EXHIBIT(a)(1)(A)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
MICROTOUCH SYSTEMS, INC.
AT
$21.00 NET PER SHARE
BY
EQUINOX ACQUISITION, INC.,
A WHOLLY OWNED SUBSIDIARY OF
MINNESOTA MINING AND MANUFACTURING COMPANY
--------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON, JANUARY 3, 2001, UNLESS THE OFFER IS EXTENDED.
--------------------------------------------------------------------------------
THE OFFER IS BEING MADE PURSUANT TO THE AGREEMENT AND PLAN OF MERGER, DATED
AS OF NOVEMBER 13, 2000, AMONG MINNESOTA MINING AND MANUFACTURING COMPANY
("PARENT"), EQUINOX ACQUISITION, INC. (THE "PURCHASER") AND MICROTOUCH SYSTEMS,
INC. (THE "COMPANY") (THE "MERGER AGREEMENT"). THE BOARD OF DIRECTORS OF THE
COMPANY (AT A MEETING DULY CALLED AND HELD) HAS DETERMINED THAT THE TERMS OF THE
MERGER AGREEMENT, THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN) ARE FAIR TO
AND IN THE BEST INTERESTS OF THE COMPANY AND THE SHAREHOLDERS OF THE COMPANY;
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER
AGREEMENT, INCLUDING THE OFFER AND THE MERGER; AND RESOLVED TO RECOMMEND THAT
THE SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES (AS
DEFINED HEREIN) PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD REPRESENT AT LEAST A MAJORITY OF ALL OUTSTANDING SHARES ON A
FULLY DILUTED BASIS.
-----------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares should either (1) complete and sign the Letter of Transmittal (or
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, have such shareholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such facsimile) and any other required documents to EquiServe,
L.P. (the "DEPOSITARY") and deliver the certificates for such Shares to the
Depositary along with the Letter of Transmittal (or such facsimile) or, in the
case of a book-entry transfer effected pursuant to the procedures described in
Section 2, deliver an Agent's Message (as defined herein) and any other required
documents to the Depositary and deliver such Shares pursuant to the procedures
for book-entry transfer described in Section 2, in each case prior to the
expiration of the Offer, or (2) request such shareholder's broker, dealer, bank,
trust company or other nominee to effect the transaction for such shareholder. A
shareholder having Shares registered in the name of a broker, dealer, bank,
trust company or other nominee must contact such broker, dealer, bank, trust
company or other nominee if such shareholder desires to tender such Shares.
A shareholder who desires to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply in a timely manner
with the procedure for book-entry transfer, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedures for guaranteed delivery described in
Section 2. The Rights (as defined herein) are presently evidenced by
certificates for common stock and a tender by shareholders of their Shares will
also constitute a tender of the Rights.
Questions and requests for assistance may be directed to MacKenzie
Partners, Inc. (the "INFORMATION AGENT") or to Merrill Lynch & Co. (the "DEALER
MANAGER") at their respective addresses and telephone numbers set forth on the
back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery or any
other tender materials may be obtained from the Information Agent or from
brokers, dealers, banks, trust companies or other nominees.
-----------------
THE DEALER MANAGER FOR THE OFFER IS:
MERRILL LYNCH & CO.
November 17, 2000
<PAGE>
TABLE OF CONTENTS
PAGE
----
SUMMARY TERM SHEET ......................................................... 1
INTRODUCTION ............................................................... 5
THE TENDER OFFER ........................................................... 6
1. Terms of the Offer .................................................... 6
2. Procedures for Tendering Shares ....................................... 8
3. Withdrawal Rights ..................................................... 11
4. Acceptance for Payment and Payment .................................... 12
5. Certain U.S. Federal Income Tax Consequences .......................... 13
6. Price Range of the Shares; Dividends on the Shares .................... 14
7. Effect of the Offer on the Market for the Shares; Nasdaq Listing;
Exchange Act Registration; Margin Regulations ........................ 14
8. Certain Information Concerning the Company ............................ 15
9. Certain Information Concerning Parent and the Purchaser ............... 17
10. Source and Amount of Funds ............................................ 19
11. Contacts and Transactions with the Company; Background of the Offer ... 20
12. Purpose of the Offer; Plans for the Company ........................... 21
13. The Merger Agreement; the Shareholders Agreement; the Stock Option
Agreement ............................................................ 21
14. Dividends and Distributions ........................................... 34
15. Certain Conditions of the Offer ....................................... 34
16. Certain Legal Matters ................................................. 35
17. Fees and Expenses ..................................................... 37
18. Miscellaneous ......................................................... 38
SCHEDULE I -- Directors and Executive Officers of Parent and the Purchaser . S-1
<PAGE>
--------------------------------------------------------------------------------
SUMMARY TERM SHEET
Equinox Acquisition, Inc. is offering to purchase all of the outstanding
common stock of MicroTouch Systems, Inc. (including the associated preferred
stock purchase rights) for $21.00 net per share in cash. The following are some
of the questions you, as a shareholder of MicroTouch Systems, may have and
answers to those questions. We urge you to read carefully the remainder of this
offer to purchase and the letter of transmittal because the information in this
summary is not complete. Additional important information is contained in the
remainder of this offer to purchase and the letter of transmittal.
WHO IS OFFERING TO BUY MY SHARES?
Our name is Equinox Acquisition, Inc. We are a Massachusetts corporation
formed for the purpose of making a tender offer for all of the common stock of
MicroTouch Systems. We are a wholly owned subsidiary of Minnesota Mining and
Manufacturing Company, a Delaware corporation ("3M"). See "Introduction" and
Section 9 -- "Certain Information Concerning Parent and the Purchaser" -- of
this offer to purchase.
WHAT SHARES ARE BEING SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding common stock of
MicroTouch Systems (including the associated preferred stock purchase rights).
See "Introduction" and Section 1 -- "Terms of the Offer" -- of this offer to
purchase.
HOW MUCH ARE YOU OFFERING TO PAY, WHAT IS THE FORM OF PAYMENT AND WILL I HAVE TO
PAY ANY FEES OR COMMISSIONS?
We are offering to pay $21.00 per share (including the associated preferred
stock purchase rights), net to you, in cash without interest. If you are the
record owner of your shares and you tender your shares to us in the offer, you
will not have to pay brokerage fees or similar expenses. If you own your shares
through a broker or other nominee, and your broker tenders your shares on your
behalf, your broker or nominee may charge you a fee for doing so. You should
consult your broker or nominee to determine whether any charges will apply. See
"Introduction" and Section 1 -- "Terms of the Offer" -- of this offer to
purchase.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
3M will provide us with sufficient funds to acquire all tendered shares and
any shares to be acquired in the merger that is expected to follow the
successful completion of the offer. 3M expects to obtain these funds from its
available cash on hand. The offer is not conditioned upon any financing
arrangements. See Section 10 -- "Source and Amount of Funds" -- of this offer to
purchase.
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision
whether to tender shares and accept the offer because:
-- the offer is being made for all outstanding shares solely for cash,
-- the offer is not subject to any financing condition, and
-- if we consummate the offer, we will acquire all remaining shares for
the same cash price in the merger.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 midnight, New York City time, on
January 3, 2001, to tender your shares in the offer, unless the expiration date
of the offer is extended. Further, if you cannot deliver everything that is
required in order to make a valid tender by that time, you may be able to use a
guaranteed delivery procedure, which is described later in this offer to
purchase. See Section 1 -- "Terms of the Offer" -- and Section 2 -- "Procedures
for Tendering Shares" -- of this offer to purchase.
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
Subject to the terms of the merger agreement, we can extend the offer. We
have agreed in the merger agreement that:
--------------------------------------------------------------------------------
1
<PAGE>
--------------------------------------------------------------------------------
-- we may (i) extend the offer for one or more periods of time that we
reasonably believe to be necessary to cause the conditions to the
offer to be satisfied, if at the scheduled expiration date of the
offer any of the conditions to our obligation to accept shares for
payment is not satisfied or waived until such time as all conditions
are satisfied or waived, (ii) extend the offer for any period required
by any rule, regulation, interpretation or position of the Securities
and Exchange Commission that is applicable to the offer or (iii)
extend the offer for an aggregate period of not more than 10 business
days beyond the latest applicable date that would otherwise be
permitted under clause (i) or (ii) of this sentence, if, as of such
date, all of the conditions to our obligation to accept the shares for
payment are satisfied or waived, but the number of shares validly
tendered and not withdrawn pursuant to the offer equals less than 90%
of the outstanding shares of MicroTouch Systems;
-- we shall extend the offer for a period of time which we reasonably
believe is necessary to cause the conditions to the offer to be
satisfied if (i) all of the conditions to the offer are not satisfied
on any scheduled expiration date of the offer, (ii) these unsatisfied
conditions are reasonably capable of being satisfied within 30 days
after the initial expiration date of the offer and (iii) MicroTouch
Systems is in compliance with all of its covenants in the merger
agreement; PROVIDED, HOWEVER, that we are not required to extend the
offer beyond February 2, 2001; and
-- we may elect to provide a "subsequent offering period" for the offer.
A subsequent offering period, if one is included, will be an
additional period of time beginning after we have purchased shares
tendered during the offer, during which shareholders may tender, but
not withdraw, their shares and receive the offer consideration. We do
not currently intend to include a subsequent offering period, although
we reserve the right to do so. See Section 1 -- "Terms of the Offer"
-- of this offer to purchase.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform EquiServe, L.P., the depositary for
the offer, of that fact and will make a public announcement of the extension,
not later than 9:00 a.m., New York City time, on the next business day after the
day on which the offer was scheduled to expire. See Section 1 -- "Terms of the
Offer" -- of this offer to purchase.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
There is no financing condition to the offer, however:
-- we are not obligated to purchase any tendered shares unless the number
of shares validly tendered and not withdrawn before the expiration
date of the offer represents at least a majority of the shares of
MicroTouch Systems outstanding on a fully diluted basis. We have
agreed not to waive this minimum tender condition without the consent
of MicroTouch Systems.
-- we are not obligated to purchase any tendered shares if:
-- there is a material adverse change in MicroTouch Systems or its
business; or
-- the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 or under any other applicable
material competition, merger, control, antitrust or similar law
or regulation have not expired or been terminated.
The offer is also subject to a number of other conditions. See Section 15
-- "Certain Conditions of the Offer" -- of this offer to purchase.
HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed letter of transmittal and any other documents
required, to EquiServe, L.P., the depositary for the offer, not later than the
time the tender offer expires. If your shares are held in street name, the
shares can be tendered by your nominee through The Depository Trust Company. If
you cannot deliver something that is required to be delivered to the depositary
by the expiration of the tender offer, you may get a little extra time to do so
by having a broker, a bank or other fiduciary that is a member of the Securities
Transfer Agents Medallion Program or other eligible institution guarantee that
the missing items will be received by the depositary within three National
Association of Securities
--------------------------------------------------------------------------------
2
<PAGE>
--------------------------------------------------------------------------------
Dealers Automated Quotation trading days. For the tender to be valid, however,
the depositary must receive the missing items within that three trading day
period. See Section 2 -- "Procedures for Tendering Shares" -- of this offer to
purchase.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw shares at any time until the offer has expired and, if we
have not by January 15, 2001, agreed to accept your shares for payment, you can
withdraw them at any time after such time until we accept shares for payment.
This right to withdraw will not apply to any subsequent offering period, if one
is included. See Section 1 -- "Terms of the Offer" -- and Section 3 --
"Withdrawal Rights" -- of this offer to purchase.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw the shares. See Section 1 -- "Terms of the
Offer" -- and Section 3 -- "Withdrawal Rights" -- of this offer to purchase.
WHAT DOES THE MICROTOUCH SYSTEMS BOARD OF DIRECTORS THINK OF THE OFFER?
We are making the offer pursuant to a merger agreement among us, 3M and
MicroTouch Systems. The MicroTouch Systems board of directors (at a meeting duly
called and held) determined that the merger agreement, the offer and the merger
are fair to and in the best interests of MicroTouch Systems and the shareholders
of MicroTouch Systems and approved and adopted the merger agreement and the
transactions contemplated thereby, including our tender offer and our proposed
merger with MicroTouch Systems and resolved to recommend that shareholders
accept the offer and tender their shares.
HAVE ANY SHAREHOLDERS AGREED TO TENDER THEIR SHARES?
Yes. Certain officers and directors of MicroTouch Systems have entered into
a shareholders agreement with us and 3M under which they have agreed to tender
all of their shares of MicroTouch Systems. These shareholders own, in the
aggregate, 11.2% of the outstanding common stock of MicroTouch Systems on a
fully diluted basis. See Section 13 -- "The Merger Agreement; the Shareholders
Agreement; the Stock Option Agreement" -- of this offer to purchase.
WHY DID MICROTOUCH SYSTEMS GRANT 3M AN OPTION TO PURCHASE ITS SHARES?
As a prerequisite to entering into the merger agreement, we required that
MicroTouch Systems grant an option to our parent, 3M, to buy up to 1,291,873
shares of MicroTouch Systems common stock. This represents 19.9% of the shares
of MicroTouch Systems outstanding on November 13, 2000. The number of shares
issuable under the option will be increased if the number of outstanding shares
of MicroTouch Systems increases, in order to maintain the percentage of
outstanding shares represented by the option at 19.9%. The exercise price of the
option is $21.00 per share.
The option is not currently exercisable and may only be exercised by 3M if
(i) any person or group acquires or has the right to acquire 20% or more of the
outstanding shares of common stock of MicroTouch; or (ii) an event occurs that
would entitle us to receive a termination fee under the merger agreement.
Otherwise, the option will terminate and may not be exercised by 3M.
The option may discourage third parties from acquiring a significant stake
in MicroTouch Systems, and is intended to increase the likelihood that the
tender offer and merger will be completed. If the merger agreement is terminated
and 3M exercises its option to purchase MicroTouch Systems common stock,
MicroTouch Systems would not be able to account for future transactions on a
pooling-of-interests basis.
See Section 13 -- "The Merger Agreement; the Shareholders Agreement; the
Stock Option Agreement" -- of this offer to purchase.
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL THE SHARES ARE NOT TENDERED
IN THE OFFER?
If we accept for payment and pay for at least a majority of the outstanding
shares on a fully diluted basis of MicroTouch Systems, we will be merged with
MicroTouch Systems. If that merger takes place, 3M will own all of
--------------------------------------------------------------------------------
3
<PAGE>
--------------------------------------------------------------------------------
the shares of MicroTouch Systems, and all other shareholders of MicroTouch
Systems will receive $21.00 per share in cash (or any higher price per share
that is paid in the offer).
There are no dissenters' rights available in connection with the offer.
However, if the merger takes place, shareholders who have not sold their shares
in the offer will have dissenters' rights under Massachusetts law. See Section
13 -- "The Merger Agreement; the Shareholders Agreement; the Stock Option
Agreement -- Dissenters' Rights" -- of this offer to purchase.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger takes place, shareholders who do not tender in the offer
will receive the same amount of cash per share that they would have received had
they tendered their shares in the offer, subject to their right to pursue
dissenters' rights under Massachusetts law. Therefore, if the merger takes place
and you do not perfect your dissenters' rights, the only difference to you
between tendering your shares and not tendering your shares is that you will be
paid earlier if you tender your shares. However, if the merger does not take
place, the number of shareholders and the number of shares of MicroTouch Systems
that are still in the hands of the public may be so small that there may no
longer be an active public trading market (or, possibly, any public trading
market) for the shares. Also, the shares may no longer be eligible to be traded
on The National Association of Securities Dealers Automated Quotation System --
National Market or any other securities exchange, and MicroTouch Systems may
cease making filings with the SEC or otherwise cease being required to comply
with the SEC's rules relating to publicly held companies. See Section 7 --
"Effect of the Offer on the Market for the Shares; Nasdaq Listing; Exchange Act
Registration; Margin Regulations" -- of this offer to purchase.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On November 13, 2000, the last trading day before MicroTouch Systems and 3M
announced that they had signed the merger agreement, the last sale price of the
shares reported on The National Association of Securities Dealers Automated
Quotation System -- National Market was $14.875 per share. On November 16, 2000,
the last trading day before we commenced our tender offer, the last sale price
of the shares was $20.56 per share. We advise you to obtain a recent quotation
for shares of MicroTouch Systems in deciding whether to tender your shares. See
Section 6 -- "Price Range of the Shares; Dividends on the Shares" -- of this
offer to purchase.
TO WHOM CAN I TALK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call MacKenzie Partners, Inc. at (800) 322-2885 (toll free) or
Merrill Lynch & Co. at (212) 236-3790 (call collect). MacKenzie Partners is
acting as the information agent and Merrill Lynch is acting as the dealer
manager for our tender offer. See the back cover of this offer to purchase.
--------------------------------------------------------------------------------
4
<PAGE>
To the Holders of Common Stock of
MicroTouch Systems, Inc.:
INTRODUCTION
EQUINOX ACQUISITION, INC., a Massachusetts corporation (the "PURCHASER")
and wholly owned subsidiary of MINNESOTA MINING AND MANUFACTURING COMPANY, a
Delaware corporation ("PARENT"), hereby offers to purchase all the outstanding
shares of common stock, par value $0.01 per share ("COMMON STOCK"), of
MICROTOUCH SYSTEMS, INC., a Massachusetts corporation (the "COMPANY"), including
the associated preferred stock purchase rights (the "RIGHTS") issued pursuant to
the Rights Agreement, dated as of January 19, 1996, between the Company and The
First National Bank of Boston, as Rights Agent (the "RIGHTS AGREEMENT") (the
Common Stock and the Rights together are referred to herein as the "SHARES") at
a price of $21.00 per Share, net to the seller in cash, without interest thereon
(the "OFFER PRICE"), upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which, together
with any amendments or supplements hereto or thereto, collectively constitute
the "OFFER").
Tendering shareholders whose Shares are registered in their own names and
who tender directly to the Depositary (as defined below) will not be obligated
to pay brokerage fees or commissions or, except as set forth in Instruction 6 of
the Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to
the Offer. Shareholders who hold their Shares through banks or brokers should
check with such institutions as to whether they charge any service fees. The
Purchaser will pay all fees and expenses of Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), which is acting as the Dealer Manager (the
"DEALER MANAGER"), EquiServe, L.P., which is acting as the Depositary (the
"DEPOSITARY"), and MacKenzie Partners, Inc., which is acting as the Information
Agent (the "INFORMATION AGENT"), incurred in connection with the Offer. See
Section 16.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of November 13, 2000, among Parent, the Purchaser and the Company (the
"Merger Agreement"), pursuant to which, following the consummation of the Offer
and the satisfaction or waiver of certain conditions, the Purchaser will be
merged with and into the Company, with the Company surviving the merger as a
wholly owned subsidiary of Parent (the "MERGER"). In the Merger, each
outstanding Share (other than Shares owned by Parent, the Purchaser or the
Company or by shareholders, if any, who are entitled to and properly exercise
dissenters' rights under Massachusetts law) will be converted into the right to
receive the price per Share paid pursuant to the Offer in cash, without interest
thereon.
The Merger Agreement is more fully described in Section 13.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") (AT A MEETING
DULY CALLED AND HELD), HAS (X) DETERMINED THAT THE MERGER AGREEMENT, THE OFFER
AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND THE
SHAREHOLDERS OF THE COMPANY; (Y) APPROVED AND ADOPTED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE OFFER AND
THE MERGER; AND (Z) RESOLVED TO RECOMMEND THAT SHAREHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER (THE
DETERMINATIONS, APPROVALS AND RECOMMENDATIONS OF THE COMPANY BOARD SET FORTH IN
CLAUSES (X), (Y) AND (Z) ABOVE BEING COLLECTIVELY REFERRED TO AS THE
"RECOMMENDATION"). THE FACTORS CONSIDERED BY THE COMPANY BOARD IN ARRIVING AT
ITS DECISION TO APPROVE THE MERGER AGREEMENT, THE OFFER, THE MERGER AND THE
OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND TO RECOMMEND THAT
SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO
THE OFFER ARE DESCRIBED IN THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT
ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9"), WHICH HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") AND IS BEING MAILED TO
SHAREHOLDERS OF THE COMPANY CONCURRENTLY HEREWITH.
Broadview International LLC ("Broadview"), the Company's financial advisor
has delivered to the Company Board a written opinion, dated November 13, 2000,
to the effect that, as of the date of the opinion and based upon and subject to
certain matters stated in such opinion, the $21.00 per Share cash
5
<PAGE>
consideration to be received in the Offer and the Merger by the holders of
Shares (other than Parent and its affiliates) was fair, from a financial point
of view, to such holders. A copy of Broadview's opinion is included as an annex
to the Schedule 14D-9. Shareholders are urged to, and should, read the Schedule
14D-9 and such opinion carefully in their entirety.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION 1
HEREOF) THAT NUMBER OF SHARES THAT WOULD REPRESENT AT LEAST A MAJORITY OF THE
FULLY DILUTED SHARES ON THE DATE OF PURCHASE (THE "MINIMUM TENDER CONDITION"),
AND (B) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS
ACT OF 1976, AS AMENDED (THE "HSR ACT"), APPLICABLE TO THE PURCHASE OF SHARES
PURSUANT TO THE OFFER OR TO THE MERGER AND ANY OTHER WAITING PERIODS UNDER ANY
OTHER APPLICABLE MATERIAL COMPETITION, MERGER, CONTROL, ANTITRUST OR SIMILAR LAW
OR REGULATION SHALL HAVE EXPIRED OR BEEN TERMINATED.
Consummation of the Merger is subject to a number of conditions, including
approval by shareholders of the Company, if such approval is required under
applicable law, and Shares having been purchased pursuant to the Offer. In the
event the Purchaser acquires 90% or more of the outstanding Shares pursuant to
the Offer or otherwise, the Purchaser and the Company may agree to amend the
Merger Agreement to allow the Merger to be effected pursuant to the "short-form"
merger provisions of the Massachusetts Business Corporation Law (the "MBCL"),
without prior notice to, or any action by any other shareholder of the Company.
In such event, the Purchaser would effect the Merger without any action by any
other shareholder of the Company as promptly as practicable following the
purchase of Shares pursuant to the Offer. See Section 13.
The Company has informed the Purchaser that, as of November 10, 2000, there
were 8,247,309 fully diluted Shares, consisting of 6,491,823 Shares issued and
outstanding and 1,755,486 Shares reserved for issuance upon the exercise of
outstanding options to purchase Shares from the Company. Based upon the
foregoing and assuming that no Shares are otherwise issued after November 10,
2000, the Minimum Tender Condition will be satisfied if at least 4,123,655
Shares are validly tendered and not withdrawn prior to the Expiration Date. The
actual number of Shares required to be tendered to satisfy the Minimum Tender
Condition will depend upon the actual number of fully diluted Shares on the date
that the Purchaser accepts Shares for payment pursuant to the Offer. If the
Minimum Tender Condition is satisfied, and the Purchaser accepts for payment
Shares tendered pursuant to the Offer, the Purchaser will be able to elect a
majority of the members of the Company Board and to effect the Merger without
the affirmative vote of any other shareholder of the Company. See Section 13.
No dissenters' rights are available in connection with the Offer.
Shareholders may exercise dissenters' rights under the MBCL in connection with
the Merger, however, regardless of whether the Merger is consummated with or
without a vote of the shareholders.
Certain U.S. federal income tax consequences of the sale of Shares pursuant
to the Offer and the conversion of Shares pursuant to the Merger are described
in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY AND IN THEIR ENTIRETY BEFORE
ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3. The
term "EXPIRATION DATE" means 12:00 midnight, New York City time, on January 3,
2001, unless and until the Purchaser shall have extended the period of time
during which the
6
<PAGE>
Offer is open in accordance with the terms of Merger Agreement, in which event
the term "EXPIRATION DATE" shall mean the latest time and date on which the
Offer, as so extended by the Purchaser, will expire.
The Purchaser may, at any time and from time to time, take one or more of
the following actions without the consent of the Company: (a) extend the Offer
for one or more periods of time that the Purchaser reasonably believes are
necessary to cause the conditions to the Offer to be satisfied, if at the
Expiration Date any of the conditions to the Purchaser's obligation to accept
Shares for payment is not satisfied or waived, until such time as all such
conditions are satisfied or waived, (b) extend the Offer for any period required
by any rule, regulation, interpretation or position of the Commission or the
staff thereof that is applicable to the Offer or (c) extend the Offer for an
aggregate period of not more than ten business days beyond the latest applicable
date that would otherwise be permitted under clause (a) or (b) of this sentence,
if, as of such date, all of the conditions to the Purchaser's obligation to
accept Shares for payment (including the Minimum Tender Condition) are satisfied
or waived but the number of Shares validly tendered and not withdrawn pursuant
to the Offer equals less than 90% of the outstanding Shares on a fully diluted
basis. If (x) all of the conditions to the Offer are not satisfied on any
scheduled Expiration Date of the Offer and (y) the Company is in compliance with
all of its covenants in the Merger Agreement, then the Purchaser will extend the
Offer for one or more periods of time that the Purchaser reasonably believes are
necessary to cause the conditions of the Offer to be satisfied, until all such
conditions are satisfied or waived; PROVIDED, HOWEVER, that the Purchaser will
not be required to extend the Offer pursuant to this sentence beyond February 2,
2001. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR
TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF OR AMENDMENT TO THE OFFER OR ANY
DELAY IN PAYING FOR SUCH SHARES.
The Purchaser expressly reserves the right (but shall not be obligated), at
any time and from time to time, to waive any condition to the Offer or modify
the terms of the Offer, by giving oral or written notice of such waiver or
modification to the Depositary, in each case in its sole discretion; PROVIDED,
HOWEVER, that, without the consent of the Company, the Purchaser shall not (i)
reduce the number of Shares subject to the Offer, (ii) reduce the price per
Share to be paid pursuant to the Offer or change the form of consideration
payable in the Offer, (iii) amend or waive the Minimum Tender Condition or add
to the conditions of the Offer, (iv) except as provided above, extend the Offer,
or (v) otherwise amend the terms of Offer in any manner adverse to the holders
of Shares.
If by 12:00 midnight, New York City time, on January 3, 2001 (or any later
date or time then set as the Expiration Date), any of or all the conditions to
the Offer have not been satisfied or waived, the Purchaser, subject to the terms
of the Merger Agreement and the applicable rules and regulations of the
Commission, reserves the right (but shall not be obligated) (a) to terminate the
Offer and not accept for payment or pay for any Shares and return all tendered
Shares to tendering shareholders, (b) except as set forth above with respect to
the Minimum Tender Condition, to waive all the unsatisfied conditions and accept
for payment and pay for all Shares validly tendered prior to the Expiration Date
and not theretofore validly withdrawn, (c) as set forth above, to extend the
Offer and, subject to the right of shareholders to withdraw Shares until the
Expiration Date, retain the Shares that have been tendered during the period or
periods for which the Offer is extended or (d) except as set forth above, to
amend the Offer.
Any extension, waiver, amendment or termination will be followed as
promptly as practicable by public announcement thereof. An announcement in the
case of an extension will be made no later than 9:00 a.m., Eastern time, on the
next Business Day (as defined below) after the previously scheduled Expiration
Date. Without limiting the manner in which the Purchaser may choose to make any
public announcement, subject to applicable law (including Rules 14d-4(d),
14d-6(c) and 14(e)-1 under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), which require that material changes be promptly disseminated to
holders of Shares), we will have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a
release to the Dow Jones News Service. As used in this Offer to Purchase,
"BUSINESS DAY" has the meaning set forth in Rule 14d-1 under the Exchange Act.
7
<PAGE>
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of such offer or information concerning
such offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. With
respect to a change in price or a change in the percentage of securities sought,
a minimum period of 10 business days is generally required to allow for adequate
dissemination to shareholders.
Pursuant to Rule 14d-11 under the Exchange Act, although the Purchaser does
not currently intend to do so, the Purchaser may, subject to certain conditions,
elect to provide a subsequent offering period of from three business days to 20
business days in length following the expiration of the Offer on the Expiration
Date and acceptance of the Shares for payment pursuant to the Offer (a
"SUBSEQUENT OFFERING PERIOD"). A Subsequent Offering Period would be an
additional period of time, following the expiration of the Offer and the
purchase of Shares in the Offer, during which shareholders may tender Shares not
tendered in the Offer. A Subsequent Offering Period, if one is included, is not
an extension of the Offer, which already will have been completed.
During a Subsequent Offering Period, tendering shareholders will not have
withdrawal rights and the Purchaser will promptly purchase and pay for any
Shares tendered at the same price paid in the Offer. Rule 14d-11 provides that
the Purchaser may provide a Subsequent Offering Period so long as, among other
things, (i) the initial period of the Offer has expired, (ii) the Purchaser
offers the same form and amount of consideration for Shares in the Subsequent
Offering Period as in the initial Offer, (iii) the Purchaser immediately accepts
and promptly pays for all securities tendered during the Offer prior to its
expiration, (iv) the Purchaser announces the results of the Offer, including the
approximate number and percentage of Shares deposited in the Offer, no later
than 9:00 a.m., Eastern time, on the next business day after the Expiration Date
and immediately begins the Subsequent Offering Period and (v) the Purchaser
immediately accepts and promptly pays for Shares as they are tendered during the
Subsequent Offering Period. The Purchaser will be able to include a Subsequent
Offering Period, if it satisfies the conditions above, after January 3, 2001. In
a public release, the Commission has expressed the view that the inclusion of a
Subsequent Offering Period would constitute a material change to the terms of
the Offer requiring the Purchaser to disseminate new information to shareholders
in a manner reasonably calculated to inform them of such change sufficiently in
advance of the Expiration Date (generally five business days). In the event the
Purchaser elects to include a Subsequent Offering Period, it will notify
shareholders of the Company consistent with the requirements of the Commission.
THE PURCHASER DOES NOT CURRENTLY INTEND TO INCLUDE A SUBSEQUENT OFFERING
PERIOD IN THE OFFER, ALTHOUGH IT RESERVES THE RIGHT TO DO SO IN ITS SOLE
DISCRETION. PURSUANT TO RULE 14d-7 UNDER THE EXCHANGE ACT, NO WITHDRAWAL RIGHTS
APPLY TO SHARES TENDERED DURING A SUBSEQUENT OFFERING PERIOD AND NO WITHDRAWAL
RIGHTS APPLY DURING THE SUBSEQUENT OFFERING PERIOD WITH RESPECT TO SHARES
TENDERED IN THE OFFER AND ACCEPTED FOR PAYMENT. THE SAME CONSIDERATION WILL BE
PAID TO SHAREHOLDERS TENDERING SHARES IN THE OFFER OR IN A SUBSEQUENT OFFERING
PERIOD, IF ONE IS INCLUDED.
The Company has provided the Purchaser with the Company's shareholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares, and will be
furnished to brokers, dealers, banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the shareholder lists, or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
2. PROCEDURES FOR TENDERING SHARES
VALID TENDER. For a shareholder validly to tender Shares pursuant to the
Offer, (a) the certificates for tendered Shares, together with a Letter of
Transmittal (or facsimile thereof), properly completed and
8
<PAGE>
duly executed, any required signature guarantees and any other required
documents, must, prior to the Expiration Date, be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase; (b)
in the case of a transfer effected pursuant to the book-entry transfer
procedures described under "Book-Entry Transfer", either a Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, and any required
signature guarantees, or an Agent's Message (as defined below), and any other
required documents, must be received by the Depositary at one of such addresses,
such Shares must be delivered pursuant to the book-entry transfer procedures
described below and a Book-Entry Confirmation (as defined below) must be
received by the Depositary, in each case prior to the Expiration Date; or (c)
the tendering shareholder must, prior to the Expiration Date, comply with the
guaranteed delivery procedures described below under "Guaranteed Delivery".
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering shareholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY
(AS DEFINED BELOW), IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER.
SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "BOOK-ENTRY TRANSFER
FACILITY") for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant of the
Book-Entry Transfer Facility's system may make book-entry delivery of Shares by
causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents, must be, in any case,
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase prior to the Expiration Date for a valid tender of
Shares by book-entry. The confirmation of a book-entry transfer of Shares into
the Depositary's account at the Book-Entry Transfer Facility as described above
is referred to herein as a "Book-Entry Confirmation". DELIVERY OF DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "AGENT'S MESSAGE" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal if (a) the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section 2, includes any participant
in the Book-Entry Transfer Facility's system whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (b) such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (such
9
<PAGE>
participant, an "ELIGIBLE INSTITUTION"). In all other cases, all signatures on
the Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Shares
not tendered or not accepted for payment are to be returned to a person other
than the registered holder of the certificates surrendered, the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as aforesaid. See Instructions 1 and 5 to the Letter of
Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or the book-entry transfer procedures cannot be completed on a timely
basis or time will not permit all required documents to reach the Depositary
prior to the Expiration Date, such shareholder's tender may be effected if all
the following conditions are met:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by the Purchaser, is received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date; and
(c) Either (i) the certificates for tendered Shares together with a Letter
of Transmittal (or facsimile thereof), properly completed and duly executed, and
any required signature guarantees, and any other required documents are received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase within three trading days after the date of execution of such
Notice of Guaranteed Delivery or (ii) in the case of a book-entry transfer
effected pursuant to the book-entry transfer procedures described above under
"Book-Entry Transfer", either a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, and any required signature guarantees, or
an Agent's Message, and any other required documents, is received by the
Depositary at one of such addresses, such Shares are delivered pursuant to the
book-entry transfer procedures above and a Book-Entry Confirmation is received
by the Depositary, in each case within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "TRADING DAY" is any day on
which the National Association of Securities Dealers Automated Quotation System
("NASDAQ") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary 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 of Guaranteed Delivery.
PREFERRED STOCK PURCHASE RIGHTS. The Rights Agreement has been amended as
of November 9, 2000, to exempt from the provisions of the Rights Agreement the
Merger Agreement, the acquisition of Shares by the Purchaser pursuant to the
Offer and the other transactions contemplated by the Merger Agreement. The
Rights are represented by and transferred with the Shares. Accordingly a tender
of Shares will constitute a tender of the associated Rights.
OTHER REQUIREMENTS. Notwithstanding any provision hereof, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares, (b) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message in lieu of the Letter of Transmittal) and (c) any other
documents required by the Letter of Transmittal. Accordingly, tendering
shareholders may be paid at different times depending upon when certificates for
Shares or Book-Entry Confirmations with respect to Shares are actually received
by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE PURCHASER
ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
APPOINTMENT. By executing a Letter of Transmittal (or facsimile thereof),
(or, in the case of a book-entry transfer, by delivery of an Agent's Message, in
lieu of a Letter of Transmittal), a tendering
10
<PAGE>
shareholder will irrevocably appoint designees of the Purchaser as such
shareholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after November 17, 2000. All such proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such shareholder as provided herein. Upon the
effectiveness of such appointment, all prior powers of attorney, proxies and
consents given by such shareholder with respect to such Shares or other
securities or rights will, without further action, be revoked and no subsequent
powers of attorney, proxies, consents or revocations may be given (and, if
given, will not be effective). The designees of the Purchaser will thereby be
empowered to exercise all voting and other rights with respect to such Shares
and other securities or rights in respect of any annual, special or adjourned
meeting of the Company's shareholders, actions by written consent in lieu of any
such meeting or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser must be able to exercise full voting, consent and
other rights with respect to such Shares and other securities or rights,
including voting at any meeting of shareholders.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser, be
unlawful. The Purchaser also reserves the absolute right to waive any defect or
irregularity in the tender of any Shares of any particular shareholder whether
or not similar defects or irregularities are waived in the case of other
shareholders. No tender of Shares will be deemed to have been validly made until
all defects or irregularities relating thereto have been cured or waived. None
of the Purchaser, Parent, the Company, the Depositary, the Information Agent,
the Dealer Manager or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. The Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto and any other related documents thereto) will be final and
binding.
BACKUP WITHHOLDING TAX. In order to avoid U.S. federal backup withholding
tax on payments of cash pursuant to the Offer, a shareholder surrendering Shares
in the Offer must, unless an exemption applies, provide the Depositary with such
shareholder's correct taxpayer identification number ("TIN") on a Substitute
Form W-9 and certify under penalties of perjury that such TIN is correct and
that such shareholder is not subject to backup withholding tax. If a shareholder
does not provide such shareholder's correct TIN or fails to provide the
certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such shareholder and any payment of cash to such shareholder
pursuant to the Offer may be subject to backup withholding tax at a rate of 31%.
All shareholders surrendering Shares pursuant to the Offer should complete and
sign the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding tax (unless an applicable exemption exists and is
proved in a manner satisfactory to the Purchaser and the Depositary). Certain
shareholders (including, among others, all corporations and certain foreign
individuals and entities) are not subject to backup withholding tax.
Noncorporate foreign shareholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding tax. See
Instruction 9 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser
11
<PAGE>
pursuant to the Offer, may also be withdrawn at any time after January 15, 2001
unless, as described below, such Shares are tendered during any Subsequent
Offering Period.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and must specify
the name of the person having tendered the Shares to be withdrawn, the number of
Shares to be withdrawn and the name of the registered holder of the Shares to be
withdrawn, if different from the name of the person who tendered the Shares. If
certificates for Shares have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and,
unless such Shares have been tendered by an Eligible Institution, any and all
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been tendered pursuant to the book-entry transfer
procedures described in Section 2, any notice of withdrawal must also specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares and otherwise comply with the Book-Entry
Transfer Facility's procedures. Withdrawals of tenders of Shares may not be
rescinded, and any Shares properly withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 2 at
any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Company, the Depositary, the Information Agent, the
Dealer Manager or any other person will be under any duty to give notification
of any defects or irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification.
In the event the Purchaser provides a Subsequent Offering Period following
the Offer, no withdrawal rights will apply to Shares tendered during such
Subsequent Offering Period or to Shares tendered in the Offer and accepted for
payment.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3 promptly after the Expiration Date. The Purchaser,
subject to the Merger Agreement, expressly reserves the right, in its sole
discretion, to delay acceptance for payment of or payment for Shares in order to
comply in whole or in part with any applicable law, including, without
limitation, the HSR Act, and any other applicable material competition, merger,
control, antitrust or similar law or regulation. Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to a
bidder's obligation to pay for or return tendered securities promptly after the
termination or withdrawal of such bidder's offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) the certificates
for such Shares, together with a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, and any required signature guarantees or
(b) in the case of a transfer effected pursuant to the book-entry transfer
procedures described in Section 2, a Book-Entry Confirmation and either a Letter
of Transmittal (or facsimile thereof), properly completed and duly executed, and
any required signature guarantees, or an Agent's Message, and any other required
documents. Accordingly, tendering shareholders may be paid at different times
depending upon when certificates for Shares or Book-Entry Confirmations with
respect to Shares are actually received by the Depositary.
The per Share consideration paid to any shareholder pursuant to the Offer
will be the highest per Share consideration paid to any other shareholder
pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered to the Purchaser and
not properly withdrawn as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
Shares. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for
12
<PAGE>
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as an agent for tendering
shareholders for the purpose of receiving payment from the Purchaser and
transmitting payment to tendering shareholders whose Shares have been accepted
for payment. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE
FOR TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF OR AMENDMENT TO THE OFFER OR
ANY DELAY IN PAYING FOR SUCH SHARES.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act
(relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer) and the
terms of the Merger Agreement (requiring that the Purchaser pay for Shares
accepted for payment as soon as practicable after the Expiration Date)), the
Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to do so as described in Section 3.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, the certificates for such Shares
will be returned (and, if certificates are submitted for more Shares than are
tendered, new certificates for the Shares not tendered will be sent) in each
case without expense to the tendering shareholder (or, in the case of Shares
delivered by book-entry transfer of such Shares into the Depositary's account at
the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described in Section 2, such Shares will be credited to an account maintained at
the Book-Entry Transfer Facility), as promptly as practicable after the
expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Shares tendered pursuant to
the Offer, but any such transfer or assignment will not relieve the Purchaser of
its obligations under the Offer and will in no way prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for U.S. federal income tax purposes under the Internal Revenue Code
of 1986, as amended (the "CODE"), and may also be a taxable transaction under
applicable state, local or foreign income or other tax laws. Generally, for U.S.
federal income tax purposes, a tendering shareholder will recognize gain or loss
equal to the difference between the amount of cash received by the shareholder
as consideration for the Shares tendered by the shareholder and purchased
pursuant to the Offer or converted into cash in the Merger, as the case may be,
and the adjusted tax basis of such Shares. Gain or loss will be calculated
separately for each block of Shares that have the same holding period and
adjusted tax basis. If tendered Shares are held by a tendering shareholder as
capital assets, gain or loss recognized by such shareholder will be capital gain
or loss, which will be long-term capital gain or loss if such shareholder's
holding period for the Shares exceeds one year.
A shareholder (other than certain exempt shareholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
may be subject to a 31% federal backup withholding tax unless the shareholder
provides its TIN and certifies that such number is correct (or properly
certifies that it is awaiting a TIN) and certifies as to no loss of exemption
from backup withholding tax and otherwise complies with the applicable
requirements of the backup withholding tax rules. A shareholder that does not
furnish a required TIN or that does not otherwise establish a basis for an
exemption from backup withholding tax may be subject to a penalty imposed by the
IRS. See "Backup Withholding Tax" under Section 2. Each shareholder should
complete and sign the Substitute Form W-9 included as part of the Letter of
Transmittal so as to provide the information and certification necessary to
avoid backup withholding tax.
If U.S. Federal backup withholding tax applies to a shareholder, the
Depositary is required to withhold 31% from payments to such shareholder. Backup
withholding tax is not an additional tax.
13
<PAGE>
Rather, the amount of the backup withholding tax can be credited against the
U.S. federal income tax liability of the person subject to the backup
withholding tax, provided that the required information is given to the IRS. If
backup withholding tax results in an overpayment of tax, a refund can be
obtained by the shareholder by filing a U.S. federal income tax return.
The foregoing discussion may not be applicable with respect to Shares
received pursuant to the exercise of employee stock options or otherwise as
compensation or with respect to holders of Shares who are subject to special tax
treatment under the Code -- such as non-U.S. persons, insurance companies,
tax-exempt organizations, partnerships, dealers or traders in securities and
financial institutions -- and may not apply to a holder of Shares in light of
individual circumstances, such as holding Shares as a hedge or as part of a
hedging, straddle, conversion or other risk-reduction transaction. SHAREHOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are listed on the Nasdaq National Market under the symbol
"MTSI." The following table sets forth, for each of the periods indicated, the
high and low sales prices per Share as reported on the Nasdaq National Market
based on published financial sources.
HIGH LOW
-------- --------
Fiscal Year Ended December 31, 1998:
Fourth Quarter ..................................... $ 16.88 $ 12.25
Fiscal Year Ended December 31, 1999:
First Quarter ...................................... 19.56 11.88
Second Quarter ..................................... 15.56 12.25
Third Quarter ...................................... 17.50 14.56
Fourth Quarter ..................................... 17.94 12.06
Fiscal Year Ending December 31, 2000:
First Quarter ...................................... 14.63 12.63
Second Quarter ..................................... 12.75 8.63
Third Quarter ...................................... 9.50 6.13
Fourth Quarter (through November 16, 2000) ......... 20.63 6.00
On November 13, 2000, the last full trading day before the public
announcement of the execution of the Merger Agreement, the last reported sales
price of the Shares on the Nasdaq National Market was $14.875 per Share. On
November 16, 2000, the last full trading day before commencement of the Offer,
the last reported sales price of the Shares on the Nasdaq National Market was
$20.56 per Share. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR THE SHARES.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, the Company had never paid a cash dividend on its
common stock and expected that future earnings would be retained for use in its
business.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ LISTING; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
MARKET FOR THE SHARES. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
NASDAQ NATIONAL MARKET LISTING. Depending upon the number of Shares
purchased pursuant to the Offer, the Shares may no longer meet the requirements
for continued inclusion on the Nasdaq National Market, which requires that an
issuer either (i) have at least 750,000 publicly held shares held by at least
400 round-lot shareholders, with a market value of at least $5,000,000, net
tangible assets
14
<PAGE>
(total assets (excluding goodwill) less total liabilities) of at least
$4,000,000 and have a minimum bid price of $1 or (ii) have at least 1,100,000
publicly held shares, held by at least 400 round-lot shareholders, with a market
value of at least $15,000,000, have a minimum bid price of $5 and have either
(A) a market capitalization of at least $50,000,000 or (B) total assets and
revenues each of at least $50,000,000. If the Nasdaq National Market and the
NASDAQ Smallcap Market were to cease to publish quotations for the Shares, it is
possible that the Shares would continue to trade in the over-the-counter market
and that price or other quotations would be reported by other sources. The
extent of the public market for such Shares and the availability of such
quotations would depend, however, upon such factors as the number of
shareholders and/or the aggregate market value of such securities remaining at
such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration under the Exchange
Act as described below, and other factors. The Purchaser cannot predict whether
the reduction in the number of Shares that might otherwise trade publicly would
have an adverse or beneficial effect on the market price for, or marketability
of, the Shares or whether it would cause future market prices to be greater or
lesser than the price per Share to be paid in the Offer. In the Merger
Agreement, the Company has represented that, as of November 10, 2000, 6,491,823
Shares were issued and outstanding.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the Commission if the Shares are neither listed on a national
securities exchange nor held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would reduce the information
required to be furnished by the Company to its shareholders and to the
Commission and would make certain provisions of the Exchange Act no longer
applicable to the Company, such as the short-swing profit-recovery provisions of
Section 16(b) of the Exchange Act and the requirement of furnishing a proxy
statement pursuant to Section 14(a) or 14(c) of the Exchange Act in connection
with shareholders' meetings and the related requirement of furnishing an annual
report to shareholders.
Furthermore, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant to
Rule 144 or 144A promulgated under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), may be impaired or eliminated. The Purchaser intends to seek
to cause the Company to apply for termination of registration of the Shares
under the Exchange Act as soon after the completion of the Offer as the
requirements for such termination are met.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"FEDERAL RESERVE BOARD"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Massachusetts corporation with its principal offices at
300 Griffin Brook Park Drive, Methuen, Massachusetts 01844, telephone number
(978) 659-9000. According to the Company's Quarterly Report for the fiscal
quarter ended September 30, 2000, the Company develops, manufactures and sells
touch and pen input systems, including touch sensitive screens, digitizers and
ThruGlass products.
Set forth below is certain selected financial data with respect to the
Company and its subsidiaries excerpted from the data contained in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1999 and its
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000.
More comprehensive financial data is included in such reports and other
documents filed by the Company with the Commission, and the following summary is
qualified in its entirety by reference to such reports, other documents and all
the financial data (including any related notes) contained therein. Such reports
and other documents should be available for inspection and copies thereof should
be obtainable in the manner set forth below under "Available Information."
15
<PAGE>
MICROTOUCH SYSTEMS, INC.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
-------------------------- ------------------------------------------
OCTOBER 2, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 2000 1997 1998 1999
---------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales ............................. $116,324 $117,178 $128,481 $144,370 $157,491
Gross Profit .......................... 41,969 30,795 44,928 55,420 53,168
Operating Income (Loss) ............... 8,176 (3,250) 9,757 12,767 5,982
Net Income (Loss) ..................... 3,985 (1,856) 6,411 9,368 2,671
Basic Earnings (Loss) Per Share ....... 0.57 (0.29) 0.81 1.22 0.39
Diluted Earnings (Loss) Per Share ..... 0.56 (0.29) 0.77 1.20 0.38
</TABLE>
<TABLE>
<CAPTION>
AT AT AT
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
2000 1998 1999
------------- ------------ ------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Total Current Assets ................................................ $73,644 $ 84,935 $74,327
Total Assets ........................................................ 96,376 104,345 97,104
Total Current Liabilities ........................................... 32,152 25,875 27,526
Total Liabilities ................................................... 32,152 25,976 27,596
Total Stockholder's Equity .......................................... 64,224 78,369 69,508
</TABLE>
CERTAIN COMPANY PROJECTIONS. During the course of discussions between
representatives of Parent and the Company, the Company provided Parent or its
representatives with certain non-public business and financial information about
the Company. This information included the following projections of revenue,
operating income and EBITDA (earnings before interest, taxes, depreciation and
amortization) for the Company for the years 2000 through 2002:
<TABLE>
<CAPTION>
2000 2001 2002
------ ------ ------
(IN $ MILLIONS)
<S> <C> <C> <C>
Revenue .............................................................. $163.0 $194.6 $245.9
Operating Income ..................................................... 0.2 23.9 45.4
Operating Income as a % of Sales .................................... 0.1% 12.3% 18.5%
EBITDA ............................................................... $ 5.7 $ 30.1 $ 51.9
</TABLE>
The projections set forth above are included in this Offer to Purchase only
because this information was provided to Parent. The projections were not
prepared with a view to public disclosure or compliance with the published
guidelines of the Commission or the guidelines established by the American
Institute of Certified Public Accountants regarding projections or forecasts.
The projections do not purport to present operations in accordance with
generally accepted accounting principles, and the Company's independent auditors
have not examined or compiled the projections and accordingly assume no
responsibility for them. The Company has advised Parent and the Purchaser that
its internal financial forecasts (upon which the projections provided to Parent
and the Purchaser were based in part) are, in general, prepared solely for
internal use and capital budgeting and other management decisions and are
subjective in many respects and thus susceptible to interpretations and periodic
revision based on actual experience and business developments. The projections
also reflect numerous assumptions made by management of the Company, with
respect to industry performance (including general business, economic, market
and financial conditions and other matters), all of which are difficult to
predict, many of which are beyond the Company's control, and none of which were
subject to approval by Parent or the Purchaser. Accordingly, there can be no
assurance that the assumptions made in preparing the projections will prove
accurate. It is expected that there will be differences between actual and
projected results, and actual results may be materially greater or less than
those contained in the projections. The inclusion of the projections herein
should not be regarded as an indication that any of Parent, the Purchaser, the
Company or their respective affiliates or representatives considered or consider
the
16
<PAGE>
projections to be a reliable prediction of future events, and the projections
should not be relied upon as such. None of Parent, the Purchaser, the Company or
any of their respective affiliates or representatives has made or makes any
representation to any person regarding the ultimate performance of the Company
compared to the information contained in the projections, and none of them
intends to update or otherwise revise the projections to reflect circumstances
existing after the date when made or to reflect the occurrence of future events
even in the event that any or all of the assumptions underlying the projections
are shown to be in error.
AVAILABLE INFORMATION. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Certain information as of particular
dates concerning the Company's directors and officers, their remuneration, stock
options and other matters, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in the Company's proxy statements distributed to the
Company's shareholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, DC 20549, and at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, NY 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
information should be obtainable, by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450 Fifth
Street, N.W., Washington, DC 20549. The Commission also maintains a Web site on
the Internet at http://www.sec.gov/ that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. Such information should also be available for inspection at
the offices of the National Association of Securities Dealers, Reports Section,
1735 K Street, Washington, D.C. 20006. The Parent's SEC filings are also
available to the public over the Internet at EDGAR Online, Inc.'s web site
(http://www.freeedgar.com).
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although Parent and the Purchaser do not have any
knowledge that any such information is untrue, neither Parent nor the Purchaser
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER
The Purchaser, a Massachusetts corporation that is a wholly owned
subsidiary of Parent, was organized to acquire the Company and has not conducted
any unrelated activities since its organization. The principal executive office
and telephone number of the Purchaser are those of the Parent.
Parent is a Delaware corporation. The principal executive office of Parent
is located at 3M Center, St. Paul, Minnesota 55144, telephone number (651)
773-1110. Parent is an integrated enterprise characterized by substantial
intercompany cooperation in research, manufacturing and marketing of products.
Parent's business has developed from its research and technology in coating and
bonding for coated abrasives, the company's original product. Coating and
bonding is the process of applying one material to another, such as abrasive
granules to paper or cloth (coated abrasives), adhesives to backing
(pressure-sensitive tapes), ceramic coating to granular mineral (roofing
granules), glass beads to plastic backing (reflective sheeting), and low-tack
adhesives to paper (repositionable notes). Shares of Parent are listed on the
New York Stock Exchange.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of Parent and the Purchaser are set forth in Schedule I
hereto.
Except as described in this Offer to Purchase, none of Parent or the
Purchaser, or, to the best knowledge of Parent and the Purchaser, any of the
persons listed in Schedule I or any associate or majority-owned subsidiary of
Parent or the Purchaser, or any of the persons so listed, beneficially owns
17
<PAGE>
any equity security of the Company, and none of Parent or the Purchaser or, to
the best knowledge of Parent and the Purchaser, any of the other persons
referred to above has effected any transaction in any equity security of the
Company during the past 60 days.
Except as described in this Offer to Purchase or the Schedule TO filed with
the Commission, (a) there have not been any contracts, transactions or
negotiations between Parent or the Purchaser, any of their respective
subsidiaries or, to the best knowledge of Parent and the Purchaser, any of the
persons listed in Schedule I, on the one hand, and the Company or any of its
directors, officers or affiliates, on the other hand, that are required to be
disclosed pursuant to the rules and regulations of the Commission and (b) none
of Parent, or the Purchaser or, to the best knowledge of Parent and the
Purchaser, any of the persons listed in Schedule I has any contract,
arrangement, understanding or relationship with any person with respect to any
securities of the Company.
Because the only consideration in the Offer and Merger is cash and the
Offer covers all outstanding Shares, and in view of the absence of a financing
condition and in view of the financial capacity of Parent, Parent and the
Purchaser believe the financial condition of Parent is not material to a
decision by a holder of Shares whether to sell, tender or hold Shares pursuant
to the Offer.
Notwithstanding the foregoing, however, set forth below is certain selected
financial data with respect to the Parent and its subsidiaries excerpted from
the data contained in the Parent's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999 and its Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 2000. More comprehensive financial data is
included in such reports and other documents filed by the Parent with the
Commission, and the following summary is qualified in its entirety by reference
to such reports, other documents and all the financial data (including any
related notes) contained therein. Such reports and other documents should be
available for inspection and copies thereof should be obtainable in the manner
set forth below under "Available Information."
18
<PAGE>
MINNESOTA MINING AND MANUFACTURING COMPANY
HISTORICAL FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------- --------------------
1995 1996 1997 1998 1999 1999 2000
------- ------- ------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales .................... $13,460 $14,236 $15,070 $15,021 $15,659 $11,636 $12,528
Income from continuing
operations .................. 1,306(2) 1,516 2,121(3) 1,213(4) 1,763(5) 1,319(5) 1,456(1)
Income per share from
continuing operations --
basic ....................... 3.11 3.63 5.14 3.01 4.39 3.28 3.67
Income per share from
continuing operations --
diluted ..................... 3.09 3.59 5.06 2.97 4.34 3.25 3.64
Cash dividends declared and
paid per share .............. 1.88 1.92 2.12 2.20 2.24 1.68 1.74
BALANCE SHEET DATA:
Total assets ................. $14,183(6) $13,364 $13,238 $14,153 $13,896 $14,682
Long-term debt (excluding
portion due within one
year) ....................... 1,203 851 1,015 1,614 1,480 1,141
</TABLE>
--------------------
(1) The first nine months of 2000 includes non-recurring costs, primarily
relating to the company's decision to phase-out its perfluorooctanyl
chemistry production, and includes non-recurring gains relating to asset
dispositions, which together offset each other. The first nine months of
2000 also reflects a benefit of $31 million after tax, or 8 cents per
diluted share, associated with the termination of a product distribution
agreement.
(2) 1995 includes a restructuring charge of $52 million after tax, or 12 cents
per diluted share.
(3) 1997 includes a gain of $495 million after tax, or $1.18 per diluted share,
on the sale of National Advertising Company.
(4) 1998 includes a restructuring charge of $313 million after tax, or 77 cents
per diluted share.
(5) Total year 1999 and the first nine months of 1999 include a gain of $52
million after tax, or 13 cents per diluted share, relating to gains on
divestitures, litigation expense, an investment valuation adjustment, and a
change in estimate that reduced the 1998 restructuring charge.
(6) 1995 total assets include net assets of discontinued operations.
AVAILABLE INFORMATION. The Parent is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Certain information as of particular
dates concerning the Parent's directors and officers, their remuneration, stock
options and other matters, the principal holders of the Parent's securities and
any material interest of such persons in transactions with the Parent is
required to be disclosed in the Parent's proxy statements distributed to the
Parent's shareholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
Commission and copies thereof should be obtainable from the Commission in the
same manner as is set forth with respect to the Company in Section 8. The
Parent's SEC filings are also available to the public over the Internet at EDGAR
Online, Inc.'s web site (http://www.freeedgar.com).
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all
outstanding Shares pursuant to the Offer (assuming the exercise of all
outstanding options and after deducting the proceeds of such exercise) and to
pay fees and expenses related to the Offer and the Merger is estimated to be
approximately $160 million. The Purchaser plans to obtain all funds needed for
the Offer and the Merger
19
<PAGE>
through a capital contribution that will be made by Parent to the Purchaser.
Parent intends to use its available cash on hand to make this capital
contribution. Neither the Offer nor the Merger is conditioned on obtaining
financing.
11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND OF
THE OFFER
Parent's Optical Systems Division has been regularly considering strategic
acquisition opportunities during the past 18 months. During this period of
consideration and review, Parent frequently considered the Company as a
candidate for an alliance or business combination.
On August 18, 2000, representatives of Broadview, the Company's financial
advisor, contacted the Company to initiate discussions of possible strategic
alliances between Parent and the Company.
On August 30, 2000, Mr. Wong, Division Vice President of Parent's Optical
Systems Division, along with other representatives of Parent met with D.
Westervelt Davis, President and Chief Executive Officer of the Company, and
other representatives and advisors of the Company, at the Company's offices in
Methuen, Massachusetts, to discuss a full range of possible strategic alliances
between Parent and the Company including a possible business combination.
Between August 30, 2000 and September 14, 2000, the Company provided
selected information to Parent for purposes of evaluating a possible business
combination and potential tender offer price.
On September 15, 2000, Mr. Wong and other representatives of Parent met
with Mr. Davis and other representatives and advisors in Parent's offices in St.
Paul, Minnesota to continue discussions regarding a possible business
combination.
On September 20, 2000 Parent and the Company reached a preliminary
understanding on a possible purchase price of $21.00 per share and certain other
tentative terms of a possible transaction.
On September 27, 2000 and September 28, 2000, representatives and advisors
of both Parent and the Company met at the offices of Company counsel in Boston,
Massachusetts, to discuss the Company's business operations. The parties also
discussed the material terms of a possible business transaction. These
discussions led to the execution of an exclusivity agreement on October 6, 2000
pursuant to which, subject to certain exceptions, the Company agreed to refrain
from negotiating a business combination with any party other than Parent until
October 25, 2000. The term of this exclusivity agreement was subsequently
extended through November 3, 2000.
From October 2, 2000 through October 19, 2000, Parent's representatives and
advisors met with various representatives and advisors of the Company to review
the Company's business plans and operations. Also during this period, and
continuing through November 3, 2000, Parent and its advisors conducted legal,
environmental, business, and financial due diligence.
On October 19 and 20, 2000, representatives of Parent and the Company and
their respective legal advisors met at Parent's offices in St. Paul, Minnesota
to negotiate the Merger Agreement, Shareholders Agreement and Option Agreement.
These negotiations continued telephonically until November 3, 2000, at which
time the documents were finalized, subject to minor revisions over the next
several days.
On November 9, 2000, the Company's Board of Directors approved the Offer,
the Merger, the Merger Agreement, the Option Agreement, the Shareholders
Agreement, and the other transactions contemplated thereby.
On November 13, 2000, Parent's Board of Directors approved the Offer, the
Merger, the Merger Agreement, the Option Agreement, the Shareholder Agreement,
and the other transactions contemplated thereby.
On November 13, 2000, Parent, the Purchaser and the Company executed the
Merger Agreement, Parent and the Company executed the Option Agreement, and
Parent, the Purchaser and certain officers and directors of the Company executed
the Shareholders Agreement.
On November 13, 2000, Parent and the Company issued a joint press release
in the United States announcing the execution of the Merger Agreement.
20
<PAGE>
12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY
PURPOSE OF THE OFFER
The purpose of the Offer is to enable Parent to acquire control of the
Company and to acquire the outstanding Shares. The Offer, as the first step in
the acquisition of the Company, is intended to facilitate the acquisition of all
the outstanding Shares. The purpose of the Merger is to acquire all outstanding
Shares not tendered and purchased pursuant to the Offer or otherwise.
PLANS FOR THE COMPANY
If a majority of the outstanding Shares are purchased by the Purchaser
pursuant to the Offer, Parent may designate its representatives as a majority of
the Company Board. Parent's principal reason for acquiring the Company is the
strategic fit of the Company's operations with Parent's operations. Parent
intends to continue to review the Company and its assets, corporate structure,
dividend policy, capitalization, operations, properties, policies, management
and personnel and to consider, subject to the terms of the Merger Agreement,
what, if any, actions or changes would be desirable in light of the
circumstances then existing (including steps to integrate the operations of the
Company with those of Parent under the direction of Parent's management as well
as the implementation of technical and industrial savings and synergies created
by the transaction), and reserves the right to take such actions or effect such
changes as it deems desirable. Such changes could include changes in the
Company's corporate structure, capitalization, management or dividend policy.
Except as described above or elsewhere in this Offer to Purchase, Parent
and the Purchaser have no present plans or proposals that would relate to or
result in (i) any extraordinary corporate transaction involving the Company or
any of its subsidiaries (such as a merger, reorganization, liquidation,
relocation of any operations or sale or other transfer of a material amount of
assets), (ii) any sale or transfer of a material amount of assets of the Company
or any of its subsidiaries, (iii) any change in the Company Board or management
of the Company, (iv) any material change in the Company's capitalization or
dividend policy, (v) any other material change in the Company's corporate
structure or business, (vi) a class of securities of the Company being delisted
from a national securities exchange or ceasing to be authorized to be quoted in
an inter-dealer quotation system of a registered national securities association
or (vii) a class of equity securities of the Company being eligible for
termination of registration pursuant to Section 12(g) of the Exchange Act.
13. THE MERGER AGREEMENT; THE SHAREHOLDERS AGREEMENT; THE STOCK OPTION
AGREEMENT
THE MERGER AGREEMENT
The Merger Agreement provides that, following the satisfaction or waiver of
the conditions described below under "Conditions to the Merger," the Purchaser
will be merged with and into the Company, with the Company being the surviving
corporation, and each issued Share (other than Shares owned by Parent, the
Purchaser or the Company or by shareholders, if any, who are entitled to and who
properly exercise appraisal rights under Massachusetts law) will be converted
into the right to receive highest the price per Share paid pursuant to the Offer
in cash, without interest thereon.
THE COMPANY ACTION. The Merger Agreement states that the Company Board (i)
determined that the Merger Agreement, the Offer and the Merger are fair to and
in the best interests of the Company and the shareholders of the Company, (ii)
approved and adopted the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, and (iii) resolved to recommend
that the shareholders of the Company accept the Offer and tender their Shares
pursuant to the Offer.
VOTE REQUIRED TO APPROVE MERGER. The MBCL requires, among other things,
that, if the "short-form" merger procedure described below is not available, the
adoption of any plan of merger or consolidation of the Company must be approved
by the holders of two-thirds of the Company's outstanding Common Stock or such
lesser percentage as is required under the Company's Articles of Organization
(but in no event less than a majority). The Company's Articles of Organization
permit approval of the Merger Agreement by the holders of a majority of the
Company's outstanding Common Stock. Consequently, if
21
<PAGE>
the "short-form" merger procedure is not available, the Company will call and
hold a meeting of its shareholders promptly following the consummation of the
Offer for the purpose of voting upon the approval of the Merger and the Merger
Agreement. At such meeting all shares of Common Stock then owned by Parent or
the Purchaser will be voted in favor of the approval of the Merger and the
Merger Agreement. If the Purchaser acquires, through the Offer or otherwise,
voting power with respect to at least a majority of the outstanding shares of
Company Common Stock (which would be the case if the Minimum Tender Condition
were satisfied and the Purchaser accepts for payment Shares tendered pursuant to
the Offer), it would have sufficient voting power to effect the Merger without
the affirmative vote of any other shareholder of the Company.
The MBCL provides that, if a parent company owns at least 90% of the
outstanding shares of each class of the stock of another corporation, the parent
company may effect a "short-form" merger pursuant to which the subsidiary can be
merged into the parent company without a shareholder vote. The Merger Agreement
currently provides that, upon consummation of the Merger, Purchaser would be
merged into the Company. However, the MBCL "short-form" merger provisions do not
permit a parent to merge into a subsidiary. Thus, a "short-form" merger would
not be available unless the Merger Agreement were amended to provide that the
Company would be merged into the Purchaser. The Purchaser and the Company may
agree to amend the Merger Agreement to allow the Merger to be effected pursuant
to the "short-form" merger provisions of the MBCL without any action by any
shareholder of the Company.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the respective
obligations of each party to effect the Merger are subject to the satisfaction
or waiver of certain conditions, including the following: (a) Shareholder
Approval (as defined below under "Termination of the Merger Agreement"), if
required by applicable law, shall have been obtained; (b) no order, decree or
injunction (collectively, "LEGAL RESTRAINTS") shall have been entered or issued
by any governmental or regulatory authority, court, agency, commission or other
governmental entity or any securities exchange or other self-regulatory body,
domestic or foreign ("GOVERNMENTAL ENTITY"), that has the effect of making the
Merger illegal or otherwise prohibiting consummation of the merger; (c) any
requisite waiting period (and any extension thereof) applicable to the Merger
under the HSR Act shall have expired or been terminated and any other approval
or waiting period required prior to the effective time of the Merger (the
"EFFECTIVE TIME") under any other applicable competition, merger control,
antitrust or similar law or regulation of any Governmental Entity shall have
been obtained or terminated or shall have expired, other than those the failure
of which to have been obtained or terminated or to have expired would not
reasonably be expected to have a Material Adverse Effect, as defined in the
Merger Agreement or result in the commission of a criminal offense; (d) the
Purchaser shall have previously accepted for payment and paid for the Shares
pursuant to the Offer; (e) the Shareholders Agreement shall be in full force and
effect; (f) the Stock Option Agreement shall be in full force and effect; and
(g) the Company shall have performed in all material respects its covenants
regarding employee benefits plans contained in the Merger Agreement that are
required to be performed on or prior to the Closing Date.
TERMINATION OF THE MERGER AGREEMENT. Except as otherwise provided in the
Merger Agreement, the Merger Agreement may be terminated at any time prior to
the Effective Time, whether before or after the Shareholder Approval has been
obtained:
(a) by mutual written consent of Parent and the Company;
(b) by any party, if the Purchaser shall not have accepted for payment any
Shares pursuant to the Offer satisfying the Minimum Tender Condition prior to
February 28, 2001 (the "TERMINATION DATE"); PROVIDED that this right to
terminate the Merger Agreement is not available to any party whose breach of the
Merger Agreement has been a principal reason the Offer has not been consummated
by such date; and provided further, that either party, by written notice to the
other party, may extend the Expiration Date beyond February 28, 2001 to a date
not later than April 30, 2001 if all conditions of the Offer other than those
set forth in paragraph (f) of Section 15 -- "Conditions to the Offer" -- of this
Offer to Purchase have been satisfied on or before February 28, 2001;
(c) by any party, if a Governmental Entity shall have issued an order,
decree or injunction or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or payment
for the Shares pursuant to the Offer or the Merger and such order, decree or
injunction, or other action shall have become final and nonappealable;
22
<PAGE>
(d) by Parent (i) if the Company shall have breached or failed to perform
in any material respect any of its representations, warranties, covenants or
other agreements contained in the Merger Agreement, which breach, individually
or in the aggregate with other breaches, would give rise to the failure of a
condition set forth in paragraph (d) or (e) under Section 15 -- "Certain
Conditions of the Offer" -- of this Offer to Purchase, and has not been or is
incapable of being cured by the Company within 20 business days after its
receipt of written notice thereof from Parent, or (ii) if any suit, action or
proceeding described in paragraph (a) under Section 15 -- "Certain Conditions of
the Offer" -- of this Offer to Purchase shall have prevailed and become final
and nonappealable;
(e) by the Company, if either of Parent or the Purchaser shall have
breached or failed to perform in any material respect any of its
representations, warranties, covenants or other agreements contained in the
Merger Agreement, except for such failures that, individually or in the
aggregate, would not reasonably be expected to have a material adverse effect on
Parent's or the Purchaser's ability to consummate the transactions contemplated
by the Merger Agreement, including the Offer and the Merger, which breach or
failure to perform has not been or is incapable of being cured by Parent within
20 business days after its receipt of written notice thereof from the Company;
(f) by Parent, if the Merger and Merger Agreement have not been approved by
an affirmative vote of the holders of a majority of the outstanding Shares
("SHAREHOLDER APPROVAL") unless Shares satisfying the Minimum Tender condition
have been tendered to the Purchaser;
(g) by Parent, if (i) the Company Board shall or shall resolve to (A)
either not recommend that Company shareholders accept the Offer or, if
applicable, give the Shareholder Approval, (B) withdraw or modify in any manner
materially adverse to Parent or the Purchaser the Recommendation, (C) approve,
recommend or fail to take a position that is adverse to any proposed Acquisition
Transaction involving the Company or any of its subsidiaries (as described below
under "Acquisition Proposals") or (D) except pursuant to the exercise of the
Company's rights in circumstances described below under "Acquisition Proposals"
in which termination of the Merger Agreement by the Company is permitted, take
any action to make the provisions of Chapter 110D or 110F of the MGL (as
described in Section 16) inapplicable to any Acquisition Transaction or release
any standstill agreements or other similar restrictions, or amend the Rights
Agreement, redeem the Rights or take any other action which would result in the
Rights Agreement becoming inapplicable to any person or any Acquisition
Transaction; (ii) the Company Board shall have refused to affirm to the Parent
its recommendation to Company shareholders that they accept the Offer and give
the Shareholder Approval as promptly as practicable (but in any case within five
days) after receipt of any reasonable written request for such affirmation from
Parent; or (iii) a person shall have acquired more than 20% of the outstanding
shares of Company Common Stock; or
(h) by the Company in the circumstances described below under "Acquisition
Proposals" in which such termination by the Company is permitted, subject to
compliance by the Company with the notice and termination fee provisions
described below.
ACQUISITION PROPOSALS. The Merger Agreement provides that, without the
prior written consent of Parent, the Company will not, and will not authorize or
permit any of its subsidiaries to, and shall use its reasonable best efforts to
cause any of its or their respective officers, directors, employees, financial
advisors, agents or other representatives not to, directly or indirectly,
solicit, initiate or encourage (including by way of furnishing information) or
take any other action to facilitate the making of any proposal which constitutes
or may reasonably be expected to lead to an Acquisition Proposal (as defined
below) from any person, engage in any discussion or negotiations relating
thereto or accept any Acquisition Proposal or enter into any contract or
understanding requiring it to abandon, terminate or fail to consummate the
Merger or any of the other transactions contemplated by the Merger Agreement;
provided that, at any time prior to the acceptance for payment of Shares
pursuant to the Offer, the Company may furnish information to, and negotiate or
otherwise engage in discussions with, any person (a "PROPOSING PARTY") who (a)
delivers a bona fide written Acquisition Proposal which was not solicited,
initiated, encouraged or facilitated by the Company, directly or indirectly,
after the date of the Merger Agreement or otherwise resulted from a breach of
Section 5.3 of the Merger Agreement, and (b) enters into an appropriate
confidentiality agreement with the Company, if, but only if, the Board of
Directors
23
<PAGE>
of the Company determines in good faith by a majority vote, (i) after
consultation with, and receipt of advice from, its outside legal counsel, and
taking into account, among other things, all legal, financial, regulatory and
other aspects of the proposal and the party making the proposal, that such
proposal would, if consummated, result in a transaction that is more favorable
to its shareholders (in their capacities as shareholders), from a financial
point of view, than the transactions contemplated by the Merger Agreement, and
(ii) after consultation with the Company's independent financial advisors, that
such proposal could reasonably be expected to be completed (a "SUPERIOR
TRANSACTION").
The Merger Agreement provides that the Company shall notify Parent orally
and in writing (i) of any such offers or proposals described in the immediately
preceding paragraph (including, without limitation, the terms and conditions of
any such offers or proposals), and any amendments or revisions thereto, (ii)
whether the person making such offer or proposal has a class of equity
securities that is publicly traded, and whether such person is a Fortune 500
company, is listed on the New York Stock Exchange or is traded on The Nasdaq
National Market, and (iii) without requiring the Company to divulge information
that reasonably could lead Parent to identify the person making such offer or
proposal, such other information regarding the financial position of the person
making such offer or proposal and such other information as Parent reasonably
may request relating to such person's ability to finance and consummate the
Acquisition Transaction (as defined below) so offered or proposed. The foregoing
information shall be delivered to Parent as promptly as practicable following
the receipt by the Company of such offer or proposal, and the Company shall keep
Parent reasonably informed of the status and material terms of any such offer or
proposal.
"ACQUISITION PROPOSAL" means any proposal or offer from any person (other
than Parent or any of its subsidiaries) relating to any (i) direct or indirect
acquisition or purchase of a portion of the business of the Company or any of
its subsidiaries that generates 20% or more of the consolidated net revenues or
constitutes 20% or more of the assets of the Company and its subsidiaries, (ii)
direct or indirect acquisition or purchase of 20% or more of any class of equity
securities of the Company or any of its subsidiaries whose business generates
20% or more of the consolidated net revenues or constitutes 20% or more of the
assets of the Company and its subsidiaries, (iii) tender offer or exchange offer
that if consummated would result in any person beneficially owning 20% or more
of the capital stock of the Company, or (iv) merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of it subsidiaries whose business generates 20% or
more of the consolidated net revenues or constitutes 20% or more of the assets
of the Company and its subsidiaries. Each of the transactions referred to in
clauses (i) -- (iv) above, other than any such transaction to which Parent or
any of its subsidiaries is a party, shall be deemed to exclude the Company's
subsidiary in Australia and is referred to as an "ACQUISITION TRANSACTION."
For purposes of the definitions of the terms "Acquisition Proposal" and
"Acquisition Transaction," the term "consolidated net revenues" means the
aggregate revenues of the Company and its subsidiaries for the 12-month period
ending on the last day of the period covered by the most recent Form 10-K report
of the Company or, if later, the most recent Form 10-Q report of the Company
filed with the SEC.
If, prior to the acceptance for payment of Shares pursuant to the Offer,
the Board of Directors of the Company determines in good faith by a majority
vote, with respect to any Acquisition Proposal from a proposing party for an
Acquisition Transaction received after the date of the Merger Agreement that was
not solicited, initiated, encouraged or facilitated by the Company, directly or
indirectly, after the date of the Merger Agreement or did not otherwise result
from a breach of the requirements described above, that, based upon
consultations with the Company's independent financial advisors and outside
legal counsel, the Acquisition Transaction is a Superior Transaction, then the
Company may terminate the Merger Agreement and enter into an acquisition
agreement for the Superior Transaction; provided that, prior to any such
termination, and in order for such termination to be effective, (i) the Company
shall provide Parent three business days' written notice that it intends to
terminate the Merger Agreement, identifying the Superior Transaction and
delivering an accurate description of all material terms of the Superior
Transaction to be entered into, and (ii) on the date of termination (provided
that the advice of the Company's independent financial advisors and outside
legal counsel referred to above shall continue in effect without revocation,
revision or modification), the Company shall deliver to
24
<PAGE>
Parent (A) a written notice of termination of the Merger Agreement, (B) a wire
transfer of immediately available funds in the amount of the Termination Fee
described below, (C) a written acknowledgment from the Company that the
termination of the Merger Agreement and the entry into the Superior Transaction
are a Triggering Event (as defined below), and (D) a written acknowledgment from
each other party to the Superior Transaction that it has read the Company's
acknowledgment referred to in clause (C) above and will not contest the matters
thus acknowledged by the Company, including the payment of the Termination Fee.
The Merger Agreement provides that the provisions described above will
prevent the Board of Directors of the Company from taking, and disclosing to the
Company's shareholders, a position contemplated by Rule 14d-9 and Rule 14e-2(a)
promulgated under the Exchange Act or making any disclosure required under the
MGL (subject, however, to compliance with the balance of this sentence where
applicable), and the Company Board may prior to the acceptance for payment of
Shares pursuant to the Offer, withdraw, modify or change its recommendation if,
in its good faith judgment, after consultation with outside legal counsel,
failure to take such action would be inconsistent with its obligations under
applicable law; provided that in the case of a tender offer, the Company Board
shall not recommend that shareholders tender their Shares in such tender offer
unless (i) such tender offer is determined to be a Superior Transaction in
accordance with the provisions the Merger Agreement and (ii) the Company has
provided Parent with not less than three business days' prior written notice of
any such action.
FEES AND EXPENSES; TERMINATION FEE. The Merger Agreement provides that,
except as set forth below, all costs and expenses incurred in connection with
the Merger Agreement, the Offer, the Merger and the other transactions
contemplated by the Merger Agreement shall be paid by the party incurring such
fees or expenses, whether or not the Offer or the Merger is consummated. All
reasonable fees and expenses of the Company's financial advisors and legal
counsel shall be paid by the Surviving Corporation of the Merger upon the
consummation of the Merger.
Upon the happening of a Triggering Event, the Company shall pay to Parent
the amount of $9,000,000 (the "TERMINATION FEE"). "TRIGGERING EVENT" is defined
in the Merger Agreement to mean any one of the following:
(i) a termination of the Merger Agreement by Parent pursuant to
clauses (i) and (ii) of paragraph (g) under this Section 13 -- "Termination
of the Merger Agreement" -- of this Offer to Purchase;
(ii) a termination of the Merger Agreement by Parent pursuant to
clause (i) of paragraph (d)(i) or paragraph (f) under this Section 13 --
"Termination of the Merger Agreement" -- of this Offer to Purchase, if any
Acquisition Proposal is publicly proposed or announced on or after the date
of the Merger Agreement and such Acquisition Proposal has not been publicly
rejected by the Board of Directors of the Company;
(iii) a termination of the Merger Agreement by the Company pursuant to
paragraph (h) under this Section 13 -- "Termination of the Merger
Agreement" -- of this Offer to Purchase; or
(iv) if, within twelve months after a termination of the Merger
Agreement, any Acquisition Transaction is entered into, agreed to or
consummated by the Company with a person (other than Parent or the
Purchaser) who made, or who is affiliated with any person (other than
Parent or the Purchaser) who made (A) an Acquisition Proposal or (B) a
statement of intent to pursue an Acquisition Transaction, either of which
was publicly proposed or announced prior to a termination of the Merger
Agreement.
Payment of the Termination Fee shall be made by wire transfer of
immediately available funds (1) on the second business day after such
termination in the case of clauses (i) and (ii) of the definition of Triggering
Event set forth above, (2) on or prior to the date of such termination, in the
case of clause (iii) of the definition of Triggering Event, or (3) on the
earlier of (x) the date a contract is entered into with respect to an
Acquisition Transaction or (y) the date an Acquisition Transaction is
consummated, in the case of clause (iv) of the definition of Triggering Event.
In no event shall more than one Termination Fee be payable by each party under
the Merger Agreement.
25
<PAGE>
The Merger Agreement also provides that, if the Company terminates the
Merger Agreement pursuant to paragraph (e) under this Section 13 -- "Termination
of the Merger Agreement" -- of this Offer to Purchase, Parent shall pay to the
Company, as liquidated damages, the sum of $9,000,000.
INTERIM OPERATIONS OF THE COMPANY. In the Merger Agreement, the Company
covenants and agrees as to itself and its subsidiaries, that, unless otherwise
approved in writing by Parent or expressly contemplated by the Merger Agreement
or the disclosure letter furnished by the Company to Parent (the "DISCLOSURE
LETTER"), during the period from the date of the Merger Agreement until the
earlier of (a) the termination of the Merger Agreement and (b) the Effective
Time:
(i) the business of the Company and its subsidiaries (other than the
Company's subsidiary in Australia) taken as a whole shall be conducted in
all material respects in the ordinary and usual course consistent with the
Company's past practice and, to the extent consistent therewith, the
Company shall use, and shall cause its subsidiaries to use, reasonable
commercial efforts to preserve its business organization intact in all
material respects, keep available the services of its officers and
employees as a group (subject to changes in the ordinary course) and
maintain its existing relations and goodwill in all material respects with
customers, suppliers, regulators, distributors, creditors, lessors, and
others having business dealings with it, in each case, consistent with the
Company's past practice;
(ii) the Company shall not issue, deliver, grant or sell any
additional shares of Company Common Stock or any subscriptions, options
(including those granted under either the Company's (a) 1992 Equity
Incentive Plan, (b) 1994 Directors Stock Option Plan, or (c) 1998 Employee
and Consultant Non-Qualified Stock Option Plan (collectively, the "STOCK
OPTION PLANS")), warrants, calls, commitments, agreements, conversion
rights or other rights of any character (contingent or otherwise) to
purchase or otherwise acquire from the Company or any of its subsidiaries
at any time, or upon the happening of any stated event, any shares of
capital stock of the Company (the "COMPANY OPTIONS") (other than the
issuance, delivery, grant or sale of shares of Company Common Stock
pursuant to the exercise or conversion of Company Options outstanding as of
the date of the Merger Agreement);
(iii) the Company shall not (A) amend its Articles of Organization or
By-laws, amend or take any action under the Rights Agreement (other than
actions requested by Parent in order to render the Rights inapplicable to
the Offer, the Merger and the other transactions contemplated by the Merger
Agreement), or adopt any other shareholders rights plan or enter into any
agreement with any of its shareholders in their capacity as such; (B)
split, combine, subdivide or reclassify its outstanding shares of capital
stock; (C) declare, set aside or pay any dividend or distribution payable
in cash, stock or property in respect of any of its capital stock, other
than dividends and distributions by a direct or indirect wholly-owned
subsidiary of the Company to its parent corporation; or (D) repurchase,
redeem or otherwise acquire or permit any of its subsidiaries to purchase,
redeem or otherwise acquire, any shares of its capital stock or any Company
Options (it being understood that this provision shall not prohibit the
exercise (cashless or otherwise) of Company Options);
(iv) the Company shall not, and shall not cause or permit any of its
subsidiaries to, take any action that it knows would cause any of its
representations and warranties in the Merger Agreement to become inaccurate
in any material respect;
(v) except as expressly permitted by the Merger Agreement, and except
as required by applicable law or pursuant to contractual obligations in
effect on the date of the Merger Agreement, the Company shall not, and
shall not permit its subsidiaries to, (A) enter into, adopt or amend
(except for renewals on substantially identical terms) any agreement or
arrangement relating to severance, (B) enter into, adopt or amend (except
for renewals on substantially identical terms) any employee benefit plan or
employment or consulting; or (C) grant any stock options or other equity
related awards;
(vi) except for borrowings under lines of credit contemplated by the
Disclosure Letter and trade debt incurred in the ordinary course of
business consistent with past practice, neither the Company nor any of its
subsidiaries shall issue, incur or amend the terms of any indebtedness for
26
<PAGE>
borrowed money or guarantee any such indebtedness (other than indebtedness
of the Company or any wholly-owned subsidiary);
(vii) neither the Company nor any of its subsidiaries shall make any
capital expenditures in an aggregate amount in excess of the aggregate
amount reflected in the capital expenditure budget, a copy of which is
attached to the Disclosure Letter;
(viii) other than in the ordinary course of business consistent with
past practice, neither the Company nor any of its subsidiaries shall
transfer, lease, license, sell, mortgage, pledge, encumber or otherwise
dispose of any of its or its subsidiaries' property or assets (including
capital stock of any of its subsidiaries) material to the Company and its
subsidiaries taken as a whole, except pursuant to contracts existing as of
the date of the Merger Agreement (the terms of which have been previously
disclosed to Parent);
(ix) neither the Company nor any of its subsidiaries shall issue,
deliver, sell or encumber shares of any class of its capital stock or any
securities convertible into, or any rights, warrants or options to acquire,
any such shares, except any such shares issued pursuant to options and
other awards outstanding on this date under Company benefit plans or as
otherwise permitted by the Merger Agreement;
(x) neither the Company nor any of its subsidiaries shall acquire any
business, including any facilities, whether by merger, consolidation,
purchase of property or assets or otherwise, except to the extent provided
for in the capital expenditure budget attached to the Disclosure Letter;
(xi) the Company shall not change its accounting policies, practices
or methods in any manner that materially affects the reported consolidated
assets, liabilities or results of operations of the Company, except as
required by generally accepted accounting principles, applicable law or by
the rules and regulations of the SEC;
(xii) other than pursuant to the Merger Agreement, the Company shall
not, and shall not permit any of its subsidiaries to, take any action to
cause shares of its Common Stock to cease to be listed on the Nasdaq
National Market System;
(xiii) the Company shall not, and shall not permit any of its
subsidiaries to (A) enter into any contract, lease, agreement, instrument
or other arrangement containing any covenant limiting the freedom of the
company or any of its subsidiaries to engage in the business of the Company
or compete with any person, (B) enter into any joint venture or partnership
agreement that is material to the Company and its subsidiaries taken as a
whole, or (C) enter into or amend any distribution, supply, inventory
purchase, franchise, license, sales agency or advertising contract outside
of the ordinary course of business consistent with past practice in scope
and amount but in no event for a term (or an extension of a term) beyond
the date that is twelve months after the date of the Merger Agreement;
(xiv) the Company shall not, and shall not cause or permit any of its
subsidiaries to, change or, other than in the ordinary course of business
consistent with past practice, make any material tax election, settle any
audit or file any amended tax returns, except as required by applicable
law;
(xv) the Company shall not take any action that could reasonably be
expected to result in (A) any representation and warranty of the Company
set forth in the Merger Agreement that is qualified as to materiality
becoming untrue, (B) any such representation and warranty that is not so
qualified becoming untrue in any manner that has or is reasonably expected
to have a material adverse effect or (C) any condition to the Offer or the
Merger not being satisfied; or
(xvi) the Company shall not enter into, or permit any of its
subsidiaries to enter into, any commitments or agreements to do any of the
foregoing.
BOARD OF DIRECTORS. The Merger Agreement provides that, promptly upon the
satisfaction of the Minimum Tender Condition and the acceptance for payment of,
and payment by Purchaser for, any Shares pursuant to the Offer, Purchaser will
be entitled to designate such number of directors on the Company Board as will
give Purchaser representation on the Company Board equal to that number of
directors, rounded down to the next whole number, which is the product of (a)
the total number of
27
<PAGE>
directors on the Company Board (giving effect to the directors elected pursuant
to this sentence) MULTIPLIED BY (b) a fraction, the numerator of which is the
number of Shares so accepted for payment and paid for by Purchaser and the
denominator of which is the number of Shares outstanding at the time of
acceptance for payment of Shares pursuant to the Offer, and the Company shall,
promptly upon such designation by Purchaser, cause Purchaser's designees to be
elected or appointed to the Company Board; PROVIDED, HOWEVER, that during the
period commencing with the election or appointment of Purchaser's designees to
the Company Board until the Effective Time or earlier termination of the Merger
Agreement, the Company Board shall have at least two directors who are directors
on the date of the Merger Agreement and who are not officers of the Company or
representatives of any affiliates of the Company (the "INDEPENDENT DIRECTORS");
and PROVIDED FURTHER, HOWEVER, that if during such period the number of
Independent Directors shall be reduced below two for any reason whatsoever, the
remaining Independent Directors (or Independent Director, if there shall be only
one remaining) shall be entitled to designate persons to fill any such vacancies
who shall be deemed to be Independent Directors for purposes of the Merger
Agreement or, if no Independent Directors then remain, the other directors shall
designate two persons to fill such vacancies who are not officers, affiliates,
associates or shareholders of Parent or Purchaser, and such persons shall be
deemed to be Independent Directors for purposes of the Merger Agreement.
STOCK OPTIONS. The Merger Agreement provides that, as of the Effective
Time, each Company Option issued under the Stock Option Plans (each as defined
above under the heading "Interim Operations of the Company") and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive in cash an amount equal to the "Net Gain" attributable to such Company
Option. At the Effective Time all such Company Options shall no longer be
outstanding and shall automatically be cancelled and terminated and shall cease
to exist, and each holder of a Company Option shall cease to have any rights
with respect thereto, except the right to receive the Net Gain attributable
thereto. For purposes of the Merger Agreement, the term "NET GAIN" with respect
to a Company Option means the product of (x) the excess of the highest price per
Share paid pursuant to the Offer over the exercise price per share of such
Company Option, and (y) the number of Shares of Common Stock subject to such
Company Option. Immediately prior to the Effective Time, Parent shall provide or
cause to be provided to the Company in a timely manner the funds necessary to
pay the aggregate amount of "Net Gains" attributable to all Company Options that
the Company becomes obligated to pay pursuant to the foregoing provisions of the
Merger Agreement.
TERMINATION OF STOCK OPTION PLANS. As the plan sponsor, the Company will
(i) not issue options to purchase shares of Company Common Stock under any of
the Stock Option Plans after the date of the Merger Agreement, (ii) cause all of
the Company Options issued under the Stock Option Plans and outstanding as of
the date of the Merger Agreement to become fully vested and immediately
exercisable upon the satisfaction of the Minimum Tender Condition, (iii)
exercise its authority under the Stock Option Plans to cause each Company Option
still outstanding at the Effective Time of the Merger to be converted into the
right to receive in cash an amount equal to the Net Gain attributable to such
Company Option, and (iv) cause all of the Stock Option Plans and all of the
Company Options outstanding under such Plans to be terminated effective as of
the date of closing of the Merger (the "CLOSING DATE"), subject to the right of
the holders of Company Options to receive the Net Gains attributable to their
Company Options as described above.
MERGER OF 401(k) PLAN. As the plan sponsor, the Company will (on or before
the Closing Date, except with respect to clauses (vi), (vii) and viii below,
which shall occur as soon as administratively practicable following the Closing
Date) (i) adopt all amendments to the MicroTouch Systems, Inc. Employee Savings
Plan (the "401(k) Plan") necessary to make such Plan comply with the applicable
legal requirements as changed by the laws described in Revenue Procedure 99-23
issued by the IRS, (ii) make matching contributions (in amounts consistent with
its practice of making such contributions in prior years) to the accounts of
participants in such 401(k) Plan for the plan year ending December 31, 2000,
(iii) comply with the 401(k) Plan's provisions with respect to participant loans
by placing in default and treating as deemed distributions the amount of any
loans outstanding to former employees of the Company which have not been repaid
in full (other than the former employees affected by the sale by the Company of
its Factura business), (iv) obtain the resignations of Geoffrey Clear, James
Ragonese and Anne Marie Bell as trustees of the trust forming part of such
401(k) Plan, effective as of the Closing Date, (v) appoint
28
<PAGE>
L. Joseph Thompson as successor trustee of the trust forming part of such 401(k)
Plan, effective as of the Closing Date, (vi) approve the merger of such 401(k)
Plan with the Minnesota Mining and Manufacturing Company Voluntary Investment
Plan and Employee Stock Ownership Plan (the "VIP"), (vii) direct the trustees of
the 401(k) Plan to prepare for the transfer of the assets and records of such
Plan to the trustee of the VIP, and (viii) prior to the merger of the 401(k)
Plan into the VIP, cause the 401(k) Plan to return sufficient contributions and
earnings thereon to the Company's highly compensated employees so that the
401(k) Plan complies with the anti-discrimination provisions of Section 401(k)
of the Code for the plan year ending December 31, 2000. The Merger Agreement
provides that the surviving corporation of the Merger shall permit its employees
to continue their participation in the 401(k) Plan (if they have not become
eligible to participate in the VIP) until the 401(k) Plan is merged into the
VIP.
EMPLOYMENT AGREEMENTS. The Company will assist Parent in (i) identifying
those key employees of the Company and its subsidiaries whose continued
employment following the Closing Date should be covered by individual employment
agreements, and (ii) designing the provisions of such agreements; PROVIDED,
HOWEVER, that the surviving corporation of the Merger shall have the final
authority to decide which of the Company's employees will be offered such
employment agreements. The Company will use reasonable commercial efforts to
convince such key employees to enter into such individual employment agreements
on or prior to the Closing Date.
RETENTION INCENTIVES. The Company will assist Parent in (i) identifying
those key employees of the Company and its subsidiaries who should be eligible
for retention bonuses/compensation as an incentive for them to continue their
employment following the Closing Date, and (ii) designing the terms and
conditions of such retention bonuses/compensation; PROVIDED, HOWEVER, that the
surviving corporation of the Merger shall have the final authority to decide
both the employees eligible for such retention bonuses/compensation as well as
the terms and conditions of such bonuses/compensation.
TERMINATION OF STOCK PURCHASE PLAN. As the plan sponsor, the Company will
(i) exercise its authority under its 1995 Employee Stock Purchase Plan to treat
the Closing Date as an "Offering Termination Date" for purposes of such Plan,
(ii) cause each option in effect under the 1995 Employee Stock Purchase Plan as
of such Offering Termination Date to be exercised as of the Closing Date, and
(iii) cause the 1995 Employee Stock Purchase Plan and all of the options
outstanding under such Plan to be terminated effective as of the Closing Date,
subject to the right of the option holders to receive the highest price per
Share paid pursuant to the Offer for the Shares they become entitled to receive
upon the exercise of their options.
INDEMNIFICATION, EXCULPATION AND INSURANCE. The Merger Agreement provides
that Parent shall maintain in effect with a carrier reasonably acceptable to the
Company for not less than six years after the Effective Time, the Company's
current directors and officers insurance policies, if such insurance is
obtainable (or policies of at least the same coverage containing terms and
conditions no less advantageous to the current and all former directors and
officers of the Company) with respect to acts or failures to act prior to the
Effective Time, including acts relating to the transactions contemplated by the
Merger Agreement; provided, however, that in order to maintain or procure such
coverage, Parent shall not be required to maintain or obtain policies providing
such coverage except to the extent such coverage can be provided at an annual
cost of no greater than two times the most recent annual premium paid by the
Company prior to the date of the Merger Agreement (the "CAP"); and provided,
further, that if equivalent coverage cannot be obtained, or can be obtained only
by paying an annual premium in excess of the Cap, Parent shall only be required
to obtain as much coverage as can be obtained by paying an annual premium equal
to the Cap.
The Merger Agreement also provides that from and after the Effective Time,
Parent shall indemnify and hold harmless, to the fullest extent permitted under
applicable law, each person who is, or has been at any time prior to the date of
the Merger Agreement or who becomes prior to the Effective Time, an officer or
director of the Company or any of its subsidiaries (each, an "INDEMNIFIED
PARTY") against all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments, fines, penalties and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or omissions, or alleged acts
or omissions, by them in their capacities as such, which acts or omissions
occurred prior to the Effective Time, whether asserted or claimed prior to, at
or after the Effective Time.
29
<PAGE>
The Merger Agreement requires the surviving corporation in the Merger to
keep in effect all provisions in its articles of organization and by-laws that
provide for exculpation of director and officer liability and indemnification
(and advancement of expenses related thereto) of the past and present officers
and directors of the Company to the fullest extent permitted by the MBCL and
such provisions shall not be amended except as either required by applicable law
or to make changes permitted by law that would enhance the rights of past or
present officers and directors to indemnification or advancement of expenses.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties, including representations relating to
corporate existence and power; capitalization; corporate authorizations;
subsidiaries; SEC filings; absence of certain changes; litigation; contracts;
compliance with laws; labor matters; environmental matters; employee benefits
matters; taxes; intellectual property; real and personal property; state
takeover statutes; brokers; the inapplicability of the Rights Agreement to the
Offer and the Merger; and the opinion of the Company's financial advisor.
PROCEDURE FOR AMENDMENT, EXTENSION OR WAIVER. The Merger Agreement provides
that it may be amended in writing by the parties thereto at any time, whether
before or after the Shareholder Approval has been obtained; PROVIDED that, after
the purchase of Shares pursuant to the Offer, no amendment shall be made which
decreases the price per Share payable pursuant to the Offer and, after the
Shareholder Approval, if required, has been obtained, there shall be made no
amendment that by law requires further approval by the shareholders of the
parties without the further approval of such shareholders. Following the
consummation of the Offer and prior to the Effective Time, the affirmative vote
of a majority of the Independent Directors then in office shall be required by
the Company to (i) amend or terminate the Merger Agreement by the Company, (ii)
exercise or waive any of the Company's rights or remedies under the Merger
Agreement or (iii) extend the time for performance of Parent and Purchaser's
respective obligations under the Merger Agreement.
The foregoing summary of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, which is filed as Exhibit (d)(1) to the
Schedule TO. The Merger Agreement should be read in its entirety for a more
complete description of the matters summarized above.
THE SHAREHOLDERS AGREEMENT
The following is a summary of certain provisions of the Shareholders
Agreement, dated as of November 13, 2000 among Parent, Purchaser and certain
executive officers and directors of the Company (the "SHAREHOLDERS AGREEMENT").
TENDER OF SHARES. Subject to certain permitted dispositions of Shares,
certain executive officers and directors of the Company (the "SHAREHOLDERS")
have agreed to tender all of their Shares in the Offer (including any Shares
acquired after the date of the Shareholders Agreement) and not to withdraw such
Shares from the Offer unless the Offer or the Merger Agreement is terminated.
The Shareholders own, in the aggregate, 11.2% of the outstanding Shares on a
fully diluted basis.
OPTIONS. Each of the Shareholders has also agreed to the cancellation of
each outstanding Company option to purchase shares of Common Stock that is held
by such Shareholder at the time of acceptance for payment of any Shares by the
Purchaser in the Offer, in exchange for the consideration described above under
"The Merger Agreement -- Stock Options."
VOTING AGREEMENT. Each of the Shareholders further agreed that from the
date of the Shareholders Agreement until the termination of the Merger
Agreement, at any meeting of the shareholders of the Company, however called,
and in any action by consent of the shareholders of the Company, such
Shareholder will vote such Shareholder's Shares (i) in favor of the approval and
adoption of the Merger Agreement, the Merger and all the transactions
contemplated by the Merger Agreement and the Shareholders Agreement and
otherwise in such manner as may be necessary to consummate the Merger; (ii)
except as otherwise agreed to in writing by Parent, against any action,
proposal, agreement or transaction that would result in a material breach of any
covenant, obligation, agreement, representation or warranty of the Company under
the Merger Agreement (whether or not theretofore terminated) or of the
Shareholder contained in the Shareholders Agreement; and (iii) against any
action, agreement or
30
<PAGE>
transaction that would materially delay or impair the ability of the Company to
consummate the transactions provided for in the Merger Agreement or any
Acquisition Proposal.
IRREVOCABLE PROXY. Pursuant to the Shareholders Agreement, each of the
Shareholders irrevocably appointed Parent and each of its officers as such
Shareholder's attorney, agent and proxy, with full power of substitution, to
vote and otherwise act (by written consent or otherwise) with respect to such
Shareholder's shares of Company Common Stock at any meeting of shareholders of
the Company or by written consent in lieu of any such meeting or otherwise, on
the matters and in the manner specified in the paragraph above.
Pursuant to the Shareholders Agreement, each Shareholder agreed to revoke
all other proxies and powers of attorney with respect to such Shareholder's
shares of Company Common Stock, and agreed that no subsequent proxy or power of
attorney will be given or written consent executed (and if given or executed,
shall not be effective) by any Shareholder with respect thereto.
NO DISPOSITION OR ENCUMBRANCE OF SHARES. Each of the Shareholders further
agreed that, except as contemplated by the Shareholders Agreement, such
Shareholder will not (i) sell, transfer, tender, pledge, assign, contribute to
the capital of any entity, hypothecate, give or otherwise dispose of, grant a
proxy or power of attorney with respect to, deposit into any voting trust, enter
into any voting agreement, or create or permit to exist any liens of any nature
whatsoever with respect to, any of such Shareholder's Shares, other than the
making of bona fide gifts of such shares in an aggregate amount of not more than
20,000 shares per Shareholder (provided that bona fide charitable organizations
under the Code need not agree to be so bound), (ii) other than as contemplated
by the Shareholders Agreement, take any action that would make any
representation or warranty of such Shareholder untrue or incorrect in any
material respect or have the effect of preventing or disabling such Shareholder
from performing such Shareholder's material obligations or (iii) directly or
indirectly, initiate, solicit or encourage any person to take actions that could
reasonably be expected to lead to the occurrence of any of the foregoing.
NO SOLICITATION OF TRANSACTIONS. Subject to each of the Shareholder's
fiduciary duties and obligations as an officer or director of the Company, each
Shareholder agreed that between the date of the Shareholders Agreement and the
date of termination of the Merger Agreement, such Shareholder will not, directly
or indirectly, solicit, initiate, facilitate, including by furnishing any
information to any person, or encourage the submission of any Acquisition
Proposal or any proposal that may reasonably be expected to lead to, an
Acquisition Proposal.
TERMINATION. Each Shareholder's obligation under the Shareholders Agreement
to tender, and not withdraw, their Shares pursuant to the Offer will terminate
on the earlier of expiration date of the Offer and the termination of the Merger
Agreement. The remaining provisions of the Shareholders Agreement will
terminate, and no party will have any rights or obligations under the
Shareholders Agreement, and the Shareholders Agreement shall become null and
void and have no further effect upon the earlier of (i) the Effective Time and
(ii) the termination of the Merger Agreement.
THE STOCK OPTION AGREEMENT
The following is a summary of certain provisions of the Stock Option
Agreement, dated as of November 13, 2000, between Parent and the Company (the
"OPTION AGREEMENT"). The Option Agreement could have the effect of making an
acquisition of the Company by a third party more costly because of the need to
acquire in any such transaction the option shares issued under the Option
Agreement. The Option Agreement could also jeopardize the ability of a third
party to acquire the Company in a transaction to be accounted for as a
pooling-of-interests.
OPTION GRANT. Under the Option Agreement, the Company has granted to Parent
an unconditional, irrevocable option (the "OPTION") to purchase up to 1,291,873
fully paid and nonassessable shares of Company Common Stock, at a price of
$21.00 per share, or, if higher, the highest price offered by Purchaser in the
Offer; PROVIDED THAT, in no event shall the number of Shares for which the
Option is exercisable exceed 19.9% of the Company's issued and outstanding
shares of Company Common Stock without giving effect to any shares subject to or
issued pursuant to the option.
In the event that any additional shares of Company Common Stock are issued
or otherwise become outstanding after the date of the Option Agreement (other
than pursuant to the Option Agreement), the
31
<PAGE>
number of shares subject to the Option shall be increased so that, after such
issuance, it equals 19.9% of the number of shares then issued and outstanding
without giving effect to any shares subject to or issued pursuant to the Option.
OPTION EXERCISE. Parent may exercise the Option only if both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined). Each of the following shall be an
"EXERCISE TERMINATION EVENT": (i) the effective time of the Merger; (ii)
termination of the Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial Triggering Event,
except a termination by Parent pursuant paragraph(d)(i) under "The Merger
Agreement -- Termination," above; or (iii) the passage of six months after
termination of the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a termination by Parent pursuant to the
aforementioned paragraph (d)(i) (PROVIDED THAT if an Initial Triggering Event
continues or occurs beyond such termination and prior to the passage of such
six-month period, the Exercise Termination Event shall be three months from the
expiration of the Last Triggering Event but in no event more than nine months
after such termination). The "LAST TRIGGERING EVENT" shall mean the last Initial
Triggering Event to expire.
The term "INITIAL TRIGGERING EVENT" shall mean any of the following events
or transactions occurring after the date of the Option Agreement:
(i) the Company or any of its subsidiaries, without having received
Parent's prior written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as defined under "The Merger
Agreement" above) with any person other than Parent or any of its
subsidiaries or the Board of Directors of the Company shall have
recommended that the Company's shareholders approve or accept any
Acquisition Transaction or shall have failed to publicly oppose an
Acquisition Transaction, in each case with any person other than Parent or
any of its subsidiaries;
(ii) the Company or any of its subsidiaries, without having received
Parent's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose to engage in, an Acquisition Transaction with any person other than
Parent or one of its subsidiaries, or the Board of Directors of the Company
shall have publicly withdrawn or modified, or publicly announced its
intention to withdraw or modify, in any manner adverse to Parent, its
recommendation that the Company's shareholders approve the transactions
contemplated by the Merger Agreement;
(iii) the Company terminates the Merger Agreement pursuant to
paragraph (h) under "The Merger Agreement -- Termination";
(iv) any person other than Parent, any subsidiary of Parent or any
subsidiary of the Company acting in a fiduciary capacity in the ordinary
course of its business shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 20% or more of the outstanding
shares of Company Common Stock (the term "beneficial ownership" for
purposes of this Option Agreement having the meaning assigned thereto in
Section 13(d) of the 1934 Act, and the rules and regulations thereunder);
or
(v) after an overture is made by a third party to the Company or its
shareholders to engage in an Acquisition Transaction, the Company shall
have breached any covenant or obligation contained in the Merger Agreement
and such breach (x) would entitle Parent to terminate the Merger Agreement
and (y) shall not have been cured prior to the date the Parent sends
written notice to the Company of its wish to exercise the Option.
The term "SUBSEQUENT TRIGGERING EVENT" shall mean either of the following
events or transactions occurring after the date hereof:
(i) the acquisition by any person of beneficial ownership of 20% or
more of the then outstanding shares of Common Stock; or
(ii) the occurrence of the Initial Triggering Event described in
clause (i) of the paragraph above defining the term "Initial Triggering
Event."
32
<PAGE>
REGISTRATION RIGHTS. The Option Agreement further provides that, upon the
occurrence of a Subsequent Triggering Event that occurs prior to an Exercise
Termination Event, the Company shall, if requested by Parent within twelve
months following such date, as expeditiously as possible prepare and file a
registration statement under the Securities Act of 1933, as amended, if such
registration is necessary in order to permit the sale or other disposition of
any or all shares of Company Common Stock or other securities that have been
acquired by or are issuable to Parent upon exercise of the Option, provided that
Parent agrees in writing, at the time of its request for registration, to
irrevocably exercise the Option immediately following the effectiveness of the
registration statement covering the shares of Common Stock issuable upon
exercise of the Option (or such earlier time as required by the SEC). The Option
Agreement also provides the Parent with "piggy-back" registration rights if the
Company, at any time after the exercise of the Option and prior to the first
anniversary of the date of the Subsequent Triggering Event, proposes to register
any Company securities or rights representing Company securities.
APPRAISAL RIGHTS
No appraisal rights to seek to obtain the "fair value" of their Shares are
available to shareholders of the Company in connection with the Offer. However,
if the Merger is consummated, a shareholder of the Company who has not tendered
his shares will have certain rights under Chapter 156B of the MGL to dissent
from the Merger, demand appraisal of and obtain payment in cash for the fair
value of that shareholder's Shares. Those rights, if the statutory procedures
set forth in Sections 85 to 98 of Chapter 156B of the MGL are complied with,
could lead to a judicial determination of the fair value (immediately prior to
the effective date of the Merger) required to be paid in cash to dissenting
shareholders of the Company for their Shares. Any judicial determination of the
fair value of the Shares could be based upon considerations other than or in
addition to the consideration payable in the Merger and the market value of the
Shares, including asset values and the investment value of the Shares. The value
so determined could be more or less than the consideration payable in the
Merger.
The Merger Agreement provides that, notwithstanding any provision of the
Merger Agreement to the contrary, any Shares which are issued and outstanding
immediately prior to the Effective Time and which are held by a holder who has
not voted such Shares in favor of the Merger and who has properly exercised
dissenters' rights with respect to such Shares in accordance with Chapter 156B
of the MGL and, as of the Effective Time, has neither effectively withdrawn nor
otherwise lost for any reason its right to exercise such dissenters' rights
("DISSENTING SHARES"), will not be converted into or represent a right to
receive the consideration payable in the Merger. The holders of Dissenting
Shares will be entitled to only such rights as are granted by Chapter 156B of
the MGL.
The Merger Agreement further provides that if any shareholder of the
Company who asserts dissenters' rights with respect to its Shares under the MGL
effectively withdraws or otherwise loses for any reason (including failure to
perfect) dissenters' rights, then as of the Effective Time or the occurrence of
such event, whichever later occurs, such holder's Shares will automatically be
cancelled and converted into and represent only the right to receive the
consideration payable in the Merger, without interest thereon, upon surrender of
the certificate or certificates formerly representing such Dissenting Shares.
The Merger Agreement further provides that the Company shall give Parent
(x) prompt notice of any written intent to demand payment of the fair value of
any Shares, withdrawals of such demands and any other instruments delivered
pursuant to the MGL in respect of Shares or the Merger received by the Company
and (y) the opportunity to control and resolve all negotiations and proceedings
with respect to dissenters' rights under the MGL. The Company may not
voluntarily make any payment with respect to any exercise of dissenters' rights
and may not, except with the prior written consent of Parent, settle or offer to
settle any such dissenters' rights.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the MGL and is qualified in its entirety by the full text
of Sections 85 to 98 of Chapter 156B of the MGL.
FAILURE TO FOLLOW THE STEPS REQUIRED BY CHAPTER 156B OF THE MGL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
33
<PAGE>
GOING-PRIVATE TRANSACTIONS
Rule 13e-3 under the Exchange Act is applicable to certain "going private"
transactions. The Purchaser does not believe that Rule 13e-3 will be applicable
to the Merger unless the Merger is consummated more than one year after the
termination of the Offer. If applicable, Rule 13e-3 requires, among other
things, that certain financial information concerning the fairness of the Merger
and the consideration offered to minority shareholders in the Merger be filed
with the SEC and disclosed to shareholders prior to the consummation of the
Merger.
14. DIVIDENDS AND DISTRIBUTIONS
As discussed in Section 13, the Merger Agreement provides that from the
date of the Merger Agreement to the Effective Time, without the prior approval
of Parent, the Company may not declare, set aside or pay any dividends on, or
make any other distributions (whether in cash, stock or property) in respect of,
any of its capital stock except for cash dividends payable to the Company or a
subsidiary of Company by a subsidiary of the Company.
15. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement,
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-l(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after the termination or withdrawal of the Offer), to pay for
any Shares tendered pursuant to the Offer and may postpone the acceptance for
payment or payment for any Shares tendered, and, when permitted by the Merger
Agreement, amend or terminate the Offer unless (i) there shall have been validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Common Shares, together with Common Shares owned by Parent or Purchaser, which
would represent at least a majority of the outstanding Common Stock (determined
on a fully diluted basis for all outstanding stock options, convertible
securities and any other rights to acquire Company Common Stock on the date of
purchase, and (ii) any requisite waiting period under the HSR Act (and any
extension thereof) applicable to the purchase of Shares pursuant to the Offer or
to the Merger and any other requisite waiting periods under any other applicable
material competition, merger, control, antitrust or similar law or regulation
shall have been terminated or shall have expired. Furthermore, notwithstanding
any other term of the Offer or the Merger Agreement, Purchaser shall not be
required to accept for payment or, subject as aforesaid, to pay for any Shares
not theretofore accepted for payment or paid for, and, subject to the Merger
Agreement, may terminate or amend the Offer, immediately prior to the applicable
expiration of the Offer, if any of the following conditions exists:
(a) there shall be pending or formally threatened any suit, action or
proceeding by any Governmental Entity (i) challenging the acquisition by
Parent or Purchaser of any Shares, seeking to restrain or prohibit
consummation of the Offer or the Merger, or seeking to place limitations on
the ownership of shares of Common Stock (or shares of common stock of the
surviving corporation) by Parent or Purchaser, (ii) seeking to prohibit or
limit the ownership or operation by the Company or Parent and their
respective subsidiaries of any material portion of the business or assets
of the Company or Parent and their respective subsidiaries taken as a
whole, or to compel the Company or Parent and their respective subsidiaries
to dispose of or hold separate any material portion of the business or
assets of the Company or Parent and their respective subsidiaries taken as
a whole, as a result of the Offer, the Merger or any of the other
transactions contemplated by the Merger Agreement, (iii) seeking to
prohibit Parent or any of its subsidiaries from effectively controlling in
any material respect the business or operations of the Company or Parent
and subsidiaries taken as a whole, or (iv) which otherwise is reasonably
expected to have a material adverse effect;
(b) any Legal Restraint, as defined in the Merger Agreement, that has
the effect of preventing the purchase of Shares pursuant to the Offer or
the Merger shall be in effect;
(c) except as set forth in the Disclosure Letter or in forms, reports
and other documents filed by the Company with the Commission, since
September 30, 2000, there shall have been any state of facts, change,
development, effect, event, condition or occurrence that, individually or
in the
34
<PAGE>
aggregate, constitutes or would reasonably be expected to have, a Material
Adverse Effect as defined in the Merger Agreement;
(d) the representation and warranty of the Company concerning its
capitalization contained in the Merger Agreement shall not be true and
correct in all material respects, or the other representations and
warranties of the Company contained in the Merger Agreement shall not be
true and correct, except for such failures to be true and correct that
(without giving effect, with respect to those representations and
warranties that are not true and correct, to any limitation as to
"materiality" or material adverse effect set forth therein), individually
and in the aggregate, would not reasonably be expected to have a material
adverse effect;
(e) the Company shall have failed to perform in any respect any
obligation required to be performed by it under the Merger Agreement at or
prior to the Termination Date, which failure would reasonably be expected
to have a material adverse effect;
(f) Parent shall not have obtained all consents, approvals,
authorizations, qualifications and orders of all Governmental Entities
legally required in connection with the Merger Agreement and the
transactions contemplated thereby, other than any such consents, approvals,
authorizations, qualifications and orders, the failure of which to obtain,
individually and in the aggregate, would not reasonably be expected to have
a material adverse effect; provided, however, that the failure to obtain
such consents, approvals, authorizations, qualifications or orders is not
the result of a breach by Parent or Purchaser of any of their covenants and
other obligations set forth in the Merger Agreement;
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
(h) the Company Board shall have (A) withdrawn or modified or changed,
in any manner adverse to Parent or Purchaser, its recommendation to Company
shareholders to accept the Offer and tender the Shares, (B) accepted,
approved or recommended any Acquisition Proposal, or (C) resolved or
publicly disclosed any intention to do any of the foregoing; or
(i) there shall have occurred (A) any general suspension of trading in
or on the Nasdaq National Market (other than a shortening of trading hours
or any coordinated trading halt triggered solely as a result of a specified
increase or decrease in a market index), (B) a decline of at least 30%
(determined for any particular day as of the close of business for such
day) in either the Dow Jones Average of Industrial Stocks or the Standard &
Poor's 500 Index from the date hereof, (C) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (D) the imposition of any limitation (whether or not mandatory) by
any government or Governmental Entity, on the extension of credit by banks
or other lending institutions, (E) a commencement of a war or armed
hostilities or any other national or international calamity directly
involving the United States or (F) in the case of any of the foregoing
existing on the date hereof, a material acceleration or worsening thereof;
which, in the sole discretion of Purchaser or Parent, in any such case, and
regardless of the circumstances giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
16. CERTAIN LEGAL MATTERS
Except as described in this Section 16, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company and discussions of representatives
of Parent with representatives of the Company, none of Parent, the Purchaser or
the Company is aware of any license or regulatory permit that appears to be
material to the business of the Company and its subsidiaries, taken as a whole,
that might be adversely affected by the Purchaser's acquisition of Shares (and
the indirect acquisition of the stock of the Company's subsidiaries) as
contemplated herein or of any approval or other action by any Governmental
Entity that would be required or desirable for the acquisition or ownership of
Shares by the Purchaser as contemplated herein. Should any such approval or
other action be required or desirable, Parent and the Purchaser currently
contemplate that such approval or other action will be sought, except as
described below under "State Takeover Laws". While (except as otherwise
expressly described in this Section 16)
35
<PAGE>
the Purchaser does not presently intend 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 failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser could, subject to the
terms and conditions of the Merger Agreement, decline to accept for payment or
pay for any Shares tendered. See Section 15 for a description of certain
conditions to the Offer.
STATE TAKEOVER LAWS. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in such states. In
EDGAR V. MITE CORP., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS CORP.
V. DYNAMICS CORP. OF AMERICA, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining shareholders, provided that such laws were applicable
only under certain conditions. Subsequently, a number of U.S. federal courts
ruled that various state takeover statutes were unconstitutional insofar as they
apply to corporations incorporated outside the state of enactment.
The Company is incorporated under the laws of the Commonwealth of
Massachusetts, which has certain "antitakeover" laws.
Chapter 110F of the MGL limits the ability of a Massachusetts corporation
to engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of five percent or more of the outstanding
voting stock of the corporation) unless, among other things, the corporation's
board of directors has given its prior approval to either the business
combination or the transaction which resulted in the stockholder becoming an
"interested stockholder." The Company's Board of Directors has approved the
Merger Agreement and the Purchaser's acquisition of Shares pursuant to the Offer
and, therefore, Chapter 110F of the MGL is inapplicable to the Offer and the
Merger.
Under Chapter 110D of the MGL, entitled "Regulation of Control Shares
Acquisitions," unless a Corporation's articles of incorporation provide that
such Chapter is not applicable to the corporation, any stockholder of a
corporation subject to this statute who acquires 20% or more of the outstanding
voting stock of a Massachusetts corporation may not vote such stock unless the
stockholders holding a majority of the outstanding voting stock (excluding the
interested shares) of the corporation so authorize. Chapter 110D of the MGL is
inapplicable to the Company because the Company opted-out of Chapter 110D in
accordance with the provisions thereof.
Based on information supplied by the Company, the Purchaser does not
believe that any state takeover statutes purport to apply to the Offer or the
Merger. Neither the Purchaser nor Parent has currently complied with any state
takeover statute or regulation. The Purchaser reserves the right to challenge
the applicability or validity of any state law purportedly applicable to the
Offer or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state takeover statute is applicable to the Offer or
the Merger and if an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, the Purchaser
might be required to file certain information with, or to receive approvals
from, the relevant state authorities, and the Purchaser might be unable to
accept for payment or pay for Shares tendered pursuant to the Offer, or be
delayed in consummating the Offer or the Merger. In such case, the Purchaser may
not be obliged to accept for payment or pay for any Shares tendered pursuant to
the Offer.
ANTITRUST LAW. Under the provisions of the HSR Act applicable to the
Offer, the acquisition of Shares under the Offer may be consummated after the
expiration of a 30-calendar day waiting period
36
<PAGE>
commenced by the filing by Parent of a Notification and Report Form with respect
to the Offer, unless Parent receives a request for additional information or
documentary material from the Antitrust Division of the Department of Justice or
the Federal Trade Commission (the "FTC"), or unless early termination of such
waiting period is granted. Parent has filed such Notification Report Form. If,
within the initial 30-day waiting period, either the Antitrust Division or the
FTC requests additional information from Parent concerning the Offer, the
waiting period will be extended and would expire at 11:59 p.m., New York City
time, on the tenth calendar day after the date of substantial compliance by
Parent with such request. Only one extension of the waiting period pursuant to a
request for additional information is authorized by the HSR Act. Thereafter,
such waiting period may be extended only by court order or with the consent of
Parent. In practice, complying with a request for additional information or
material can take a significant amount of time. In addition, if the Antitrust
Division or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and may
agree to delay consummation of the transaction while such negotiations continue.
Expiration or termination of the applicable waiting period under the HSR Act is
a condition to the Purchaser's obligation to accept for payment and pay for
Shares tendered pursuant to the Offer.
The Merger will not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of the
Company or its subsidiaries or Parent or its subsidiaries. Private parties may
also bring legal action under the antitrust laws under certain circumstances.
There can be no assurance that a challenge to the Offer on antitrust grounds
will not be made or, if such a challenge is made, of the result thereof.
FOREIGN ANTITRUST LAWS. The Purchaser believes that notices of the
acquisition of the Company will have to be filed under the laws of several
foreign jurisdictions. There can be no assurance that a challenge to the Offer
under these foreign laws on competition or other grounds will not be made or, if
such a challenge is made, of the result thereof.
17. FEES AND EXPENSES
Merrill Lynch is acting as Dealer Manager for the Offer and is providing
certain financial advisory services to Parent and the Purchaser in connection
with the Offer, for which services Merrill Lynch will receive customary
compensation. Parent also has agreed to reimburse Merrill Lynch for reasonable
out-of-pocket expenses, including fees and expenses of its legal counsel, and to
indemnify Merrill Lynch and certain related parties against certain liabilities,
including liabilities under the federal securities laws, arising out of its
engagement. In the ordinary course of business, Merrill Lynch and its affiliates
may actively trade or hold the securities of Parent and the Company for their
own account and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities.
Parent and the Purchaser have retained MacKenzie Partners, Inc. to act as
the Information Agent and EquiServe, L.P., to serve as the Depositary in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services, be reimbursed
for certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
and expenses under the U.S. federal securities laws.
Neither Parent nor the Purchaser will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager, the Information
Agent and the Depositary) in connection with the solicitation of tenders of
Shares pursuant to the Offer. Brokers, dealers, banks, trust companies and other
members will be reimbursed by the Purchaser upon request for customary mailing
and handling expenses incurred by them in forwarding material to their
customers.
37
<PAGE>
18. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither Parent nor the Purchaser is aware of any jurisdiction in
which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. To the extent Parent or the
Purchaser becomes aware of any state law that would limit the class of offerees
in the Offer, the Purchaser will amend the Offer and, depending on the timing of
such amendment, if any, will extend the Offer to provide adequate dissemination
of such information to holders of Shares prior to the expiration of the Offer.
In any jurisdiction the securities, blue sky or other laws of which require the
Offer to be made by a licensed broker or dealer, the Offer is being made on
behalf of the Purchaser by the Dealer Manager or one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Parent and the Purchaser have filed with the Commission the Schedule TO
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer, and may
file amendments thereto. In addition, the Company has filed the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, together with exhibits, setting
forth its recommendation with respect to the Offer and the reasons for such
recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Section 8 (except that such material will not be available at the regional
offices of the Commission).
EQUINOX ACQUISITION, INC.
November 17, 2000
38
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The name, present principal
occupation or employment and material occupations, positions, offices or
employment for the past five years of each of the directors and executive
officers of Parent are set forth below. Unless otherwise indicated, each
person's business address is that of the Parent. Each such director and
executive officer is a citizen of the United States.
POSITION WITH PARENT; PRESENT OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD DURING THE PAST
NAME AND BUSINESS ADDRESS FIVE YEARS.
------------------------- --------------------------------------------------
Livio D. DeSimone Chairman of the Board and Chief Executive Officer
since 1991. Mr. De Simone is also a Director of
Cargill, Incorporated, General Mills, Inc., Target
Corp., Vulcan Materials Company and Milliken &
Company.
Linda G. Alvarado Director of Parent since 2000; President and Chief
3M Executive Officer, Alvarado Construction, Inc., a
P.O. Box 33428 commercial general contracting firm that she
St. Paul, MN 55133-3428 founded in 1976. Ms. Alvarado is also a director
of Engelhard Corporation, Pitney Bowes, Inc., and
Pepsi Bottling Group, Inc.
Harry C. Andrews Executive Vice President, Electro and
Communications Markets since September 1999; Vice
President, Corporate Enterprise Development,
October 1996; Managing Director, Southern Europe
Region, May 1996; Managing Director, 3M Italy,
June 1993.
Ronald O. Baukol Director of Parent since 1996-Executive Vice
President, International Operations since 1995.
Vice President, Asia Pacific, Canada and Latin
America, 1994-1995. Mr. Baukol is also a Director
of Graco, Inc., and The Toro Company.
Ronald R. Belschner Vice President, Engineering, Manufacturing and
Logistics since November 2000; Division Vice
President, Industrial Tape and Specialties
Division, April 1995.
John W. Benson Executive Vice President, Health Care Markets
since January 1998; Group Vice President,
Industrial Markets Group, January 1996; Division
Vice President, Abrasive System Division, March
1995; Group Vice President, Abrasive, Chemical and
Film Products Group, August 1995.
Edward A. Brennan Director of Parent since 1986; retired (1995)
3M Chairman of the Board, President, and Chief
P.O. Box 33428 Executive Officer, Sears, Roebuck and Co; Mr.
St. Paul, MN 55133-3428 Brennan is also a director of The Allstate
Corporation, Morgan Stanley Dean Witter & Co., AMR
Corporation, Unicom Corporation, Dean Foods
Company, and The SABRE Group Holdings, Inc.
Robert J. Burgstahler Vice President, Finance and Administrative
Services since February 2000; President and
General Manager, 3M Canada Company, March 1998;
Staff Vice President, Taxes, May 1995; Executive
Director, Taxes, January 1994.
M. Kay Grenz Vice President, Human Resources since March 1998;
Staff Vice President, Human Resources Consulting
and Resource Services, August 1996; Staff Vice
President, Human Resources Corporate Services,
November 1992.
Paul Guehler Vice President, Research and Development since
June 2000; Vice President, Corporate Enterprise
Development and Optical Technologies, October
1999; Optical Markets and Technologies Vice
President, March 1998; Division Vice President,
Safety and Security Systems Division, February
1992.
S-1
<PAGE>
POSITION WITH PARENT; PRESENT OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD DURING THE PAST
NAME AND BUSINESS ADDRESS FIVE YEARS.
------------------------- --------------------------------------------------
Edward M. Liddy Director of Parent since 2000; Chairman, President
3M and Chief Executive Officer of The Allstate
P.O. Box 33428 Corporation, the parent of Allstate Insurance
St. Paul, MN 55133-3428 Company. Prior to this Mr. Liddy served as
President and Chief Operating Officer from 1994 to
1998. Mr. Liddy is also a director of Kroger Co.
Moe S. Nozari Executive Vice President, Consumer and Office
Markets since June 1999; Group Vice President,
Consumer and Office Market Group, May 1996;
Division Vice President, Consumer Markets, October
1993.
Aulana L. Peters Director of Parent since 1990; Partner, Gibson,
3M Dunn & Crutcher LLP, a law firm, Los Angeles,
P.O. Box 33428 California. Ms. Peters is also a director of
St. Paul, MN 55133-3428 Merrill Lynch & Co., Inc., Northrop Grumman Corp.,
and Callaway Golf Company.
David W. Powell Vice President, Marketing since June 1999;
Division Vice President, Commercial Office Supply
Division, July 1996; Managing Director, 3M France,
February 1995.
Charles Reich Executive Vice President, Specialty Material
Markets and Corporate Services since September
1999; Group Vice President, Specialty Material
Markets Group, January 1999; Group Vice President,
Chemical Markets Group, March 1998; Division Vice
President, Occupational Health and Environmental
Safety Division, July 1997; Division Vice
President, Dental Products Division, April 1990.
Rozanne L. Ridgway Director of Parent since 1989; former Assistant
3M Secretary of State for Europe and Canada; Member
P.O. Box 33428 of the Board Organization and Compensation
St. Paul, MN 55133-3428 Committee; Ms. Ridgway served from 1985 until her
retirement in 1989 as Assistant Secretary of State
for European and Canadian Affairs. Ms. Ridgway is
a director of Bell Atlantic Corporation, The
Boeing Company, Emerson Electric Co., Nabisco,
Sara Lee Corporation, and Union Carbide
Corporation. Ms. Ridgway is also chair of the
Baltic-American Enterprise Fund.
Frank Shrontz Director of Parent since 1992; Chairman Emeritus,
3M The Boeing Company; Chief Executive Officer of
P.O. Box 33428 Boeing from 1986 and Chairman of the Board from
St. Paul, MN 55133-3428 1988 until his retirement in 1997. Mr. Shrontz is
a director of Boise Cascade Corporation and
Chevron Corporation, and a citizen regent on the
Smithsonian Institution's Board of Regents. Mr.
Shrontz is also a member of the Business Council.
F. Alan Smith Director of Parent since 1986; Chairman of
3M Advanced Accessory Systems, Inc.; Chairman of
P.O. Box 33428 Mackie Automotive System; Retired Executive Vice
St. Paul, MN 55133-3428 President and Director, General Motors
Corporation; Chairman of the Audit Committee and
Member of the Public Issues Committee. Mr. Smith
was a director of General Motors from 1981 until
his retirement in 1992. Mr. Smith is a director of
TransPro, Inc., and a trustee of the Florida
Institute of Technology.
S-2
<PAGE>
POSITION WITH PARENT; PRESENT OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD DURING THE PAST
NAME AND BUSINESS ADDRESS FIVE YEARS.
------------------------- --------------------------------------------------
Louis W. Sullivan Director of Parent since 1993; President,
Morehouse School of Medicine, Atlanta, Georgia;
Dr. Sullivan is a member of the Audit and Public
Issues Committees; Dr. Sullivan served as
Secretary, United States Department of Health and
Human Services, from 1989 to 1993. He returned to
Morehouse School of Medicine in 1993. Dr. Sullivan
is a director of Bristol-Myers Squibb Company,
CIGNA Corporation, Equifax, Inc., General Motors
Corporation, Georgia-Pacific Corporation, and
Household International. Dr. Sullivan is also a
director of the Boy Scouts of American and a
trustee of the Little League Foundation.
John J. Ursu Senior Vice President, Legal Affairs and General
Counsel since 1997;Vice President, Legal Affairs
and General Counsel in 1993.
Ronald A. Weber Executive Vice President, Transportation, Graphics
and Safety Markets since 2000; Division Vice
President, Automotive Division in 1996; Division
Vice President, Automotive Engineered Systems in
1995.
Harold J. Wiens Executive Vice President, Industrial Markets since
September 1999; Executive Vice President,
Industrial and Electro Markets, June 1999;
Executive Vice President, Industrial and Consumer
Markets, July 1998; Group Vice President,
Industrial Markets Group, January 1998; Executive
Vice President, Sumitomo 3M Ltd. May 1995.
S-3
<PAGE>
2. DIRECTOR AND EXECUTIVE OFFICERS OF THE PURCHASER. The name, business
address, present principal occupation or employment and material
occupations, positions, offices or employment for the past five years of
the sole director and executive officers of the Purchaser are set forth
below. Each such director and executive officer is a citizen of the United
States.
POSITION WITH PARENT; PRESENT OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD DURING THE PAST
NAME FIVE YEARS.
---- --------------------------------------------------
Ronald A. Weber President and Director; Executive Vice President,
3M Transportation, Graphics and Safety Markets of 3M
P.O. Box 33428 since 2000; Division Vice President, Automotive
St. Paul, MN 55133-3428 Division in 1996; Division Vice President,
Automotive Engineered Systems in 1995.
Andrew H. Wong Director; Division Vice President, Optical Systems
3M Division of 3M since October 1999; General
P.O. Box 33428 Manager, Optical Systems Division, March 1998;
St. Paul, MN 55133-3428 Business Department Manager, Optical Systems,
Safety and Security Systems Division, 1996;
Business Project Manager, Optical Systems, Safety
and Security Systems Division, 1994.
Peggy Kubicz Hall Clerk and Director; Senior Counsel of 3M.
3M
P.O. Box 33428
St. Paul, MN 55133-3428
Janet L. Yeomans Treasurer; Vice President and Treasurer of 3M since
3M April 1996; Treasurer of 3M, July 1995.
P.O. Box 33428
St. Paul, MN 55133-3428
S-4
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below
THE DEPOSITARY FOR THE OFFER IS:
EQUISERVE, L.P.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and locations
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery or any other tender offer
materials may be obtained from the Information Agent. You may also contact your
broker, dealer, bank, trust company or other nominee for assistance concerning
the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
<TABLE>
<CAPTION>
BY MAIL: BY HAND: BY COURIER:
<S> <C> <C>
EquiServe Trust Company, N.A. Securities Transfer and Reporting Services, Inc. EquiServe Trust Company, N.A.
Attn: Corporate Actions c/o EquiServe Trust Company, N.A. Attn: Corporate Actions
P.O. Box 8029 100 William Street, Galleria 150 Royale Street
Boston, Massachusetts 02266 New York, New York 10038 Canton, Massachusetts 02021
</TABLE>
BY FACSIMILE TRANSMISSION:
(For Eligible Institutions only)
(781)575-2233
CONFIRM FACSIMILE TRANSMISSION:
By telephone only
(781)575-3120
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL FREE (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
MERRILL LYNCH & CO.
4 World Financial Center
New York, New York 10080
(212) 236-3790 (call collect)
