<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
------------------------
INSTRUMENT SYSTEMS CORPORATION
(Name of Issuer)
INSTRUMENT SYSTEMS CORPORATION
(Name of Person(s) Filing Statement)
------------------------
COMMON STOCK, PAR VALUE $.25 PER SHARE
(including the Associated Common Stock Purchase Rights)
(Title of Class of Securities)
------------------------
457794 30 3
(CUSIP Number of Class of Securities)
ROBERT BALEMIAN
PRESIDENT
INSTRUMENT SYSTEMS CORPORATION
100 JERICHO QUADRANGLE
JERICHO, NEW YORK 11753
(516) 938-5544
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person Filing Statement)
------------------------
COPY TO:
ELLIOTT V. STEIN, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019
(212) 403-1000
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NOVEMBER 10, 1994
(Date Tender Offer First Published, Sent or Given
to Security Holders)
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CALCULATION OF FILING FEE
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AMOUNT OF
TRANSACTION FILING
VALUATION* FEE
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$27,750,000...................................................................... $5,550.00
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</TABLE>
* For purposes of calculating fee only. Based on the Offer for 3,000,000 shares
at a maximum price per share of $9.25.
------------------------
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
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Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
</TABLE>
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<PAGE> 2
This Issuer Tender Offer Statement (the "Statement") relates to the tender
offer by Instrument Systems Corporation, a Delaware corporation (the "Company"),
to purchase 3,000,000 shares of common stock, par value $.25 per share (the
"Shares"), including the associated Common Stock Purchase Rights (the "Rights"),
at prices, net to the seller in cash, not greater than $9.25 nor less than $8.00
per Share, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated November 10, 1994 (the "Offer to Purchase") and the related
Letter of Transmittal (which are herein collectively referred to as the
"Offer"). Unless the Rights are redeemed by the Company, a tender of Shares will
also constitute a tender of the associated Rights. Unless the context requires
otherwise, all references herein to Shares shall include the associated Rights.
The Offer is being made to all holders of Shares, including officers, directors
and affiliates of the Company.
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Instrument Systems Corporation, a Delaware
corporation. The address of its principal executive offices is 100 Jericho
Quadrangle, Jericho, New York 11753.
(b) The classes of securities to which this Statement relates are the
Shares and the Rights. The information set forth in "INTRODUCTION" in the Offer
to Purchase is incorporated herein by reference.
(c) The information set forth in "INTRODUCTION" and "Price Range of Shares;
Dividends; Open-Market Purchases" in the Offer to Purchase is incorporated
herein by reference.
(d) This statement is being filed by the Issuer.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "Source and Amount of Funds" in the
Offer to Purchase is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER.
(a)-(j) The information set forth in "INTRODUCTION", "Number of Shares;
Proration", "Background and Purpose of the Offer; Certain Effects of the Offer",
"Interests of Directors and Officers; Transactions and Arrangements Concerning
the Shares" and "Effects of the Offer on the Market for Shares; Registration
Under the Exchange Act" in the Offer to Purchase is incorporated herein by
reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "Interests of Directors and Officers;
Transactions and Arrangements Concerning the Shares" in the Offer to Purchase is
incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The information set forth in "INTRODUCTION", "Number of Shares; Proration",
"Background and Purpose of the Offer; Certain Effects of the Offer" and
"Interests of Directors and Officers; Transactions and Arrangements Concerning
the Shares" in the Offer to Purchase is incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Fees and Expenses" in the Offer to Purchase
is incorporated herein by reference.
<PAGE> 3
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in "Certain Information About the
Company -- Selected Historical Consolidated Financial Information" and
"-- Summary Pro Forma Consolidated Financial Information" in the Offer to
Purchase is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in "Certain Legal Matters; Regulatory and
Foreign Approvals" and "Miscellaneous" in the Offer to Purchase is incorporated
herein by reference.
(c) The information set forth in "Effects of the Offer on the Market for
Shares; Registration Under the Exchange Act" in the Offer to Purchase is
incorporated herein by reference.
(d) Not applicable.
(e) The information set forth in the Offer to Purchase and the related
Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2), respectively, is incorporated herein by reference in their entirety.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Form of Offer to Purchase dated November 10, 1994.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Letter to brokers, dealers, commercial banks, trust
companies and other nominees dated November 10, 1994.
(a)(4) Form of Letter to Clients from Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees dated November 10, 1994.
(a)(5) Form of Notice of Guaranteed Delivery.
(a)(6) Form of letter dated November 10, 1994 to stockholders from the
Chairman of the Board of the Company and the President of the Company.
(a)(7) Form of letter dated November 10, 1994 to participants in the ESOP.
(a)(8) Form of press release issued by the Company dated November 8, 1994.
(a)(9) Form of summary advertisement dated November 10, 1994.
(a)(10) Guidelines for Certification of Taxpayer Identification Number.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
2
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: November 10, 1994
INSTRUMENT SYSTEMS CORPORATION
By: /s/ ROBERT BALEMIAN
----------------------------------
Name: Robert Balemian
Title: President
3
<PAGE> 5
INDEX TO EXHIBITS
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ITEM DESCRIPTION PAGE
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(a)(1) Form of Offer to Purchase dated November 10, 1994.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Letter to brokers, dealers, commercial banks, trust companies and
other nominees dated November 10, 1994.
(a)(4) Form of Letter to Clients from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees dated November 10, 1994.
(a)(5) Form of Notice of Guaranteed Delivery.
(a)(6) Form of letter dated November 10, 1994 to stockholders from the Chairman of
the Board of the Company and the President of the Company.
(a)(7) Form of letter dated November 10, 1994 to participants in the ESOP.
(a)(8) Form of press release issued by the Company dated November 8, 1994.
(a)(9) Form of summary advertisement dated November 10, 1994.
(a)(10) Guidelines for Certification of Taxpayer Identification Number.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
<PAGE> 1
INSTRUMENT SYSTEMS CORPORATION
Offer to Purchase for Cash
Up to 3,000,000
Shares of its Common Stock
(Including the Associated Common Stock Purchase Rights)
at a Purchase Price Not Greater than
$9.25 nor Less than $8.00 per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, DECEMBER 9, 1994, UNLESS THE OFFER IS EXTENDED.
------------------------
Instrument Systems Corporation, a Delaware corporation (the "Company"),
invites its stockholders to tender shares of its common stock, par value $.25
per share (the "Shares"), including the associated Common Stock Purchase Rights
(the "Rights"), at prices, net to the seller in cash, not greater than $9.25 nor
less than $8.00 per Share, specified by tendering stockholders, upon the terms
and subject to the conditions set forth in this Offer to Purchase and the
related Letter of Transmittal (which together constitute the "Offer"). Unless
the Rights are redeemed by the Company prior to the Expiration Time (as defined
herein), a tender of Shares will also constitute a tender of the associated
Rights. Unless the context requires otherwise, all references herein to Shares
shall include the associated Rights.
The Company will, upon the terms and subject to the conditions of the Offer,
determine a single per Share price (not greater than $9.25 nor less than $8.00
per Share) that it will pay for Shares properly tendered and not withdrawn
pursuant to the Offer (the "Purchase Price"), taking into account the number of
Shares so tendered and the prices specified by tendering stockholders. The
Company will select the lowest Purchase Price which will allow it to buy
3,000,000 Shares (or such lesser number of Shares as are properly tendered and
not withdrawn at prices not greater than $9.25 nor less than $8.00 per Share)
pursuant to the Offer. All Shares properly tendered and not withdrawn at prices
at or below the Purchase Price will be purchased at the Purchase Price, net to
the seller in cash, upon the terms and subject to the conditions of the Offer,
including the proration terms hereof. The Offer is not being made to holders of
securities convertible into or exercisable for Shares. The Company will,
however, upon the terms and subject to the conditions of the Offer, accept
tenders of Shares that are issued upon conversion or exercise of such securities
and duly tendered pursuant to the Offer.
------------------------
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE
OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of his Shares should
either (1) complete and sign the Letter of Transmittal or a facsimile thereof in
accordance with the instructions in the Letter of Transmittal, mail or deliver
it and any other required documents to American Stock Transfer & Trust Company
(the "Depositary"), and either mail or deliver his stock certificates for such
Shares to the Depositary or follow the procedure for book-entry delivery set
forth in Section 3 or (2) request his broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for him. A stockholder having
Shares registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact that broker, dealer, commercial bank,
trust company or other nominee if such stockholder desires to tender such
Shares. Stockholders who desire to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply with the procedure for
book-entry transfer on a timely basis should tender such Shares by following the
procedures for guaranteed delivery set forth in Section 3.
------------------------
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. EACH
STOCKHOLDER MUST MAKE HIS OWN DECISION WHETHER TO TENDER SHARES AND,
IF SO, HOW MANY SHARES TO TENDER AND AT WHICH PRICE OR PRICES. NO
DIRECTOR OR OFFICER OF THE COMPANY INTENDS TO TENDER ANY SHARES
PURSUANT TO THE OFFER.
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TO TENDER SHARES PROPERLY, STOCKHOLDERS MUST COMPLETE THE LETTER OF TRANSMITTAL,
INCLUDING THE SECTION THEREOF RELATING TO THE PRICE AT WHICH THEY ARE TENDERING
SHARES.
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The Shares are listed and principally traded on the New York Stock Exchange
(the "NYSE"). On November 7, 1994, the last trading day before the announcement
of the Offer, the closing per Share sales price as reported on the NYSE
Composite Tape was $7 1/2. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES. See Section 7.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Depositary or the Dealer Managers at their respective
addresses and telephone numbers set forth on the back cover of this Offer to
Purchase.
------------------------
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO. OPPENHEIMER & CO., INC.
November 10, 1994
<PAGE> 2
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT AUTHORIZED ANY
PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH
THE OFFER ON BEHALF OF THE COMPANY OTHER THAN THOSE CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL. DO NOT RELY ON ANY SUCH RECOMMENDATION
OR ANY SUCH INFORMATION OR REPRESENTATIONS, IF GIVEN OR MADE, AS HAVING BEEN
AUTHORIZED BY THE COMPANY.
------------------------
TABLE OF CONTENTS
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SECTION PAGE
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INTRODUCTION........................................................................ 1
1. Number of Shares; Proration............................................... 2
2. Tenders by Owners of Fewer than 100 Shares................................ 4
3. Procedure for Tendering Shares............................................ 4
Proper Tender of Shares................................................. 4
Signature Guarantees.................................................... 5
Method of Delivery...................................................... 5
Federal Income Tax Withholding.......................................... 5
Book-Entry Delivery..................................................... 6
Guaranteed Delivery..................................................... 6
Employee Stock Ownership Plan........................................... 6
Determinations of Validity; Rejection of Shares; Waiver of Defects;
No Obligation to Give Notice of Defects................................ 7
4. Withdrawal Rights......................................................... 7
5. Purchase of Shares and Payment of Purchase Price.......................... 8
6. Certain Conditions of the Offer........................................... 9
7. Price Range of Shares; Dividends; Open-Market Purchases................... 11
8. Background and Purpose of the Offer; Certain Effects of the Offer......... 11
9. Interests of Directors and Officers; Transactions and Arrangements
Concerning the Shares................................................... 12
10. Source and Amount of Funds................................................ 12
11. Certain Information About the Company..................................... 13
Recent Developments..................................................... 13
Selected Consolidated Financial Information............................. 13
Summary Proforma Consolidated Financial Information..................... 14
Common Stock Purchase Rights............................................ 16
Additional Information.................................................. 17
12. Effects of the Offer on the Market for Shares; Registration Under the
Exchange Act............................................................ 18
13. Certain Legal Matters; Regulatory and Foreign Approvals................... 18
14. Certain U.S. Federal Income Tax Consequences.............................. 18
15. Extension of the Offer; Termination; Amendments........................... 21
16. Fees and Expenses......................................................... 22
17. Miscellaneous............................................................. 22
</TABLE>
ii
<PAGE> 3
TO THE OWNERS OF SHARES OF THE COMMON STOCK OF INSTRUMENT SYSTEMS CORPORATION:
INTRODUCTION
Instrument Systems Corporation, a Delaware corporation (the "Company"),
invites its stockholders to tender shares of its common stock, par value $.25
per share (the "Shares"), including the associated Common Stock Purchase Rights
(the "Rights"), at prices, net to the seller in cash, not greater than $9.25 nor
less than $8.00 per Share, specified by tendering stockholders, upon the terms
and subject to the conditions set forth in this Offer to Purchase and the
related Letter of Transmittal (which together constitute the "Offer"). Unless
the Rights are redeemed by the Company, a tender of Shares will also constitute
a tender of the associated Rights. Unless the context requires otherwise, all
references herein to Shares shall include the associated Rights.
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share price (not greater than $9.25 nor less than
$8.00 per Share) that it will pay for Shares properly tendered and not withdrawn
pursuant to the Offer (the "Purchase Price"), taking into account the number of
Shares so tendered and the prices specified by tendering stockholders. The
Company will select the lowest Purchase Price which will allow it to buy
3,000,000 Shares (or such lesser number of Shares as are properly tendered and
not withdrawn at prices not greater than $9.25 nor less than $8.00 per Share)
pursuant to the Offer. All Shares properly tendered prior to the Expiration Time
(as defined in Section 1) and not withdrawn at prices at or below the Purchase
Price will be purchased at the Purchase Price, net to the seller in cash, upon
the terms and subject to the conditions of the Offer, including the proration
terms described below.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6.
If, before the Expiration Time, more than 3,000,000 Shares (or such greater
number of Shares as the Company may elect to purchase) are properly tendered and
not withdrawn at or below the Purchase Price, the Company will, upon the terms
and subject to the conditions of the Offer, purchase Shares first from all Odd
Lot Owners (as defined in Section 2) who properly tender all their Shares at or
below the Purchase Price and then on a pro rata basis from all other
stockholders who properly tender Shares at or below the Purchase Price. See
Sections 1 and 2. The Company will return at its own expense all Shares not
purchased under the Offer, including Shares tendered and not withdrawn at prices
greater than the Purchase Price and Shares not purchased because of proration.
Tendering stockholders will not be obligated to pay brokerage commissions,
solicitation fees or, subject to Instruction 7 of the Letter of Transmittal,
stock transfer taxes on the Company's purchase of Shares pursuant to the Offer.
In addition, the Company will pay all fees and expenses of Goldman, Sachs & Co.
and Oppenheimer & Co., Inc. (the "Dealer Managers") and American Stock Transfer
& Trust Company (the "Depositary") in connection with the Offer. See Section 16.
The Company's Employee Stock Ownership Plan (the "ESOP") holds Shares in
accounts for participants in the ESOP. Under the terms of the ESOP, a
participant may instruct the ESOP's trustee to tender all or part of the Shares
attributed to the participant's account and in each such case must specify the
price or prices at which such Shares are to be tendered. See Section 3.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. EACH
STOCKHOLDER MUST MAKE HIS OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES TO TENDER AND AT WHICH PRICE OR PRICES. NO DIRECTOR OR OFFICER OF
THE COMPANY INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
The Company is offering to purchase up to 3,000,000, or approximately 9%,
of the Company's 33,738,036 Shares outstanding as of November 10, 1994. In
addition, as of such date, (i) an
<PAGE> 4
aggregate of 1,677,129 Shares were issuable upon the conversion of the Company's
Second Preferred Stock, Series I, $.25 par value ("Second Preferred Stock"),
(ii) an aggregate of 926,500 Shares were issuable upon exercise of outstanding
employee stock options ("Options") and (iii) an aggregate of 226,414 Shares were
issuable upon exercise of outstanding warrants ("Warrants" and, together with
the Second Preferred Stock and the Options, the "Convertible Securities"). THE
OFFER IS NOT BEING MADE TO HOLDERS OF THE CONVERTIBLE SECURITIES. THE COMPANY
WILL, UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF THE OFFER, ACCEPT TENDERS
OF SHARES THAT, IN ACCORDANCE WITH THE TERMS OF SUCH CONVERTIBLE SECURITIES, ARE
ISSUED UPON EXERCISE OR CONVERSION OF CONVERTIBLE SECURITIES AND DULY TENDERED
PURSUANT TO THE OFFER. To the extent shares of Second Preferred Stock are
converted into Shares, but the resulting Shares are not purchased pursuant to
the Offer, such conversion will nevertheless be irrevocable and holders of
shares of Second Preferred Stock so converted will have lost all preferential
rights of Second Preferred Stock as compared to Shares (including, among other
things, the priority afforded holders of shares of Second Preferred Stock with
respect to the distribution of assets upon liquidation). Each holder of shares
of Second Preferred Stock is urged to consult his own broker or investment or
tax advisor with respect to the Offer. NEITHER THE COMPANY NOR ITS BOARD OF
DIRECTORS MAKES ANY RECOMMENDATION TO ANY HOLDER OF SHARES OF SECOND PREFERRED
STOCK AS TO WHETHER TO CONVERT ALL OR ANY PORTION OF HIS SHARES OF SECOND
PREFERRED STOCK INTO SHARES OR AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
PURSUANT TO THE OFFER ALL OR ANY PORTION OF THE SHARES ISSUABLE UPON SUCH
CONVERSION.
The Company is making the Offer because its Board of Directors believes
that, given the Company's businesses, assets and prospects and the current
market price of the Shares, the purchase of the Shares pursuant to the Offer is
an attractive investment for the Company. In addition, the Offer provides
stockholders who are considering a sale of all or a portion of their Shares the
opportunity to sell those Shares for cash at a price that is greater than the
market price prevailing immediately prior to announcement of the Offer without
the usual transaction costs associated with open-market sales.
The Shares are listed and principally traded on the New York Stock Exchange
("NYSE") (Ticker Symbol: ISY). The closing per Share sales price as reported on
the NYSE Composite Tape on November 7, 1994, the last trading day before the
announcement of the Offer, was $7 1/2. THE COMPANY URGES STOCKHOLDERS TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES.
1. NUMBER OF SHARES; PRORATION
Upon the terms and subject to the conditions of the Offer, the Company will
accept for payment (and thereby purchase) 3,000,000 Shares or such lesser number
of Shares as are properly tendered before the Expiration Time (and not withdrawn
in accordance with Section 4) at a price (determined in the manner set forth
below) not greater than $9.25 nor less than $8.00 per Share. The term
"Expiration Time" means 12:00 midnight, New York City time, on Friday, December
9, 1994, unless and until the Company in its sole discretion shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Time" shall refer to the latest time and date at which the Offer, as
so extended by the Company, shall expire. See Section 15 for a description of
the Company's right to extend the time during which the Offer is open and to
delay, terminate or amend the Offer. See also Section 6. Subject to Section 2,
if the Offer is oversubscribed, Shares tendered at or below the Purchase Price
before the Expiration Time will be eligible for proration. The proration period
also expires at the Expiration Time.
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single Purchase Price that it will pay for Shares properly
tendered and not withdrawn pursuant to the Offer, taking into account the number
of Shares so tendered and the prices specified by tendering stockholders. The
Company will select the lowest Purchase Price which will allow it to buy
3,000,000 Shares (or such lesser number as are properly tendered and not
withdrawn at prices not greater than $9.25 nor less than $8.00 per Share)
pursuant to the Offer. The Company reserves the right to purchase more than
3,000,000 Shares pursuant to the Offer. If (a) the Company increases or
2
<PAGE> 5
decreases the price to be paid for Shares, or the Company increases the number
of Shares being sought and any such increase in the number of Shares being
sought exceeds 2% of the outstanding Shares, or the Company decreases the number
of Shares being sought and (b) the Offer is scheduled to expire less than ten
business days from and including the date that notice of such increase or
decrease is first published, sent or given in the manner specified in Section
15, then the Offer will be extended for at least ten business days from and
including the date of such notice. For purposes of the Offer, a "business day"
means any day other than a Saturday, Sunday or federal holiday and consists of
the time period from 12:01 a.m. through 12:00 midnight, New York City time.
In accordance with Instruction 5 of the Letter of Transmittal, each
stockholder desiring to tender Shares must specify the price or prices (not
greater than $9.25 nor less than $8.00 per Share) at which such stockholder is
willing to have the Company purchase his Shares. As promptly as practicable
following the Expiration Time, the Company will determine the Purchase Price
(not greater than $9.25 nor less than $8.00 per Share) that it will pay for
Shares properly tendered and not withdrawn pursuant to the Offer, taking into
account the number of Shares so tendered and the prices specified by tendering
stockholders. All Shares purchased pursuant to the Offer will be purchased at
the Purchase Price. All Shares not purchased pursuant to the Offer, including
Shares tendered at prices greater than the Purchase Price and Shares not
purchased because of proration, will be returned to the tendering stockholders
at the Company's expense as promptly as practicable (which, in the event of
proration, is expected to be approximately 12 NYSE trading days) following the
Expiration Time.
If the number of Shares properly tendered and not withdrawn prior to the
Expiration Time at or below the Purchase Price is less than or equal to
3,000,000 Shares (or such greater number of Shares as the Company may elect to
purchase), the Company will, upon the terms and subject to the conditions of the
Offer, purchase at the Purchase Price all Shares so tendered.
Upon the terms and subject to the conditions of the Offer, in the event
that prior to the Expiration Time more than 3,000,000 Shares (or such greater
number of Shares as the Company may elect to purchase) are properly tendered and
not withdrawn at or below the Purchase Price, the Company will accept Shares for
purchase in the following order of priority:
(a) first, all Shares properly tendered and not withdrawn at or below
the Purchase Price prior to the Expiration Time by any Odd Lot Owner (as
defined in Section 2) who:
(1) tenders all Shares beneficially owned by such Odd Lot Owner at
or below the Purchase Price (partial tenders will not qualify for this
preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(b) then, after purchase of all of the foregoing Shares, all other
Shares properly tendered and not withdrawn at or below the Purchase Price
before the Expiration Time on a pro rata basis (with adjustments to avoid
purchases of fractional Shares).
In the event that proration of tendered Shares is required, the Company
will determine the final proration factor as promptly as practicable after the
Expiration Time. Although the Company does not expect to be able to announce the
final results of such proration until approximately seven NYSE trading days
after the Expiration Time, it will announce preliminary results of proration by
press release as promptly as practicable after the Expiration Time. Stockholders
can obtain such preliminary information from the Depositary or the Dealer
Managers and may be able to obtain such information from their brokers.
As described in Section 14, the number of Shares that the Company will
purchase from a stockholder may affect the federal income tax consequences to
the stockholder of such purchase and therefore may be relevant to a
stockholder's decision whether to tender Shares. The Letter of
3
<PAGE> 6
Transmittal affords each tendering stockholder the opportunity to designate the
order of priority in which Shares tendered are to be purchased in the event of
proration.
2. TENDERS BY OWNERS OF FEWER THAN 100 SHARES
The Company, upon the terms and subject to the conditions of the Offer,
will accept for purchase, without proration, all Shares properly tendered and
not withdrawn on or before the Expiration Time at or below the Purchase Price by
or on behalf of stockholders who beneficially owned as of the close of business
on November 7, 1994 and continue to beneficially own as of the Expiration Time,
an aggregate of fewer than 100 Shares ("Odd Lot Owners"). See Section 1. To
avoid proration, however, an Odd Lot Owner must properly tender at or below the
Purchase Price all Shares that such Odd Lot Owner beneficially owns; partial
tenders will not qualify for this preference. This preference is not available
to owners of 100 or more Shares, even if such owners have separate stock
certificates for fewer than 100 Shares. ANY ODD LOT OWNER WISHING TO TENDER ALL
SHARES BENEFICIALLY OWNED BY HIM PURSUANT TO THIS OFFER MUST COMPLETE THE BOX
CAPTIONED "ODD LOTS" ON THE LETTER OF TRANSMITTAL AND, IF APPLICABLE, ON THE
NOTICE OF GUARANTEED DELIVERY. See Section 3. Stockholders owning an aggregate
of less than 100 Shares whose Shares are purchased pursuant to the Offer not
only will avoid the payment of brokerage commissions, but also will avoid any
applicable odd-lot discounts payable on a sale of their Shares in a NYSE
transaction.
The special odd lot purchase rules described above do not apply to Shares
held in the ESOP, and such Shares will be disregarded in determining whether a
stockholder is an Odd Lot Owner.
3. PROCEDURE FOR TENDERING SHARES
Proper Tender of Shares. For Shares to be properly tendered pursuant to
the Offer:
(a) the certificates for such Shares (or confirmation of receipt of
such Shares pursuant to the procedures for book-entry transfer set forth
below), together with a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) with any required signature
guarantees, and any other documents required by the Letter of Transmittal,
must be received before the Expiration Time by the Depositary at its
address set forth on the back cover of this Offer to Purchase; or
(b) the tendering stockholder must comply with the guaranteed delivery
procedure set forth below.
Unless the Rights are redeemed prior to the Expiration Time, holders of
Shares are required to tender one Right for each Share tendered in order to
effect a valid tender of such Share. Unless and until Rights Certificates (as
defined in Section 11) are issued, a tender of Shares pursuant to the Offer will
constitute a tender of the associated Rights evidenced by the certificate for
such Shares. If Rights Certificates are issued, holders of Shares will be
required to tender Rights Certificates representing a number of Rights equal to
the number of Shares tendered. If, after Rights Certificates are issued, a
stockholder sells the Rights separately from the Shares, the selling stockholder
will be unable to tender Shares unless the stockholder reacquires Rights to
tender with the Shares.
As specified in Instruction 5 of the Letter of Transmittal, each
stockholder desiring to tender Shares pursuant to the Offer must properly
indicate in the section captioned "Price (In Dollars) Per Share At Which Shares
Are Being Tendered" on the Letter of Transmittal the price (in multiples of
$.125) at which his Shares are being tendered, except that an Odd Lot Owner may
check the box in the section of the Letter of Transmittal entitled "Odd Lots"
indicating that he is tendering all of his Shares at the Purchase Price.
Stockholders desiring to tender Shares at more than one price must complete
separate Letters of Transmittal for each price at which Shares are being
tendered, except that the same Shares cannot be tendered (unless properly
withdrawn previously in accordance with the terms of the Offer) at more than one
price. IN ORDER TO PROPERLY TENDER SHARES, ONE AND ONLY ONE PRICE BOX MUST BE
CHECKED IN THE APPROPRIATE SECTION ON EACH LETTER OF TRANSMITTAL.
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<PAGE> 7
It is a violation of Rule 14e-4 promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), for a person acting alone or in
concert with others, directly or indirectly, to tender Shares for his own
account unless at the time of tender and at the Expiration Time he has a "net
long position" equal to or greater than the amount tendered in (i) the Shares
and will deliver or cause to be delivered such Shares for the purpose of tender
to the Company within the period specified in the Offer or (ii) other securities
immediately convertible into, exercisable for or exchangeable into Shares
("equivalent securities") and, upon the acceptance of his tender, will acquire
such Shares by conversion, exchange or exercise of such securities to the extent
required by the terms of the Offer and will deliver or cause to be delivered
such Shares so acquired for the purpose of tender to the Company within the
period specified in the Offer. Rule 14e-4 also provides a similar restriction
applicable to the tender or guarantee of a tender on behalf of another person. A
tender of Shares made pursuant to any method of delivery set forth herein will
constitute a binding agreement between the tendering stockholder and the Company
upon the terms and subject to the conditions of the Offer, including the
tendering stockholder's representation and warranty that (i) such stockholder
has a "net long position" in Shares or equivalent securities at least equal to
the Shares being tendered within the meaning of Rule 14e-4 and (ii) such tender
of Shares complies with Rule 14e-4.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if the Letter of Transmittal is signed by the registered holder of
the Shares (which term, for purposes of this Section, includes any participant
in The Depository Trust Company, Midwest Securities Trust Company or
Philadelphia Depository Trust Company (collectively, the "Book-Entry Transfer
Facilities") whose name appears on a security position listing as the holder of
the Shares) tendered therewith, and payment and delivery are to be made directly
to such registered holder, or if Shares are tendered for the account of a member
firm of a registered national securities exchange, a member of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
having an office, branch or agency in the United States (each such entity being
hereinafter referred to as an "Eligible Institution"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 1 of the Letter of Transmittal. If a certificate
representing Shares is registered in the name of a person other than the signer
of a Letter of Transmittal, or if payment is to be made, or Shares not purchased
or tendered are to be issued, to a person other than the registered holder, the
certificate must be endorsed or accompanied by an appropriate stock power, in
either case signed exactly as the name of the registered holder appears on the
certificate, with the signature on the certificate or stock power guaranteed by
an Eligible Institution. In all cases, payment for Shares tendered and accepted
for payment pursuant to the Offer will be made only after timely receipt by the
Depositary of certificates for such Shares (or a timely confirmation of a
book-entry transfer of such Shares into the Depositary's account at one of the
Book-Entry Transfer Facilities), a properly completed and duly executed Letter
of Transmittal (or facsimile thereof) and any other documents required by the
Letter of Transmittal.
Method of Delivery. THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING
SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED.
Federal Income Tax Withholding. To prevent backup federal income tax
withholding equal to 31% of the gross payments made pursuant to the Offer, each
stockholder who does not otherwise establish an exemption from such withholding
must notify the Depositary of such stockholder's correct taxpayer identification
number (or certify that such taxpayer is awaiting a taxpayer identification
number) and provide certain other information by completing the Substitute Form
W-9 included in the Letter of Transmittal. Foreign stockholders who are
individuals must submit Form W-8, certifying non-United States status, in order
to avoid backup withholding.
The Depositary will withhold 30% of the gross payments payable to a foreign
stockholder unless the Depositary determines that a reduced rate of withholding
or an exemption from withholding is
5
<PAGE> 8
applicable. For this purpose, a foreign stockholder is a stockholder that is not
(i) a citizen or resident of the United States, (ii) a corporation, partnership
or other entity created or organized in or under the laws of the United States
or any political subdivision thereof or (iii) any estate or trust the income of
which is subject to United States federal income taxation regardless of the
source of such income. The Depositary will determine a stockholder's status as a
foreign stockholder and eligibility for a reduced rate of, or an exemption from,
withholding by reference to the stockholder's address and to any outstanding
certificates or statements concerning eligibility for a reduced rate of, or
exemption from, withholding (e.g., Form 1001 or Form 4224) unless facts and
circumstances indicate that such reliance is not warranted. A foreign
stockholder who has not previously submitted the appropriate certificates or
statements with respect to a reduced rate of, or exemption from, withholding for
which such stockholder may be eligible should consider doing so in order to
avoid overwithholding. A foreign stockholder may be eligible to obtain a refund
of tax withheld if such stockholder meets one of the three tests for capital
gain or loss treatment described in Section 14 or is otherwise able to establish
that no tax or a reduced amount of tax was due.
For a discussion of certain other federal income tax consequences to
tendering stockholders, see Section 14.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares at each of the Book-Entry Transfer Facilities 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 a Book-Entry Transfer Facility's
system may make book-entry delivery of the Shares by causing such facility to
transfer such Shares into the Depositary's account in accordance with such
facility's procedure for such transfer. Even though delivery of Shares may be
effected through book-entry transfer into the Depositary's account at one of the
Book-Entry Transfer Facilities, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), with any required signature guarantees and
other required documents must, in any case, be transmitted to and received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Time, or the guaranteed delivery procedure
set forth below must be followed. Delivery of the Letter of Transmittal and any
other required documents to one of the Book-Entry Transfer Facilities does not
constitute delivery to the Depositary.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates are not immediately available (or
the procedures for book-entry transfer cannot be completed on a timely basis) or
time will not permit all required documents to reach the Depositary before the
Expiration Time, such Shares may nevertheless be tendered provided that all of
the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives (by hand, mail, telegram or facsimile
transmission), on or prior to the Expiration Time, a properly completed and
duly executed Notice of Guaranteed Delivery substantially in the form the
Company has provided with this Offer to Purchase (indicating the price at
which the Shares are being tendered), including a guarantee by an Eligible
Institution in the form set forth in such Notice; and
(c) the certificates for all tendered Shares in proper form for
transfer (or confirmation of book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities),
together with a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof) and any other documents required by the Letter of
Transmittal, are received by the Depositary within five NYSE trading days
after the date the Depositary receives such Notice of Guaranteed Delivery.
Employee Stock Ownership Plan. As of November 9, 1994, the Company's
Employee Stock Ownership Plan (the "ESOP") owned 2,610,618 Shares, of which
2,344,185 were allocated to the accounts of the ESOP participants. Shares
allocated to participants' accounts will, subject to the
6
<PAGE> 9
limitations of the Employee Retirement Income Security Act of 1974, as amended,
and applicable regulations thereunder ("ERISA"), be tendered by U.S. Trust
Company of California, N.A., as the Trustee of the ESOP, according to the
instructions of participants to the Trustee. Decisions as to whether to tender
Shares not allocated to participants' accounts and allocated Shares for which
the Trustee has not received timely instructions from participants will be made
by the Trustee subject to the terms of the ESOP and ERISA. The Trustee will make
available to the participants whose accounts hold allocated Shares all documents
furnished to the stockholders in connection with the Offer generally. Each such
participant will also receive a form upon which the participant may instruct the
Trustee regarding the Offer. Each participant may direct that all, some or none
of the Shares allocated to the participant's accounts be tendered. The Company
will also provide additional information in a separate letter with respect to
the operations of the Offer to the participants of the ESOP. Participants in the
ESOP may not use the Letter of Transmittal to direct the tender of the Shares
attributed to their accounts, but must use the separate form sent to them.
Participants in the ESOP are urged to read the separate form and related
materials carefully.
Under ERISA the Company will be prohibited from purchasing any Shares from
the ESOP (including Shares allocated to the accounts of participants) if the
Purchase Price is less than the prevailing market price of the Shares on the
date the Shares are accepted for payment pursuant to the Offer. If Shares
tendered from the ESOP would have been accepted pursuant to the terms of the
Offer except for this prohibition, such Shares shall automatically be deemed to
be properly withdrawn.
Determinations of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the price to be paid therefor and the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Company, in its sole discretion, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tenders it determines not to be in
proper form or the acceptance of or payment for which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Offer and any defect or irregularity in the
tender of any particular Shares. No tender of Shares will be deemed to be
properly made until all defects or irregularities have been cured or waived.
None of the Company, the Dealer Managers, the Depositary or any other person is
or will be obligated to give notice of any defects or irregularities in tenders,
and none of them will incur any liability for failure to give any such notice.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, a tender of Shares pursuant
to the Offer is irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time before the Expiration Time and, unless theretofore
accepted for payment by the Company as provided in this Offer to Purchase, may
also be withdrawn after 12:00 midnight, New York City time, on Tuesday, January
10, 1995.
For a withdrawal to be effective, the Depositary must timely receive (at
its address set forth on the back cover of this Offer to Purchase) a written,
telegraphic or facsimile transmission notice of withdrawal. Such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder, if different from that of the person who tendered such Shares. If the
certificates have been delivered or otherwise identified to the Depositary,
then, prior to the release of such certificates, the tendering stockholder must
also submit the serial numbers shown on the particular certificates evidencing
the Shares and the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution (except in the case of Shares tendered by an Eligible
Institution). If Shares have been tendered pursuant to the procedure for
book-entry transfer set forth in Section 3, the notice of withdrawal must
specify the name and the number of the account at the applicable Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with the proce-
7
<PAGE> 10
dures of such facility. All questions as to the form and validity (including
time of receipt) of notices of withdrawal will be determined by the Company, in
its sole discretion, which determination shall be final and binding on all
parties. None of the Company, the Dealer Managers, the Depositary or any other
person is or will be obligated to give any notice of any defects or
irregularities in any notice of withdrawal, and none of them will incur any
liability for failure to give any such notice. Any Shares properly withdrawn
will thereafter be deemed not tendered for purposes of the Offer. Withdrawn
Shares may, however, be retendered before the Expiration Time by again following
any of the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or
is unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain on behalf of the Company all tendered Shares, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the Offer, the Company will
determine the Purchase Price it will pay for Shares properly tendered and not
withdrawn pursuant to the Offer, taking into account the number of Shares
tendered and the prices specified by tendering stockholders, and will accept for
payment (and thereby purchase) Shares properly tendered and not withdrawn at or
below the Purchase Price as soon as practicable after the Expiration Time. For
purposes of the Offer, the Company will be deemed to have accepted for payment
(and therefore purchased), subject to proration, Shares which are properly
tendered and not withdrawn at or below the Purchase Price when, as and if it
gives oral or written notice to the Depositary of its acceptance of such Shares
for payment pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase and pay a single Purchase Price for all of the Shares accepted for
payment pursuant to the Offer as soon as practicable after the Expiration Time.
In all cases, payment for Shares accepted for payment pursuant to the Offer will
be made promptly (subject to possible delay in the event of proration) but only
after timely receipt by the Depositary of certificates for Shares (or of a
confirmation of a book-entry transfer of such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities), a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) and any other
required documents.
Payment for Shares purchased pursuant to the Offer will be made by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering stockholders. In the
event of proration, the Company will determine the proration factor and pay for
those tendered Shares accepted for payment as soon as practicable after the
Expiration Time. However, the Company does not expect to be able to announce the
final results of any such proration until approximately seven NYSE trading days
after the Expiration Time. Certificates for all Shares not purchased, including
all Shares tendered at prices greater than the Purchase Price and Shares not
purchased due to proration, will be returned (or, in the case of Shares tendered
by book-entry transfer, such Shares will be credited to the account maintained
with one of the Book-Entry Transfer Facilities by the participant therein who so
delivered such Shares) as promptly as practicable following the Expiration Time
or termination of the Offer without expense to the tendering stockholder. Under
no circumstances will the Company pay interest on the Purchase Price. In
addition, if certain events occur, the Company may not be obligated to purchase
Shares pursuant to the Offer. See Section 6.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer; provided, however,
that if payment of the Purchase Price is to be made to, or (in the circumstances
permitted by the Offer) if unpurchased Shares are to be
8
<PAGE> 11
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person signing the Letter of Transmittal, the amount of all stock transfer
taxes, if any (whether imposed on the registered holder or such other person),
payable on account of the transfer to such person will be deducted from the
Purchase Price unless evidence satisfactory to the Company of the payment of
such taxes or exemption therefrom is submitted. See Instruction 7 of the Letter
of Transmittal.
ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND
SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL (OR, IN THE
CASE OF A FOREIGN INDIVIDUAL, A FORM W-8) MAY BE SUBJECT TO REQUIRED FEDERAL
INCOME TAX WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAID TO SUCH STOCKHOLDER OR
OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION 3.
6. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Company, subject to
Rule 13e-4(f) of the Exchange Act, shall not be required to accept for payment,
purchase or pay for any Shares tendered, and may terminate or amend the Offer if
at any time after November 9, 1994, and at or before the Expiration Time, any of
the following events shall have occurred (as determined by the Company in good
faith) which makes it inadvisable for the Company, in its reasonable judgment,
to proceed with the Offer or with such purchase or payment:
(a) there shall have been threatened, instituted or pending before any
court, agency, authority or other tribunal any action, suit or proceeding
by any government or governmental, regulatory or administrative agency or
authority or by any other person, domestic or foreign, or any judgment,
order or injunction entered, enforced or deemed applicable by any such
court, authority, agency or tribunal, which:
(i) challenges or seeks to make illegal, or to delay or otherwise
directly or indirectly to restrain, prohibit or otherwise affect the
making of the Offer, the acquisition of Shares pursuant to the Offer or
is otherwise related in any manner to, or otherwise affects, the Offer;
or
(ii) could, in the sole judgment of the Company, materially affect
the business, condition (financial or other), income, operations or
prospects of the Company and its subsidiaries, taken as a whole, or
otherwise materially impair in any way the contemplated future conduct
of the business of the Company and its subsidiaries, taken as a whole,
or materially impair the Offer's contemplated benefits to the Company;
or
(b) there shall have been any action threatened or taken, or any
approval withheld, or any statute, rule or regulation invoked, proposed,
sought, promulgated, enacted, entered, amended, enforced or deemed to be
applicable to the Offer or the Company or any of its subsidiaries, by any
government or governmental, regulatory or administrative authority or
agency or tribunal, domestic or foreign, which, in the sole judgment of the
Company, would or might directly or indirectly result in any of the
consequences referred to in clause (i) or (ii) of paragraph (a) above; or
(c) there shall have occurred:
(i) the declaration of any banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not
mandatory);
(ii) any general and protracted suspension of trading in, or
limitation on prices for, securities on any United States national
securities exchange or in the over-the-counter market;
(iii) the commencement of a war, armed hostilities or any other
national or international crisis directly or indirectly involving the
United States;
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<PAGE> 12
(iv) any limitation (whether or not mandatory) by any governmental,
regulatory or administrative agency or authority on, or any event which,
in the sole judgment of the Company, might materially affect, the
extension of credit by banks or other lending institutions in the United
States;
(v) any significant decrease in the market price of the Shares or
in the market prices of equity securities generally in the United States
or any change in the general political, market, economic or financial
conditions in the United States or abroad that could have in the sole
judgment of the Company a material adverse effect on the business,
condition (financial or otherwise), income, operations or prospects of
the Company and its subsidiaries, taken as a whole, or on the trading in
the Shares;
(vi) in the case of any of the foregoing existing at the time of
the commencement of the Offer, a material acceleration or worsening
thereof; or
(vii) any decline in either the Dow Jones Industrial Average
(3,831.75 at the close of business on November 9, 1994) or the Standard
and Poor's Index of 400 Industrial Companies (554.02 at the close of
business on November 9, 1994) by an amount in excess of 10% measured
from the close of business on November 9, 1994; or
(d) any change shall occur or be threatened in the business, condition
(financial or other), income, operations or prospects of the Company and
its subsidiaries, taken as a whole, which in the sole judgment of the
Company may have a material adverse effect on the Company and its
subsidiaries taken as a whole; or
(e) a tender or exchange offer for any or all of the Shares (other
than the Offer), or any merger, business combination or other similar
transaction with or involving the Company or any subsidiary, shall have
been proposed, announced or made by any person; or
(f) any entity, "group" (as that term is used in Section 13(d)(3) of
the Exchange Act) or person (other than entities, groups or persons, if
any, who have filed with the Securities and Exchange Commission (the
"Commission") on or before November 9, 1994 a Schedule 13G or a Schedule
13D with respect to any of the Shares) shall have acquired or proposed to
acquire beneficial ownership of more than 5% of the outstanding Shares; or
(g) any entity, group or person who has filed with the Commission on
or before such date a Schedule 13G or a Schedule 13D with respect to the
Shares shall have acquired, or proposed to acquire, beneficial ownership of
additional Shares constituting more than 2% of the outstanding Shares or
shall have been granted any option or right to acquire beneficial ownership
of more than 2% of the outstanding Shares; or
(h) any person or group shall have filed a Notification and Report
Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
reflecting an intent to acquire the Company or any of its Shares.
The foregoing conditions are for the Company's sole benefit and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition (including any action or inaction by the Company) or may be waived by
the Company in whole or in part. The Company's failure at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time. Any determination by the Company concerning the
events described in this Section 6 and any related judgment or decision by the
Company regarding the inadvisability of proceeding with the purchase of or
payment for any Shares tendered shall be final and shall be binding on all
parties.
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<PAGE> 13
7. PRICE RANGE OF SHARES; DIVIDENDS; OPEN-MARKET PURCHASES
The Shares are currently traded principally on the NYSE. Until February 2,
1993, the Shares were traded principally on the American Stock Exchange. The
following table sets forth for the periods indicated the high and low sales
prices per Share on the NYSE Composite Tape (for the period beginning February
3, 1993) or on the American Stock Exchange (for the period ended February 2,
1993) for each of the quarters in the Company's fiscal year ended September 30,
as reported in published financial sources:
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
FISCAL 1993
Quarter ended December 31, 1992..................................... $6 1/4 $4 1/8
Quarter ended March 31, 1993........................................ 7 3/8 6
Quarter ended June 30, 1993......................................... 8 1/8 6
Quarter ended September 30, 1993.................................... 8 3/4 6 1/4
FISCAL 1994
Quarter ended December 31, 1993..................................... 9 1/8 8
Quarter ended March 31, 1994........................................ 9 3/4 7 3/4
Quarter ended June 30, 1994......................................... 9 6 5/8
Quarter ended September 30, 1994.................................... 8 1/8 6 7/8
FISCAL 1995
Quarter ended December 31, 1994
(through November 9, 1994)........................................ 8 1/2 7 3/8
</TABLE>
The closing per Share sales price as reported on the NYSE Composite Tape on
November 7, 1994, the last trading day before the announcement of the Offer, was
$7 1/2. The closing per Share sales price as reported on the NYSE Composite Tape
on November 9, 1994, the last trading day before the commencement of the Offer,
was $8 3/8. THE COMPANY URGES STOCKHOLDERS TO OBTAIN CURRENT QUOTATIONS OF THE
MARKET PRICE OF THE SHARES.
The Company paid no dividends on the Shares during fiscal years 1993 and
1994.
The Board of Directors of the Company previously has authorized the
purchase by the Company of up to 4,000,000 Shares in open-market or privately
negotiated transactions. As of November 9, 1994, approximately 2,300,000 Shares
had been purchased pursuant to such authorization at a weighted average purchase
price of $7 3/4 per Share, including 134,700 Shares purchased since September
14, 1994 at a weighted average purchase price of $7 3/4 per Share (in each case
excluding commissions). All such purchases were open-market purchases on the
NYSE. The Company anticipates continuing its open-market purchase program. See
Section 8.
8. BACKGROUND AND PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
The Company is making the Offer because its Board of Directors believes
that, given the Company's businesses, assets and prospects and the current
market price of the Shares, the purchase of the Shares pursuant to the Offer is
an attractive investment for the Company.
In addition, the Offer provides stockholders who are considering a sale of
all or a portion of their Shares the opportunity to determine the price or
prices (not greater than $9.25 nor less than $8.00 per Share) at which they are
willing to sell their Shares and, if any such Shares are purchased pursuant to
the Offer, to sell those Shares for cash without the usual transaction costs
associated with open-market sales. Any Odd Lot Owners whose Shares are purchased
pursuant to the Offer not only will avoid the payment of brokerage commissions,
but also will avoid any applicable odd lot discounts payable on sales of odd
lots. The Offer also gives stockholders the opportunity to sell their Shares at
a price that is greater than the market price prevailing immediately prior to
the
11
<PAGE> 14
announcement of the Offer. To the extent the purchase of Shares in the Offer
results in a reduction in the number of stockholders of record, the costs to the
Company for services to stockholders will be reduced. Stockholders who determine
not to accept the Offer will increase their proportionate interest in the
Company's equity, and thus in the Company's future earnings and assets, subject
to the Company's right to issue additional Shares and other equity securities in
the future.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES AND
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS HAS AUTHORIZED ANY PERSON TO MAKE
ANY SUCH RECOMMENDATION. EACH STOCKHOLDER MUST MAKE HIS OWN DECISION WHETHER TO
TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND AT WHICH PRICE OR
PRICES. NO DIRECTOR OR OFFICER OF THE COMPANY INTENDS TO TENDER ANY SHARES
PURSUANT TO THE OFFER.
The Company may in the future purchase additional Shares on the open
market, in private transactions, through tender offers or otherwise. See Section
7. Any such purchases may be on the same terms as, or on terms which are more or
less favorable to stockholders than, the terms of the Offer. However, Rule
13e-4(f)(6) under the Exchange Act generally prohibits the Company and its
affiliates from purchasing any Shares, other than pursuant to the Offer, until
at least ten business days after the expiration or termination of the Offer. Any
possible future purchases by the Company will depend on many factors, including
the market price of the Shares, the results of the Offer, the Company's business
and financial position and general economic and market conditions.
All Shares purchased by the Company pursuant to the Offer will be retired.
9. INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE SHARES
At November 10, 1994, the Company's directors and officers as a group
beneficially owned 1,830,330 Shares (including 859,914 Shares issuable upon
exercise of Options or Warrants), or approximately 5.2% of the outstanding
Shares. The Company has been advised that no director or officer of the Company
intends to tender any Shares pursuant to the Offer.
Based upon information provided to the Company by its directors, executive
officers and affiliates, to the best of the Company's knowledge, none of the
directors or executive officers of the Company, nor any affiliate of any of the
foregoing, has effected any transactions in the Shares during the 40 business
days prior to the date hereof. Transactions in the Shares by the Company during
such period are set forth in Annex A hereto.
Except as set forth in this Offer to Purchase, neither the Company nor, to
the Company's knowledge, any of its executive officers or directors, is a party
to any contract, arrangement, understanding or relationship relating, directly
or indirectly, to the Offer with any other person with respect to Shares. Except
as disclosed herein, none of the Company or its executive officers or directors
has current plans or proposals which relate to or would result in any
extraordinary corporate transaction involving the Company or its subsidiaries,
such as a merger, reorganization, sale or transfer of a material amount of its
or their assets, any change in the Company's present Board of Directors or
management, any material change in its present dividend policy or indebtedness
or capitalization, any other material change in its business or corporate
structure, any material change in its Certificate of Incorporation or Bylaws, or
any actions causing a class of its equity securities to be delisted by the NYSE
or to become eligible for termination of registration pursuant to Section
12(g)(4) of the Exchange Act, or the suspension of the Company's obligation to
file reports pursuant to Section 15(d) of the Exchange Act, or any actions
similar to any of the foregoing.
10. SOURCE AND AMOUNT OF FUNDS
Assuming the Company purchases 3,000,000 Shares pursuant to the Offer at
the maximum price of $9.25 per Share, the Company expects the maximum aggregate
cost, including all fees and
12
<PAGE> 15
expenses applicable to the Offer, would be approximately $28.5 million. The
Company anticipates that all of the funds necessary to purchase Shares pursuant
to the Offer and to pay the related fees and expenses will come from cash, cash
equivalents and marketable securities of the Company. At November 9, 1994, the
Company had cash, cash equivalents and marketable securities of approximately
$50 million.
11. CERTAIN INFORMATION ABOUT THE COMPANY
The Company is a diversified manufacturer with operations in three business
segments: Home and Commercial Products, the principal products of which are
residential and commercial garage doors, other building products and specialty
hardware for the food service industry; Specialty Plastic Films and Electronic
Information and Communication Systems. The Company was incorporated under the
laws of the State of Delaware in 1970 as the successor to a business originally
incorporated in 1959. The Company's principal executive offices are located at
100 Jericho Quadrangle, Jericho, New York 11753, and its telephone number at
that address is (516) 938-5544.
Recent Developments. On November 8, 1994, the Company issued a press
release stating that it would commence the Offer and reporting its operating
results for the fourth quarter and fiscal year ended September 30, 1994.
Information with respect to operating results included the following:
Instrument Systems Corporation (NYSE: ISY) reported record operating
results for the fourth quarter and fiscal year ended September 30, 1994.
Net sales for the quarter increased to $141,658,000 up 8.6% over last
year's $130,469,000. Income from continuing operations for the fourth
quarter was a record $10,603,000 or $.29 per share compared to $9,560,000
or $.25 per share last year. Net sales for the fiscal year increased by
11.9% up to $488,957,000 from $436,949,000 last year. Income from
continuing operations for the fiscal year was a record $29,705,000 or $.80
per share compared to $26,560,000 or $.70 per share for fiscal 1993.
Increased sales and earnings in the building products division
accounted for the increase in operating results in the fourth quarter. For
fiscal 1994, earnings increased in each of the Company's three core
business units with significant increases in the building products and
specialty plastic films units.
Selected Consolidated Financial Information. Set forth below is certain
selected historical and proforma consolidated financial information with respect
to the Company. Historical consolidated financial information for the years
ended September 30, 1992 and 1993 was derived from the audited consolidated
financial statements of Instrument Systems Corporation contained in the
Company's Annual Report on Form 10-K for the year ended September 30, 1993.
Historical consolidated financial information for the nine-month periods ended
June 30, 1993 and 1994 was derived from the unaudited consolidated financial
statements of the Company contained in the Quarterly Reports on Form 10-Q for
the periods ended June 30, 1993 and June 30, 1994. The historical financial
information below is qualified in its entirety by reference to such reports
(which may be inspected or obtained at the offices of the Commission in the
manner set forth below) and the financial information and related notes
contained therein. The historical financial information for the year ended
September 30, 1994 is derived from the audited consolidated financial statements
which will be contained in the Company's Annual Report on Form 10-K for the year
ended September 30, 1994 to be filed with the Commission in December 1994. As
described above, a summary of the operating results for the year ended September
30, 1994 was contained in a press release issued on November 8, 1994.
13
<PAGE> 16
INSTRUMENT SYSTEMS CORPORATION
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30, NINE MONTHS ENDED JUNE 30, YEAR ENDED
SEPTEMBER 30,
---------------------------- ---------------------------- -------------
1992 1993 1993 1994 1994
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Consolidated Income
Statement Data:
Net sales............................ $398,761,000 $436,949,000 $306,480,000 $347,299,000 $488,957,000
Income from continuing operations
before income taxes................ 36,091,000 44,266,000 28,053,000 32,376,000 50,347,000
Income from continuing operations.... 21,594,000 26,560,000 17,000,000 19,102,000 29,705,000
Income before extraordinary item..... 24,068,000 18,085,000 9,350,000 19,102,000 29,705,000
Net income........................... $ 23,968,000 $ 18,085,000 $ 9,350,000 $ 19,102,000 $ 29,705,000
============ ============ ============ ============ ============
Per share of common stock:
Continuing operations.............. $.59 $ .70 $ .45 $.51 $.80
Discontinued operations............ .07 (.22) (.20) -- --
---- ----- ----- ---- ----
Net income........................... $.66 $ .48 $ .25 $.51 $.80
==== ===== ===== ==== ====
Weighted Average Number of Common
Shares Used to Compute Income Per
Share................................ 36,314,000 37,989,000 37,994,000 37,408,000 37,102,000
Ratio of Earnings from Continuing
Operations to Fixed Charges(a)....... 5.0x 6.8x 5.9x 6.4x 7.2x
Consolidated Balance Sheet Data
(at end of period):
Working capital...................... $ 78,411,000 $116,783,000 $ 97,050,000 $117,733,000 $121,048,000
Total assets......................... 246,750,000 270,270,000 253,424,000 264,561,000 293,215,000
Total assets, less goodwill.......... 228,538,000 252,575,000 235,600,000 246,229,000 274,975,000
Total indebtedness................... 28,831,000 27,532,000 26,804,000 23,401,000 25,080,000
Shareholders' equity................. 144,361,000 161,313,000 153,422,000 167,346,000 176,049,000
Book Value per Common Share:
Assuming Second Preferred Stock,
Series I is converted into common
stock.............................. $3.87 $4.33 $4.10 $4.68 $4.95
Assuming Second Preferred Stock,
Series I is redeemed at $10 per
share.............................. $3.58 $4.06 $3.82 $4.41 $4.70
</TABLE>
- ---------------
(a) The ratios of earnings from continuing operations to fixed charges are
computed by dividing earnings by the fixed charges. Earnings from continuing
operations consist of income from continuing operations, to which has been
added fixed charges and income taxes. Fixed charges consist of interest
expense, amortization of debt issuance costs, and the portion of rent
expense considered to represent interest.
Summary Proforma Consolidated Financial Information. The following summary
proforma consolidated financial information of the Company for the years ended
September 30, 1993 and 1994 and for the nine-month period ended June 30, 1994
gives effect to the purchase of 3,000,000 Shares pursuant to the Offer, based on
certain assumptions described in the notes to summary proforma consolidated
financial information. The income statement data give effect to the purchase of
Shares pursuant to the Offer as if it had occurred at the beginning of each
period presented. The balance sheet data give effect to the purchase of Shares
pursuant to the Offer as if it had occurred as of the date of the respective
balance sheets. The summary proforma consolidated financial information should
be read in conjunction with the summary historical consolidated financial
information and does not purport to be indicative of the results that would
actually have been obtained had the purchase of the Shares been completed at the
dates indicated or that may be obtained in the future.
14
<PAGE> 17
SUMMARY PROFORMA CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
YEAR ENDED SEPTEMBER 30, 1993 1994
------------------------------------------ ---------------------------
ASSUMED ASSUMED ASSUMED
$8.00 PER $9.25 PER $8.00 PER
SHARE SHARE SHARE
PURCHASE PURCHASE PURCHASE
HISTORICAL PRICE PRICE HISTORICAL PRICE
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Consolidated Income Statement Data:
Net sales........................................... $436,949,000 $436,949,000 $436,949,000 $347,299,000 $347,299,000
Income from continuing operations before income
taxes............................................. 44,266,000 43,401,000 43,270,000 32,376,000 31,542,000
Income from continuing operations................... 26,560,000 26,041,000 25,962,000 19,102,000 18,610,000
Net income.......................................... $ 18,085,000 $ 17,566,000 $ 17,487,000 $ 19,102,000 $ 18,610,000
============ ============ ============ ============ ============
Per share of common stock:
Continuing operations............................. $ .70 $ .74 $ .74 $.51 $.54
Discontinued operations........................... (.22) (.24) (.24) -- --
------------ ------------ ------------ ------------ ------------
Net income........................................ $ .48 $ .50 $ .50 $.51 $.54
============ ============ ============ ============ ============
Weighted Average Number of Common Shares Used to
Compute Income Per Share............................ 37,989,000 34,989,000 34,989,000 37,408,000 34,408,000
Ratio of Earnings from Continuing Operations to Fixed
Charges............................................. 6.8x 6.7x 6.7x 6.4x 6.2x
Consolidated Balance Sheet Data (at end of period):
Working capital..................................... $116,783,000 $ 92,083,000 $ 88,333,000 $117,733,000 $ 93,033,000
Total assets........................................ 270,270,000 245,570,000 241,820,000 264,561,000 239,861,000
Total assets, less goodwill......................... 252,575,000 227,875,000 224,125,000 246,229,000 221,529,000
Total indebtedness.................................. 27,532,000 27,532,000 27,532,000 23,401,000 23,401,000
Shareholders' equity................................ 161,313,000 136,613,000 132,863,000 167,346,000 142,646,000
Book Value per Common Share:
Assuming Second Preferred Stock, Series I is
converted into common stock....................... $4.33 $3.99 $3.88 $4.68 $4.35
Assuming Second Preferred Stock, Series I is
redeemed at $10 per share......................... $4.06 $3.68 $3.56 $4.41 $4.04
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1994
------------------------------------------
ASSUMED ASSUMED ASSUMED
$9.25 PER $8.00 PER $9.25 PER
SHARE SHARE SHARE
PURCHASE PURCHASE PURCHASE
PRICE HISTORICAL PRICE PRICE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Consolidated Income Statement Data:
Net sales........................................... $347,299,000 $488,957,000 $488,957,000 $488,957,000
Income from continuing operations before income
taxes............................................. 31,416,000 50,347,000 49,235,000 49,067,000
Income from continuing operations................... 18,536,000 29,705,000 29,049,000 28,950,000
Net income.......................................... $ 18,536,000 $ 29,705,000 $ 29,049,000 $ 28,950,000
============ ============ ============ ============
Per share of common stock:
Continuing operations............................. $.54 $.80 $.85 $.85
Discontinued operations........................... -- -- -- --
------------ ------------ ------------ ------------
Net income........................................ $.54 $.80 $.85 $.85
============ ============ ============ ============
Weighted Average Number of Common Shares Used to
Compute Income Per Share............................ 34,408,000 37,102,000 34,102,000 34,102,000
Ratio of Earnings from Continuing Operations to Fixed
Charges............................................. 6.2x 7.2x 7.1x 7.1x
Consolidated Balance Sheet Data (at end of period):
Working capital..................................... $ 89,283,000 $121,048,000 $ 96,348,000 $ 92,598,000
Total assets........................................ 236,111,000 293,215,000 268,515,000 264,765,000
Total assets, less goodwill......................... 217,779,000 274,975,000 250,275,000 246,525,000
Total indebtedness.................................. 23,401,000 25,080,000 25,080,000 25,080,000
Shareholders' equity................................ 138,896,000 176,049,000 151,349,000 147,599,000
Book Value per Common Share:
Assuming Second Preferred Stock, Series I is
converted into common stock....................... $4.24 $4.95 $4.65 $4.54
Assuming Second Preferred Stock, Series I is
redeemed at $10 per share......................... $3.92 $4.70 $4.36 $4.24
</TABLE>
15
<PAGE> 18
NOTES TO SUMMARY PROFORMA CONSOLIDATED FINANCIAL INFORMATION
The following assumptions regarding the Offer were made in determining the
proforma financial
information:
a. The information assumes 3,000,000 Shares are purchased at $8.00 and
$9.25 per Share, with the purchase being financed with cash, cash
equivalents and marketable securities on hand.
b. Net income has been adjusted by the after tax effect of reduced
interest income on lower investable cash, cash equivalents and marketable
securities as required to finance the acquisition of the Shares.
c. Expenses directly related to the Offer are estimated to be $700,000
and are charged against shareholders' equity.
Common Stock Purchase Rights. On April 2, 1986, the Board of Directors of
the Company declared a dividend of one Right for each then outstanding Share.
The distribution was payable on May 2, 1986 to the stockholders of record on May
2, 1986. Once exercisable, each Right entitles the holder to acquire from the
Company one-half of a Share at an exercise price of $6.00 per one-half of a
Share, subject to adjustment (the "Purchase Price"). The description and terms
of the Rights are set forth in a Rights Agreement (as amended, the "Rights
Agreement") between the Company and American Stock Transfer & Trust Company, as
Rights Agent (the "Rights Agent"). On November 8, 1994, the Company and the
Rights Agent entered into an Amendment, dated as of November 8, 1994, to the
Rights Agreement.
Until the earlier to occur of (i) ten days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") acquired, or obtained the right to acquire, beneficial ownership of 15%
or more of the outstanding Shares or (ii) ten business days (or such later date
as may be determined by action of the Board of Directors prior to such time as
any person becomes an Acquiring Person) following the commencement, or
announcement of an intention to make, a tender offer or exchange offer by a
person (other than the Company, any wholly-owned subsidiary of the Company or
certain employee benefit plans) which, if consummated, would result in such
person becoming an Acquiring Person (the earlier of the dates being called the
"Distribution Date") for the Shares, the Rights will be evidenced by certificate
with a copy of a Summary of Rights attached thereto. The Rights Agreement
provides that, until the Distribution Date, the Rights will be transferred with
and only with the Shares. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new certificates for the Shares issued after May 2,
1986 upon transfer or new issuance of the Shares will contain a notation
incorporating the Rights Agreement by reference. In certain circumstances,
Shares issued after the Distribution Date will be accompanied by Rights. Until
the Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the certificates for Shares outstanding, even
without a copy of the Summary of Rights attached thereto, will also constitute
the transfer of the Rights associated with the Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on May 2, 1996, unless earlier redeemed by the Company as described
below. The Purchase Price payable, and the number of halves of shares of the
Common Stock or other securities or property issuable, upon exercise of the
Rights are subject to certain customary anti-dilution adjustments.
16
<PAGE> 19
In the event that after the Distribution Date the Company were acquired in
a merger or other business combination transaction or that 50% or more of its
assets or earning power were sold, proper provision is to be made so that each
holder of a Right, other than Rights that were or are beneficially owned by the
Acquiring Person (which will thereafter be void), shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction would have a market value of two times the
Purchase Price of the Right. In the event that at any time any person shall
become an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than Rights that were or are beneficially owned by the
Acquiring Person (which will thereafter be void), shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price,
that number of Shares which at the time of such transaction would have a market
value of two times the exercise price of the Right.
At any time prior to the time at which a person or group of affiliated or
associated persons has acquired beneficial ownership of 15% or more of the
outstanding Shares (the "Shares Acquisition Date"), the Board of Directors of
the Company may redeem the Rights in whole, but not in part, at a price of $.01
per Right (the "Redemption Price"). Immediately upon the action of the Board of
Directors of the Company electing to redeem the Rights, the Company shall make
announcement thereof, and upon such election, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price. In addition, the Rights Agreement permits the Board of
Directors, following the acquisition by a person or group of beneficial
ownership of 15% or more of the Shares (but before an acquisition of 50% or more
of the Shares), to exchange the Rights (other than Rights owned by such 15%
person or group), in whole or in part, for Shares, at an exchange ratio of one
Share per Right.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The provisions of the Rights Agreement may be amended by the Board of
Directors in order to cure any ambiguity or correct any defect or inconsistency
and by the Continuing Directors (as defined in the Rights Agreement), prior to
the Distribution Date, to make changes deemed to be in the best interests of the
holders of the Rights or, after the Distribution Date, to make such other
changes which do not adversely affect the interests of the holders of the Rights
(excluding the interests of any Acquiring Person and its Affiliates and
Associates).
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person who attempts to acquire the Company without the
consent of the Board of Directors. The Rights will not affect a transaction
approved by the Company prior to the existence of an Acquiring Person, because
the Rights can be redeemed before the consummation of such transaction.
Additional Information. The Company is subject to the informational
requirements of the Exchange Act and in accordance therewith files periodic
reports, proxy statements and other information with the Commission. The Company
is required to disclose in such proxy statements certain information, as of
particular dates, concerning the Company's directors and executive officers,
their remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interest of such persons in transactions
with the Company. The Company has also filed an Issuer Tender Offer Statement on
Schedule 13E-4 with the Commission which includes certain additional information
relating to the Offer.
Such material can be inspected and copied at the public reference
facilities of the Commission located at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at its regional offices located at 7 World Trade
Center, 13th Floor, New York, New York 10048, and the Northwestern Atrium
Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661. Reports, proxy
materials and other information about the Company should also be available at
the offices of the NYSE, 20 Broad Street, New York, New York 10005. Copies may
also be obtained by mail, upon payment of the Commission's customary fees, by
writing to the Commission's Public Reference Section at 450 Fifth
17
<PAGE> 20
Street, N.W., Washington, D.C. 20549. The Company's Schedule 13E-4 will not be
available at the Commission's regional offices.
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and is likely to reduce the
number of stockholders. Nonetheless, the Company anticipates that there will
still be a sufficient number of Shares outstanding and publicly traded following
the Offer to ensure a continued trading market in the Shares. Based on the
published guidelines of the NYSE, the Company does not believe that its purchase
of Shares pursuant to the Offer will cause its remaining Shares to be delisted
from such exchange.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. The Company believes that,
following the purchase of Shares pursuant to the Offer, the Shares will continue
to be "margin securities" for purposes of the Federal Reserve Board's margin
regulations.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its stockholders
and to the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's stockholders. The Company believes that its
purchase of Shares pursuant to the Offer will not result in the Shares becoming
eligible for deregistration under the Exchange Act.
13. CERTAIN LEGAL MATTERS; REGULATORY AND FOREIGN APPROVALS
The Company is not aware of any license or regulatory permit that appears
to be material to its business that might be adversely affected by its
acquisition of Shares as contemplated in the Offer or of any approval or other
action by any governmental, administrative or regulatory authority or agency,
domestic or foreign, that would be required for the Company's acquisition or
ownership of Shares as contemplated by the Offer. Should any such approval or
other action be required, the Company currently contemplates that it will seek
such approval or other action. The Company cannot predict whether it may
determine that it is required to delay the acceptance for payment of, or payment
for, Shares tendered pursuant to the Offer pending the outcome of any such
matter. There can be no assurance that any such approval or other action, if
needed, would be obtained or would be obtained without substantial conditions or
that the failure to obtain any such approval or other action might not result in
adverse consequences to the Company's business. The Company's obligations under
the Offer to accept for payment and pay for Shares are subject to certain
conditions. See Section 6.
14. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The discussion set forth below of the U.S. federal income tax consequences
of participating in the Offer is for general information only and does not
purport to consider all aspects of federal income taxation that may be relevant
to stockholders. The consequences to any particular stockholder may differ
depending upon that stockholder's own circumstances and tax position. In
addition, certain types of stockholders (including financial institutions,
tax-exempt organizations, foreign persons and persons who acquired their Shares
upon the exercise of employee stock options or otherwise as compensation) may be
subject to special rules. The discussion does not consider the effect of any
applicable foreign, state or local tax laws. EACH STOCKHOLDER IS URGED TO
CONSULT HIS TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER TO
SUCH STOCKHOLDER, INCLUDING THE APPLICATIONS OF STATE, LOCAL AND FOREIGN TAX
LAWS.
For purposes of this discussion, stockholders are assumed to hold their
Shares as capital assets (generally, property held for investment).
18
<PAGE> 21
The sale of Shares pursuant to the Offer will be a taxable transaction, the
consequences of which will be determined under the stock redemption rules of
Section 302 of the Internal Revenue Code of 1986, as amended (the "Code"). Under
those rules, the entire cash proceeds received by a stockholder for his Shares
pursuant to the Offer will be treated as a distribution taxable as a dividend
(to the extent of the Company's available "earnings and profits"), without
regard to gain or loss realized, unless the particular stockholder satisfies one
of the three tests described below. Amounts includible in income as a dividend
will not be reduced by the stockholder's basis in the Shares purchased pursuant
to the Offer and (except as described below for corporate holdings eligible for
the dividends received deduction) the stockholder's basis in those Shares will
be added to the stockholder's basis in the remaining Shares. If any of the tests
described below are satisfied, the stockholder will recognize capital gain or
loss equal to the difference between the cash proceeds received for the Shares
pursuant to the Offer and the tax basis of such Shares.
Under Section 302 the entire proceeds received from the sale of Shares
pursuant to the Offer will be treated as a distribution unless the sale (a)
results in a "complete redemption" of the stockholder's stock in the Company,
(b) is "substantially disproportionate" with respect to the stockholder or (c)
is "not essentially equivalent to a dividend" with respect to the stockholder.
In determining whether any of these tests is satisfied, a stockholder must take
into account both Shares actually owned by such stockholder and any Shares
considered as owned by such stockholder by reason of certain constructive
ownership rules set forth in Section 318 of the Code. Under these rules an
individual stockholder generally will be considered to own Shares which such
stockholder has the right to acquire by the exercise of an option or warrant and
Shares owned (and, in some cases, constructively owned) by certain members of
the stockholder's family and by certain entities (such as corporations,
partnerships, trusts and estates) in which such stockholder, a member of such
stockholder's family or a related entity has an interest. Under Section 318,
participants in the ESOP will not be considered to own Shares held by the ESOP
and attributable to participants' accounts ("ESOP Shares"). ESOP participants
may also actually own or be considered to own Shares ("Non-ESOP Shares") other
than ESOP Shares. Whether an ESOP participant satisfies one of the three tests
under Section 302 with respect to a sale of Non-ESOP Shares pursuant to the
Offer is determined without regard to ESOP Shares.
A sale of Shares pursuant to the Offer will result in a "complete
redemption" of a stockholder's stock in the Company if, pursuant to the Offer,
the Company purchases all of the Shares actually and constructively owned by the
stockholder and the stockholder holds no other stock of the Company. If the
stockholder's sale of Shares pursuant to the Offer includes all Shares actually
owned by the stockholder but the stockholder continues to constructively own
Shares held by family members, such stockholder may qualify for "complete
redemption" treatment if he is eligible to elect and properly elects waiver of
the constructive ownership rules regarding attribution from family members.
Stockholders in this position should consult their tax advisors as to the
availability of such an election.
The sale of Shares pursuant to the Offer will be "substantially
disproportionate" with respect to a stockholder if, immediately after the sale
pursuant to the Offer, such stockholder's actual and constructive percentage
ownership of Shares is less than 80% of the stockholder's actual and
constructive percentage ownership of Shares immediately before the purchase of
Shares pursuant to the Offer.
In order for the sale of Shares by a stockholder pursuant to the Offer to
qualify as "not essentially equivalent to a dividend" the stockholder must
experience a "meaningful reduction" in his proportionate interest in the Company
as a result of such sale, taking into account the constructive ownership rules.
The Internal Revenue Service has held in a published ruling that, under the
particular facts of that ruling, a very small reduction in the percentage stock
ownership of a stockholder constituted a "meaningful reduction" when the
stockholder owned an insignificant percentage of the corporation's stock before
and after a redemption and did not exercise any
19
<PAGE> 22
control over corporate affairs. Stockholders seeking to rely on this test should
consult their tax advisors as to the application of this standard to their
particular situations.
Stockholders should be aware that their ability to satisfy any of the
foregoing tests may be affected by any proration pursuant to the Offer. While
not free from doubt, it is possible that an acquisition or disposition of Shares
(including market purchases and sales) substantially contemporaneous with the
Offer will be taken into account in determining whether any of the three tests
described above is satisfied.
If none of the tests described above is satisfied with respect to a
stockholder, such stockholder's receipt of cash for Shares pursuant to the
Offer will be treated as a distribution, taxable as a dividend to the extent of
the Company's available "earnings and profits." Any cash received in excess of
such earnings and profits will be treated, first, as a non-taxable return of
capital to the extent of the stockholder's basis in all of his Shares, and,
thereafter, as a capital gain to the extent it exceeds the stockholder's basis.
The Company anticipates, but there can be no assurance, that its available
earnings and profits will be such that all amounts treated as a distribution
will be taxed as a dividend.
Any income which is treated as a dividend pursuant to the rules described
above will be eligible for the 70% dividends received deduction generally
allowable to corporate stockholders under Section 243 of the Code, subject to
applicable limitations, including those relating to "debt-financed portfolio
stock" under Section 246A of the Code and to the 45-day holding period
requirement of Section 246 of the Code. Also, since it is expected that
purchases pursuant to the Offer will not be pro rata as to all stockholders, any
amount treated as a dividend to a corporate stockholder will constitute an
"extraordinary dividend" subject to the provisions of Section 1059 of the Code
(except as may otherwise be provided in regulations yet to be promulgated by the
Treasury Department). Under Section 1059, a corporate stockholder must reduce
the tax basis in all of such stockholder's stock (but not below zero) by the
portion of any "extraordinary dividend" which is an allowable deduction under
the dividends received deduction rules, and, if such portion exceeds the
stockholder's tax basis for the stock, must treat any such excess as additional
gain on the subsequent sale or other disposition of such Shares.
In addition, corporate stockholders should be aware that the aggregation
rules might require that other dividends received by the stockholders on the
stock of the Company be treated as an additional part of the extraordinary
dividend unless the two-year holding period discussed below is satisfied.
Generally, a dividend with respect to a share of common stock is deemed
"extraordinary" when it exceeds 10% of a corporate taxpayer's adjusted basis in
that share of stock. In determining whether this threshold percentage limitation
is met, all dividends that are received by a taxpayer with respect to any share
of stock and that have ex-dividend dates within the same period of 85
consecutive days are treated as one dividend. Additionally, all dividends that
are received by a taxpayer with respect to any share of stock and that have
ex-dividend dates within the same period of 365 consecutive days are treated as
extraordinary dividends if the total of these dividends exceeds 20% of the
taxpayer's adjusted basis in that share of stock. All dividends paid on the
shares of stock held by corporate stockholders within either aggregation period
(including dividends deemed received by such stockholders upon sales pursuant to
the Offer) will be counted in determining whether such dividends amount to an
extraordinary dividend, unless the two-year holding period requirement discussed
below is satisfied. In determining whether a dividend paid is an extraordinary
dividend, a stockholder may under certain circumstances elect to use the fair
market value of the stock rather than its basis for purposes of determining
whether the 10% or 20% threshold is met. Except with respect to amounts paid in
connection with non-pro-rata redemptions (such as those pursuant to the Offer)
and also treated as dividends, no basis reduction is generally required in the
case of an otherwise extraordinary dividend received with respect to stock of a
corporation where the stock was held by the selling stockholder for more than
two years as of the earlier of the date on which the payment of such dividend is
announced, declared, or agreed to.
20
<PAGE> 23
Corporate stockholders should consult their tax advisors as to the
application of Section 1059 of the Code to the Offer.
For a discussion of certain withholding tax consequences to tendering
stockholders, see Section 3.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. EACH STOCKHOLDER IS URGED TO CONSULT SUCH STOCKHOLDER'S OWN
TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH STOCKHOLDER
(INCLUDING THE APPLICABILITY AND EFFECT OF THE CONSTRUCTIVE OWNERSHIP RULES AND
FOREIGN, STATE AND LOCAL TAX LAWS) OF THE SALE OF SHARES PURSUANT TO THE OFFER.
15. EXTENSION OF THE OFFER; TERMINATION; AMENDMENTS
The Company expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the Offer
is open by giving oral or written notice of such extension to the Depositary,
followed by a public announcement thereof no later than 9:00 a.m. New York City
time, on the next business day after the previously scheduled Expiration Time.
There can be no assurance that the Company will exercise its right to extend the
Offer. During any such extension, all Shares previously tendered and not
accepted for payment or withdrawn will remain subject to the Offer and may be
accepted for payment by the Company, except to the extent that such Shares may
be withdrawn as set forth in Section 4.
The Company also expressly reserves the right, in its sole discretion, (i)
upon the occurrence of any of the conditions specified in Section 6, (A) to
delay payment for any Shares not theretofore paid for or (B) to terminate the
Offer and not to accept for payment any Shares not theretofore accepted for
payment or (ii) at any time or from time to time, to amend the Offer in any
respect, including increasing or decreasing the number of Shares the Company may
purchase or the range of prices it may pay pursuant to the Offer.
Any such extension, delay, termination or amendment will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which the Company may choose to make any public announcement, except
as provided by applicable law (including Rule 13e-4(e)(2) of the Exchange Act),
the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
If the Company makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Company will extend the Offer to the extent required by Rules
13e-4(d)(2) and 13e-4(e)(2) under the Exchange Act, which require that the
minimum period during which an offer must remain open following material changes
in the terms of the offer or information concerning the offer (other than a
change in price, a change in dealer's soliciting fee, or a change in percentage
of securities sought) will depend upon the facts and circumstances, including
the relative materiality of such terms or information. In a published release,
the Commission has stated that in its view an offer should remain open for a
minimum of five business days from the date that notice of such a material
change is first published, sent or given. The Company confirms that its
reservation of the right to delay payment for Shares which it has accepted for
payment is limited by Rule 13e-4(f)(5) under the Exchange Act, which requires
that an issuer pay the consideration offered or return the tendered securities
promptly after the termination or withdrawal of a tender offer. If (i) the
Company increases or decreases the price to be paid for Shares, the Company
increases or decreases the Dealer Managers' soliciting fee, the Company
increases the number of Shares being sought and such increase in the number of
Shares being sought exceeds 2% of the outstanding Shares, or the Company
decreases the number of Shares being sought, and (ii) the Offer is scheduled to
expire at any time earlier than the expiration of a period ending on the tenth
business day from, and including, the date that notice of such
21
<PAGE> 24
increase or decrease is first published, sent or given, the Offer will be
extended until the expiration of such period of ten business days.
16. FEES AND EXPENSES
The Company has retained Goldman, Sachs & Co. and Oppenheimer & Co., Inc.
as the Dealer Managers in connection with the Offer. The Dealer Managers may
contact stockholders by mail, telephone, telex, telegraph and personal
interviews and may request brokers, dealers and other nominee stockholders to
forward materials relating to the Offer to beneficial owners. The Dealer
Managers will receive, in the aggregate, a fee of $.12 per Share purchased
pursuant to the Offer, subject to a minimum fee of $100,000. The Company will
also reimburse the Dealer Managers for their reasonable out-of-pocket expenses
relating to the Offer, including the reasonable fees and expenses of their
counsel. The Company has agreed to indemnify the Dealer Managers against certain
liabilities in connection with the Offer, including certain liabilities under
the federal securities laws.
The Company has retained American Stock Transfer & Trust Company as
Depositary in connection with the Offer. The Depositary will receive reasonable
and customary compensation for its services. The Company will also reimburse the
Depositary for out-of-pocket expenses, including reasonable attorneys' fees, and
has agreed to indemnify the Depositary against certain liabilities in connection
with the Offer, including certain liabilities under the federal securities laws.
The Depositary has not been retained to make solicitations or recommendations in
connection with the Offer.
The Company will not pay fees or commissions to any broker, dealer,
commercial bank, trust company or other person (other than the Dealer Managers)
for soliciting any Shares pursuant to the Offer. The Company will, however, on
request, reimburse such persons for customary handling and mailing expenses
incurred in forwarding materials in respect of the Offer to the beneficial
owners for which they act as nominees. No such broker, dealer, commercial bank
or trust company has been authorized to act as the Company's agent for purposes
of the Offer. The Company will pay (or cause to be paid) any stock transfer
taxes on its purchase of Shares, except as otherwise provided in Instruction 7
of the Letter of Transmittal.
17. MISCELLANEOUS
The Offer is not being made to, nor will the Company accept tenders from,
holders of Shares in any jurisdiction in which the Offer or its acceptance would
not comply with the securities or blue sky laws of such jurisdiction. In any
jurisdiction in which the securities or blue sky laws require the Offer to be
made by a licensed broker or dealer, the Offer is being made on the Company's
behalf by the Dealer Managers or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
INSTRUMENT SYSTEMS CORPORATION
November 10, 1994
22
<PAGE> 25
ANNEX A
Set forth below is a list of all transactions in the Shares by the Company
since September 14, 1994. All such transactions were open-market purchases on
the NYSE.
<TABLE>
<CAPTION>
TRADE DATE NUMBER OF SHARES PRICE PER SHARE
- ------------------------------------------------------------ ---------------- ---------------
<S> <C> <C>
September 27, 1994.......................................... 10,000 $ 7.625
September 30, 1994.......................................... 6,500 7.75
September 30, 1994.......................................... 1,000 7.875
October 3, 1994............................................. 500 7.625
October 4, 1994............................................. 34,600 7.75
October 5, 1994............................................. 600 7.625
October 6, 1994............................................. 4,100 7.50
October 7, 1994............................................. 1,000 7.625
October 7, 1994............................................. 8,000 7.75
October 10, 1994............................................ 7,000 7.75
October 10, 1994............................................ 1,500 7.625
October 11, 1994............................................ 1,000 7.625
October 11, 1994............................................ 9,000 7.75
October 12, 1994............................................ 10,000 7.75
October 13, 1994............................................ 200 7.75
October 13, 1994............................................ 9,800 7.875
October 14, 1994............................................ 10,000 7.875
October 17, 1994............................................ 8,500 7.875
October 18, 1994............................................ 8,500 7.75
October 19, 1994............................................ 1,400 7.75
October 19, 1994............................................ 1,500 7.625
</TABLE>
23
<PAGE> 26
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for the Shares and any other required documents
should be sent or delivered by each stockholder or his broker, dealer,
commercial bank, trust company or other nominee to the Depositary at its address
set forth below:
THE DEPOSITARY:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C>
BY MAIL, BY HAND FACSIMILE TRANSMISSION:
OR BY OVERNIGHT COURIER: (718) 234-5001
40 WALL STREET CONFIRM BY TELEPHONE:
46TH FLOOR (212) 936-5100
NEW YORK, NEW YORK 10005
</TABLE>
FOR INFORMATION TELEPHONE:
(800) 937-5449
Any questions or requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Depositary, at the telephone number and address
above, or to the Dealer Managers, at the telephone numbers and addresses below.
You may also contact your broker, dealer, commercial bank or trust company for
assistance concerning the Offer. To confirm delivery of your Shares, you are
directed to contact the Depositary.
THE DEALER MANAGERS:
<TABLE>
<S> <C>
GOLDMAN, SACHS & CO. OPPENHEIMER & CO., INC.
85 BROAD STREET ONE WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10004 NEW YORK, NEW YORK 10281
(212) 902-1000 (212) 667-7000
</TABLE>
<PAGE> 1
LETTER OF TRANSMITTAL
TO ACCOMPANY SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
INSTRUMENT SYSTEMS CORPORATION
TENDERED PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 10, 1994
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 9,
1994 UNLESS THE OFFER IS EXTENDED.
To: American Stock Transfer & Trust Company, Depositary
<TABLE>
<S> <C>
By Mail, By Hand or Facsimile Transmission
By Overnight Courier: (718) 234-5001
40 Wall Street Confirm by Telephone:
46th Floor (212) 936-5100
New York, New York 10005
</TABLE>
For Information Telephone:
(800) 937-5449
--------------
<PAGE> 2
<TABLE>
DESCRIPTION OF SHARES TENDERED
(See Instructions 3 and 4)
<CAPTION>
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY CERTIFICATE(S) TENDERED
AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH SIGNED LIST IF NECESSARY)
------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES
CERTIFICATE REPRESENTED BY NUMBER OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
---------------------------------------------------------------
<S> <C> <C> <C>
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
TOTAL SHARES TENDERED
</TABLE>
Indicate in this box the order (by certificate number) in which Shares are to
be purchased in the event of proration.*** (Attach additional signed list if
necessary.)
See Instruction 10.
1st: ; 2nd: ; 3rd: ; 4th: ; 5th:
* Need not be completed if Shares are delivered by book-entry transfer.
** If you desire to tender fewer than all Shares evidenced by any
certificates listed above, please indicate in this column the number of
Shares you wish to tender. Otherwise, all Shares evidenced by such
certificates will be deemed to have been tendered. See Instruction 4.
*** If you do not designate an order, then in the event less than all shares
tendered are purchased due to proration, Shares will be selected for
purchase by the Depositary.
<PAGE> 3
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN THOSE SHOWN ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE OF THOSE
LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This Letter of Transmittal is to be used only (a) if certificates for
Shares (as defined below) are to be forwarded with it (or such certificates will
be delivered pursuant to a Notice of Guaranteed Delivery previously sent to the
Depositary) or (b) if a tender of Shares is to be made by book-entry transfer to
the account maintained by the Depositary at The Depository Trust Company
("DTC"), Midwest Securities Trust Company ("MSTC") or Philadelphia Depository
Trust Company ("PDTC") (collectively, the "Book-Entry Transfer Facilities")
pursuant to Section 3 of the Offer to Purchase.
Stockholders whose certificates are not immediately available or who cannot
deliver their certificates for Shares and all other required documents to the
Depositary before the Expiration Time (as defined in the Offer to Purchase) or
whose Shares cannot be delivered on a timely basis pursuant to the procedure for
book-entry transfer must tender their Shares according to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. See
Instruction 2. Delivery of the Letter of Transmittal and any other required
documents to one of the Book-Entry Transfer Facilities does not constitute
delivery to the Depositary.
/ /CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH ONE OF THE BOOK-ENTRY
TRANSFER FACILITIES, AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: .............................................
Check Box of Applicable Book-Entry Transfer Facility:
/ / DTC / / MSTC / / PDTC
Account Number: ............................................................
Transaction Code Number: ...................................................
/ /CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY, AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): ...........................................
Date of Execution of Notice of Guaranteed Delivery:.........................
Name of Institution Which Guaranteed Delivery:..............................
Check Box of Applicable Book-Entry Transfer Facility and Give Account Number
if Delivered by Book-Entry Transfer:
/ / DTC / / MSTC / / PDTC
Account Number: ............................................................
Transaction Code Number: ...................................................
<PAGE> 4
ODD LOTS
(See Instruction 8)
To be completed ONLY if Shares are being tendered by or on behalf of a
person owning beneficially, as of the close of business on November 7, 1994, an
aggregate of fewer than 100 Shares.
The undersigned either (check one box):
/ /was the beneficial owner as of the close of business on November 7, 1994
and will continue to be the beneficial owner as of the Expiration Time,
of an aggregate of fewer than 100 Shares, all of which are being
tendered; or
/ /is a broker, dealer, commercial bank, trust company or other nominee
which:
(a) is tendering, for the beneficial owners thereof, Shares with
respect to which it is the record holder; and
(b) believes, based upon representations made to it by such beneficial
owners, that each such person was the beneficial owner as of the
close of business on November 7, 1994 and each such person will
continue to be the beneficial owner as of the Expiration Time, of
an aggregate of fewer than 100 Shares and is tendering all of such
Shares.
In addition, the undersigned is tendering Shares (check one box):
/ /at the Purchase Price (as defined below), as the same shall be
determined by the Company in accordance with the terms of the Offer
(persons checking this box need not indicate the price per Share below);
or
/ /at the price per Share indicated under "Price (in Dollars) Per Share at
Which Shares Are Being Tendered" in this Letter of Transmittal.
<PAGE> 5
Ladies and Gentlemen:
The undersigned hereby tenders to Instrument Systems Corporation, a
Delaware corporation (the "Company"), the above-described shares of the
Company's common stock, par value $.25 per share (the "Shares"), including the
associated Common Stock Purchase Rights (the "Rights"), at the price per Share
indicated in this Letter of Transmittal, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Company's Offer to Purchase
dated November 10, 1994, receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which together constitute the "Offer"). Unless the Rights
are redeemed by the Company, a tender of Shares will also constitute a tender of
the associated Rights. Unless the context requires otherwise, all references
herein to Shares shall include the associated Rights.
Subject to, and effective on acceptance for payment of the Shares tendered
hereby in accordance with, the terms of the Offer (including, if the Offer is
extended or amended, the terms or conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to all Shares tendered
hereby or orders the registration of such Shares tendered by book-entry transfer
that are purchased pursuant to the Offer to or upon the order of the Company and
hereby irrevocably constitutes and appoints the Depositary as attorney-in-fact
of the undersigned with respect to such Shares, with full power of substitution
(such power of attorney being an irrevocable power coupled with interest), to:
(a) deliver certificates for such Shares, or transfer ownership of
such Shares on the account books maintained by a Book-Entry Transfer
Facility, together in either such case with all accompanying evidences of
transfer and authenticity, to or upon the order of the Company, upon
receipt by the Depositary, as the undersigned's agent, of the Purchase
Price (as defined below) with respect to such Shares;
(b) present certificates for such Shares for cancellation and transfer
on the Company's books; and
(c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, subject to the next paragraph, all in
accordance with the terms of the Offer.
The undersigned hereby represents and warrants that:
(a) the undersigned understands that tenders of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and
in the Instructions hereto will constitute the undersigned's acceptance of
the terms and conditions of the Offer, including the undersigned's
representation and warranty that (i) the undersigned has a "net long
position" in Shares or "equivalent securities" at least equal to the Shares
tendered within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended, and (ii) such tender of Shares complies
with Rule 14e-4;
(b) when and to the extent the Company accepts the Shares for
purchase, the Company will acquire good, marketable and unencumbered title
to them, free and clear of all security interests, liens, charges,
encumbrances, conditional sales agreements or other obligations relating to
their sale or transfer, and not subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any
additional documents the Depositary or the Company deems necessary or
desirable to complete the assignment, transfer and purchase of the Shares
tendered hereby; and
(d) the undersigned has read and agrees to all of the terms of the
Offer.
<PAGE> 6
The names and addresses of the registered holders should be printed, if
they are not already printed above, exactly as they appear on the certificates
representing Shares tendered hereby. The certificate numbers, the number of
Shares represented by such certificates, the number of Shares that the
undersigned wishes to tender and the purchase price at which such Shares are
being tendered should be indicated in the appropriate boxes on this Letter of
Transmittal.
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single per Share price (not
greater than $9.25 nor less than $8.00 per Share) that it will pay for Shares
properly tendered and not withdrawn pursuant to the Offer (the "Purchase
Price"), taking into account the number of shares so tendered and the prices
specified by tendering stockholders. The undersigned understands that the
Company will select the lowest Purchase Price which will allow it to buy
3,000,000 Shares (or such lesser number of Shares as are properly tendered and
not withdrawn at prices not greater than $9.25 nor less than $8.00 per Share)
pursuant to the Offer, or such greater number of Shares as the Company may elect
to purchase. The undersigned understands that all Shares properly tendered and
not withdrawn at prices at or below the Purchase Price will be purchased at the
Purchase Price, net to the seller in cash, upon the terms and subject to the
conditions of the Offer, including its proration provisions, and that the
Company will return all other Shares, including Shares tendered and not
withdrawn at prices greater than the Purchase Price and Shares not purchased
because of proration.
The undersigned recognizes that under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may not be required to purchase any of the Shares tendered hereby or may accept
for payment fewer than all of the Shares tendered hereby. In either event, the
undersigned understands that certificate(s) for any Shares not tendered or not
purchased will be returned to the undersigned at the address indicated above,
unless otherwise indicated under the "Special Payment Instructions" or "Special
Delivery Instructions" below. The undersigned recognizes that the Company has no
obligation, pursuant to the Special Payment Instructions, to transfer any
certificate for Shares from the name of their registered holder, or to order the
registration or transfer of such Shares tendered by book-entry transfer, if the
Company purchases none of the Shares represented by such certificate or tendered
by such book-entry transfer.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
The check for the Purchase Price for such of the tendered Shares as are
purchased will be issued to the order of the undersigned and mailed to the
address indicated above unless otherwise indicated under the Special Payment
Instructions or the Special Delivery Instructions below.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligations of the undersigned under this Letter of Transmittal shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
<PAGE> 7
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED
IF SHARES ARE BEING TENDERED AT MORE
THAN ONE PRICE, USE A SEPARATE
LETTER OF TRANSMITTAL FOR EACH PRICE SPECIFIED.
(SEE INSTRUCTION 5.)
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED, OR IF
NO BOX IS CHECKED (EXCEPT AS OTHERWISE PROVIDED
HEREIN), THERE IS NO PROPER TENDER OF SHARES.
<TABLE>
<S> <C>
/ / $8.000 / / $8.750
/ / $8.125 / / $8.875
/ / $8.250 / / $9.000
/ / $8.375 / / $9.125
/ / $8.500 / / $9.250
/ / $8.625
</TABLE>
<PAGE> 8
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 9)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or any check for the Purchase Price of Shares purchased are to
be issued in the name of and sent to someone other than the undersigned.
Issue / / Check / / Certificates to:
Name: ........................................................................
Please Print
Address: .....................................................................
.............................................................................
.............................................................................
.............................................................................
(Include Zip Code)
.............................................................................
(Tax Identification or
Social Security Number)
/ / Credit Shares tendered by book-entry transfer and not purchased to the
account set forth below:
Name of account party: .......................................................
Account number: ..............................................................
Check box of applicable Book-Entry Transfer Facility:
DTC / / MSTC / / PDTC / /
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, AND 9)
To be completed ONLY if certificates for Shares not tendered or not
purchased issued in the name of the undersigned and/or any check for the
Purchase Price of Shares purchased issued in the name of undersigned are to be
sent to someone other than the undersigned or to the undersigned at an address
other than that shown above.
Deliver / / Check / / Certificates to:
Name: ........................................................................
Please Print
Address: .....................................................................
.............................................................................
.............................................................................
.............................................................................
(Include Zip Code)
<PAGE> 9
STOCKHOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 1 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
Must be signed by the registered holder(s) exactly as name(s) appear(s) on
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificate(s) and documents transmitted with
this Letter of Transmittal. If signature is by attorney-in-fact, executor,
administrator, trustee, guardian, officer of a corporation or another acting in
a fiduciary or representative capacity, please set forth the full title. See
Instruction 6.
...............................................................................
...............................................................................
(Signature(s))
Dated: .................................................................. , 1994
Name(s): .......................................................................
...............................................................................
(Please Print)
Capacity (full title): .........................................................
...............................................................................
Address: .......................................................................
...............................................................................
...............................................................................
...............................................................................
Area Code and Telephone Number: ................................................
Tax Identification or
Social Security Number(s): .....................................................
Dated: .........................................................................
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6)
Authorized Signature: ..........................................................
Name: ..........................................................................
(Please Print)
Title: .........................................................................
Name of Firm: ..................................................................
Address: .......................................................................
...............................................................................
...............................................................................
...............................................................................
Area Code and Telephone Number: ................................................
Dated: .................................................................. , 1994
Tax Identification or Social Security Number(s): ...............................
<PAGE> 10
INSTRUCTIONS
FORMING PART OF THE TERMS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required if either:
(a) this Letter of Transmittal is signed by the registered holder of
the Shares (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) exactly as the name of
the registered holder appears on the certificate tendered with this Letter
of Transmittal unless such holder has completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions"; or
(b) such Shares are tendered for the account of a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office, branch or agency in the United States (each such
entity, an "Eligible Institution"). See Instruction 6.
In all other cases, an Eligible Institution must guarantee all signatures
on this Letter of Transmittal. See Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be used only if certificates are
delivered with it to the Depositary (or such certificates will be delivered
pursuant to a Notice of Guaranteed Delivery previously sent to the Depositary)
or if tenders are to be made pursuant to the procedure for tender by book-entry
transfer set forth in Section 3 of the Offer to Purchase. Certificates for all
physically tendered Shares, or confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of Shares tendered
electronically, together in each case with a properly completed and duly
executed Letter of Transmittal or duly executed facsimile of it, and any other
documents required by this Letter of Transmittal, should be mailed or delivered
to the Depositary at the appropriate address set forth herein and must be
delivered to the Depositary on or before the Expiration Time (as defined in the
Offer to Purchase). Delivery of documents to one of the Book-Entry Transfer
Facilities does not constitute delivery to the Depositary.
Stockholders whose certificates are not immediately available or who cannot
deliver Shares and all other required documents to the Depositary before the
Expiration Time, or whose Shares cannot be delivered on a timely basis pursuant
to the procedure for book-entry transfer, may tender their Shares by or through
any Eligible Institution by properly completing (including the price at which
the Shares are being tendered) and duly executing and delivering a Notice of
Guaranteed Delivery (or a facsimile of it) and by otherwise complying with the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
Pursuant to such procedure, the certificates for all physically tendered Shares
or book-entry confirmation, as the case may be, as well as a properly completed
Letter of Transmittal and all other documents required by this Letter of
Transmittal, must be received by the Depositary within five New York Stock
Exchange trading days after receipt by the Depositary of such Notice of
Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in such Notice. For
Shares to be properly tendered pursuant to the guaranteed delivery procedure,
the Depositary must receive the Notice of Guaranteed Delivery before the
Expiration Time.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
<PAGE> 11
The Company will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares. All tendering stockholders,
by execution of this Letter of Transmittal (or a facsimile of it), waive any
right to receive any notice of the acceptance of their tender.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Shares Tendered" is inadequate, the certificate numbers and/or
the number of Shares should be listed on a separate signed schedule and attached
to this Letter of Transmittal.
4. PARTIAL TENDERS AND UNPURCHASED SHARES. (Not applicable to stockholders
who tender by book-entry transfer.) If fewer than all of the Shares evidenced by
any certificate are to be tendered, fill in the number of Shares which are to be
tendered in the column entitled "Number of Shares Tendered." In such case, if
any tendered Shares are purchased, a new certificate for the remainder of the
Shares evidenced by the old certificate(s) will be issued and sent to the
registered holder(s), unless otherwise specified in the "Special Payment
Instructions" or "Special Delivery Instructions" box on this Letter of
Transmittal, as soon as practicable after the Expiration Time. All Shares
represented by the certificate(s) listed and delivered to the Depositary are
deemed to have been tendered unless otherwise indicated.
5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. For Shares to
be properly tendered, the stockholder must check the box indicating the price
per Share at which he is tendering Shares under "Price (In Dollars) Per Share at
Which Shares Are Being Tendered" on this Letter of Transmittal; provided,
however, that an Odd Lot Owner (as defined in Instruction 8) may check the box
above in the section entitled "Odd Lots" indicating that he is tendering all of
his Shares at the Purchase Price. ONLY ONE BOX MAY BE CHECKED. IF MORE THAN ONE
BOX IS CHECKED, OR IF NO BOX IS CHECKED (EXCEPT AS OTHERWISE PROVIDED HEREIN),
THERE IS NO PROPER TENDER OF SHARES. A stockholder wishing to tender portions of
his Share holdings at different prices must complete a separate Letter of
Transmittal for each price at which he wishes to tender each such portion of his
Shares. The same Shares cannot be tendered (unless previously properly withdrawn
as provided in Section 4 of the Offer to Purchase) at more than one price.
6. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS, AND ENDORSEMENTS.
(a) If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the certificate without
any change whatsoever.
(b) If the Shares are registered in the names of two or more joint
holders, each such holder must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles of it) as there are
different registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered
holder(s) of the Shares listed and transmitted hereby, no endorsements of
certificate(s) representing such Shares or separate stock powers are
required unless payment is to be made, or the certificate(s) for Shares not
tendered or not purchased are to be issued, to a person other than the
registered holder(s). If this Letter of Transmittal is signed by a person
other than the registered holder(s) of the certificate(s) listed, or if
payment is to be made or certificate(s) for Shares not tendered or not
purchased are to be issued to a person other than the registered holder(s),
the certificate(s) must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered
holder(s) appear(s) on the certificate(s), and any signature(s) on such
certificate(s) or stock power(s) must be guaranteed by an Eligible
Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificates or stock powers
are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting
<PAGE> 12
in a fiduciary or representative capacity for the registered holder(s) of
the certificates listed, such persons should so indicate when signing and
must submit proper evidence satisfactory to the Company of their authority
so to act.
7. STOCK TRANSFER TAXES. Except as provided in this Instruction, no stock
transfer tax stamps or funds to cover such stamps need accompany this Letter of
Transmittal. The Company will pay or cause to be paid any stock transfer taxes
payable on the transfer to it of Shares purchased pursuant to the Offer. If,
however:
(a) payment of the Purchase Price is to be made to any person other
than the registered holder(s);
(b) Shares not tendered or not accepted for purchase are to be
registered in the name of any person other than the registered holder(s);
or
(c) tendered certificates are registered in the name of any person
other than the person(s) signing this Letter of Transmittal;
then the Depositary will deduct from the Purchase Price the amount of any stock
transfer taxes (whether imposed on the registered holder, such other person or
otherwise) payable on account of the transfer to such person unless satisfactory
evidence of the payment of such taxes, or an exemption from them, is submitted.
8. ODD LOTS. As described in Section 2 of the Offer to Purchase, if the
Company is to purchase less than all Shares properly tendered and not withdrawn
before the Expiration Time, the Shares purchased first will consist of all
Shares properly tendered and not withdrawn by any stockholder who owned
beneficially as of the close of business on November 7, 1994 and who continues
to own as of the Expiration Time, an aggregate of fewer than 100 Shares and who
tenders all of his Shares at or below the Purchase Price (an "Odd Lot Owner").
This preference will not be available unless the box captioned "Odd Lots" is
completed.
9. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If certificate(s) for Shares
not tendered or not purchased and/or check(s) are to be issued in the name of a
person other than the signer of the Letter of Transmittal or if such
certificate(s) and/or check(s) are to be sent to someone other than the signer
of the Letter of Transmittal or to the signer at a different address, the boxes
captioned "Special Payment Instructions" and/or "Special Delivery Instructions"
on this Letter of Transmittal should be completed and signatures must be
guaranteed as described in Instructions 1 and 6.
10. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 1 of
the Offer to Purchase, stockholders may designate the order in which their
Shares are to be purchased in the event of proration. The order of purchase may
have an effect on the federal income tax classification of any gain or loss on
the Shares purchased. See Section 1 of the Offer to Purchase.
11. IRREGULARITIES. The Company will determine, in its sole discretion,
all questions as to the validity, form, eligibility (including time of receipt)
and acceptance for payment of any tender of Shares, and its determination shall
be final and binding on all parties. The Company reserves the absolute right to
reject any or all tenders determined by it not to be in proper form or the
acceptance of which or payment for which may, in the opinion of the Company's
counsel, be unlawful. The Company also reserves the absolute right to waive any
of the conditions of the Offer or any defects or irregularities in the tender of
any particular Shares, and the Company's interpretation of the terms of the
Offer (including these instructions) will be final and binding on all parties.
No tender of Shares will be deemed to be properly made until all defects and
irregularities have been cured or waived. Unless waived, any defects or
irregularities in connection with tenders must be cured within such time as the
Company shall determine. None of the Company, the Dealer Manager, the Depositary
nor any other person is or will be obligated to give notice of any defects or
irregularities in tenders, nor shall any of them incur any liability for failure
to give any such notice.
<PAGE> 13
12. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, the Notice of Guaranteed Delivery, and this Letter of
Transmittal may be obtained from the Dealer Managers or the Depositary at their
addresses and telephone numbers set forth at the end of this Letter of
Transmittal or from your broker, dealer, commercial bank or trust company.
13. SUBSTITUTE FORM W-9 AND FORM W-8. Stockholders other than corporations
and certain foreign individuals may be subject to backup federal income tax
withholding. Each such tendering stockholder or other payee who does not
otherwise establish to the satisfaction of the Depositary an exemption from
backup federal income tax withholding is required to provide the Depositary with
a correct taxpayer identification number ("TIN") on Substitute Form W-9 which is
provided as a part of this Letter of Transmittal, and to indicate that the
stockholder or other payee is not subject to backup withholding by checking the
box in Part 2 of the form. For an individual, his TIN will generally be his
social security number. Failure to provide the information on the form or to
check the box in Part 2 of the form may subject the tendering stockholder or
other payee to 31% backup federal income tax withholding on the payments made to
the stockholder or other payee with respect to Shares purchased pursuant to the
Offer and to a $50.00 penalty imposed by the Internal Revenue Service. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained. The
box in Part 3 of the form may be checked if the tendering stockholder or other
payee has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked and the Depositary
is not provided with a TIN within sixty (60) days, the Depositary will withhold
31% on all such payments thereafter until a TIN is provided to the Depositary.
Stockholders who are foreign individuals should submit Form W-8 to certify that
they are exempt from backup withholding, unless Instruction 14 applies. Form W-8
may be obtained from the Depositary. For additional information concerning
Substitute Form W-9, see the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9."
14. WITHHOLDING ON FOREIGN STOCKHOLDERS. The Depositary will withhold
federal income taxes equal to 30% of the gross payments payable to a foreign
stockholder or his agent unless the Depositary determines that a reduced rate of
withholding or an exemption from withholding is applicable. (Exemption from
backup withholding does not exempt a foreign stockholder from the 30%
withholding.) For this purpose, a foreign stockholder is any stockholder that is
not (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is subject to United States federal income taxation
regardless of the source of such income. The Depositary will determine a
stockholder's status as a foreign stockholder and eligibility for a reduced rate
of, or an exemption from, withholding by reference to the stockholder's address
and to any outstanding certificates or statements concerning eligibility for a
reduced rate of, or exemption from, withholding unless facts and circumstances
indicate that reliance is not warranted. In order to obtain an exemption from
withholding on the grounds that the gross proceeds paid pursuant to the Offer
are effectively connected with the conduct of a trade or business within the
United States, a foreign stockholder must deliver to the Depositary a properly
executed Form 4224. Such form can be obtained from the Depositary or the Dealer
Manager. A foreign stockholder who has not previously submitted the appropriate
certificates or statements with respect to a reduced rate of, or exemption from,
withholding for which such stockholder may be eligible should consider doing so
in order to avoid overwithholding. A foreign stockholder may be eligible to
obtain a refund of tax withheld if such stockholder meets one of the three tests
for capital gain or loss treatment described in Section 14 of the Offer to
Purchase or is otherwise able to establish that no tax or reduced amount of tax
was due. Foreign stockholders are urged to consult their tax advisors regarding
the application of federal income tax withholding, including eligibility for a
withholding tax reduction or exemption and the refund procedures.
<PAGE> 14
15. EMPLOYEE STOCK OWNERSHIP PLAN. Participants in the Company's Employee
Stock Ownership Plan may not use this Letter of Transmittal to direct the tender
of Shares attributed to a participant's account, but must use the separate
instruction form sent to them.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE OF IT
(TOGETHER WITH CERTIFICATE(S) FOR SHARES OR CONFIRMATION OF BOOK-ENTRY TRANSFER
AND ALL OTHER REQUIRED DOCUMENTS) OR, IF APPLICABLE, THE NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY BEFORE THE EXPIRATION TIME.
<PAGE> 15
IMPORTANT TAX INFORMATION
Under United States federal income tax law, a stockholder whose tendered
Shares are accepted for payment generally is required by law to provide the
Depositary with such stockholder's correct TIN on Substitute Form W-9 below. If
the Depositary is not provided with the correct TIN, the Internal Revenue
Service may subject the stockholder or other payee to a $50 penalty. In
addition, payments that are made to such stockholder or other payee with respect
to Shares purchased pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to the individual's exempt status. A Form W-8 can be obtained
from the Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the stockholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payment made to a stockholder or other
payee with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of the stockholder's correct TIN by completing
the form below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such stockholder is awaiting a TIN) and that:
(a) the stockholder is exempt from backup withholding;
(b) the stockholder has not been notified by the Internal Revenue
Service that the stockholder is subject to backup withholding as a result
of failure to report all interest or dividends; or
(c) the Internal Revenue Service has notified the stockholder that the
stockholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the registered holder of
the Shares. If the Shares are in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
<PAGE> 16
<TABLE>
PAYER'S NAME
<S> <C> <C>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX Social Security Number
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING OR ...............................
DEPARTMENT OF THE TREASURY BELOW Taxpayer Identification Number
INTERNAL REVENUE SERVICE
----------------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART 2 -- Check the box if you are NOT subject to backup withholding under the
IDENTIFICATION NUMBER (TIN) provisions of Section 3406(a)(1)(C) of the Internal Revenue Code because (1)
you are exempt from backup withholding, or (2) you have not been notified by
the Internal Revenue Service that you are subject to backup withholding as a
result of failure to report all interest or dividends, or (3) the Internal
Revenue Service has notified you that you are no longer subject to backup
withholding. / /
----------------------------------------------------------------------------------
CERTIFICATION -- UNDER THE PENALTIES PART 3
OF PERJURY, I CERTIFY THAT THE INFOR-
MATION PROVIDED ON THIS FORM IS TRUE, Awaiting TIN / /
CORRECT AND COMPLETE.
Signature .............. Date ......
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECK THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within sixty (60) days, 31%
of all reportable payments made to me thereafter will be withheld until I
provide a number.
..................................... .....................................
Signature Date
<PAGE> 17
FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL WILL BE ACCEPTED FROM
ELIGIBLE INSTITUTIONS. THE LETTER OF TRANSMITTAL AND CERTIFICATES FOR SHARES AND
ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH TENDERING
STOCKHOLDER OR HIS BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER
NOMINEE TO THE DEPOSITARY AT ITS ADDRESS SET FORTH BELOW.
The Depositary: American Stock Transfer & Trust Company
<TABLE>
<S> <C>
By Mail, By Hand or Facsimile Transmission:
By Overnight Courier: (718) 234-5001
40 Wall Street Confirm by Telephone:
46th Floor (212) 936-5100
New York, New York 10005
</TABLE>
For Information Telephone:
(800) 937-5449
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE
OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL OR THE NOTICE OF GUARANTEED
DELIVERY MAY BE DIRECTED TO THE DEPOSITARY AT THE TELEPHONE NUMBERS AND
ADDRESSES SET FORTH ABOVE OR TO THE DEALER MANAGERS AT THE TELEPHONE NUMBER AND
ADDRESS SET FORTH BELOW. A TENDERING STOCKHOLDER MAY ALSO CONTACT HIS BROKER,
DEALER, COMMERCIAL BANK OR TRUST COMPANY FOR ASSISTANCE CONCERNING THE OFFER. IN
ORDER TO CONFIRM THE DELIVERY OF HIS SHARES, A TENDERING STOCKHOLDER SHOULD
CONTACT THE DEPOSITARY.
The Dealer Managers:
<TABLE>
<S> <C>
Goldman, Sachs & Co. Oppenheimer & Co., Inc.
85 Broad Street One World Financial Center
New York, New York 10004 New York, New York 10281
(212) 902-1000 (212) 667-7000
</TABLE>
November 10, 1994
<PAGE> 1
INSTRUMENT SYSTEMS CORPORATION
OFFER TO PURCHASE FOR CASH
3,000,000 SHARES
OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK
PURCHASE RIGHTS) AT A PURCHASE PRICE
NOT GREATER THAN $9.25 NOR LESS THAN $8.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 9, 1994,
UNLESS THE OFFER IS EXTENDED.
November 10, 1994
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Instrument Systems Corporation, a Delaware corporation (the "Company"), has
appointed us to act as Dealer Managers in connection with its offer to purchase
3,000,000 shares of its Common Stock, par value $.25 per share (the "Shares"),
including the associated Common Stock Purchase Rights (the "Rights") at prices,
net to the seller in cash, not greater than $9.25 nor less than $8.00 per Share,
specified by tendering stockholders, upon the terms and subject to the
conditions set forth in its Offer to Purchase, dated November 10, 1994, and the
related Letter of Transmittal (which together constitute the "Offer"). Unless
the Rights are redeemed by the Company, a tender of Shares will also constitute
a tender of the associated Rights. Unless the context requires otherwise, all
references herein to Shares include the associated Rights.
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share price (not greater than $9.25 nor less than
$8.00 per Share) that it will pay for Shares properly tendered and not withdrawn
pursuant to the Offer (the "Purchase Price"), taking into account the number of
Shares so tendered and the prices specified by tendering stockholders. The
Company will select the lowest Purchase Price which will allow it to purchase
3,000,000 Shares (or such lesser number of Shares as are properly tendered and
not withdrawn at prices not greater than $9.25 nor less than $8.00 per Share)
pursuant to the Offer. All Shares properly tendered and not withdrawn at prices
at or below the Purchase Price will be purchased at the Purchase Price, net to
the seller in cash, upon the terms and subject to the conditions of the Offer,
including the proration terms thereof. See Section 1 of the Offer to Purchase.
If, prior to the Expiration Time (as defined in the Offer to Purchase),
more than 3,000,000 Shares are properly tendered and not withdrawn at or below
the Purchase Price, the Company will, upon the terms and subject to the
conditions of the Offer, buy Shares first from all Odd Lot Owners (as defined in
the Offer to Purchase) who properly tender and do not withdraw all their Shares
at or below the Purchase Price and then on a pro rata basis from all other
stockholders whose Shares are properly tendered and not withdrawn at or below
the Purchase Price.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6 OF THE OFFER TO PURCHASE.
<PAGE> 2
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase, dated November 10, 1994;
2. Letter to Clients that may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
3. Letter dated November 10, 1994 from Harvey R. Blau, Chairman of the
Board of the Company, and Robert Balemian, President of the Company, to
stockholders of the Company;
4. Letter of Transmittal for your use and for the information of your
clients (together with accompanying Substitute Form W-9 and guidelines);
and
5. Notice of Guaranteed Delivery to be used to accept the Offer if the
Share certificates and all other required documents cannot be delivered to
the Depositary by the Expiration Time or if the procedure for book-entry
transfer cannot be completed on a timely basis.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, DECEMBER 9, 1994, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or any person
for soliciting tenders of Shares pursuant to the Offer other than fees paid to
the Dealer Managers or the Depositary as described in the Offer to Purchase. The
Company will, however, upon request, reimburse you for customary mailing and
handling expenses incurred by you in forwarding any of the enclosed materials to
the beneficial owners of Shares held by you as a nominee or in a fiduciary
capacity. The Company will pay or cause to be paid any stock transfer taxes
applicable to its purchase of Shares, except as otherwise provided in
Instruction 7 of the Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either certificate(s) representing the tendered Shares or
confirmation of their book-entry transfer all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
As described in Section 3, "Procedure for Tendering Shares," of the Offer
to Purchase, tenders may be made without the concurrent deposit of stock
certificates or concurrent compliance with the procedure for book-entry
transfer, if such tenders are made by or through a broker or dealer which is a
member firm of a registered national securities exchange, or a member of the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office, branch or agency in the United States. Certificates
for Shares so tendered (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities described in the Offer to Purchase), together with a properly
completed and duly executed Letter of Transmittal and any other documents
required by the Letter of Transmittal, must be received by the Depositary within
five New York Stock Exchange trading days after timely receipt by the Depositary
of a properly completed and duly executed Notice of Guaranteed Delivery.
Any inquiries you may have with respect to the Offer should be addressed to
Goldman, Sachs & Co. or Oppenheimer & Co., Inc. at their respective addresses
and telephone numbers set forth on the back cover page of the Offer to Purchase.
<PAGE> 3
Additional copies of the enclosed material may be obtained from Goldman,
Sachs & Co., telephone: (212) 902-1000, or Oppenheimer & Co., Inc., telephone:
(212) 667-7000.
Very truly yours,
Goldman, Sachs & Co. Oppenheimer & Co., Inc.
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR ANY OF ITS AFFILIATES, THE
DEALER MANAGERS OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE
ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
<PAGE> 1
INSTRUMENT SYSTEMS CORPORATION
Offer to Purchase for Cash
3,000,000 Shares
of its Common Stock
(Including the Associated Common Stock
Purchase Rights) at a Purchase Price Not Greater
than $9.25 Nor Less than $8.00 Per Share
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated November
10, 1994 and the related Letter of Transmittal (which together constitute the
"Offer") in connection with the Offer by Instrument Systems Corporation, a
Delaware corporation (the "Company"), to purchase 3,000,000 shares of its common
stock, par value $.25 per share (the "Shares"), including the associated Common
Stock Purchase Rights (the "Rights"), at prices net to the seller in cash, not
greater than $9.25 nor less than $8.00 per Share, specified by tendering
stockholders, on the terms and subject to the conditions of the Offer. Unless
the Rights are redeemed by the Company, a tender of Shares will also constitute
a tender of the associated Rights. Unless the context requires otherwise, all
references herein to Shares shall include the associated Rights.
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share price (not greater than $9.25 nor less than
$8.00 per Share) that it will pay for the Shares properly tendered and not
withdrawn pursuant to the Offer (the "Purchase Price"), taking into account the
number of Shares so tendered and the prices specified by tendering stockholders.
The Company will select the lowest Purchase Price which will allow it to
purchase 3,000,000 Shares (or such lesser number of Shares as are properly
tendered and not withdrawn at prices not greater than $9.25 nor less than $8.00
per Share) pursuant to the Offer. All Shares properly tendered and not withdrawn
at prices at or below the Purchase Price will be purchased at the Purchase
Price, net to the seller in cash, upon the terms and subject to the conditions
of the Offer, including the proration terms thereof. The Company will return all
other Shares, including Shares tendered at prices greater than the Purchase
Price and Shares not purchased because of proration. See Section 1 of the Offer
to Purchase.
If, prior to the Expiration Time (as defined in the Offer to Purchase),
more than 3,000,000 Shares (or such greater number of Shares as the Company may
elect to purchase) are properly tendered and not withdrawn, the Company will,
upon the terms and subject to the conditions of the Offer, accept Shares for
purchase first from Odd Lot Owners (as defined in the Offer to Purchase) who
properly tender their Shares at or below the Purchase Price and then on a pro
rata basis from all other stockholders whose Shares are properly tendered at or
below the Purchase Price and not withdrawn. See Section 2 of the Offer to
Purchase.
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. AS SUCH, WE
ARE THE ONLY ONES WHO CAN TENDER YOUR SHARES, AND THEN ONLY PURSUANT TO YOUR
INSTRUCTIONS. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION
ONLY; YOU CANNOT USE IT TO TENDER SHARES WE HOLD FOR YOUR ACCOUNT.
Please instruct us as to whether you wish us to tender any or all of the
Shares we hold for your account on the terms and subject to the conditions of
the Offer.
We call your attention to the following:
1. You may tender Shares at prices, net to you in cash, not greater
than $9.25 nor less than $8.00 per Share, as indicated in the attached
instruction form.
2. You may designate the priority in which your Shares will be
purchased in the event of proration.
3. The Offer is not conditioned upon any minimum number of Shares
being tendered.
<PAGE> 2
4. The Offer, proration period and withdrawal rights will expire at
12:00 Midnight, New York City time, on Friday, December 9, 1994, unless the
Company extends the Offer.
5. The Offer is for 3,000,000 Shares, constituting approximately 9% of
the Shares outstanding as of November 10, 1994.
6. Tendering stockholders will not be obligated to pay any brokerage
commissions, solicitation fees or, subject to Instruction 7 of the Letter
of Transmittal, stock transfer taxes on the Company's purchase of Shares
pursuant to the Offer.
7. If you owned beneficially as of the close of business on November
7, 1994 and will continue to own beneficially as of the Expiration Time an
aggregate of fewer than 100 Shares (not including Shares held in the
Company's Employee Stock Ownership Plan) and you instruct us to tender on
your behalf all such Shares at or below the Purchase Price before the
Expiration Time and check the box captioned "Odd Lots" in the attached
instruction form, the Company, upon the terms and subject to the conditions
of the Offer, will accept all such Shares for purchase before proration, if
any, of the purchase of other Shares tendered and not withdrawn at or below
the Purchase Price.
8. If you wish to tender portions of your Share holdings at different
prices you must complete separate instructions for each price at which you
wish to tender each such portion of your Shares. We must submit separate
Letters of Transmittal on your behalf for each price you will accept.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the attached instruction form.
An envelope to return your instructions to us is enclosed. If you authorize us
to tender your Shares, we will tender all such Shares unless you specify
otherwise on the attached instruction form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION OF THE OFFER. THE
OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, DECEMBER 9, 1994, UNLESS THE COMPANY EXTENDS THE OFFER.
As described in Section 1 of the Offer to Purchase, if before the
Expiration Time a greater number of Shares is properly tendered and not
withdrawn at or below the Purchase Price than the Company will accept for
purchase, the Company will accept Shares for purchase at the Purchase Price in
the following order of priority:
(a) first, all Shares properly tendered and not withdrawn at or below
the Purchase Price before the Expiration Time by any Odd Lot Owner who:
(1) tenders all Shares beneficially owned by such Odd Lot Owner at
or below the Purchase Price (partial tenders will not qualify for this
preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(b) then, after purchase of all of the foregoing Shares, all other
Shares properly tendered and not withdrawn at or below the Purchase Price
before the Expiration Time on a pro rata basis (with adjustments to avoid
purchases of fractional Shares), as provided in the Offer to Purchase.
The Company is not making the Offer to, nor will it accept tenders from or
on behalf of, owners of Shares in any jurisdiction in which the Offer or its
acceptance would violate the securities, blue sky or other laws of such
jurisdiction. In any jurisdiction in which the securities or blue sky laws
require the Offer to be made by a licensed broker or dealer, the Offer is being
made on the Company's behalf by Goldman, Sachs & Co. or Oppenheimer & Co., Inc.
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
<PAGE> 3
Instruction Form
With Respect to the
Offer to Purchase for Cash
Up to 3,000,000 Shares
of Common Stock
(Including the Associated
Common Stock Purchase Rights)
of
INSTRUMENT SYSTEMS CORPORATION
AT A PURCHASE PRICE PER SHARE NOT GREATER
THAN $9.25 NOR LESS THAN $8.00 PER SHARE
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated November 10, 1994 and the related Letter of Transmittal
(which together constitute the "Offer"), in connection with the Offer by
Instrument Systems Corporation, a Delaware corporation (the "Company"), to
purchase 3,000,000 shares of its common stock, par value $.25 per share (the
"Shares"), including the associated Common Stock Purchase Rights (the "Rights"),
at prices, net to the Seller in cash, not greater than $9.25 nor less than $8.00
per Share, specified by the undersigned, upon the terms and subject to the
conditions of the Offer. Unless the Rights are redeemed by the Company, a tender
of Shares will also constitute a tender of the associated Rights. Unless the
context requires otherwise, all references herein to Shares shall include the
associated Rights.
The undersigned acknowledges that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single per Share price (not
greater than $9.25 nor less than $8.00 per Share) that it will pay for Shares
properly tendered and not withdrawn pursuant to the Offer (the "Purchase
Price"), taking into account the number of Shares so tendered and the prices
specified by tendering stockholders. The Company will select the lowest Purchase
Price which will allow it to purchase 3,000,000 Shares (or such lesser number of
Shares as are properly tendered and not withdrawn at prices not greater than
$9.25 nor less than $8.00 per Share) pursuant to the Offer. All Shares properly
tendered and not withdrawn at prices at or below the Purchase Price will be
purchased at the Purchase Price, net to the seller in cash, upon the terms and
subject to the conditions of the Offer, including the proration terms thereof.
The Company will return all other Shares, including Shares tendered at prices
greater than the Purchase Price and Shares not purchased because of proration.
See Section 1 of the Offer to Purchase.
The undersigned hereby instruct(s) you to tender to the Company the number
of Shares indicated below or, if no number is indicated, all Shares you hold for
the account of the undersigned, at the price per Share indicated below, pursuant
to the terms and subject to the conditions of the Offer. The Company will return
Shares tendered at prices greater than the Purchase Price and Shares not
purchased because of proration.
AGGREGATE NUMBER OF SHARES TO BE TENDERED BY YOU FOR
THE ACCOUNT OF THE UNDERSIGNED:*
SHARES
- ---------------
* Unless otherwise indicated, all of the Shares held for the account of the
undersigned will be tendered.
<PAGE> 4
ODD LOTS
/ / By checking this box, the undersigned represents that the undersigned owned
beneficially as of the close of business on November 7, 1994 and will
continue to own beneficially as of the Expiration Time an aggregate of fewer
than 100 Shares and is instructing the holder to tender all such Shares.
In addition, the undersigned is tendering Shares (check one box):
/ / at the Purchase Price (as defined below), as the same shall be determined by
the Company in accordance with the terms of the Offer (persons checking this
box need not indicate the price per Share below); or
/ / at the price per Share indicated below under "Price (in Dollars) Per Share
at which Shares are Being Tendered."
<PAGE> 5
PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED
IF SHARES ARE BEING TENDERED AT MORE
THAN ONE PRICE, USE A SEPARATE
INSTRUCTION FORM FOR EACH PRICE SPECIFIED.
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED, OR IF
NO BOX IS CHECKED (EXCEPT AS OTHERWISE PROVIDED
HEREIN), THERE IS NO PROPER TENDER OF SHARES.
<TABLE>
<S> <C> <C> <C> <C> <C>
/ / $8.000 / / $8.500 / / $9.000
/ / $8.125 / / $8.625 / / $9.125
/ / $8.250 / / $8.750 / / $9.250
/ / $8.375 / / $8.875
</TABLE>
<PAGE> 6
SIGNATURE BOX
Signature(s)
-------------------------------------------------------------------
- -------------------------------------------------------------------------------
Dated , 1994
--------------------------------------------------------------------
Name(s) and Address(es)
--------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please Print)
Area Code and Telephone Number
-------------------------------------------------
Taxpayer Identification or
Social Security Number
---------------------------------------------------------
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
OF
SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
INSTRUMENT SYSTEMS CORPORATION
This form or a facsimile of it must be used to accept the Offer, as defined
below, if:
(a) certificates for common stock, par value $.25 per share (the "Shares"),
including the associated Rights (as defined herein), of Instrument Systems
Corporation, a Delaware corporation, are not immediately available or
certificates for Shares and all other required documents cannot be delivered to
the Depositary before the Expiration Time (as defined in Section 1 of the Offer
to Purchase, as defined below); or
(b) Shares cannot be delivered on a timely basis pursuant to the procedure
for book-entry transfer.
This form or a facsimile of it, signed and properly completed, may be
delivered by hand, mail, telegram or facsimile transmission to the Depositary.
See Section 3 of the Offer to Purchase.
To: American Stock Transfer & Trust Company
<TABLE>
<S> <C>
By Mail, By Hand Facsimile Transmission:
or By Overnight Courier: (718) 234-5001
40 Wall Street Confirm by Telephone:
46th Floor (212) 936-5100
New York, New York 10005
</TABLE>
For Information Telephone:
(800) 937-5449
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN THOSE
SHOWN ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A
FACSIMILE NUMBER OTHER THAN THAT LISTED ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby tenders to Instrument Systems Corporation, at the
price per Share indicated below, net to the seller in cash, upon the terms and
conditions set forth in the Offer to Purchase, dated November 10, 1994 (the
"Offer to Purchase") and the related Letter of Transmittal (which together
constitute the "Offer"), receipt of which is hereby acknowledged,
Shares, including the associated Common Stock Purchase Rights
issued pursuant to the Rights Agreement dated April 2, 1986, as amended (the
"Rights"), pursuant to the guaranteed delivery procedure set forth in Section 3
of the Offer to Purchase. Unless the Rights are redeemed by the Company prior to
the Expiration Time (as defined in the Offer), a tender of Shares will also
constitute a tender of the associated Rights. Unless the context requires
otherwise, all references herein to the Shares shall include the associated
Rights.
<PAGE> 2
ODD LOTS
To be completed ONLY if Shares are being tendered by or on behalf of a
person owning beneficially, as of the close of business on November 7, 1994 and
who will continue to own beneficially as of the Expiration Time, an aggregate of
fewer than 100 Shares.
The undersigned either (check one):
/ / was the beneficial owner as of the close of business November 7, 1994
and will continue to be the beneficial owner as of the Expiration Time,
of an aggregate of fewer than 100 Shares, all of which are being
tendered; or
/ / is a broker, dealer, commercial bank, trust company or other nominee
which:
(a) is tendering, for beneficial owners, Shares with respect to which
it is the registered holder; and
(b) believes, based upon representations made to it by such beneficial
owners, that each such person was the beneficial owner as of the
close of business on November 7, 1994 and each such person would
continue to be the beneficial owner as of the Expiration Time, of
an aggregate of fewer than 100 Shares and is tendering all of such
Shares.
In addition, the undersigned is tendering Shares (check one box):
/ / at the Purchase Price (as defined below), as the same shall be
determined by the Company in accordance with the terms of the Offer
(persons checking this box need not indicate the price per Share
below); or
/ / at the price per Share indicated below under "Price (in Dollars) Per
Share at Which Shares Are Being Tendered."
<PAGE> 3
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS
CHECKED, OR IF NO BOX IS CHECKED (EXCEPT AS
OTHERWISE PROVIDED HEREIN), THERE IS
NO PROPER TENDER OF SHARES.
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED
IF SHARES ARE BEING TENDERED AT MORE
THAN ONE PRICE, USE A SEPARATE
INSTRUCTION FORM FOR EACH PRICE SPECIFIED.
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED, OR IF
NO BOX IS CHECKED (EXCEPT AS OTHERWISE PROVIDED
HEREIN), THERE IS NO PROPER TENDER OF SHARES.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
/ / $8.000 / / $8.750
/ / $8.125 / / $8.875
/ / $8.250 / / $9.000
/ / $8.375 / / $9.125
/ / $8.500 / / $9.250
/ / $8.625
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 4
Certificate Nos. (if available):
--------------------------------------------------------------------------
Name(s):
--------------------------------------------------------------------------
--------------------------------------------------------------------------
PLEASE TYPE OR PRINT
Address(es):
--------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
ZIP CODE
Area Code and
Telephone Number:
---------------------------------------------------------
SIGN HERE
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Dated: , 1994
--------------------------------------------------------------
If Shares will be tendered by book-entry transfer, check box of applicable
Book-Entry Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number:
-----------------------------------------------------------
<PAGE> 5
GUARANTEE
The undersigned is (1) a member firm of a registered securities exchange;
(2) a member of the National Association of Securities Dealers, Inc.; or (3) a
commercial bank or trust company having an office, branch or agency in the
United States, and represents that:
(a) the above-named person(s) has a "net long position" in Shares or
"equivalent securities" at least equal to the Shares tendered within the meaning
of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended;
and
(b) such tender of Shares complies with such Rule 14e-4;
and guarantees that the Depositary will receive certificates for the Shares
tendered hereby in proper form for transfer, or Shares will be tendered pursuant
to the procedure for book-entry transfer at The Depository Trust Company,
Midwest Securities Trust Company or Philadelphia Depository Trust Company, in
any case, together with a properly completed and duly executed Letter of
Transmittal and any other documents required by the Letter of Transmittal (or a
manually signed facsimile of them), all within five New York Stock Exchange
trading days after the day the Depositary receives this Notice.
<TABLE>
<S> <C>
Name of Firm: Address:
------------------------------- ------------------------------
--------------------------------------
- ---------------------------------------------- --------------------------------------
Authorized Signature Zip Code
Area Code and
Name: Telephone Number:
--------------------------------------- ---------------------
Please Print
Title: Dated: , 1994
-------------------------------------- --------------------------
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD BE
SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
[INSTRUMENT SYSTEMS CORPORATION LETTERHEAD]
November 10, 1994
To Our Shareholders:
Instrument Systems Corporation is offering to purchase up to 3,000,000
shares of its Common Stock from its shareholders at a cash price not greater
than $9.25 nor less than $8.00 per share. The Company is conducting the Offer
through a procedure commonly referred to as a "Dutch Auction."
This procedure allows you to select the price within that price range at
which you are willing to sell your shares to the Company. Based upon the number
of shares tendered and the prices specified by the tendering shareholders, the
Company will determine the single per share price within that price range which
will allow it to buy 3,000,000 shares (or such lesser number of shares as are
properly tendered and not withdrawn at prices not greater than $9.25 or less
than $8.00). Subject to possible proration, all of the shares that are properly
tendered at prices at or below that purchase price (and are not withdrawn) will
be purchased at that purchase price, net to the selling shareholder in cash. All
other shares that have been tendered and not purchased will be returned to the
shareholder.
For those shareholders who own an aggregate of fewer than 100 shares, the
Offer may represent an opportunity to sell all of their shares without any
applicable odd-lot discounts normally payable on a sale of their shares.
The Offer, proration period and withdrawal rights expire at 12:00 midnight,
New York City time, on Friday, December 9, 1994, unless the Offer is extended.
Neither the Company nor its Board of Directors makes any recommendation to
any shareholder as to whether to tender or refrain from tendering shares. You
must make your own decision whether to tender shares and, if so, how many shares
to tender and at which price or prices.
This Offer is explained in detail in the enclosed Offer to Purchase and
Letter of Transmittal. If you want to tender your shares, the instructions on
how to tender shares are also explained in detail in the enclosed materials. I
encourage you to read these materials carefully before making any decision with
respect to the Offer.
Very truly yours,
/s/ HARVEY R. BLAU
---------------------------------
Harvey R. Blau
Chairman of the Board
/s/ ROBERT BALEMIAN
---------------------------------
Robert Balemian
President
<PAGE> 1
IMMEDIATE ATTENTION REQUIRED
November 10, 1994
RE: DIRECTION CONCERNING TENDER OF SHARES
DEAR ESOP PARTICIPANT:
Enclosed are materials that require your immediate attention. They describe
matters directly affecting your interest in the Instrument Systems Corporation
Employee Stock Ownership Plan (ESOP). Read all the materials carefully. You will
need to complete the enclosed Direction Form and return it in the postage paid
envelope provided. THE DEADLINE FOR RECEIPT OF YOUR COMPLETED DIRECTION FORM IS
5:00 P.M., EST, WEDNESDAY, DECEMBER 7, 1994 (UNLESS EXTENDED). YOU SHOULD
COMPLETE THE FORM AND RETURN IT EVEN IF YOU DECIDE NOT TO PARTICIPATE IN THE
TRANSACTION DESCRIBED IN THE MATERIALS.
The remainder of this letter summarizes the transaction and your rights and
options under the ESOP, but you also should review the more detailed explanation
provided in the other materials.
BACKGROUND
As you no doubt have heard, Instrument Systems Corporation (Company) has
made a tender offer to purchase up to three million shares of its Common Stock.
The objectives of the purchase, and financial and other information relating to
the offer, are described in detail in the enclosed Offer to Purchase and Letter
of Transmittal, which are being provided to all stockholders of the Company.
As a participant in the ESOP, you are directly affected, because the
Company's Offer to Purchase extends to the approximately 2.6 million shares of
the Company's stock currently held by the ESOP. Only U.S. Trust Company of
California, N.A. (U.S. Trust), as the Trustee of the ESOP, actually can tender
these shares for sale. However, as an ESOP participant, you have the right
pursuant to the terms of the ESOP to direct the Trustee whether or not to tender
the shares that are allocated to your ESOP Account as of September 30, 1994. If
you elect to have the Trustee tender these shares, you also are entitled to
specify the price or prices at which they should be tendered.
Please note that the Trustee is the holder of record of shares allocated to
your Account as a participant in the ESOP. A tender of such shares can be made
only by the Trustee as the holder of record; however the Trustee generally must
act pursuant to your directions as explained herein. The Letter of Transmittal
is furnished to you for your information only and cannot be used by you to
tender shares allocated to your ESOP Account.
THE COMPANY'S BOARD OF DIRECTORS HAS APPROVED THE MAKING OF THE OFFER TO
PURCHASE. HOWEVER, NEITHER THE COMPANY, ITS BOARD OF DIRECTORS, U.S. TRUST AS
TRUSTEE, NOR ANY OTHER PARTY MAKES ANY RECOMMENDATIONS TO PARTICIPANTS AS TO
WHETHER TO TENDER SHARES, THE PRICE AT WHICH TO TENDER, OR TO REFRAIN FROM
TENDERING SHARES. EACH PARTICIPANT MUST MAKE HIS OWN DECISION ON THESE MATTERS.
To assure the confidentiality of your decision, the Company has retained
American Stock Transfer & Trust Company (American Stock) to tabulate the
directions of ESOP participants. You will note from the included envelope that
your Direction Form is to be returned to American Stock. To further assure
confidentiality and independence of all actions, the Company also has hired U.S.
Trust, as Trustee of the ESOP, to make all discretionary determinations. In
particular, the Trustee will decide whether to tender or hold shares of the ESOP
that currently have not been allocated to participants' Accounts. The Trustee
will also decide the disposition of shares that are allocated to Accounts of
participants who fail to return timely or complete directions. Finally, the
Trustee will determine whether the implementation of any participant's
directions or adherence to any ESOP provisions would be a violation of the
Employee Retirement Income Security Act of 1974, as
<PAGE> 2
amended (ERISA). Although it is not anticipated that any direction will violate
ERISA, such that the direction would have to be reversed or ignored, the
Department of Labor requires that the Trustee, as the independent fiduciary for
ESOP participants, retain this discretion.
HOW THE OFFER TO PURCHASE WORKS
The details of the Offer to Purchase are described in the enclosed
materials, which you should review carefully. However, in broad outline, the
transaction will work as follows with respect to ESOP participants.
- The Company has offered to purchase up to 3 million of its shares of
common stock at a price not less than $8.00 nor more than $9.25 per share.
- If you want any of the shares allocated to your ESOP Account sold,
you need to direct that they be offered (or "tendered") for sale.
- You also need to specify the price at which you want the shares
tendered. That price must be at or between the two limits above.
- After the deadline for the tender of shares by all stockholders,
including the ESOP, American Stock will complete the tabulation of all
directions.
- The Company will then determine the price, at or between the two
limits, at which the Company can purchase the number of shares that it
wants. This is referred to as the Purchase Price.
- Unless the offer is voided or discontinued in accordance with its
terms, the Company then will buy all the shares, up to 3 million, that were
tendered at that price or below. However, all sellers will receive the same
Purchase Price, even if they tendered at or below the Purchase Price.
- If you direct the tender of any shares at a price in excess of the
Purchase Price as finally determined, those shares will not be purchased,
and they will remain allocated to your ESOP Account.
This form of transaction is commonly called a "Dutch Auction" and requires
some strategy on your part. For example, if you are anxious to sell, you may
want to tender your shares at a price at or near the lower limit. If you are not
sure whether or not you want to participate, but would be willing to sell at a
price above the lower limit, then you may want to specify a higher price, not to
exceed the upper limit, of course. If you do not want to sell under any
circumstances an option is provided for you to direct that shares allocated to
your ESOP Account will be held.
Of course, the Trustee may override any direction that it determines to be
in violation of ERISA, as previously described. In particular, the Company will
be prohibited from purchasing shares from the ESOP if the Purchase Price, as
finally determined, is less than the prevailing market price of the shares on
the date the shares are accepted for purchase. Finally, the Company will prorate
the number of shares purchased from stockholders if there is an excess of shares
over the exact number desired at the Purchase Price as ultimately determined.
PROCEDURE FOR DIRECTING TRUSTEE
A Direction Form for making your direction is enclosed. You must complete
this form and return it in the included envelope in time to be received by
American Stock no later than 5:00 p.m., Eastern time, on Wednesday, December 7,
1994 (unless the Offer to Purchase is extended or amended). If your form is not
received by this deadline, or if it is not fully and properly completed, the
shares in your ESOP Account will be tendered or held as decided by the Trustee.
Please note the address label on the reverse side of the Direction Form; it
indicates the number of shares allocated to your Account as of September 30,
1994. The number of shares shown on the address label includes any
<PAGE> 3
shares allocated as a result of contributions made on your behalf by the Company
for the year ended September 30, 1994.
To properly complete your Direction Form, you must do the following:
(1) On the face of the form, check Box 1 or 2. CHECK ONLY ONE BOX.
Make your decision which box to check as follows:
- CHECK BOX 1 if you do not want the shares allocated to your Account
tendered for sale at any price and simply want the ESOP to continue
holding shares allocated to your Account.
- CHECK BOX 2 in all other cases and complete the table immediately
below Box 2. (You should not complete the table if you checked Box 1.)
Use line A of the table to specify the number of shares that you want
to tender at each price indicated. Typically, you would elect to have
all of the shares tendered at a single price. However, the form gives
you the option of splitting your shares among several prices. You must
state the number of shares to be sold at each indicated price by
filling in the number of shares in the box immediately below the
price. Leave a box blank if you want no shares tendered at that price.
After you have specified your tender price or prices, total the number
of shares in line A and insert the total in the box provided at the
end of the line. Specify the number of shares, if any, that you do not
want tendered but wish the Trustee to hold in the single box on line
B.
Finally, total the shares in the end boxes on lines A and B and insert
the total in the box on line C. The total in this box must equal the
number of shares allocated to your ESOP Account as shown on the
address label on the reverse side of the Direction Form.
(2) Turn the Direction Form over, date and sign it in the space
provided.
(3) Return the Direction Form promptly in the included postage prepaid
envelope so that it is received by American Stock no later than 5:00 p.m.,
Eastern time, on Wednesday, December 7, 1994 (unless this deadline is
extended). Be sure to return the form even if you decide not to have the
Trustee tender any shares. No facsimile transmittals will be accepted.
Your direction will be deemed irrevocable unless withdrawn by 5:00 p.m.,
Eastern time, on Wednesday, December 7, 1994 (unless the Offer is extended
or amended). To be effective, a notice of withdrawal of your direction must
be in writing and must be received by American Stock at the following
address:
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 Wall Street
46th Floor
New York, New York 10005
Your notice must include your name, address, Social Security number, and
the number of shares allocated to your ESOP Account. Upon receipt of your
notice by American Stock, your previous direction will be deemed cancelled.
You may direct the retendering of any shares in your Account by repeating
the previous instructions for directing the tendering set forth in this
letter.
INVESTMENT OF TENDER PROCEEDS
For any ESOP shares that are tendered and purchased by the Company, the
Company will pay cash to the ESOP. The Trustee then will decide whether to
reinvest the proceeds in shares of the Company's stock or in alternative
investments, being guided by the ESOP's terms and the trust agreement, subject
to the limitations of ERISA. There can be no assurance that all or a portion of
the
<PAGE> 4
proceeds of the sale of shares allocated to your account will be reinvested by
the Trustee in shares of common stock of the Company.
INDIVIDUAL PARTICIPANTS IN THE ESOP WILL NOT RECEIVE ANY PORTION OF THE
TENDER PROCEEDS. ALL SUCH PROCEEDS AND THE ASSETS WILL REMAIN IN THE ESOP AND
MAY BE WITHDRAWN ONLY IN ACCORDANCE WITH THE ESOP'S TERMS.
No gain or loss will be recognized by participants in the ESOP for federal
income tax purposes in connection with the tender or sale of shares held in the
ESOP.
CONFIDENTIALITY
AS MENTIONED ABOVE, BOTH AMERICAN STOCK AND U.S. TRUST WILL PROTECT THE
CONFIDENTIALITY OF YOUR DECISION AS AN ESOP PARTICIPANT. UNDER NO CIRCUMSTANCES
WILL YOUR DECISION BE DISCLOSED TO ANY DIRECTORS, OFFICERS, OR EMPLOYEES OF
INSTRUMENT SYSTEMS CORPORATION, EXCEPT TO A LIMITED NUMBER OF ADMINISTRATORS FOR
THE VERY SOLE PURPOSE OF ALLOCATING PROCEEDS TO YOUR ESOP ACCOUNT IN THE EVENT
THAT ALL OR A PORTION OF YOUR SHARES ARE SOLD.
FURTHER INFORMATION
Although the Trustee has no recommendation and cannot advise you what to
do, its representatives are prepared to answer any question that you may have on
the procedures involved in the Dutch Auction and your direction. The Trustee
also can help you complete your Direction Form.
For this purpose, you may contact the Trustee at the following toll-free
number between 8:00 a.m. and 11:00 p.m., Eastern time, Monday through Friday:
1-800-535-3093
Participants in California may contact the Trustee at the following
toll-free number between 8:00 a.m. and 5:00 p.m., Pacific time, Monday through
Friday:
1-800-441-1800
Your ability to instruct the Trustee concerning whether or not to tender
shares allocated to your Account is an important part of your rights as an ESOP
participant. Please consider this letter and the enclosed materials carefully
and then return your Direction Form promptly.
Sincerely,
U.S. Trust Company of California, N.A.
<PAGE> 5
INSTRUMENT SYSTEMS CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
DIRECTION FORM
BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY
THE ACCOMPANYING OFFER TO PURCHASE
See the Reverse Side of This Form for the
Number of Shares Allocated to Your Plan Account
In accordance with the Instrument Systems Corporation ("Company") Offer to
Purchase dated November 10, 1994, a copy of which I have received and read, and
pursuant to the provisions of the Instrument Systems Corporation Employee Stock
Ownership Plan ("ESOP"), I hereby direct the ESOP's Trustee, U.S. Trust Company
of California, N.A., as follows (check only one box):
/ / 1. To refrain from tendering and to hold all shares allocated to my Account.
/ / 2. To tender shares allocated to my Account at the price or prices indicated
on line A below, except for any shares to be held as indicated on line B
below. FILL IN THE TABLE BELOW ONLY IF YOU HAVE CHECKED BOX NUMBER 2.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
PRICE $8.00 $8.125 $8.25 $8.375 $8.50 $8.625 $8.75 $8.875 $9.00 $9.125 $9.25 ROW A TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------
A NUMBER
OF
SHARES
----------------------------------------------------------------------------------------------------------------
-----------
----------
B SHARES
TO BE
HELD
-----------
----------
......................................................................
----------
-----------
----------
C TOTAL
SHARES
-----------
----------
......................................................................
</TABLE>
Total the number of shares in row A and insert that total in the
box at end of the row. Show shares to be held in the box at end of row
B. Total the numbers in the end boxes of rows A and B and insert that
total number in the end box of row C. The total in the end box of row C
must equal the number of shares allocated to your Account as shown on
the address label on the reverse side of this form.
<PAGE> 6
INSTRUCTIONS
Carefully complete the face portion of this Direction Form. Then insert
today's date and sign your name in the spaces provided immediately below.
Enclose the form in the included postage prepaid envelope and mail it promptly.
Your Direction Form must be received no later than 5:00 p.m., Eastern Standard
Time, on Wednesday, December 7, 1994. Direction Forms that are not fully or
properly completed, dated, and signed, or that are received after the deadline,
will be ignored, and the shares allocated to your Account will be held or
tendered, and if tendered, at a price, as determined by U.S. Trust Company of
California, N.A., as Trustee. Note that the Trustee also has the right to ignore
any direction that it determines cannot be implemented without violation of
applicable law.
- --------------------------------------------------------------------------------
Neither the Company, its Board of Directors, the Trustee, nor any other
party makes any recommendation to participants as to whether to tender shares,
the price at which to tender, or to refrain from tendering shares. Each
participant must make his or her own decision on these matters.
The Company has been advised that none of its directors or executive
officers intends to tender any shares.
- --------------------------------------------------------------------------------
Date: , 1994
----------------------------------------------
Your Signature (Please sign as your name
appears below)
As of September 30, 1994, there were allocated to your Account the number
of shares of Instrument Systems Corporation common stock shown to the right of
your address on the label below.
<PAGE> 1
<TABLE>
NEWS RELEASE
<S> <C> <C>
Instrument Systems Corporation 100 Jericho Quadrangle, Jericho, New York 11753 (516) 938-5544
</TABLE>
INSTRUMENT SYSTEMS CORPORATION REPORTS RECORD
OPERATING RESULTS FOR THE FOURTH QUARTER AND FISCAL YEAR
AND ANNOUNCES "DUTCH AUCTION" SELF-TENDER OFFER FOR UP TO
3,000,000 SHARES OF COMMON STOCK
Jericho, New York, November 8, 1994 -- Instrument Systems Corporation
(NYSE:ISY) reported record operating results for the fourth quarter and fiscal
year ended September 30, 1994.
Net sales for the quarter increased to $141,658,000 up 8.6% over last
year's $130,469,000. Income from continuing operations for the fourth quarter
was a record $10,603,000 or $.29 per share compared to $9,560,000 or $.25 per
share last year. Net sales for the fiscal year increased by 11.9% up to
$488,957,000 from $436,949,000 last year. Income from continuing operations
for the fiscal year was a record $29,705,000 or $.80 per share compared to
$26,560,000 or $.70 per share for fiscal 1993.
Increased sales and earnings in the building products division
accounted for the increase in operating results in the fourth quarter. For
fiscal 1994, earnings increased in each of the company's three core business
units with significant increases in the building products and specialty plastic
films units. The company also announced the acquisition of Residential
Construction Specialties, Inc., an Atlanta, Georgia based installer and
distributor of building products. This is the latest acquisition for the
service
<PAGE> 2
and installation segment of our building products business and will add sales
of approximately $30 million per year.
The Board of Directors of Instrument Systems Corporation today
authorized a "Dutch Auction" self-tender offer for up to 3,000,000 shares of
the company's Common Stock. The offer will commence within a week, and will be
subject to the terms and conditions that will be more fully described in the
offering materials.
Under the terms of the offer, the company will invite shareholders to
tender their shares at prices between $8.00 and $9.25, as the shareholder shall
specify. Within that range the company will determine the per share price (the
"Purchase Price") that will allow it to purchase 3,000,000 shares or such
lesser number as may be tendered. All shares tendered at or below the
Purchase Price will be purchased at the Purchase Price. If more than 3,000,000
shares are tendered at or below the Purchase Price, there will be a proration.
The company has outstanding 33,738,000 shares of Common Stock and
shares of Second Preferred Stock, Series I which are convertible into 1,677,000
shares of Common Stock. The offer will not be conditioned on any minimum
number of shares being tendered.
Goldman, Sachs & Co. and Oppenheimer & Co., Inc. are the Dealer
Managers for the offer, and the Depositary will be American Stock Transfer &
Trust Co.
The self-tender offer is in addition to a previously announced program
authorizing the purchase of up to 4,000,000 shares of the company's Common and
Preferred Stock, under which approximately 2.3 million shares of Common Stock
have been purchased.
<PAGE> 3
Instrument Systems Corporation is a leading manufacturer and marketer of
residential garage doors, as well as a major supplier of industrial garage
doors and a range of related products for the home building and replacement
markets.
The company is a leader in the development and production of embossed and
laminated specialty plastic films used in the baby diaper, feminine napkin,
adult incontinent and surgical markets.
The company also develops and manufactures information and communication
systems for government and commercial markets worldwide.
<PAGE> 4
<TABLE>
OPERATING HIGHLIGHTS
--------------------
<CAPTION>
For the Three Months Ended For the Fiscal Years Ended
September 30, September 30,
---------------------------- ----------------------------
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $141,658,000 $130,469,000 $488,957,000 $436,949,000
============ ============ ============ ============
Income from continuing operations $ 17,971,000 $ 16,213,000 $ 50,347,000 $ 44,266,000
before income taxes
Provision for income taxes 7,368,000 6,653,000 20,642,000 17,706,000
------------ ------------ ------------ ------------
Income from continuing operations 10,603,000 9,560,000 29,705,000 26,560,000
Discontinued operations, net of income
tax effect --- (825,000) --- (8,475,000)
------------ ------------ ------------ ------------
Net income $ 10,603,000 $ 8,735,000 $ 29,705,000 $ 18,085,000
============ ============ ============ ============
Income per share of common stock:
Continuing operations $.29 $ .25 $.80 $ .70
Discontinued operations -- (.02) -- (.22)
---- ----- ---- -----
Net income $.29 $ .23 $.80 $ .48
==== ===== ==== =====
Weighted average number of shares used
in the calculation of per share results 36,184,000 37,972,000 37,102,000 37,989,000
============ ============ ============ ============
</TABLE>
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase, dated
November 10, 1994, and the related Letter of Transmittal. Capitalized terms
not defined in this notice are defined in the Offer to Purchase. The Offer is
not being made to, nor will tenders be accepted from or on behalf of, owners of
Shares in any jurisdiction in which making or accepting the Offer would violate
that jurisidiction's laws. In those jurisdictions whose laws require that the
Offer be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of the Company by Goldman, Sachs & Co. or Oppenheimer & Co.,
Inc. as Dealer Managers, or one or more brokers or dealers registered or
licensed under the laws of such jurisdictions.
NOTICE OF OFFER TO PURCHASE FOR CASH
BY
INSTRUMENT SYSTEMS CORPORATION
UP TO 3,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
AT A PURCHASE PRICE NOT GREATER THAN
$9.25 NOR LESS THAN $8.00 PER SHARE
Instrument Systems Corporation, a Delaware corporation (the "Company"),
invites stockholders to tender shares of its common stock, par value $.25 per
share (the "Shares") including the associated Common Stock Purchase Rights (the
"Rights"), at prices, net to the seller in cash, not greater than $9.25 nor
less than $8.00 per Share, specified by tendering stockholders, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated
November 10, 1994 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which together constitute the "Offer"). Unless the Rights are
redeemed by the Company, a tender of Shares will also constitute a tender of
the associated Rights. Unless the context requires otherwise, all references
herein to Shares shall include the associated Rights.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 9, 1994, UNLESS THE OFFER IS
EXTENDED (THE "EXPIRATION TIME").
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share price (not greater than $9.25 nor less
than $8.00 per Share) that it will pay for Shares properly tendered and not
withdrawn pursuant to the Offer (the "Purchase Price"), taking into account the
number of Shares so tendered and the prices specified by tendering
stockholders. The Company will select the lowest Purchase Price which will
allow it to buy 3,000,000 Shares (or such lesser number as are properly tendered
and not withdrawn at prices not greater than $9.25 nor less than $8.00 per
Share) pursuant to the Offer, or such greater number of Shares as the Company
may elect to purchase. All shares properly tendered and not withdrawn at
prices at or below the Purchase Price will be purchased at the Purchase Price,
net to the seller in cash, upon the terms and subject to the conditions of the
Offer, including the proration terms thereof. For purposes of the Offer, the
Company will be deemed to have accepted for payment (and thereby purchased),
subject to proration, Shares which are properly tendered and not withdrawn at
or below the Purchase Price when, as and if it gives oral or written notice to
the Depositary of its acceptance of such Shares for payment pursuant to the
Offer. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of certificates for such Shares (or a timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at one of the Book-Entry
Transfer Facilities (as defined in the Offer to Purchase)), a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other documents required by the Letter of Transmittal.
Upon the terms and subject to the conditions of the Offer, in the event
that prior to the Expiration Time a greater number of Shares is properly
tendered and not withdrawn at or below the Purchase Price than the Company will
accept for purchase, the Company will accept Shares for purchase in the
following order of priority: (a) first, all Shares properly tendered and not
withdrawn at or below the Purchase Price by or on behalf of any stockholder who
beneficially owned as of the close of business on November 7, 1994 and
continues to beneficially own as of the Expiration Time, an aggregate of fewer
than 100 Shares, who tenders all such Shares at or below the Purchase Price
(partial tenders will not qualify for this preference) and who completes the
box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on
the Notice of Guaranteed Delivery, and (b) then, after purchase of all the
foregoing Shares, all other shares properly tendered and not withdrawn at or
below the Purchase Price before the Expiration Time on a pro rata basis (with
adjustments to avoid purchases of fractional Shares).
<PAGE> 2
The Company is making the Offer because its Board of Directors believes
that, given the Company's businesses, assets and prospects and the current
market price of the Shares, the purchase of the Shares is an attractive
investment for the Company. In addition, the Offer provides stockholders who
are considering a sale of all or a portion of their Shares the opportunity to
sell those Shares for cash at a price that is greater than the market price
prevailing immediately prior to announcement of the Offer without the usual
transaction costs associated with open-market sales.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES.
EACH STOCKHOLDER MUST MAKE HIS OWN DECISION WHETHER TO TENDER SHARES AND, IF
SO, HOW MANY SHARES TO TENDER AND AT WHICH PRICE OR PRICES. NO DIRECTOR OR
OFFICER OF THE COMPANY INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
The Company expressly reserves the right, in its sole discretion, at
any time or from time to time, to extend the period of time during which the
Offer is open by giving oral or written notice of such extension to the
Depositary, followed by a public announcement thereof no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Time.
Except as otherwise provided in the Offer, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time before the Expiration Time and, unless theretofore
accepted for payment by the Company, may also be withdrawn after 12:00 midnight,
New York City time, on Tuesday, January 10, 1995. For a withdrawal to be
effective, the Depositary must timely receive (at its address set forth on the
back cover of the Offer to Purchase) a written, telegraphic or facsimile
transmission notice of withdrawal. Such notice of withdrawal must specify the
name of the person who tendered the Shares to be withdrawn, the number of
Shares to be withdrawn and the name of the registered holder, if different from
that of the person who tendered such Shares. If the certificates have been
delivered or otherwise identified to the Depositary, then, prior to the release
of such certificates, the tendering stockholder must also submit the serial
numbers shown on the particular certificates evidencing the Shares and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in the Offer to Purchase) (except in the case of Shares
tendered by an Eligible Institution). If Shares have been tendered pursuant to
the procedure for book-entry transfer set forth in Section 3 of the Offer to
Purchase, the notice of withdrawal must specify the name and number of the
account at the applicable Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with the procedures of such facility.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE STOCKHOLDERS DECIDE WHETHER TO ACCEPT
OR REJECT THE OFFER. They have been mailed to record holders of Shares and
have been furnished to brokers, banks and similar persons whose names, or the
names of whose nominees, appear on the Company's stockholder list (or, if
applicable, who are listed as participants in clearing agency's security
position listing) for transmittal to beneficial owners of Shares.
THE INFORMATION REQUIRED TO BE DISCLOSED BY RULE 13e-4(d)(1)
PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, IS CONTAINED
IN THE OFFER TO PURCHASE AND IS INCORPORATED IN THIS NOTICE BY REFERENCE.
Please contact the Depositary or the Dealer Managers for copies of the
Offer to Purchase, the related Letter of Transmittal and other tender offer
materials. The Depositary or the Dealer Managers will furnish copies promptly
at the Company's expense.
The Depositary:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail, By Hand or By Overnight Courier: Facsimile Transmission:
40 Wall Street (718) 234-5001
46th Floor
New York, New York 10005 Confirm by Telephone:
(212) 936-5100 (212) 936-5100
For Information Telephone:
(800) 937-5449
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO. OPPENHEIMER & CO., INC.
85 Broad Street One World Financial Center
New York, New York 10004 New York, New York 10281
(212) 902-1000 (212) 667-7000
November 10, 1994
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.
Purpose of Form. -- A person who is required to file an information return
with the IRS must obtain your correct TIN to report income paid to you, real
estate transactions, mortgage interest you paid, the acquisition or abandonment
of secured property, or contributions you made to an IRA. Use Form W-9 to
furnish your correct TIN to the requester (the person asking you to furnish your
TIN) and, when applicable, (1) to certify that the TIN you are furnishing is
correct (or that you are waiting for a number to be issued), (2) to certify that
you are not subject to backup withholding, and (3) to claim exemption from
backup withholding if you are an exempt payee. Furnishing your correct TIN and
making the appropriate certifications will prevent certain payments from being
subject to backup withholding.
Note: If a requester gives you a form other than a W-9 to request your TIN,
you must use the requester's form.
How To Obtain a TIN. -- If you do not have a TIN, apply for one
immediately. To apply, get Form SS-5, Application for a Social Security Card
(for individuals), from your local office of the Social Security Administration,
or Form SS-4, Application for Employer Identification Number (for businesses and
all other entities), from your local IRS office.
To complete Form W-9 if you do not have a TIN, write "Applied for" in the
space for the TIN in Part I (or check box 2 of Substitute Form W-9), sign and
date the form, and give it to the requester. Generally, you must obtain a TIN
and furnish it to the requester by the time of payment. If the requester does
not receive your TIN by the time of payment, backup withholding, if applicable,
will begin and continue until you furnish your TIN to the requester.
Note: Writing "Applied for" (or checking box 2 of the Substitute Form W-9)
on the form means that you have already applied for a TIN OR that you intend to
apply for one in the near future.
As soon as you receive your TIN, complete another Form W-9, include your
TIN, sign and date the form, and give it to the requester.
What Is Backup Withholding? -- Persons making certain payments to you after
1992 are required to withhold and pay to the IRS 31% of such payments under
certain conditions. This is called "backup withholding." Payments that could be
subject to backup withholding include interest, dividends, broker and barter
exchange transactions, rents, royalties, nonemployee compensation, and certain
payments from fishing boat operators, but do not include real estate
transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS notifies the requester that you furnished an incorrect TIN,
or
3. You are notified by the IRS that you are subject to backup
withholding because you failed to report all your interest and dividends on
your tax return (for reportable interest and dividends only), or
4. You do not certify to the requester that you are not subject to
backup withholding under 3 above (for reportable interest and dividend
accounts opened after 1983 only), or
5. You do not certify your TIN. This applies only to reportable
interest, dividend, broker, or barter exchange accounts opened after 1983,
or broker accounts considered inactive in 1983.
<PAGE> 2
Except as explained in 5 above, other reportable payments are subject to
backup withholding only if 1 or 2 above applies. Certain payees and payments are
exempt from backup withholding and information reporting. See Payees and
Payments Exempt From Backup Withholding, below, and Example Payees and Payments
under Specific Instructions, below, if you are an exempt payee.
Payees and Payments Exempt From Backup Withholding. -- The following is a
list of payees exempt from backup withholding and for which no information
reporting is required. For interest and dividends, all listed payees are exempt
except item (9). For broker transactions, payees listed in (1) through (13) and
a person registered under the Investment Advisers Act of 1940 who regularly acts
as a broker are exempt. Payments subject to reporting under sections 6041 and
6041A are generally exempt from backup withholding only if made to payees
described in items (1) through (7), except a corporation that provides medical
and health care services or bills and collects payments for such services is not
exempt from backup withholding or information reporting. Only payees described
in items (2) through (6) are exempt from backup withholding for barter exchange
transactions, patronage dividends, and payments by certain fishing boat
operators.
(1) A corporation. (2) An organization exempt from tax under section
501(a), or an IRA, or a custodial account under section 403(b)(7). (3) The
United States or any of its agencies or instrumentalities. (4) A state, the
District of Columbia, a possession of the United States, or any of their
political subdivisions or instrumentalities. (5) A foreign government or any of
its political subdivisions, agencies, or instrumentalities. (6) An international
organization or any of its agencies or instrumentalities. (7) A foreign central
bank of issue. (8) A dealer in securities or commodities required to register in
the United States or a possession of the United States. (9) A futures commission
merchant registered with the Commodity Futures Trading Commission. (10) A real
estate investment trust. (11) An entity registered at all times during the tax
year under the Investment Company Act of 1940. (12) A common trust fund operated
by a bank under section 584(a). (13) A financial institution. (14) A middleman
known in the investment community as a nominee or listed in the most recent
publication of the American Society of Corporate Secretaries, Inc., Nominee
List. (15) A trust exempt from tax under section 664 or described in section
4947.
Payments of dividend and patronage dividends generally not subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have not
provided your correct TIN to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid by you.
<PAGE> 3
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and their regulations.
PENALTIES
Failure To Furnish TIN. -- If you fail to furnish your correct TIN to a
requester, you will be subject to a penalty of $50 for each such failure unless
your failure is due to reasonable cause and not to willful neglect.
Civil Penalty for False Information With Respect to Withholding. -- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
Criminal Penalty for Falsifying Information. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
Misuse of TINS. -- If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
Name. -- If you are an individual, you must generally provide the name
shown on your Social Security card. However, if you have changed your last name,
for instance, due to marriage, without informing the Social Security
Administration of the name change, please enter your first name, the last name
shown on your Social Security card, and your new last name.
If you are a sole proprietor, you must furnish your individual name and
either your SSN or EIN. You may also enter your business name or "doing business
as" name on the business name line. Enter your name(s) as shown on your Social
Security card and/or as it was used to apply for your EIN on Form SS-4.
SIGNING THE CERTIFICATION
1. Interest, Dividend, Broker and Barter Exchange Accounts Opened Before
1984 and Broker Accounts Considered Active During 1983. You are required to
furnish your correct TIN, but you are not required to sign the certification.
2. Interest, Dividend, Broker, and Barter Exchange Accounts Opened After
1983 and Broker Accounts Considered Inactive During 1983. You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item 2 in the certification before signing the form.
3. Real Estate Transactions. You must sign the certification. You may cross
out item 2 of the certification.
4. Other Payments. You are required to furnish your correct TIN, but you
are not required to sign the certification unless you have been notified of an
incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services, payments to a nonemployee for
services (including attorney and accounting fees), and payments to certain
fishing boat crew members.
5. Mortgage Interest Paid by You, Acquisition or Abandonment of Secured
Property, IRA Contributions. You are required to furnish your correct TIN, but
you are not required to sign the certification.
6. Exempt Payees and Payments. If you are exempt from backup withholding,
you should complete this form to avoid possible erroneous backup withholding.
Enter your correct TIN in Part I, write "EXEMPT" in the block in Part II, and
sign and date the form. If you are a nonresident alien or
<PAGE> 4
foreign entity not subject to backup withholding, give the requester a complete
Form W-8, Certificate of Foreign Status.
7. TIN "Applied for." Follow the instructions under How To Obtain a TIN on
page 1, and sign and date this form.
Signature. -- For a joint account, only the person whose TIN is shown in
Part I should sign.
Privacy Act Notice. -- Section 6109 requires you to furnish your correct
TIN to persons who must file information returns with the IRS to report
interest, dividends, and certain other income paid to you, mortgage interest you
paid, the acquisition or abandonment of secured property, or contributions you
made to an IRA. The IRS uses the numbers for identification purposes and to help
verify the accuracy of your tax return. You must provide your TIN whether or not
you are required to file a tax return. Payers must generally withhold 31% of
taxable interest, dividend, and certain other payments to a payee who does not
furnish a TIN to a payer. Certain penalties may also apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<S> <C>
For this type of account: Give name and SSN of:
1. Individual......................................... The individual
2. Two or more individuals (joint account)............ The actual owner of the account
or, if combined funds, the first
individual on the account(1)
3. Custodian account of a minor (Uniform Gift
to Minors Act)..................................... The minor(2)
4. a. The usual revocable savings trust (grantor is
also trustee)................................... The grantor-trustee(1)
b. So-called trust account that is not a legal or
valid trust under state law..................... The actual owner(1)
5. Sole proprietorship................................ The owner(3)
For this type of account: Give name and EIN of:
6. Sole proprietorship................................ The owner(3)
7. A valid trust, estate, or pension trust............ Legal entity(4)
8. Corporate.......................................... The corporation
9. Association, club, religious, charitable,
educational, or other tax-exempt organization...... The organization
10. Partnership........................................ The partnership
11. A broker or registered nominee..................... The broker or nominee
12. Account with the Department of Agriculture in the
name of a public entity (such as a state or local
government, school district or prison) that
receives agriculture program payments.............. The public entity
</TABLE>
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(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's SSN.
(3) Show your individual name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless
the legal entity itself is not designated in the account title.)
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
