrust laws. Nevertheless, there can be no
assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such a challenge is made, what the result would be. See Section 13 for
certain conditions to the Offer, including conditions with respect to
litigation.
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<PAGE>
Litigation. There are no pending legal proceedings relating to the Offer.
15. Fees and Expenses; Persons Retained.
Except as described below, Purchaser will not pay any fees or commissions to
any broker, dealer or other person for soliciting tenders of Securities
pursuant to the Offer.
Chase Securities is acting as the Dealer Manager in connection with the
Offer and has provided financial advisory services to WADC and Parent in
connection with the Offer and Merger. Parent will pay the Dealer Manager
customary compensation for such services, plus reimbursement for reasonable
out-of-pocket expenses. Parent has agreed to indemnify the Dealer Manager
against certain liabilities in connection with its services as financial
advisor and Dealer Manager, including certain liabilities under the federal
securities laws.
Purchaser has retained Innisfree M&A Incorporated as the Information Agent.
The Information Agent may contact Securityholders by mail, telephone, telex,
telecopy, telegraph and personal interview and may request banks, brokers,
dealers and other nominee shareholders to forward materials relating to the
Offer to beneficial owners. As compensation for acting as Information Agent in
connection with the Offer, Innisfree M&A Incorporated will be paid reasonable
and customary compensation for its services and will also be reimbursed for
certain out-of-pocket expenses and may be indemnified against certain
liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws.
In addition, Purchaser has retained ChaseMellon Shareholder Services, L.L.C.
as the Depositary. Purchaser will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, plus reimbursement
for out-of-pocket expenses, and will indemnify the Depositary against certain
liabilities and expenses in connection therewith, including under the federal
securities laws. Brokers, dealers, commercial banks and trust companies will be
reimbursed by Purchaser for customary handling and mailing expenses incurred by
them in forwarding material to their customers.
16. Miscellaneous.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to Securityholders. Neither Parent nor
Purchaser is aware of any jurisdiction where the making of the Offer or the
acceptance of securities pursuant thereto is prohibited by any administrative
or judicial action or by any valid state statute. If Purchaser becomes aware of
any valid state statute prohibiting the making of the Offer or the acceptance
of Securities pursuant thereto, Purchaser will make a good faith effort to
comply with any such state statute. If, after such good faith effort, Purchaser
cannot comply with any such state statute, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) the Securityholders in such
state. In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed
to be made on behalf of Purchaser by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
Purchaser has not authorized any person to give any information or make any
representation on its behalf not contained in this Offer to Purchase or in the
Letter of Transmittal, and if given or made, holders of Securities should not
rely on such information or representation as having been authorized.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Purchaser has filed with the SEC the Schedule TO, together with
exhibits, furnishing certain additional information with respect to the Offer.
In addition, PSC has filed the Schedule 14D-9 with the SEC, setting forth its
recommendation with respect to the Offer and the reasons for such
recommendation and furnishing additional related information. The Schedule TO
and Schedule 14D-9 and any amendments thereto, including exhibits, may be
inspected at, and copies may be obtained from, the same places and in the same
manner as described in Section 8 (except that they will not be available at the
regional offices of the SEC).
MOHAWK ACQUISITION CORP.
Dated: June 19, 2000.
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SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND PURCHASER
The following table sets forth the name, age, current business address,
citizenship and present principal occupation or employment, and material
occupations, positions, offices or employments and business addresses for the
past five years of each director and executive officer of Parent and Purchaser.
Unless stated otherwise, the current business address for all directors and
officers and the business address of Welch Allyn, Inc. is 4341 State Street
Road, P.O. Box 220, Skaneateles Falls, New York 13153-0220. The business
address for WADC is 4619 Jordan Road, P.O. Box 187, Skaneateles Falls, New
York, 13153-0187. All of the officers and directors are citizens of the United
States of America.
<TABLE>
<CAPTION>
Name, Age and Present Principal Occupation or Employment;
Current Material Positions Held During the Past Five Years
Business Address and Business Addresses Thereof
---------------- --------------------------------------------------
<C> <S>
William F. Allyn, Chairman of the Board of Directors of Parent and
64 Purchaser since the incorporation of Parent and
Purchaser. Mr. Allyn has been the President and Chief
Executive Officer of Welch Allyn, Inc. since 1980. Mr.
Allyn is a Director of Niagara Mohawk Power, and a member
of the Nuclear Oversight, Compensation and Succession,
Executive and Audit Committees. Mr. Allyn in also a
member of the Board of Directors of Oneida Ltd., M&T
Bank, Syracuse Research Corporation, and Perfex
Corporation. Mr. Allyn is also a Trustee of Syracuse
University and Community General Hospital.
Kevin R. Jost, 46 Chief Executive Officer, President, and a member of the
Board of Directors of Parent and Purchaser since the
incorporation of Parent and Purchaser. Mr. Jost has been
President and Chief Operating Officer of WADC since July
1, 1999. From 1985 until July 1, 1999, Mr. Jost was Vice
President and General Manager of Welch Allyn, Data
Collection Division. Mr. Jost is also a member of the
Board of Directors of @POS.com, in San Diego, California.
Miles Smith, Jr., Member of the Board of Directors of Parent and Purchaser
72 507 Best Innes since the incorporation of Parent and Purchaser. Mr.
Street Suite 280 Smith has been Chairman of the Board of Directors of Nex
Salisbury, Gen Capital Corp., a family partnership, since 1996. He
North Carolina has been the Vice-Chairman of U-Vest Investment Services
28144 Brokerage since 1995, and Vice-Chairman of Telecomm USA
Money Transfer since 1999. He has been the Chairman of
Security Capital-Banking since 1996. Mr. Smith was the
Chairman of Hand Held Products, Inc. until September of
1999.
Joseph M. Hennigan, Vice President and Treasurer of Parent and Purchaser
46 since the incorporation of Parent and Purchaser. Mr.
Hennigan has been Chief Financial Officer of WADC since
July 1, 1999. From June 1996 until June 30, 1999, Mr.
Hennigan was the Tax & Risk Manager of Welch Allyn Inc.
From July 1989 until June 1996, Mr. Hennigan was a
Partner at KPMG Peat Marwick, at 201 East Fifth Street,
Cincinnati, Ohio 45202, an accounting and tax advisory
partnership.
M. Jack Rudnick, 52 Vice President and Secretary of Parent and Purchaser
since the incorporation of Parent and Purchaser. Mr.
Rudnick has been Vice-President of Welch Allyn, Inc.
since 1993, and has been General Counsel of Welch Allyn,
Inc. from 1992.
George S. Smith II, Assistant Secretary of Parent and Purchaser since the
41 incorporation of Parent and Purchaser. Mr. Smith has been
Corporate Attorney for WADC since January of 2000. From
1997 until 2000, Mr. Smith was Strategic Business Manger
of Welch Allyn Data Corporation, Inc. From 1996 until
1997, Mr. Smith was Business Development Manager for
Welch Allyn, Inc. From January of 1995 until 1996, Mr.
Smith was a Patent Engineer for Welch Allyn, Inc.
</TABLE>
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<PAGE>
SCHEDULE II
NEW YORK BUSINESS CORPORATION LAW
Sections 910 and 623
Dissenters' Rights
s. 910. Right of shareholder to receive payment for shares upon merger or
consolidation, or sale, lease, exchange or other disposition of assets,
or share exchange
(a) A shareholder of a domestic corporation shall, subject to and by
complying with section 623 (Procedure to enforce shareholder's right to receive
payment for shares), have the right to receive payment of the fair value of his
shares and the other rights and benefits provided by such section, in the
following cases:
(1) Any shareholder entitled to vote who does not assent to the taking
of an action specified in clauses (A), (B) and (C).
(A) Any plan of merger or consolidation to which the corporation is
a party; except that the right to receive payment of the fair value of
his shares shall not be available: (i) To a shareholder of the parent
corporation in a merger authorized by section 905 (Merger of parent and
subsidiary corporations), or paragraph (c) of section 907 (Merger or
consolidation of domestic and foreign corporations); or (ii) To a
shareholder of the surviving corporation in a merger authorized by this
article, other than a merger specified in subclause (i), unless such
merger effects one or more of the changes specified in subparagraph
(b)(6) of section 806 (Provisions as to certain proceedings) in the
rights of the shares held by such shareholder; or (iii) Notwithstanding
subclause (ii) of this clause, to a shareholder for the shares of any
class or series of stock, which shares or depository receipts in
respect thereof, at the record date fixed to determine the shareholders
entitled to receive notice of the meeting of shareholders to vote upon
the plan of merger or consolidation, were listed on a national
securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of
Securities Dealers, Inc.
(B) Any sale, lease, exchange or other disposition of all or
substantially all of the assets of a corporation which requires
shareholder approval under section 909 (Sale, lease, exchange or other
disposition of assets) other than a transaction wholly for cash where
the shareholders' approval thereof is conditioned upon the dissolution
of the corporation and the distribution of substantially all of its net
assets to the shareholders in accordance with their respective
interests within one year after the date of such transaction.
(C) Any share exchange authorized by section 913 in which the
corporation is participating as a subject corporation; except that the
right to receive payment of the fair value of his shares shall not be
available to a shareholder whose shares have not been acquired in the
exchange or to a shareholder for the shares of any class or series of
stock, which shares or depository receipt in respect thereof, at the
record date fixed to determine the shareholders entitled to receive
notice of the meeting of shareholders to vote upon the plan of
exchange, were listed on a national securities exchange or designated
as a national market system security on an interdealer quotation system
by the National Association of Securities Dealers, Inc.
(2) Any shareholder of the subsidiary corporation in a merger authorized
by section 905 or paragraph (c) of section 907, or in a share exchange
authorized by paragraph (g) of section 913, who files with the corporation
a written notice of election to dissent as provided in paragraph (c) of
section 623.
(3) Any shareholder, not entitled to vote with respect to a plan of
merger or consolidation to which the corporation is a party, whose shares
will be cancelled or exchanged in the merger or consolidation for cash or
other consideration other than shares of the surviving or consolidated
corporation or another corporation.
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<PAGE>
s. 623. Procedure to enforce shareholder's right to receive payment for shares
(a) A shareholder intending to enforce his right under a section of this
chapter to receive payment for his shares if the proposed corporate action
referred to therein is taken shall file with the corporation, before the
meeting of shareholders at which the action is submitted to a vote, or at such
meeting but before the vote, written objection to the action. The objection
shall include a notice of his election to dissent, his name and residence
address, the number and classes of shares as to which he dissents and a demand
for payment of the fair value of his shares if the action is taken. Such
objection is not required from any shareholder to whom the corporation did not
give notice of such meeting in accordance with this chapter or where the
proposed action is authorized by written consent of shareholders without a
meeting.
(b) Within ten days after the shareholders' authorization date, which term
as used in this section means the date on which the shareholders' vote
authorizing such action was taken, or the date on which such consent without a
meeting was obtained from the requisite shareholders, the corporation shall
give written notice of such authorization or consent by registered mail to each
shareholder who filed written objection or from whom written objection was not
required, excepting any shareholder who voted for or consented in writing to
the proposed action and who thereby is deemed to have elected not to enforce
his right to receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any shareholder
from whom written objection was not required and who elects to dissent shall
file with the corporation a written notice of such election, stating his name
and residence address, the number and classes of shares as to which he dissents
and a demand for payment of the fair value of his shares. Any shareholder who
elects to dissent from a merger under section 905 (Merger of subsidiary
corporation) or paragraph (c) of section 907 (Merger or consolidation of
domestic and foreign corporations) or from a share exchange under paragraph (g)
of section 913 (Share exchanges) shall file a written notice of such election
to dissent within twenty days after the giving to him of a copy of the plan of
merger or exchange or an outline of the material features thereof under section
905 or 913.
(d) A shareholder may not dissent as to less than all of the shares, as to
which he has a right to dissent, held by him of record, that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any
beneficial owner as to less than all of the shares of such owner, as to which
such nominee or fiduciary has a right to dissent, held of record by such
nominee or fiduciary.
(e) Upon consummation of the corporate action, the shareholder shall cease
to have any of the rights of a shareholder except the right to be paid the fair
value of his shares and any other rights under this section. A notice of
election may be withdrawn by the shareholder at any time prior to his
acceptance in writing of an offer made by the corporation, as provided in
paragraph (g), but in no case later than sixty days from the date of
consummation of the corporate action except that if the corporation fails to
make a timely offer, as provided in paragraph (g), the time for withdrawing a
notice of election shall be extended until sixty days from the date an offer is
made. Upon expiration of such time, withdrawal of a notice of election shall
require the written consent of the corporation. In order to be effective,
withdrawal of a notice of election must be accompanied by the return to the
corporation of any advance payment made to the shareholder as provided in
paragraph (g). If a notice of election is withdrawn, or the corporate action is
rescinded, or a court shall determine that the shareholder is not entitled to
receive payment for his shares, or the shareholder shall otherwise lose his
dissenter's rights, he shall not have the right to receive payment for his
shares and he shall be reinstated to all his rights as a shareholder as of the
consummation of the corporate action, including any intervening preemptive
rights and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu hereof, at the
election of the corporation, the fair value thereof in cash as determined by
the board as of the time of such expiration or completion, but without
prejudice otherwise to any corporate proceedings that may have been taken in
the interim.
(f) At the time of filing the notice of election to dissent or within one
month thereafter the shareholder of shares represented by certificates shall
submit the certificates representing his shares to the corporation, or to its
II-2
<PAGE>
transfer agent, which shall forthwith note conspicuously thereon that a notice
of election has been filed and shall return the certificates to the shareholder
or other person who submitted them on his behalf. Any shareholder of shares
represented by certificates who fails to submit his certificates for such
notation as herein specified shall, at the option of the corporation exercised
by written notice to him within forty-five days from the date of filing of such
notice of election to dissent, lose his dissenter's rights unless a court, for
good cause shown, shall otherwise direct. Upon transfer of a certificate
bearing such notation, each new certificate issued therefor shall bear a
similar notation together with the name of the original dissenting holder of
the shares and a transferee shall acquire no rights in the corporation except
those which the original dissenting shareholder had at the time of the
transfer.
(g) Within fifteen days after the expiration of the period within which
shareholders may file their notices of election to dissent, or within fifteen
days after the proposed corporate action is consummated, whichever is later
(but in no case later than ninety days from the shareholders' authorization
date), the corporation or, in the case of a merger or consolidation, the
surviving or new corporation, shall make a written offer by registered mail to
each shareholder who has filed such notice of election to pay for his shares at
a specified price which the corporation considers to be their fair value. Such
offer shall be accompanied by a statement setting forth the aggregate number of
shares with respect to which notices of election to dissent have been received
and the aggregate number of holders of such shares. If the corporate action has
been consummated, such offer shall also be accompanied by (1) advance payment
to each such shareholder who has submitted the certificates representing his
shares to the corporation, as provided in paragraph (f), of an amount equal to
eighty percent of the amount of such offer, or (2) as to each shareholder who
has not yet submitted his certificates a statement that advance payment to him
of an amount equal to eighty percent of the amount of such offer will be made
by the corporation promptly upon submission of his certificates. If the
corporate action has not been consummated at the time of the making of the
offer, such advance payment or statement as to advance payment shall be sent to
each shareholder entitled thereto forthwith upon consummation of the corporate
action. Every advance payment or statement as to advance payment shall include
advice to the shareholder to the effect that acceptance of such payment does
not constitute a waiver of any dissenters' rights. If the corporate action has
not been consummated upon the expiration of the ninety day period after the
shareholders' authorization date, the offer may be conditioned upon the
consummation of such action. Such offer shall be made at the same price per
share to all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet of the
corporation whose shares the dissenting shareholder holds as of the latest
available date, which shall not be earlier than twelve months before the making
of such offer, and a profit and loss statement or statements for not less than
a twelve month period ended on the date of such balance sheet or, if the
corporation was not in existence throughout such twelve month period, for the
portion thereof during which it was in existence. Notwithstanding the
foregoing, the corporation shall not be required to furnish a balance sheet or
profit and loss statement or statements to any shareholder to whom such balance
sheet or profit and loss statement or statements were previously furnished, nor
if in connection with obtaining the shareholders' authorization for or consent
to the proposed corporate action the shareholders were furnished with a proxy
or information statement, which included financial statements, pursuant to
Regulation 14A or Regulation 14C of the United States Securities and Exchange
Commission. If within thirty days after the making of such offer, the
corporation making the offer and any shareholder agree upon the price to be
paid for his shares, payment therefor shall be made within sixty days after the
making of such offer or the consummation of the proposed corporate action,
whichever is later, upon the surrender of the certificates for any such shares
represented by certificates.
(h) The following procedure shall apply if the corporation fails to make
such offer within such period of fifteen days, or if it makes the offer and any
dissenting shareholder or shareholders fail to agree with it within the period
of thirty days thereafter upon the price to be paid for their shares:
(1) The corporation shall, within twenty days after the expiration of
whichever is applicable of the two periods last mentioned, institute a
special proceeding in the supreme court in the judicial district in which
the office of the corporation is located to determine the rights of
dissenting shareholders and to fix the fair value of their shares. If, in
the case of merger or consolidation, the surviving or new corporation is
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<PAGE>
a foreign corporation without an office in this state, such proceeding
shall be brought in the county where the office of the domestic
corporation, whose shares are to be valued, was located.
(2) If the corporation fails to institute such proceeding within such
period of twenty days, any dissenting shareholder may institute such
proceeding for the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding is not instituted
within such thirty day period, all dissenter's rights shall be lost unless
the supreme court, for good cause shown, shall otherwise direct.
(3) All dissenting shareholders, excepting those who, as provided in
paragraph (g), have agreed with the corporation upon the price to be paid
for their shares, shall be made parties to such proceeding, which shall
have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in such proceeding upon each
dissenting shareholder who is a resident of this state in the manner
provided by law for the service of a summons, and upon each nonresident
dissenting shareholder either by registered mail and publication, or in
such other manner as is permitted by law. The jurisdiction of the court
shall be plenary and exclusive.
(4) The court shall determine whether each dissenting shareholder, as to
whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation does not
request any such determination or if the court finds that any dissenting
shareholder is so entitled, it shall proceed to fix the value of the
shares, which, for the purposes of this section, shall be the fair value as
of the close of business on the day prior to the shareholders'
authorization date. In fixing the fair value of the shares, the court shall
consider the nature of the transaction giving rise to the shareholder's
right to receive payment for shares and its effects on the corporation and
its shareholders, the concepts and methods then customary in the relevant
securities and financial markets for determining fair value of shares of a
corporation engaging in a similar transaction under comparable
circumstances and all other relevant factors. The court shall determine the
fair value of the shares without a jury and without referral to an
appraiser or referee. Upon application by the corporation or by any
shareholder who is a party to the proceeding, the court may, in its
discretion, permit pretrial disclosure, including, but not limited to,
disclosure of any expert's reports relating to the fair value of the shares
whether or not intended for use at the trial in the proceeding and
notwithstanding subdivision (d) of section 3101 of the civil practice law
and rules.
(5) The final order in the proceeding shall be entered against the
corporation in favor of each dissenting shareholder who is a party to the
proceeding and is entitled thereto for the value of his shares so
determined.
(6) The final order shall include an allowance for interest at such rate
as the court finds to be equitable, from the date the corporate action was
consummated to the date of payment. In determining the rate of interest,
the court shall consider all relevant factors, including the rate of
interest which the corporation would have had to pay to borrow money during
the pendency of the proceeding. If the court finds that the refusal of any
shareholder to accept the corporate offer of payment for his shares was
arbitrary, vexatious or otherwise not in good faith, no interest shall be
allowed to him.
(7) Each party to such proceeding shall bear its own costs and expenses,
including the fees and expenses of its counsel and of any experts employed
by it. Notwithstanding the foregoing, the court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by the corporation against any or all of the dissenting
shareholders who are parties to the proceeding, including any who have
withdrawn their notices of election as provided in paragraph (e), if the
court finds that their refusal to accept the corporate offer was arbitrary,
vexatious or otherwise not in good faith. The court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by any or all of the dissenting shareholders who are parties to
the proceeding against the corporation if the court finds any of the
following: (A) that the fair value of the shares as determined materially
exceeds the amount which the corporation offered to pay; (B) that no offer
or required advance payment was made by the corporation; (C) that the
corporation failed to institute the special proceeding within the period
specified therefor; or (D) that the action of the corporation in complying
with its obligations as provided in this
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<PAGE>
section was arbitrary, vexatious or otherwise not in good faith. In making
any determination as provided in clause (A), the court may consider the
dollar amount or the percentage, or both, by which the fair value of the
shares as determined exceeds the corporate offer.
(8) Within sixty days after final determination of the proceeding, the
corporation shall pay to each dissenting shareholder the amount found to be
due him, upon surrender of the certificate for any such shares represented
by certificates.
(i) Shares acquired by the corporation upon the payment of the agreed value
therefor or of the amount due under the final order, as provided in this
section, shall become treasury shares or be cancelled as provided in section
515 (Reacquired shares), except that, in the case of a merger or consolidation,
they may be held and disposed of as the plan of merger or consolidation may
otherwise provide.
(j) No payment shall be made to a dissenting shareholder under this section
at a time when the corporation is insolvent or when such payment would make it
insolvent. In such event, the dissenting shareholder shall, at his option:
(1) Withdraw his notice of election, which shall in such event be deemed
withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation and, if it
is liquidated, be subordinated to the rights of creditors of the
corporation, but have rights superior to the non-dissenting shareholders,
and if it is not liquidated, retain his right to be paid for his shares,
which right the corporation shall be obliged to satisfy when the
restrictions of this paragraph do not apply.
(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation within
thirty days after the corporation has given him written notice that payment
for his shares cannot be made because of the restrictions of this
paragraph. If the dissenting shareholder fails to exercise such option as
provided, the corporation shall exercise the option by written notice given
to him within twenty days after the expiration of such period of thirty
days.
(k) The enforcement by a shareholder of his right to receive payment for his
shares in the manner provided herein shall exclude the enforcement by such
shareholder of any other right to which he might otherwise be entitled by
virtue of share ownership, except as provided in paragraph (e), and except that
this section shall not exclude the right of such shareholder to bring or
maintain an appropriate action to obtain relief on the ground that such
corporate action will be or is unlawful or fraudulent as to him.
(l) Except as otherwise expressly provided in this section, any notice to be
given by a corporation to a shareholder under this section shall be given in
the manner provided in section 605 (Notice of meetings of shareholders).
(m) This section shall not apply to foreign corporations except as provided
in subparagraph (e)(2) of section 907 (Merger or consolidation of domestic and
foreign corporations).
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<PAGE>
Manually signed facsimiles of the Letter of Transmittal, properly completed,
will be accepted. The Letter of Transmittal and certificates evidencing
Securities and any other required documents should be sent or delivered by each
Securityholder or such Securityholder's broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses described
below.
The Depositary for the Offer is:
[Logo of ChaseMellon]
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
Reorganization Dept. Reorganization Dept. Reorganization Dept.
Post Office Box 3301 85 Challenger Road 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Mail Drop--Reorg. New York, NY 10271
Attn: Reorganization Dept. Ridgefield Park, NJ 07660 Attn: Reorganization Dept.
</TABLE>
Other Information:
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their addresses and telephone numbers listed
below. Additional copies of this Offer to Purchase, the Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information
Agent. A shareholder may also contact brokers, dealers, commercial banks or
trust companies for assistance concerning the Offer.
The Information Agent for the Offer is:
INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th floor
New York, New York 10022
Bankers and Brokers call: (212) 750-5833
All Others Call Toll Free: (888) 750-5834
The Dealer Manager for the Offer is:
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Call Collect: (212) 270-2631
