AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 13, 2000
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM S-4
REGISTRATION STATEMENT Under the Securities Act of 1933
----------------------------
MINNESOTA MINING AND MANUFACTURING COMPANY
(Exact name of registrant as specified in its articles of incorporation)
DELAWARE 3290 41-0417775
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrical Identification No.)
incorporation or Classification
organization) Code Number)
----------------------------
GREGG M. LARSON, ESQ.
ASSISTANT GENERAL COUNSEL,
3M CENTER ASSISTANT SECRETARY
ST. PAUL, MINNESOTA 55144 MINNESOTA MINING AND MANUFACTURING COMPANY
(651) 733-1110 3M CENTER
(Address, including zip code, ST. PAUL, MINNESOTA 55144
and telephone number, including (651) 733-1110
area code, of registrant's (Name and address, including zip code,
principal executive offices) and telephone number, including
area code, of agent for service)
----------------------------
<TABLE>
<CAPTION>
COPIES TO:
<S> <C> <C>
JEAN E. HANSON, ESQ. GREGG M. LARSON, ESQ. BERKLEY W. DUCK III, ESQ.
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON ASSISTANT GENERAL COUNSEL, ICE MILLER
ONE NEW YORK PLAZA ASSISTANT SECRETARY ONE AMERICAN SQUARE
NEW YORK, NEW YORK 10004 MINNESOTA MINING AND MANUFACTURING COMPANY BOX 82001
TEL: (212) 859-8000 3M CENTER INDIANAPOLIS, IN 46282-0002
FAX: (212) 859-4000 ST. PAUL, MN 55144-1000 TEL: (317) 236-2100
TEL: (651) 733-1110 FAX: (317) 236-2219
FAX: (651) 736-9469
</TABLE>
----------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after the effectiveness of this Registration
Statement and the effective time of the merger described herein.
If the securities being registered on this Form are being offered
in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box. |_|
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT AGGREGATE OFFERING PRICE REGISTRATION FEE
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per 1,370,268(1) Not Applicable Not Applicable $28,981.43(2)
share
===================================================================================================================================
<FN>
(1) Based on 5,913,975 common shares, no par value, of Robinson Nugent,
Inc., which is the maximum number of Robinson Nugent common shares
that may be outstanding immediately prior to the completion of the
transactions described herein, assuming an exchange ratio of 0.2317 of
a share of 3M common stock for each Robinson Nugent common share
(which is the highest possible exchange ratio in the merger).
(2) Pursuant to Rules 457(f)(1) and 457(c) under the Securities Act of
1933, as amended, the registration fee has been calculated based on a
price of $18.5625 per Robinson Nugent common share (the average of the
high and low price per Robinson Nugent common share as reported on the
Nasdaq National Market on November 7, 2000, and the maximum number of
shares of such common stock that may be outstanding immediately prior
to the completion of the transactions described herein as set forth in
footnote 1 above).
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
[ROBINSON NUGENT LOGO]
November__, 2000
Dear Shareholder:
The board of directors of Robinson Nugent, Inc. has unanimously
approved a merger agreement dated October 2, 2000 that provides for the
merger of Minnesota Mining and Manufacturing Company (3M) and Robinson
Nugent. As a result of the merger, Robinson Nugent will become a wholly
owned subsidiary of 3M. Each Robinson Nugent common share will be exchanged
for between 0.2317 and 0.19 of a share of 3M common stock, depending on the
average closing price of 3M common stock during the 20 trading days prior
to the completion of the merger.
On November __, 2000, the last trading day before the date of the
accompanying proxy statement/prospectus, 3M common stock, which trades on
the New York Stock Exchange under the symbol "MMM," closed at $[___] and
Robinson Nugent common shares, which trade on the Nasdaq National Market
under the symbol "RNIC," closed at $[___].
Robinson Nugent has scheduled a special meeting of its
shareholders to vote on various proposals relating to the merger. A
majority of the outstanding common shares of Robinson Nugent entitled to
vote is required to approve and adopt the merger agreement and the merger.
We cannot complete the merger unless the shareholders of Robinson Nugent
vote in favor of this proposal. For a more detailed description of the
special meeting, see "The Special Shareholders Meeting" on page 19.
The accompanying proxy statement/prospectus gives you detailed
information about 3M, Robinson Nugent and the merger, and includes a copy
of the merger agreement. We encourage you to read the entire document
carefully before deciding how to vote. IN PARTICULAR, YOU SHOULD READ THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 16 FOR A DESCRIPTION OF VARIOUS
RISKS YOU SHOULD CONSIDER IN EVALUATING THE MERGER.
We are very enthusiastic about the merger. I join all the other
members of the board of directors in recommending that you vote "FOR" each
of the proposals being submitted to shareholders.
[signature]
Patrick C. Duffy
Chairman
Robinson Nugent, Inc.
----------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE SECURITIES TO BE
ISSUED IN CONNECTION WITH THE MERGER OR DETERMINED IF THIS PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------------------------------------------------------------------
THIS PROXY STATEMENT/PROSPECTUS IS DATED NOVEMBER __, 2000, AND
IS FIRST BEING MAILED TO SHAREHOLDERS ON OR ABOUT NOVEMBER __, 2000.
<PAGE>
ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about 3M and Robinson Nugent from documents each has
filed with the SEC that are not included in or delivered with this proxy
statement/prospectus. If you call or write, 3M will send you copies of
these documents, excluding exhibits, without charge. You may contact 3M at:
Minnesota Mining and Manufacturing Company
3M Center
St. Paul, Minnesota 55144
Attention: Investor Relations
Telephone number: (651) 736-1915
If you call or write, Robinson Nugent will send you copies of the
documents that it has filed with the SEC, excluding exhibits, without
charge. You may contact Robinson Nugent at:
Robinson Nugent, Inc.
800 East Eighth Street
P.O. Box 1208
New Albany, IN 47151
Attention: Investor Relations
Telephone Number: (812) 945-0211
IN ORDER TO RECEIVE TIMELY DELIVERY OF THE DOCUMENTS IN ADVANCE OF THE
SPECIAL SHAREHOLDERS MEETING, YOU SHOULD MAKE YOUR REQUEST NO LATER THAN
NOVEMBER __, 2000.
For more information on the matters incorporated by reference in this
proxy statement/prospectus, see "Where You Can Find More Information" on
page 66.
<PAGE>
[ROBINSON NUGENT LOGO]
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [ ] __, 2000
--------------------------------
To the Shareholders of Robinson Nugent, Inc.:
A special meeting of the shareholders of Robinson Nugent, Inc. will be
held at [the Holiday Inn Lakeview, 505 Marriott Drive, Clarksville,
Indiana] on [________], [________], 2000, at [10:00] a.m., local time, to
consider and vote on the matter of Proposal No. 1 and any other matters
which may properly come before the Robinson Nugent special shareholders
meeting or any adjournment or postponement of the special shareholders
meeting.
1. To approve and adopt the Agreement and Plan of Merger, dated
as of October 2, 2000, by and among Minnesota Mining and Manufacturing
Company (3M), Barbados Acquisition Inc., a wholly owned subsidiary of
3M, and Robinson Nugent, and the merger contemplated thereby of
Barbados Acquisition Inc. with and into Robinson Nugent. A copy of the
merger agreement is attached to the proxy statement/prospectus as
Annex A.
THE BOARD OF DIRECTORS OF ROBINSON NUGENT UNANIMOUSLY RECOMMENDS THAT
YOU VOTE "FOR" PROPOSAL NO. 1.
Only shareholders of record at the close of business on November [__],
2000 are entitled to notice of, and to vote at, the special shareholders
meeting or any adjournment or postponement of the special shareholders
meeting.
You are cordially invited to attend the Robinson Nugent special
shareholders meeting. Whether or not you plan to attend, please act
promptly to vote your shares on the proposal described above. You may vote
your shares by completing, signing, and dating the enclosed proxy card and
returning it as promptly as possible in the enclosed postage-paid envelope.
You may revoke your proxy in the manner described in the accompanying proxy
statement/prospectus at any time before it has been voted at the special
meeting.
If you attend the Robinson Nugent special shareholders meeting,
you may vote your shares in person even if you have previously submitted a
proxy.
By Order of the Board of Directors,
Richard L. Mattox
Secretary
New Albany, Indiana
November [__], 2000
<PAGE>
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE 3M/ROBINSON NUGENT MERGER...................1
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS..................4
SUMMARY.....................................................................4
RISK FACTORS...............................................................16
Risks Relating to the Merger Transaction................................16
Risks Relating to 3M....................................................17
THE SPECIAL SHAREHOLDERS MEETING...........................................19
Time and Place of the Special Meeting; Matters to Be Considered.........19
Vote Required...........................................................19
Record Date; Quorum.....................................................19
How Proxies Will Be Voted at the Robinson Nugent Special
Shareholders Meeting..................................................20
Treatment of Abstentions and Broker Non-Votes...........................20
How to Revoke a Proxy...................................................20
Solicitation of Proxies.................................................20
Appraisal Rights........................................................21
THE MERGER.................................................................22
General.................................................................22
Background of the Merger................................................23
Reasons for the Merger; Recommendations of the Board of Directors.......25
Opinion of Financial Advisor to Robinson Nugent.........................28
Competitor Summary Financial Data.......................................33
Competitor Valuation Metrics............................................34
Interests of Directors and Executive Officers of Robinson Nugent
in the Merger.........................................................35
Accounting Treatment....................................................36
Federal Income Tax Consequences.........................................36
Regulatory Matters......................................................38
Federal Securities Laws Consequences; Stock Transfer Restrictions.......39
THE MERGER AGREEMENT.......................................................40
Structure of the Merger.................................................40
Closing; Effective Time.................................................40
What Shareholders Will Receive in the Merger............................40
Procedures for Surrender of Robinson Nugent Certificates;
Fractional Shares.....................................................41
Representations and Warranties..........................................41
Conduct of Business.....................................................42
No Solicitation.........................................................44
Employee Benefit Plans..................................................46
Insurance and Indemnification...........................................46
Expenses................................................................47
Conditions to the Completion of the Merger..............................47
Termination.............................................................48
Amendments..............................................................50
THE VOTING AND STOCK OPTION AGREEMENT......................................51
3M Voting Agreement with Robinson Nugent Shareholders...................51
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION................52
Market Prices and Dividends.............................................52
THE BUSINESS OF MINNESOTA MINING AND MANUFACTURING COMPANY.................53
THE BUSINESS OF ROBINSON NUGENT, INC.......................................54
COMPARISON OF STOCKHOLDER RIGHTS...........................................55
WHERE YOU CAN FIND MORE INFORMATION........................................66
EXPERTS....................................................................68
INDEPENDENT AUDITORS.......................................................68
LEGAL MATTERS..............................................................68
SHAREHOLDER PROPOSALS FOR ANNUAL MEETINGS..................................68
<PAGE>
LIST OF ANNEXES
ANNEX A Agreement and Plan of Merger...............................A-1
ANNEX B Voting and Stock Option Agreement..........................B-1
ANNEX C Opinion of Goelzer Investment Banking......................C-1
ANNEX D Restated Robinson Nugent, Inc. 2000 Annual Report
on Form 10-K...............................................D-1
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE 3M/ROBINSON NUGENT MERGER
Q. WHAT IS THE PROPOSED TRANSACTION?
A. 3M will acquire Robinson Nugent by merging a wholly owned subsidiary
of 3M with and into Robinson Nugent. As a result of the merger,
Robinson Nugent will be a wholly owned subsidiary of 3M.
Q. WHY IS THE ROBINSON NUGENT BOARD OF DIRECTORS RECOMMENDING THE
APPROVAL OF THE MERGER AGREEMENT?
A. The Robinson Nugent board of directors believes that the merger is
fair to and in the best interests of Robinson Nugent and its
shareholders. The Robinson Nugent board of directors received an
opinion from Goelzer Investment Banking that, as of October 2, 2000,
and based on and subject to the various considerations described in
the opinion, the terms of the proposed merger are fair from a
financial point of view to the holders of Robinson Nugent common
shares. See "The Merger--Reasons for the Merger; Recommendations of
the Board of Directors" on page 25.
Q: WHAT WILL ROBINSON NUGENT SHAREHOLDERS RECEIVE IN THE MERGER?
A: Robinson Nugent shareholders will receive common stock of 3M in the
merger. The amount of 3M common stock that will be received will be
based on a formula contained in the merger agreement. If the "average
trading price" of 3M common stock is between $82.00 and $100.00, for
each Robinson Nugent common share you own you will receive a number of
shares of 3M common stock having a value of $19.00, based on the
average trading price, subject to the collar described below. The
average trading price is based on the average closing price for a
share of 3M common stock on the New York Stock Exchange Composite Tape
for the 20 consecutive trading days ending on the business day before
the closing of the merger. Within this range of average trading
prices, the actual number of shares of 3M common stock you will
receive will vary based on the formula contained in the merger
agreement which adjusts the number of shares you receive to maintain
their value at $19.00, based on the average trading price, subject to
the collar described below.
If the average trading price of shares of 3M common stock is below
$82.00, you will receive 0.2317 shares of 3M common stock for each
Robinson Nugent common share you own. In that case, the value of the
3M common stock you receive in the merger will be less than $19.00 for
each Robinson Nugent common share you own, based on the average
trading price.
If the average trading price of shares of 3M common stock is above
$100.00, you will receive 0.19 shares of 3M common stock for each
Robinson Nugent common share you own. In that case, the value of the
shares of 3M common stock you receive in the merger will be more than
$19.00 for each Robinson Nugent common share, based on the average
trading price.
Immediately after the merger, former Robinson Nugent shareholders will
own less than 1% of 3M.
Q: WHAT DO I NEED TO DO NOW?
A: After you have carefully read this proxy statement/prospectus, please
fill out, sign and date the enclosed proxy card and mail it in the
enclosed prepaid return envelope as soon as possible, so that your
shares may be represented and voted at the Robinson Nugent special
shareholders meeting. You may also attend the Robinson Nugent special
shareholders meeting in person.
<PAGE>
Q: WHAT ARE ROBINSON NUGENT SHAREHOLDERS BEING ASKED TO VOTE ON AT THE
SPECIAL SHAREHOLDERS MEETING?
A: For Robinson Nugent to complete the merger, Robinson Nugent
shareholders must vote to approve and adopt the merger agreement and
the merger. IF YOU DO NOT VOTE YOUR ROBINSON NUGENT COMMON SHARES, THE
EFFECT WILL BE A VOTE AGAINST THE MERGER AGREEMENT AND THE MERGER.
THE BOARD OF DIRECTORS OF ROBINSON NUGENT UNANIMOUSLY RECOMMENDS
VOTING "FOR" THE PROPOSAL BEING PRESENTED AT THE ROBINSON NUGENT
SPECIAL SHAREHOLDERS MEETING.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
AUTOMATICALLY VOTE MY SHARES FOR ME?
A: No. Your broker is not permitted to vote your shares without specific
instructions from you. Unless you follow the directions your broker
provides you regarding how to instruct your broker to vote your
shares, your shares will not be voted.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY PROXY CARD?
A: Yes. You may change your vote:
o by writing to Robinson Nugent's corporate secretary prior to the
Robinson Nugent special shareholders meeting stating that you are
revoking your proxy;
o by signing a later-dated proxy card and returning it by mail
prior to the Robinson Nugent special shareholders meeting; or
o by attending the Robinson Nugent special shareholders meeting and
voting in person.
Q: SHOULD I SEND IN MY SHARE CERTIFICATES NOW?
A: No. After we complete the merger, 3M will send Robinson Nugent
shareholders written instructions explaining how to exchange their
share certificates.
Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A: We are working toward completing the merger as quickly as possible. We
anticipate completing the merger shortly after the Robinson Nugent
special shareholders meeting is held, assuming that the Robinson
Nugent shareholders approve and adopt the merger agreement and the
merger.
Q: WILL THE MERGER BE TAXABLE TO ME?
A: The merger generally will not be taxable to Robinson Nugent
shareholders.
Q: WILL I HAVE THE RIGHT TO HAVE MY SHARES APPRAISED IF I DISSENT FROM
THE MERGER?
A: No. Robinson Nugent is organized under Indiana law. Under Indiana law,
Robinson Nugent shareholders do not have appraisal rights in
connection with the merger.
Q: WHERE CAN I FIND MORE INFORMATION ABOUT THE COMPANIES?
A: Both companies file reports and other information with the SEC. You
may read and copy this information at the SEC's public reference
facilities. Please call the SEC at 1-800-SEC-0330 for information
about these facilities. This information is also available at the
Internet site the SEC maintains at http://www.sec.gov and at the
offices of the New York Stock Exchange and the National Association of
Securities Dealers. You can also request copies of these documents
from either 3M or Robinson Nugent. Also, you can get
<PAGE>
information about our companies from an Internet Site located at
www.3M.com and www.robinsonnugent.com. See "Where You Can Find More
Information," on page 66.
Q: WHO CAN ANSWER MY QUESTIONS?
A: If you are a Robinson Nugent shareholder and have
questions or want additional copies of this proxy
statement/prospectus, please contact:
Robinson Nugent, Inc.
800 East Eighth Street
P.O. Box 1208
New Albany, IN 47151
Attention: Investor Relations
Telephone Number: (812) 945-0211
<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains or incorporates by
reference forward-looking statements, including information concerning
possible or assumed future results of operations of 3M and Robinson Nugent,
that are subject to risks and uncertainties. These forward-looking
statements are necessarily dependent upon assumptions, estimates and dates
that may be incorrect or imprecise and involve known and unknown risks,
uncertainties and other factors, including those set forth under "Risk
Factors," "The Merger--Background of the Merger," "The Merger--Reasons for
the Merger; Recommendations of the Board of Directors" and "The
Merger--Opinion of Financial Advisor to Robinson Nugent," and those
preceded by, followed by or that include the words "believes," "expects,"
"anticipates" or similar expressions.
The following important factors, in addition to those discussed
elsewhere in this proxy statement/prospectus and in the documents that are
incorporated into this proxy statement/prospectus by reference, could
affect the industries in which 3M and Robinson Nugent operate in general,
and/or each company in particular. Accordingly, future results could differ
materially from those expressed in these forward-looking statements
contained in this proxy statement/prospectus:
o the effects of, and changes in, worldwide economic
conditions;
o foreign currency exchange rates and fluctuations in those
rates;
o the timing and market acceptance of new product offerings;
o manufacturing risks, including shortages and increases in
the costs of key raw materials;
o acquisitions, divestitures and strategic alliances;
o liabilities and other claims asserted against either
company;
o the ability to compete in a rapidly changing marketplace;
o protection of intellectual property rights; or
o Robinson Nugent's dependence on key customers.
Accordingly, you should not place undue reliance on
forward-looking statements, which speak only as of the date of this proxy
statement/prospectus, or, in the case of documents incorporated by
reference, the date of those documents.
All subsequent written and oral forward-looking statements
attributable to 3M or Robinson Nugent or any person acting on their behalf
are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section. Neither 3M nor Robinson Nugent
assumes any obligation to update any of these forward-looking statements to
reflect events or circumstances after the date of this proxy
statement/prospectus.
<PAGE>
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus. It may not contain all of the information that is
important to you. To understand the proposed transactions fully and their
consequences to you, we urge you to read carefully the entire proxy
statement/prospectus and the documents we refer to in this proxy
statement/prospectus. Please see "Where You Can Find More Information" on
page 66. We have included page references directing you to a more complete
description of each item presented in this summary.
THE COMPANIES
MINNESOTA MINING AND MANUFACTURING COMPANY. (SEE PAGE 53)
3M Center
St. Paul, Minnesota 55144
(651) 733-1110
3M was incorporated in 1929 under the laws of the State of Delaware to
continue operations, begun in 1902, of a Minnesota corporation of the same
name.
3M is an integrated enterprise characterized by substantial
intercompany cooperation in research, manufacturing and marketing of
products. 3M's business has developed from its research and technology in
coating and bonding for coated abrasives, 3M's original product. Coating
and bonding is the process of applying one material to another, such as:
o abrasive granules to paper or cloth, namely, coated abrasives;
o adhesives to a backing, namely, pressure-sensitive tapes;
o ceramic coating to granular mineral, namely, roofing granules;
o glass beads to plastic backing, namely, reflective sheeting; and
o low-tack adhesives to paper, namely, repositionable notes.
3M is among the leading manufacturers of products for many of the
markets it serves. In all cases, 3M products are subject to direct or
indirect competition. Most 3M products involve expertise in product
development, manufacturing and marketing, and are subject to competition
from products manufactured and sold by other technically oriented
companies.
3M's strategic business units are aggregated into six reportable
segments:
o Industrial Markets;
o Health Care Markets;
o Transportation, Graphics and Safety Markets;
o Consumer and Office Markets;
o Electro and Communications Markets; and
o Specialty Material Markets.
These segments bring together common or related 3M technologies, enhancing
the development of innovative products and services and providing for
efficient sharing of business resources. These segments have worldwide
responsibility for virtually all 3M product lines. A few miscellaneous
businesses and staff-sponsored products, as well as various corporate
assets and corporate overhead expenses, are not assigned to the segments.
ROBINSON NUGENT, INC. (SEE PAGE 54)
800 East Eighth Street
P. O. Box 1208
New Albany, IN 47151
(812) 945-0211
Robinson Nugent was organized as an Indiana corporation in 1955.
Robinson Nugent
<PAGE>
designs, manufactures and markets electronic devices used to
interconnect components of electronic systems. Robinson Nugent's
principal products are integrated circuit sockets: connectors used in
board-to-board, wire-to-board, and custom molded-on cable assemblies.
Robinson Nugent also offers application tooling that is used in
applying wire and cable to its connectors.
Robinson Nugent's products are used in electronic telecommunication
equipment, including:
o switching and networking equipment such as servers and routers,
mass storage devices, modems and private branch exchange (PBX)
stations;
o data processing equipment such as mainframe computers, personal
computers, workstations and computer assisted design (CAD)
systems;
o peripheral equipment such as printers, disk drives, plotters and
point-of-sale terminals;
o industrial controls and electronic instruments;
o consumer products; and
o a variety of other applications.
Major markets of Robinson Nugent include the United States, Europe,
Japan, and the Southeast Asian countries, including Singapore and Malaysia.
Manufacturing facilities are located in New Albany, Indiana; Dallas, Texas;
Reynosa, Mexico; Sungai Petani, Malaysia; Inchinnan, Scotland; and
Hamont-Achel, Belgium.
Robinson Nugent's corporate headquarters are located in New Albany,
Indiana, which also is the site for Robinson Nugent's corporate
engineering, research and development, preproduction, testing of new
products and North American distribution and warehousing. International
headquarters are located in s-Hertogenbosch, The Netherlands; Singapore;
and Tokyo, Japan.
THE MERGER (SEE PAGE 22)
3M and Robinson Nugent have entered into a merger agreement that
provides for a merger of Barbados Acquisition, Inc., an Indiana corporation
and a wholly owned subsidiary of 3M, into Robinson Nugent. As a result of
the merger, Robinson Nugent will become a wholly owned subsidiary of 3M.
Each Robinson Nugent common share will be exchanged for between 0.19 and
0.2317 of a share of 3M common stock, subject to the collar provisions
described elsewhere in this summary. We urge you to read carefully the
entire merger agreement, which is attached to this proxy
statement/prospectus as Annex A.
THE SPECIAL SHAREHOLDERS MEETING (SEE PAGE 19)
The Robinson Nugent special shareholders meeting will be held at [the
Holiday Inn Lakeview, 505 Marriott Drive, Clarksville, Indiana], on
[________], [______],[__] 2000 at 10:00 a.m., local time. You may vote at
the Robinson Nugent special shareholders meeting if you owned Robinson
Nugent common shares at the close of business on the record date, [______]
[ ], 2000.
In order for us to complete the merger, Robinson Nugent shareholders
must vote to approve and adopt the merger agreement and the merger. The
affirmative vote of the holders of a majority of the outstanding shares of
Robinson Nugent common shares entitled to vote is required to approve the
merger agreement. If you do not vote your Robinson Nugent common shares,
the effect will be a vote against the approval and the adoption of the
merger agreement and the merger.
RECOMMENDATIONS OF ROBINSON NUGENT'S BOARD OF DIRECTORS (SEE PAGE 25)
After careful consideration, Robinson Nugent's board of directors
unanimously recommends that you vote "FOR" the proposal
<PAGE>
to approve and adopt the merger agreement and the merger.
OPINIONS OF FINANCIAL ADVISORS (SEE PAGE 28)
Goelzer Investment Banking, Robinson Nugent's financial advisor in
connection with the merger, delivered its oral opinion to the Robinson
Nugent board of directors, which was later confirmed in writing, that, as
of October 2, 2000, and based on and subject to the various considerations
described in the opinion, the terms of the proposed merger are fair from a
financial point of view to the holders of Robinson Nugent common shares.
This opinion is not a recommendation to any Robinson Nugent shareholder as
to how to vote. We have attached a copy of the Goelzer Investment Banking
written opinion as Annex C to this proxy statement/prospectus. You should
read it in its entirety.
SHARE OWNERSHIP BY MANAGEMENT (SEE PAGE 19)
On October 2, 2000, Robinson Nugent directors and executive officers
beneficially owned 2,306,563 Robinson Nugent common shares, including
569,920 shares that could have been acquired upon exercise of options.
These shares represented approximately 39% of the outstanding Robinson
Nugent common shares on October 2, 2000 on a fully diluted basis. Each of
the directors and executive officers of Robinson Nugent has indicated that
he intends to vote for approval of the merger agreement, and four of the
directors and executive officers of Robinson Nugent, whose 1,815,301 shares
are included in the 2,306,563 share number referred to above, have entered
into a voting and stock option agreement committing them, among other
things, to vote for the approval of the merger agreement. The affirmative
vote of the holders of a majority of the outstanding shares of Robinson
Nugent common shares entitled to vote is required to approve and adopt the
merger agreement and the merger.
VOTING AND STOCK OPTION AGREEMENT (SEE PAGE 51)
Samuel C. Robinson and James W. Robinson, who are directors of
Robinson Nugent, Patrick C. Duffy, the Chairman of the board of directors
of Robinson Nugent, and Larry W. Burke, a director and the President of
Robinson Nugent, each of whom is a Robinson Nugent shareholder, owning
collectively approximately 30.7% of the outstanding Robinson Nugent common
shares on a fully diluted basis, have entered into a voting and stock
option agreement with 3M and Robinson Nugent, that in each case commits
those shareholders, among other things, to vote all their shares in favor
of the merger. We have attached a copy of the voting and stock option
agreement as Annex B to this proxy statement/prospectus. You should read it
in its entirety.
WHAT ROBINSON NUGENT SHAREHOLDERS WILL RECEIVE IN THE MERGER (SEE PAGE 40)
Robinson Nugent shareholders will receive common stock of 3M in the
merger. The amount of 3M common stock that will be received will be based
on a formula contained in the merger agreement. If the "average trading
price" of 3M common stock is between $82.00 and $100.00, for each Robinson
Nugent common share you own you will receive a number of shares of 3M
common stock having a value of $19.00, based on the average trading price,
subject to the collar described below. The average trading price is based
on the average closing price for a share of 3M common stock on the New York
Stock Exchange Composite Tape for the 20 consecutive trading days ending on
the business day before the closing of the merger. Within this range of
average trading prices, the actual number of shares of 3M common stock you
will receive will vary based on the formula contained in the merger
agreement which adjusts the number of shares you receive to maintain their
value at $19.00, based on the average trading price, subject to the collar
described below.
If the average trading price of shares of 3M common stock is below
$82.00, you will receive 0.2317 shares of 3M common stock for each
<PAGE>
Robinson Nugent common share you own. In that case, the value of the 3M
common stock you receive in the merger will be less than $19.00 for each
Robinson Nugent common share you own, based on the average trading price.
If the average trading price of shares of 3M common stock is above
$100.00, you will receive 0.19 shares of 3M common stock for each Robinson
Nugent common share you own. In that case, the value of the shares of 3M
common stock you receive in the merger will be more than $19.00 for each
Robinson Nugent common share you own, based on the average trading price.
Immediately after the merger, Robinson Nugent shareholders will own
less than 1% of 3M.
ROBINSON NUGENT OPTIONS (SEE PAGE 35)
All outstanding unvested options under the 1993 Robinson Nugent, Inc.
Employee and Non-Employee Director Stock Option Plan automatically vested
as a result of the execution of the merger agreement. However, all options
that were not exercised prior to 5:00 p.m. on November 8, 2000 were
terminated on November 8, 2000.
ACCOUNTING TREATMENT OF THE MERGER (SEE PAGE 36)
The merger will be accounted for as a purchase by 3M for financial
reporting purposes. That means that the purchase price will be allocated by
3M to Robinson Nugent assets and liabilities based on the fair values of
the assets acquired and the liabilities assumed. Any excess of cost over
the fair market value of the net tangible and intangible assets of Robinson
Nugent acquired will be recorded on 3M's books as goodwill and will be
amortized in accordance with accounting principles generally accepted in
the United States of America.
TAX CONSEQUENCES OF THE MERGER (SEE PAGE 36)
We intend that the merger will qualify as a reorganization for United
States federal income tax purposes. Accordingly, Robinson Nugent
shareholders generally will not recognize any gain or loss for United
States federal income tax purposes on the exchange of their Robinson Nugent
common shares for shares of 3M common stock in the merger, except for any
gain or loss recognized in connection with the receipt of cash instead of a
fractional share of 3M common stock.
Tax matters are very complicated, and the tax consequences of the
merger to each shareholder will depend on the facts of that shareholder's
situation. You are urged to consult your tax advisor for a full
understanding of the tax consequences of the merger to you.
NO APPRAISAL OR DISSENTERS' RIGHTS (SEE PAGE 62)
Under Indiana law, Robinson Nugent shareholders will not have any
appraisal or dissenters' rights in connection with the merger.
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS OF ROBINSON NUGENT IN
THE MERGER (SEE PAGE 35)
In considering the recommendations of the Robinson Nugent board of
directors with respect to the merger, you should be aware that some
directors and members of management of Robinson Nugent have interests in
the merger that are different from, or in addition to, your interests as a
shareholder.
o The signing of the merger agreement caused all unvested and
unexercisable options under the Robinson Nugent stock option plan
to vest and become exercisable.
o In connection with the merger agreement, Samuel C. Robinson and
James W. Robinson, who are directors of Robinson Nugent, Patrick
C. Duffy, the Chairman of the board of directors
<PAGE>
of Robinson Nugent, and Larry W. Burke, a director and the
President of Robinson Nugent, each of whom is a Robinson Nugent
shareholder, entered into a voting and stock option agreement
with 3M and Robinson Nugent under which they have agreed, among
other things, to vote all of their Robinson Nugent common shares
(1) in favor of the merger agreement, and (2) against any other
acquisition proposal.
o Under the voting and stock option agreement, those same
shareholders also granted 3M an irrevocable option to purchase
all of their common shares at a price of $19.00 per share.
o At the completion of the merger, Robinson Nugent will sell its
manufacturing facility in Dallas, Texas to a company owned by
Samuel C. Robinson and James W. Robinson, who are directors, for
$1,750,000 in cash. This facility will be leased back to Robinson
Nugent for $220,000 per year, under a three-year lease.
o Under the merger agreement, 3M has agreed to provide various
continuing indemnification and insurance benefits for officers,
directors and employees of Robinson Nugent.
REGULATORY APPROVALS REQUIRED FOR THE MERGER (SEE PAGE 38)
On October 6, 2000, we filed the information required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with the
Antitrust Division of the Department of Justice and the Federal Trade
Commission. On November 5, 2000, the waiting period expired. The Antitrust
Division and the Federal Trade Commission have the authority to challenge
the merger on antitrust grounds at any time. On November 7, 2000, 3M made a
filing with the German Cartel Office, whose clearance is required for the
merger. The initial review period by the German Cartel Office is one month,
subject to extension for up to an additional three months if the German
Cartel Office requests additional information or determines that the merger
may be anticompetitive. We are not aware of any other significant
regulatory approvals required for the merger.
MATERIAL TERMS OF THE MERGER AGREEMENT (SEE PAGE 40)
We have attached the merger agreement as Annex A to this proxy
statement/prospectus. We encourage you to read the merger agreement because
it is the legal document that governs the merger.
Conditions to Completion of the Merger (See page 47)
We will complete the merger only if a number of conditions are
satisfied or waived, some of which are:
o Robinson Nugent shareholders approve and adopt the merger
agreement and the merger;
o no court order or injunction prohibits the completion of the
merger;
o the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, will have expired or been
terminated;
o any other antitrust approval or waiting period required prior to
the completion of the merger will have been obtained, other than
those the failure of which to have been obtained would not
reasonably be expected to have a materially adverse affect or
result in the commission of a criminal offense; and
o material compliance by 3M and Robinson Nugent with their
obligations under the merger agreement.
We anticipate completing the merger shortly after the Robinson Nugent
special shareholders meeting is held, assuming that the Robinson
<PAGE>
Nugent shareholders approve and adopt the merger agreement and the merger.
Termination of the Merger Agreement (See page 49)
We may agree in writing to terminate the merger agreement at any time
without completing the merger, even after the Robinson Nugent shareholders
have approved and adopted the merger agreement and the merger. In addition,
the merger agreement may be terminated:
by either 3M or Robinson Nugent if:
o the merger has not been completed by February 28, 2001;
o a court or other governmental agency issues a final order, decree
or ruling or if a law is enacted prohibiting the merger; or
o the other company breaches its representations or obligations
under the merger agreement in a material manner and does not cure
the breach within 30 days after being notified of the breach;
by 3M if:
o the Robinson Nugent shareholders fail to approve and adopt the
merger agreement and the merger;
o the board of directors of Robinson Nugent does not recommend, or
withdraws or adversely modifies its recommendation, that the
Robinson Nugent shareholders vote in favor of approval and
adoption of the merger agreement and the merger, or approves,
recommends or fails to take a position that is adverse to any
proposal for a competing transaction involving Robinson Nugent;
o the board of directors of Robinson Nugent refuses to affirm to 3M
its recommendation of the merger to the Robinson Nugent
shareholders within five days of a request from 3M that it do so;
or
o Robinson Nugent fails to hold the Robinson Nugent special
shareholders meeting when scheduled; or
by Robinson Nugent if:
o in order to enter into a transaction that the board of directors
of Robinson Nugent has determined, after complying with the
procedures contained in the merger agreement, to be more
favorable to Robinson Nugent shareholders than the merger.
A Termination Fee May Be Payable if the Merger Is Not Completed
(See page 49)
If the merger is not completed because 3M or Robinson Nugent exercises
its right to terminate the merger agreement in some circumstances, Robinson
Nugent will be required to pay 3M a termination fee of $3.45 million.
Restrictions on Alternative Transactions (See page 44)
The merger agreement prohibits Robinson Nugent from soliciting, and
restricts Robinson Nugent from participating in, discussions with third
parties or taking other actions related to alternative transactions to the
merger.
Restrictions on the Ability of Robinson Nugent Affiliates to Sell
3M Common Stock (See page 39)
All shares of 3M common stock that Robinson Nugent shareholders will
receive in connection with the merger will be freely transferable unless
the holder is considered an "affiliate" of Robinson Nugent for purposes of
the federal securities laws. Shares of 3M common stock held by these
affiliates may be sold only pursuant to a registration statement or an
exemption under the Securities Act of 1933.
<PAGE>
COMPARISON OF RIGHTS OF 3M STOCKHOLDERS AND ROBINSON NUGENT SHAREHOLDERS
(SEE PAGE 55)
After the merger, Robinson Nugent shareholders will become
stockholders of 3M, and their rights as stockholders will be governed by
Delaware law and the certificate of incorporation and bylaws of 3M. There
are some differences between Delaware law and Indiana law and the
certificates or articles of incorporation and bylaws of 3M and Robinson
Nugent.
<PAGE>
COMPARATIVE MARKET DATA (SEE PAGE 52)
Shares of 3M common stock currently trade on the New York Stock
Exchange under the Symbol "MMM" and Robinson Nugent common shares are
currently quoted on the Nasdaq National Market under the symbol "RNIC." The
following table presents trading information for 3M common stock and
Robinson Nugent common shares on October 2, 2000. The table also presents
the equivalent per share price of Robinson Nugent common shares, determined
by multiplying the prices of 3M common stock by 0.2147, the exchange ratio
that would have been applicable if the merger had been completed on October
2, 2000. October 2, 2000 was the last trading day before the announcement
of the signing of the merger agreement. You should read the information
presented below in conjunction with "Comparative Per Share Market Price and
Dividend Information" on page 52.
<TABLE>
<CAPTION>
ROBINSON NUGENT 3M COMMON STOCK
3M COMMON STOCK COMMON SHARES EQUIVALENT
-------------------------- ------------------------ -----------------------------
HIGH LOW CLOSING HIGH LOW CLOSING HIGH LOW CLOSING
------- -------- ---------- -------- -------- --------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
October 2, 2000............ $92.688 $90.813 $91.688 $18.375 $16.063 $16.625 $19.898 $19.495 $19.683
</TABLE>
The market prices of the shares of 3M common stock and Robinson Nugent
common shares fluctuate. These fluctuations will affect the value of the
consideration Robinson Nugent shareholders will receive in the merger. You
should obtain current market quotations.
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF 3M
You should read the following selected historical financial data in
conjunction with the historical financial statements and accompanying notes
that 3M has included in its Annual Report on Form 10-K for the year ended
December 31, 1999 and its Quarterly Report on Form 10-Q for the nine months
ended September 30, 2000. The Annual Report on Form 10-K and Quarterly
Report on Form 10-Q are incorporated by reference into this proxy
statement/prospectus. See "Where You Can Find More Information" on page 66.
<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 $12,258
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
-------------------------
<FN>
(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 and an
extraordinary loss of $38 million after tax, which combined total 86
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.
</FN>
</TABLE>
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF ROBINSON NUGENT
You should read the following selected historical financial data in
conjunction with the historical financial statements and accompanying notes
that Robinson Nugent has included in its Annual Report on Form 10-K for the
year ended June 30, 2000. The Annual Report on Form 10-K is incorporated by
reference and is attached as Annex D to this proxy statement/prospectus.
See "Where You Can Find More Information" on page 66.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------
1996 1997 1998 1999 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C
OPERATING DATA:
Net sales............................... $80,964 $84,840 $74,146 $69,992 $92,839
Income (loss) from continuing
operations............................ (2,159) 2,355 (6,181)(1) 390(1) 4,630(1)
Net income (loss) per share, basic...... (.40) .48 (1.26) .08 .93
Net income (loss) per share, diluted (.40) .48 (1.26) .08 .88
Cash dividends per share................ .12 .12 .12 -- --
BALANCE SHEET DATA:
Total assets............................ $51,466 $49,696 $42,302 $46,626 $58,067
Long-term debt.......................... 3,036 5,926 7,607 9,016 11,779
-------------------------
<FN>
(1) As discussed in Management's Discussion and Analysis of Financial
Condition and the Results of Operations contained in Robinson
Nugent's Form 10-K for the year ended June 30, 2000, the fiscal years
2000, 1999 and 1998 include special and unusual expenses. The $0.8
million ($0.5 million after tax), or 10 cents per diluted share of
special and unusual expenses in 2000, related to the implementation of
a new information and enterprise resource planning system for
operations in the United States and Europe. Special and unusual
expenses in 1999 totaled $1.6 million ($1.0 million after tax), or 21
cents per diluted share. These expenses involved $1.1 million ($0.7
million after tax), or 15 cents per diluted share, of system
implementation costs and $0.5 million ($0.3 million after tax), or 7
cents per diluted share, of costs required to relocate the company's
North American cable assembly operations to Reynosa, Mexico. Special
and unusual expenses were $5.1 million ($3.3 million after tax), or 68
cents per diluted share in 1998. These charges included $3.1 million
($2.0 million after tax), or 41 cents per diluted share, of
restructuring and reorganization expenses as well as $2.0 million
($1.3 million after tax) or 27 cents per diluted share, of unusual
charges related to a reduction in the carrying value of various pieces
of assembly equipment, mold tools and dies.
</FN>
</TABLE>
<PAGE>
COMPARATIVE PER SHARE DATA
The following table sets forth (i) selected historical per share data
for 3M and Robinson Nugent, and (ii) the unaudited pro forma combined per
share data for 3M and Robinson Nugent after giving effect to the merger as
if it had occurred on January 1, 1999. You should read this informaiton in
conjunction with the selected historical financial data for 3M and Robinson
Nugent, included eleswhere in this document, and the historical audited
financial statements of 3M and Robinson Nugent and related notes that are
incorporated in this document by reference.
The unaudited pro forma combined per share information does not
purport to represent what the actual financial position or results of
operations of 3M and Robinson Nugent would have been had the merger
occurred on January 1, 1999 or to project 3M's or Robinson Nugent's
financial position or results of operations for any future date or period.
YEAR NINE MONTHS
ENDED ENDED
DECEMBER 31, 1999 SEPTEMBER 30, 2000
----------------- ------------------
3M - HISTORICAL
Historical per common share:
Income per basic share........ $ 4.39 $ 3.67
Income per diluted share...... 4.34 3.64
Cash dividends per share...... 2.24 1.74
Book value per share.......... 15.77 16.32
TWELVE MONTHS
ENDED
JUNE 30, 2000
-------------
ROBINSON NUGENT -- HISTORICAL
Historical per common share:
Income per basic share........ $ 0.93
Income per diluted share...... 0.88
Cash dividends per share...... 0.00
Book value per share.......... 5.57
TWELVE MONTHS NINE MONTHS
ENDED ENDED
DECEMBER 31, 1999 SEPTEMBER 30, 2000(1)
----------------- ------------------
UNAUDITED PRO FORMA COMBINED
Unaudited pro forma per share of
3M common stock:
Income per basic share........ $ 4.34 $ 3.65
Income per diluted share...... 4.29 3.62
Cash dividends per share...... 2.23 1.73
Book value per share(2)....... 16.03 16.38
UNAUDITED PRO FORMA ROBINSON NUGENT EQUIVALENTS(3)
Unaudited pro forma per share of
Robinson Nugent common shares:
Income per basic share........ $ 0.93 $ 0.78
Income per diluted share...... 0.92 0.78
Cash dividends per share...... 0.48 0.37
Book value per share.......... 3.44 3.56
-------------------------
(1) For purposes of calculating the unaudited pro forma combined
enterprise information for the period ended September 30, 2000,
Robinson Nugent's nine-month period ended June 30, 2000 has been used
for Robinson Nugent because Robinson Nugent has not yet filed its
Quarterly Report on Form 10-Q for the three month period ended
September 30, 2000.
(2) The quoted market value of 3M common stock at September 30, 2000 is
used to value the Robinson Nugent transaction.
(3) Amounts are calculated by multiplying the unaudited pro forma combined
per share amounts by the exchange ratio for the merger, which we have
assumed to be 0.2147 of a share of 3M common stock for each Robinson
Nugent common share.
<PAGE>
RISK FACTORS
In addition to the other information included and incorporated by
reference in this proxy statement/prospectus, you should carefully read and
consider the following factors in evaluating the proposal to be voted on at
the Robinson Nugent special shareholders meeting.
RISKS RELATING TO THE MERGER TRANSACTION
BECAUSE THE MARKET VALUE OF SHARES OF 3M COMMON STOCK AT THE TIME OF THE
MERGER MAY BE EITHER HIGHER OR LOWER THAN THE AVERAGE TRADING PRICE USED TO
DETERMINE THE NUMBER OF SHARES OF 3M COMMON STOCK YOU WILL RECEIVE IN THE
MERGER, YOU CANNOT BE CERTAIN OF THE MARKET VALUE OF THE SHARES OF 3M
COMMON STOCK YOU WILL RECEIVE.
If the "average trading price" of 3M common stock is between $82.00
and $100.00, for each Robinson Nugent common share you own, you will
receive a number of shares of 3M common stock having a value of $19.00,
based on the average trading price. The average trading price is based on
the average closing price for a share of 3M common stock on the New York
Stock Exchange Composite Tape for the 20 consecutive trading days ending on
the business day before the closing of the merger. However, because the
actual trading price of shares of 3M common stock at the time of the merger
may be either lower or higher than the average trading price, the market
value of the shares of 3M common stock you receive in the merger may be
either lower or higher than $19.00, based on the average trading price.
If the average trading price of shares of 3M common stock is below
$82.00, you will receive 0.2317 shares of 3M common stock for each Robinson
Nugent common share you own. In that case, the value of the shares of 3M
common stock you receive in the merger will be less than $19.00 for each
Robinson Nugent common share you own, based on the average trading price.
If the average trading price of shares of 3M common stock is above $100.00,
you will receive 0.19 shares of 3M common stock for each Robinson Nugent
common share you own. In that case, the value of the shares of 3M common
stock you receive in the merger will be more than $19.00 for each Robinson
Nugent common share you own, based on the average trading price.
Furthermore, in any case, because the actual trading price of shares of 3M
common stock at the time of the merger may be either lower or higher than
the average trading price, the market value of the shares of 3M common
stock you receive in the merger may be either lower or higher than the
value of those shares based on the average trading price.
SOME DIRECTORS AND EXECUTIVE OFFICERS OF ROBINSON NUGENT HAVE POTENTIAL
CONFLICTS OF INTEREST THAT MAY HAVE INFLUENCED THEM IN RECOMMENDING THAT
ROBINSON NUGENT SHAREHOLDERS VOTE IN FAVOR OF APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT AND THE MERGER.
Some directors, including directors who are executive officers, of
Robinson Nugent who recommended that Robinson Nugent shareholders vote in
favor of the approval of the merger agreement have employment or other
benefit arrangements that provide them with interests in the merger that
differ from yours. Also, Samuel C. Robinson and James W. Robinson, who are
directors of Robinson Nugent, Patrick C. Duffy, the Chairman of the board
of directors of Robinson Nugent, and Larry W. Burke, a director and the
President of Robinson Nugent, have signed a voting and stock option
agreement with 3M and Robinson Nugent. Under the agreement, they agreed,
among other things, to vote in favor of the approval of the merger
agreement and have granted 3M an irrevocable option to purchase all of
their Robinson Nugent common shares at a price of $19.00 per share in
various circumstances.
The receipt of compensation or other benefits in the merger, and the
continuation of indemnification arrangements for current directors of
Robinson Nugent following completion of the merger, may have
<PAGE>
influenced these directors in making their recommendation that Robinson
Nugent shareholders vote in favor of the approval of the merger agreement.
See "The Merger--Interests of Directors and Executive Officers of Robinson
Nugent in the Merger" on page 35.
FAILURE TO COMPLETE THE MERGER COULD NEGATIVELY IMPACT THE ROBINSON NUGENT
COMMON SHARE PRICE AND FUTURE BUSINESS AND OPERATIONS.
If the merger is not completed, Robinson Nugent may be subject to the
following risks:
o it may be required to pay 3M a termination fee of $3.45 million,
depending on the reason the merger was not completed;
o the price of its common shares may decline to the extent that the
market price of Robinson Nugent common shares reflects a market
assumption that the merger will be completed; and
o various costs related to the merger, such as legal and accounting
fees and the expenses and fairness opinion fee of its financial
advisor, must be paid even if the merger is not completed.
Furthermore, if the merger agreement is terminated and the Robinson
Nugent board of directors determines to seek another merger or business
combination, Robinson Nugent may not be able to find a partner willing to
pay an equivalent or more attractive price than the price to be paid in the
merger. In addition, while the merger agreement is in effect, Robinson
Nugent is prohibited from soliciting, initiating or knowingly encouraging,
including entering into or taking various other actions with respect to,
any alternative transaction, such as a merger, sale of assets or other
business combination, with any party other than 3M.
RISKS RELATING TO 3M
An investment in 3M's common stock involves a number of risks, some of
which could be substantial and are inherent in its businesses. You should
consider the following factors carefully in evaluating the proposal to be
voted on at the Robinson Nugent special shareholders meeting. Additional
risks not presently known to 3M or that 3M currently deems immaterial may
also impair 3M's business operations. Actual future results and trends may
differ materially from historical results or those anticipated depending on
a variety of factors, including, but not limited to, the following.
3M'S BUSINESS MAY BE AFFECTED BY THE EFFECTS OF, AND CHANGES IN, WORLDWIDE
ECONOMIC CONDITIONS.
3M operates in more than 60 countries and derives approximately 52% of
its revenues from sales outside the United States. 3M's business may be
affected by factors in other countries that are beyond its control, such as
downturns in economic activity in a specific country or region, the
economic difficulties that occurred in Asia in 1998 as an example; social,
political or labor conditions in a specific country or region; or potential
adverse foreign tax consequences.
FOREIGN CURRENCY EXCHANGE RATES AND FLUCTUATIONS IN THOSE RATES MAY AFFECT
3M'S ABILITY TO REALIZE PROJECTED GROWTH RATES IN ITS SALES AND NET
EARNINGS AND ITS RESULTS OF OPERATIONS.
Because 3M derives more than half of its revenues from sales outside
the United States, 3M's ability to realize projected growth rates in its
sales and net earnings and its results of operations could be adversely
affected if the United States dollar strengthens significantly against
foreign currencies.
3M'S GROWTH OBJECTIVES ARE LARGELY DEPENDENT ON THE TIMING AND MARKET
ACCEPTANCE OF ITS NEW PRODUCT OFFERINGS.
<PAGE>
3M's growth objectives are largely dependent on its ability to renew
its pipeline of new products and to bring those products to market. This
ability may be adversely affected by difficulties or delays in product
development, such as the inability to:
o identify viable new products;
o successfully complete clinical trials and obtain regulatory
approvals;
o obtain adequate intellectual property protection; or
o gain market acceptance of new products.
3M'S FUTURE RESULTS ARE SUBJECT TO FLUCTUATIONS IN THE COSTS OF RAW
MATERIALS DUE TO MARKET DEMAND, CURRENCY EXCHANGE RISKS, SHORTAGES
AND OTHER FACTORS.
3M depends on various raw materials for the manufacturing of its
products. Although 3M has not experienced any difficulty in obtaining raw
materials, it is possible that any of its supplier relationships could be
terminated in the future. Any sustained interruption in 3M's receipt of
adequate supplies could have a material adverse effect on it. In addition,
while 3M has a process to minimize volatility in raw material pricing, no
assurance can be given that 3M will be able to successfully manage price
fluctuations due to market demand, currency exchange risks, or shortages or
that future price fluctuations will not have a material adverse effect on
it.
3M'S ACQUISITIONS, DIVESTITURES AND STRATEGIC ALLIANCES MAY NOT BE
BENEFICIAL TO 3M.
As part of 3M's strategy for growth, it has made and may continue to
make acquisitions, divestitures and strategic alliances. However, there can
be no assurance that any of these will be completed or beneficial to 3M.
3M IS THE SUBJECT OF VARIOUS LEGAL PROCEEDINGS.
3M and certain of its subsidiaries are named as defendants in a number
of actions, governmental proceedings and claims, including environmental
proceedings and products liability claims involving products now or
formerly manufactured and sold by 3M.
With respect to the environmental proceedings, 3M may be jointly and
severally liable under various environmental laws, including the United
States Comprehensive Environmental Response, Compensation and Liability Act
of 1980 and similar state laws, for the costs of environmental
contamination at current or former facilities and at off-site locations at
which 3M has disposed of hazardous waste. 3M has identified numerous
locations, most of which are in the United States, at which it may have
some liability for remediating contamination. Amounts expensed for
environmental remediation activities are not expected to be material at
these locations.
As for products liability claims, as reported in its Annual Report on
Form 10-K for the year ended December 31, 1999, 3M and various other
companies have been named as defendants in a number of claims and lawsuits
alleging damages for personal injuries of various types resulting from
breast implants formerly manufactured by 3M or a related company. In some
actions, the claimants seek damages as well as other relief, which, if
granted, would require substantial expenditures. 3M has accrued various
liabilities, which represent reasonable estimates of its probable
liabilities for these matters. 3M also has recorded receivables for the
probable amount of insurance recoverable with respect to these matters.
For a more detailed discussion of legal proceedings involving 3M, see
the discussion of "Legal Proceedings" in Part II, Item 1 of 3M's Quarterly
Report on Form 10-Q for the period ended September 30, 2000, which is
incorporated by reference into this proxy statement/prospectus.
<PAGE>
THE SPECIAL SHAREHOLDERS MEETING
TIME AND PLACE OF THE SPECIAL MEETING; MATTERS TO BE CONSIDERED
The Robinson Nugent special shareholders meeting will be held at the
[Holiday Inn Lakeview, 505 Marriott Drive, Clarksville, Indiana on [____],
[____ ], 2000 at 10:00 a.m., local time.] At the Robinson Nugent special
shareholders meeting, shareholders of Robinson Nugent will vote on a
proposal to approve and adopt the merger agreement and the merger. THE
ROBINSON NUGENT BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF ROBINSON
NUGENT VOTE "FOR" THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE
MERGER.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding
Robinson Nugent common shares entitled to vote is required to approve the
merger agreement. If you abstain or fail to vote your shares on these
proposals, it will have the same effect as voting against approval of the
merger agreement.
On October 2, 2000, Robinson Nugent directors and executive officers
beneficially owned 2,306,563 common shares, including 569,920 shares that
could have been acquired upon exercise of options. These shares represented
approximately 39% of the outstanding Robinson Nugent common shares on
October 2, 2000 on a fully diluted basis. Each of the directors and
executive officers of Robinson Nugent has indicated that he or she intends
to vote for the approval of the merger agreement.
Samuel C. Robinson and James W. Robinson, who are directors of
Robinson Nugent, Patrick C. Duffy, the Chairman of the board of directors
of Robinson Nugent, and Larry W. Burke, a director and the President of
Robinson Nugent, whose 1,815,301 shares are included in the 2,306,563 share
number referred to in the preceding paragraph, have entered into a voting
and stock option agreement with 3M and Robinson Nugent in which, among
other things, they have agreed to vote all of their Robinson Nugent common
shares in favor of approval of the merger agreement. These shares represent
approximately 30.7% of the outstanding Robinson Nugent common shares on a
fully diluted basis as of October 2, 2000.
RECORD DATE; QUORUM
Only holders of record of Robinson Nugent common shares at the close
of business on [ ], 2000 are entitled to receive notice of and vote at the
Robinson Nugent special shareholders meeting. As of [______], 2000, there
were [_____] Robinson Nugent common shares entitled to vote, held by
[_______] holders of record. Each Robinson Nugent common share is entitled
to one vote. Holders of at least 50% of the outstanding Robinson Nugent
common shares entitled to vote, present in person or represented by proxy,
will constitute a quorum for the transaction of business at the Robinson
Nugent special shareholders meeting.
Robinson Nugent will have a list of its shareholders entitled to vote
at the Robinson Nugent special shareholders meeting available during normal
business hours at the offices of Robinson Nugent, 800 East Eighth Street,
New Albany, Indiana 47151, for the ten-day period before the Robinson
Nugent special shareholders meeting, and also at the Robinson Nugent
special shareholders meeting.
<PAGE>
HOW PROXIES WILL BE VOTED AT THE ROBINSON NUGENT SPECIAL SHAREHOLDERS
MEETING
Robinson Nugent common shares represented by a proxy will be voted at
the Robinson Nugent special shareholders meeting as specified in the proxy.
Properly executed proxies that do not contain voting instructions will be
voted "FOR" approval of the merger agreement and, in the discretion of the
proxy holders, any other matter that may come before the Robinson Nugent
special shareholders meeting or any adjournments or postponements of the
meeting.
TREATMENT OF ABSTENTIONS AND BROKER NON-VOTES
Abstentions. If you submit a proxy that indicates an abstention from
voting on any of the proposals being submitted to shareholders for a vote,
your shares will be counted as present for purposes of determining the
existence of a quorum, but they will not be voted on the proposal or
proposals as to which you are abstaining from voting.
An abstention from voting on the approval of the merger agreement will
have the same effect as a vote against approval and adoption of the merger
agreement and the merger.
Broker Non-Votes. Under NASD rules, your broker cannot vote your
Robinson Nugent common shares without specific instructions from you.
If you do not provide instructions with your proxy, your bank or
broker may deliver a proxy card expressly indicating that it is NOT voting
your shares. This indication that a broker is not voting your shares is
referred to as a "broker non-vote." Broker non-votes will be counted for
the purpose of determining the existence of a quorum, but will not be voted
on any proposal being submitted to shareholders.
A broker non-vote will have the same effect as a vote against approval
of the merger agreement.
HOW TO REVOKE A PROXY
Your grant of a proxy on the enclosed proxy card does not prevent you
from voting in person at the Robinson Nugent special shareholders meeting,
which would automatically revoke your proxy. If your shares are held in the
name of your broker, bank or other nominee and you wish to vote at the
special shareholders meeting, you will need to obtain a proxy from the
institution that holds your shares.
In addition, a Robinson Nugent shareholder may revoke a proxy at any
time before it is voted at the Robinson Nugent special shareholders meeting
by delivering a later dated signed proxy or a written notice of revocation
to Richard L. Mattox, Secretary of Robinson Nugent, 800 East Eighth Street,
P.O. Box 1208, New Albany, IN 47151.
SOLICITATION OF PROXIES
Robinson Nugent will bear the cost of soliciting proxies from its
shareholders, except that the cost of printing and mailing this proxy
statement/prospectus is being shared by 3M and Robinson Nugent equally. In
addition to solicitation by mail, our directors, officers and employees may
solicit proxies from holders of Robinson Nugent common shares by telephone,
in person or through other means. Robinson Nugent will not compensate these
people for this solicitation, but Robinson Nugent will reimburse them for
reasonable out-of-pocket expenses they incur in connection with this
solicitation. Robinson Nugent will also arrange for brokerage firms,
fiduciaries and other custodians to send solicitation materials to the
beneficial owners of Robinson Nugent common shares held of record by those
persons. Robinson Nugent will reimburse these brokerage firms, fiduciaries
and other custodians for their reasonable out-of-pocket expenses.
<PAGE>
APPRAISAL RIGHTS
Robinson Nugent is organized under Indiana law. Under Indiana law,
Robinson Nugent shareholders do not have a right to receive the appraised
value of their shares in connection with the merger.
<PAGE>
THE MERGER
GENERAL
The merger agreement provides for the merger of a wholly owned
subsidiary of 3M into Robinson Nugent. As a result of the merger, Robinson
Nugent will become a wholly owned subsidiary of 3M and Robinson Nugent
shareholders will receive shares of 3M common stock in exchange for the
Robinson Nugent common shares they own.
If the "average trading price" of 3M common stock is between $82.00
and $100.00, for each Robinson Nugent common share you own you will receive
a number of shares of 3M common stock having a value of $19.00, based on
the average trading price, subject to the collar described below. The
average trading price is based on the average closing price for a share of
3M common stock on the New York Stock Exchange Composite Tape for the 20
consecutive trading days ending on the business day before the closing of
the merger. Within this range of average trading prices, the actual number
of shares of 3M common stock you will receive will vary based on the
formula contained in the merger agreement which adjusts the number of
shares you receive to maintain their value at $19.00, based on the average
trading price, subject to the collar described below.
If the average trading price of shares of 3M common stock is below
$82.00, you will receive 0.2317 shares of 3M common stock for each Robinson
Nugent common share you own. In that case, the value of the 3M common stock
you receive in the merger will be less than $19.00 for each Robinson Nugent
common share you own, based on the average trading price.
If the average trading price of shares of 3M common stock is above
$100.00, you will receive 0.19 shares of 3M common stock for each Robinson
Nugent common share you own. In that case, the value of the shares of 3M
common stock you receive in the merger will be more than $19.00 for each
Robinson Nugent common share you own, based on the average trading price.
This information is summarized in the table below:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF 3M COMMON STOCK YOU VALUE OF 3M COMMON STOCK YOU
AVERAGE TRADING PRICE OF 3M RECEIVE FOR EACH ROBINSON NUGENT COMMON RECEIVE FOR EACH ROBINSON
COMMON STOCK SHARE NUGENT COMMON SHARE
--------------------------- ------------------------------------------- ----------------------------
<S> <C> <C>
LESS THAN $82.00 0.2317 LESS THAN $19.00
BETWEEN $82.00 AND $100.00 $19.00 DIVIDED BY THE AVERAGE TRADING PRICE $19.00
MORE THAN $100.00 0.19 MORE THAN $19.00
</TABLE>
As a result of the merger, former Robinson Nugent shareholders will
own less than 1% of 3M. This percentage is based on the number of shares of
3M common stock and Robinson Nugent common shares outstanding on October 2,
2000 on a fully diluted basis.
On October 2, 2000, the last trading day before the merger was
publicly announced, the closing price of 3M common stock was $91.688. Had
the merger taken place then, each Robinson Nugent common share would have
been converted into 0.2147 of a share of 3M common stock with a value of
$19.68. This represented a premium of 18.40% over the closing price of
Robinson Nugent common shares on that day. When we complete the merger, the
value you receive for your Robinson Nugent common shares may be more or
less than this amount depending on the market value of 3M common stock at
that time.
The discussion in this proxy statement/prospectus of the merger and
the description of the principal terms of the merger agreement and the
merger are summarized only. You should refer to the merger agreement for
the details of the merger and the terms of the merger agreement. We have
attached a copy
<PAGE>
of the merger agreement to this proxy statement/prospectus as Annex A. See
"The Merger Agreement" on page 40.
BACKGROUND OF THE MERGER
In 1998, the board of directors of Robinson Nugent created a
Development Committee of the board of directors to consider Robinson
Nugent's strategic alternatives. Patrick C. Duffy, Chairman of Robinson
Nugent, Donald Neel and Richard Strain were appointed to the Development
Committee.
On September 10, 1999, Mr. Duffy, and Bob Pfleg, Business Development
Director of 3M's Interconnect Solutions Division, had a general
conversation to explore possible alliances between 3M and Robinson Nugent.
Over the next several weeks, the conversations began to focus on a possible
acquisition of Robinson Nugent by 3M. On September 20, 1999, Mr. Pfleg and
Herve Gindre, Business Development Manager of 3M's Interconnect Solutions
Division, met with Mr. Duffy and Mr. Neel in Indianapolis, Indiana to
discuss possible terms of an acquisition. Based upon these discussions, 3M
and Robinson Nugent entered into a non-disclosure agreement on September
20, 1999, covering the confidential exchange of information between the
parties and agreed to meet in November to discuss possible acquisition
plans.
Over the course of the next several months, senior management of both
companies held numerous discussions regarding various business, financial,
operational and technical issues involved in combining the companies.
On October 1, 1999, Mr. Duffy furnished Mr. Pfleg with requested
documents concerning Robinson Nugent's products, plans and financial
projections. Over the next several weeks, the two parties held numerous
discussions concerning the possible synergies available in an acquisition
of Robinson Nugent by 3M.
On November 22, 1999, Mr. Pfleg, Richard Iverson, Division Vice
President, Electronic Products Division, Jeff Kick, Financial Manager,
Electronic Products Division and Dave Fellner, Manager, Corporate Financial
Services, from 3M met in Dallas, Texas with a team from Robinson Nugent
that included Mr. Duffy, Larry Burke, President and a director of Robinson
Nugent, Robert Knabel, Chief Financial Officer, and Mr. Neel and Mr.
Strain, both directors of Robinson Nugent, to exchange information, discuss
possible transaction structures, further due diligence the parties expected
to conduct, and potential bases for setting an acceptable exchange ratio.
From late November 1999 to late December 1999, 3M and Robinson Nugent
exchanged due diligence materials.
On December 2, 1999, 3M and Robinson Nugent signed a non-binding
letter of intent covering the possible acquisition of Robinson Nugent by 3M
pursuant to which Robinson Nugent agreed not to enter into discussions with
another party regarding a possible business combination through March 15,
2000. Under the letter of intent, completion of the acquisition was subject
to the satisfactory completion by 3M of a due diligence review, negotiation
of a merger agreement and approval of the board of directors of both
parties.
On January 5, 2000, Mr. Iverson, Mr. Pfleg, Mr. Kick, Tom Funk,
Engineering Manager, Electronic Products Division, and Michael Stevens,
Business Development Director, Interconnect Solutions Division, from 3M met
with Mr. Duffy, Mr. Burke, Mr. Knabel, Mr. Neel and Mr. Strain in Dallas,
Texas to further discuss terms and conditions of an acquisition of Robinson
Nugent by 3M.
In early February 2000, Mr. Pfleg and Mr. Funk reviewed Robinson
Nugent's European operations with Mr. Burke. They toured Robinson Nugent's
facilities in the Netherlands, Belgium and Scotland and were given
briefings of the operations by Robinson Nugent's European management team.
Also in early
<PAGE>
February 2000, Mr. Pfleg and Mr. Funk reviewed Robinson Nugent's North
American operations with Mr. Duffy and Mr. Burke. They toured Robinson
Nugent's facilities in Reynosa, Mexico and Dallas, Texas and were given
briefings of the operations by Robinson Nugent management teams at each
location. In late February 2000, Mr. Pfleg and Mr. Stevens met with Mr.
Duffy in Florida to discuss possible integration issues, including sales
synergies, information systems and personnel.
In connection with the proposed transaction, in early March, 2000, 3M
engaged Fried, Frank, Harris, Shriver & Jacobson as legal counsel and
Robinson Nugent engaged Ice Miller as legal counsel. Consultation with the
legal counsels continued throughout the discussions and negotiations.
On March 10, 2000, Mr. Duffy met with a team from 3M that included
Harry Andrews, Executive Vice President for 3M's Electro and Communications
Markets Group, Mr. Pfleg, Mr. Stevens, Mr. Fellner, Elton Perry, Human
Resource Manager and Mark Gibson, Manufacturing Manager, in Austin, Texas.
Among the matters discussed were Robinson Nugent's operations, its past
financial performance and its future prospects.
On March 20, 2000, Mr. Pfleg informed Mr. Duffy via electronic mail
that 3M had concerns over Robinson Nugent's ability to implement its
restructuring plan and maintain constant profitability improvement and, for
these reasons, 3M was suspending its immediate plans to acquire Robinson
Nugent, pending further review of Robinson Nugent's restructuring plan and
profitability improvement over the next few months. In particular, it was
noted that since 1998, Robinson Nugent had been making a massive shift in
market focus from the consumer to the telecommunications and wireless
markets with existing products being rationalized and new high speed, high
performance interconnects being developed and produced, and that the mature
core product lines were being moved to Asian and Mexican sites for margin
improvement.
Following March 20, 2000 to late June 2000, occasional contacts were
made by Mr. Pfleg with Mr. Duffy regarding Robinson Nugent's operations,
financial performance and future prospects, as well as the progress of its
restructuring plan.
Between June 8 and September 9, 2000, Mr. Duffy had discussions with
three other concerns that had expressed an interest in an acquisition of
Robinson Nugent, but those discussions were terminated by those other
concerns following discussions regarding the price that would be required
in order to make any offer more favorable to the shareholders of Robinson
Nugent than those then under discussion with 3M.
On June 28, 2000, Mr. Stevens, Richard Becker, Mr. Pfleg and John
Woodworth, General Manager, Interconnect Solutions Division, from 3M met in
Dallas, Texas with Mr. Duffy and Mr. Neel to re-open merger discussions. A
week later, representatives of 3M met with representatives of Robinson
Nugent team in Indianapolis, Indiana to discuss the setting of an
acceptable exchange ratio for the proposed transaction.
During July 2000, representatives of 3M reviewed the acquisition
proposal and internal 3M approvals of the proposed transaction were
received subject to completion of 3M's due diligence, the negotiation of a
merger agreement and related agreements acceptable to both parties, and
approval of 3M's board of directors.
On July 28, 2000, Mr. Duffy, Mr. Neel and Mr. Strain described the
proposed transaction to the board of directors of Robinson Nugent.
On August 3, 2000, a draft merger agreement was distributed by 3M to
Robinson Nugent and its outside counsel, Ice Miller.
<PAGE>
From early August until early October 2000, the parties and their
legal advisors negotiated the terms of, and the documents for, the
transaction. During this time, 3M continued to conduct its legal and
financial due diligence of Robinson Nugent. The members of Robinson
Nugent's board of directors were updated informally from time to time
during this period.
On August 14, 2000, the 3M board of directors met to review and
approve the proposed transaction. Mr. Woodworth of the 3M Interconnect
Solutions Division reviewed the transaction with the board, including the
strategic reasons for the proposed transaction. The 3M board of directors
approved the acquisition of Robinson Nugent subject to completion of 3M's
due diligence review and negotiation of the merger and related agreements,
and appointed officers to execute the agreements on behalf of 3M.
On August 24, 2000, Robinson Nugent retained Goelzer Investment
Banking to deliver a fairness opinion to the Robinson Nugent board of
directors regarding the proposed merger.
On September 29, 2000, 3M's integration team met with Mr. Burke to
initiate integration planning.
On October 2, 2000, the board of directors of Robinson Nugent met in
New Albany, Indiana. Mr. Duffy reviewed the transaction with the board,
including strategic reasons for the proposed transaction and the principal
and other terms of the proposed transaction.
Ice Miller, counsel to Robinson Nugent, outlined the directors' legal
duties and responsibilities in connection with considering the merger and
discussed the principal terms of the merger agreement and related
documents. In addition, Goelzer Investment Banking, financial advisors to
Robinson Nugent, delivered its oral opinion, which was later confirmed in
writing, that the transaction contemplated by the merger agreement was fair
from a financial point of view to the holders of Robinson Nugent common
shares.
Upon completing its deliberations, the board of directors of Robinson
Nugent unanimously approved the merger agreement and the related agreements
and transactions contemplated by those agreements, declared them advisable,
and resolved to recommend that the Robinson Nugent shareholders vote in
favor of the merger agreement. On the evening of October 2, 2000,
representatives of 3M and Robinson Nugent executed the merger agreement. In
addition, Samuel C. Robinson and James W. Robinson, Mr. Duffy and Mr.
Burke, all of whom are directors and shareholders of Robinson Nugent,
executed a voting and stock option agreement with 3M and Robinson Nugent,
in which they agreed, among other things, to vote all of their Robinson
Nugent common shares in favor of the merger and against other proposals and
also granted 3M an irrevocable option to purchase all of their Robinson
Nugent common shares at a price of $19.00 per share.
Prior to the commencement of trading on October 3, 2000, Robinson
Nugent and 3M issued a joint press release announcing the execution of the
merger agreement.
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARD OF DIRECTORS
In approving the merger agreement and recommending the merger to the
shareholders of Robinson Nugent, the Robinson Nugent board of directors
considered the following factors, among others, relating to Robinson Nugent
and its business, that supported the board's decision to proceed with the
merger:
o The connector industry has experienced significant consolidation,
and Robinson Nugent is increasingly vulnerable to competition
from larger firms having far greater capital and human resources
than those available to Robinson Nugent.
o The product lines of 3M's Interconnect Solutions Division and of
Robinson Nugent are complimentary, and the merger should enhance
the sales and competitive conditions of both operations.
<PAGE>
o The combination of the connector operations of 3M with those of
Robinson Nugent should allow the resulting operation to be a
preferred supplier to major customers in the electronics
industry, which Robinson Nugent could not achieve standing alone.
o The combined operations will benefit from increased financial
strength, allowing the more rapid introduction of new products to
the market and greater profit potential.
o The combined operations will benefit from a common vision and
culture, and the intellectual resources, proven technology
development capabilities and seasoned management teams of both
parties should enable the combined enterprise to launch new
initiatives that meet the accelerating demand for new products
and technologies.
o There can be no assurance that Robinson Nugent as a stand-alone
enterprise will be able to continue providing the innovative
products that have allowed it to maintain its market niche.
o Robinson Nugent is vulnerable to the entry by a major competitor
into Robinson Nugent's market niche.
o Robinson Nugent risks the loss of key employees due to the
opportunities presented by industry consolidation in relation to
the limited opportunities available at and location of Robinson
Nugent.
o The business of Robinson Nugent has been cyclical, and the
erratic sales and earnings of Robinson Nugent have been reflected
in dramatic swings in its stock price.
o Robinson Nugent's profit margins have lagged below the connector
industry average.
o The small number of Robinson Nugent common shares available for
trading and the lack of securities analyst interest in Robinson
Nugent have resulted in a thin trading market in the Robinson
Nugent common shares and have generally depressed share prices in
relation to the Nasdaq Composite Index and Nasdaq Industrial
Index.
o The merger should provide to Robinson Nugent the additional
strategic management capability that has not been available due
to its small size and headquarters location.
The board of directors also considered the following factors, among
others, relating to the terms of the proposed merger, that supported the
board's decision to proceed with the merger:
o The value of the 3M shares to be received by Robinson Nugent
shareholders in the merger represents a significant premium in
relation to the historic market prices of Robinson Nugent common
shares.
o The merger is expected to be a tax-free reorganization, with the
result that, in general, shareholders will pay no federal income
tax as a result of the exchange of Robinson Nugent common shares
for 3M shares.
o The shares of 3M have a wide following in the securities markets
and far greater trading volume than do the Robinson Nugent common
shares.
o Members of the Robinson Nugent board of directors holding
approximately 30.7% of the outstanding shares of Robinson Nugent
were willing to agree to vote their shares in favor of the
merger.
o Goelzer Investment Banking was prepared to render its opinion
that the merger is fair, from a financial point of view, to the
shareholders of Robinson Nugent.
<PAGE>
The Robinson Nugent board of directors also considered the following
risks and other potentially negative factors relating to the terms of the
proposed merger:
o There is a risk that the merger may not be completed due to the
inability of the parties to meet one or more of the conditions
contained in the merger agreement.
o Robinson Nugent is severely limited in its ability to respond to
other offers during the term of the merger agreement, and
Robinson Nugent would incur significant fees payable to 3M in the
event that Robinson Nugent unilaterally terminated the merger
agreement.
o There is a possibility that another buyer might be willing to pay
a higher price for Robinson Nugent, but there also is a risk of
diversion of management attention and of the loss of management,
administrative and technical personnel if Robinson Nugent were to
engage in a protracted series of negotiations with several
potential acquirers.
The board of directors also considered that some directors and
executive officers of Robinson Nugent have interests in the merger that are
different from, or in addition to, the interests of the Robinson Nugent
shareholders generally. See "--Interests of Directors and Executive
Officers of Robinson Nugent in the Merger" on page 35.
In light of the number and variety of information and factors
considered by the Robinson Nugent board, the board did not find it
practicable to, and did not, assign any specific or relative weights to the
factors listed above. In addition, individual directors may have given
differing weights to different factors. The board of directors was advised
in its deliberations by Robinson Nugent's senior management, by its legal
counsel and by Goelzer Investment Banking.
The board of directors of Robinson Nugent believes that the merger
will:
o provide Robinson Nugent shareholders with greater liquidity and
fair value in the form of the shares of 3M to be received in the
merger, and a more favorable investment opportunity than
continuing to hold shares of Robinson Nugent;
o provide operational opportunities to Robinson Nugent including:
o the ability to apply 3M's proprietary and other technology
to the business of Robinson Nugent; and
o cross marketing, joint product development and broader
international expansion; and
o increase Robinson Nugent's growth potential as a result of:
o greater marketing capabilities; and
o availability of capital resources.
Accordingly, the Robinson Nugent board of directors determined that
the merger is advisable, fair to and in the best interests of Robinson
Nugent and its shareholders, and it unanimously approved the merger
agreement.
THE BOARD OF DIRECTORS OF ROBINSON NUGENT UNANIMOUSLY RECOMMENDS THAT
THE SHAREHOLDERS OF ROBINSON NUGENT VOTE "FOR" THE APPROVAL OF THE MERGER.
<PAGE>
OPINION OF FINANCIAL ADVISOR TO ROBINSON NUGENT
Goelzer Investment Banking has assisted the Robinson Nugent board of
directors in its examination of the fairness, from a financial point of
view, to the shareholders of Robinson Nugent of the terms of the proposed
merger between Robinson Nugent and 3M. As described in this proxy
statement/prospectus, Goelzer's opinion dated as of October 2, 2000
(together with the related presentation) to the Robinson Nugent board of
directors was only one of many factors the Robinson Nugent board of
directors considered in determining to approve the merger agreement.
Goelzer is an investment banking firm that is regularly engaged in the
valuation of businesses and securities in connection with mergers and
acquisitions. The Robinson Nugent board of directors selected Goelzer
because of Goelzer's experience and expertise. Robinson Nugent has agreed
to pay Goelzer a fee of approximately $40,000 for its services plus
reasonable out of pocket expenses incurred in connection with its
engagement. Neither Goelzer nor any affiliate of Goelzer has had any
material relationship in the past five years with Robinson Nugent or any of
its affiliates, nor is any material relationship contemplated.
On October 2, 2000, Goelzer orally delivered its opinion, which was
later confirmed in writing, to the Robinson Nugent board of directors that,
as of that date and based upon and subject to the matters stated in its
opinion, the terms of the proposed merger were fair to the Robinson Nugent
shareholders from a financial point of view.
THE FULL TEXT OF THE GOELZER FAIRNESS OPINION, WHICH CONTAINS MANY OF
THE ASSUMPTIONS GOELZER MADE, THE MATTERS IT CONSIDERED, AND THE
LIMITATIONS ON THE REVIEW IT UNDERTOOK IN CONNECTION WITH ITS DELIVERY OF
THIS OPINION, IS ATTACHED AS ANNEX C AND IS INCORPORATED BY REFERENCE INTO
THIS PROXY STATEMENT/PROSPECTUS. GOELZER'S OPINION IS DIRECTED TO THE
ROBINSON NUGENT BOARD OF DIRECTORS, AND ADDRESSES ONLY THE FAIRNESS OF THE
TERMS OF THE PROPOSED MERGER TO HOLDERS OF ROBINSON NUGENT COMMON SHARES
FROM A FINANCIAL POINT OF VIEW. IT DOES NOT ADDRESS ANY OTHER ASPECT OF THE
MERGER OR ANY RELATED TRANSACTION AND DOES NOT CONSTITUTE A RECOMMENDATION
TO ANY SHAREHOLDER AS TO HOW THAT SHAREHOLDER SHOULD VOTE AT THE ROBINSON
NUGENT SPECIAL MEETING. THE FOLLOWING SUMMARY OF THE GOELZER FAIRNESS
OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE DETAILED ANALYSIS
COMPLETED BY GOELZER.
In connection with its opinion, Goelzer:
o Conducted detailed interviews with management concerning Robinson
Nugent's history and operating record, the nature of the markets
served, competitive situation, financial condition, recent
performance and current outlook;
o Analyzed trading data (stock price and volume trends) of Robinson
Nugent's common shares for a period of ten years and analyzed the
stock's total return relative to appropriate indices over the
last five years as provided by Bloomberg Analytics;
o Analyzed Robinson Nugent's financial statements and studied its
filings under the Securities Exchange Act of 1934, as amended,
including the latest Form 10-K and Form 10-Q and Annual Reports
for the three fiscal years ended June 30, 2000;
o Conducted a search using Bloomberg Analytics and utilized a June
26, 2000 Robinson Nugent Press Release in order to find publicly
traded companies which could be used as reasonable comparables in
determining the fair value of Robinson Nugent;
o Conducted a search for merger and acquisition transactions
involving both publicly traded and privately held corporations
within the electronic connector/electrical interconnection
industry using two large proprietary databases (Mergerstat and
World M&A Network's Done Deals) and the February 1999 edition of
The Bishop Report (a publication of Bishop & Associates);
<PAGE>
o Analyzed trading data (stock price and volume trends), operating
record, the nature of the markets served, financial condition,
recent performance and current outlook of 3M; and
o Performed such other studies, analyses and investigations as
deemed appropriate.
In preparing its opinion, Goelzer relied on the accuracy and
completeness of all information supplied or otherwise made available to it
by Robinson Nugent and 3M, discussed with or reviewed by or for it, or
publicly available, and Goelzer did not assume responsibility for
independently verifying any of this information. Goelzer did not undertake
an independent evaluation or appraisal of any of the assets or liabilities,
contingent or otherwise, of Robinson Nugent or 3M.
In connection with the preparation of its opinion, Goelzer was not
authorized by Robinson Nugent or the Robinson Nugent board of directors to
solicit, nor did Goelzer solicit, third party indications of interest in
the acquisition of all or any part of, or any combination with, Robinson
Nugent.
Goelzer's opinion was necessarily based on information available to it
and on general market, economic and other conditions as they existed and
could be evaluated on the date of its opinion. Goelzer did not address the
merits of the underlying decision by Robinson Nugent to engage in the
merger. Goelzer expressed no opinion as to what the value of the 3M common
stock actually would be when issued to the shareholders of Robinson Nugent
pursuant to the merger, the prices at which the 3M common stock would trade
after the merger or the price at which Robinson Nugent common shares would
trade between the date of its opinion and the date the merger is completed.
Although Goelzer evaluated the terms of the proposed merger from a
financial point of view, Goelzer was not requested to, and did not,
recommend any specific terms of the merger.
In preparing its opinion for the Robinson Nugent board of directors,
Goelzer performed a variety of financial and comparative analyses,
including those described below. The summary of analyses performed by
Goelzer as set forth below is not a complete description of the analyses
underlying Goelzer's opinion. The preparation of a fairness opinion is a
complex analytic process involving various determinations as to the most
appropriate and relevant methods of financial analysis and the application
of those methods to the particular circumstances and, therefore, such an
opinion is not readily susceptible to partial or summary description. No
company, business or transaction used in those analyses as a comparison is
identical to 3M, Robinson Nugent or the merger, nor is an evaluation of the
results of those analyses entirely mathematical; rather, it involves
complex considerations and judgments concerning financial and operating
characteristics and other factors that could affect the merger, public
trading or other values of the companies, business segments or transactions
being analyzed. The estimates contained in those analyses and the ranges of
valuations resulting from any particular analysis are not necessarily
indicative of actual values or predictive of future results or values,
which may be significantly more or less favorable than those suggested by
those analyses. In addition, analyses relating to the value of businesses
or securities are not appraisals and may not reflect the prices at which
businesses, companies or securities actually may be sold. Accordingly,
these analyses and estimates are inherently subject to substantial
uncertainty.
Goelzer did not place any particular reliance or weight on any
individual analysis, but instead concluded that its analyses, taken as a
whole supported its opinion. Accordingly, Goelzer believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and factors, without considering all analyses and factors, could
create an incomplete view of the processes underlying such analyses and its
opinion.
The following is a summary of the material financial and comparative
analyses performed by Goelzer in arriving at its October 2, 2000 opinion
presented to the Robinson Nugent board of directors.
<PAGE>
Comparable Transaction Analysis. Goelzer reviewed publicly available
information relating to selected comparable mergers and acquisition
transactions involving companies engaged in businesses similar to those of
Robinson Nugent. The following table lists the recently completed
transactions in Robinson Nugent's SIC Code reviewed by Goelzer:
CLOSING
BUYER SELLER DATE
--------------------------------- ---------------------- ----------
Molex A Unit of Axsys 03/20/2000
Technologies
Tyco International Raychem Corp. 08/13/1999
Smiths Industries PLC Engineered Transitions 12/02/1998
Co.
PCD, Inc. Wells Electronics 12/26/1997
Framatome SA Berg Electronics 03/28/1997
Thomas & Betts Augat Inc. 12/11/1996
LaBarge, Inc. Sorep Technology Corp. 05/16/1996
Semiconductor Packaging Materials Retconn, Inc. 01/04/1996
--------------------------------- ---------------------- ----------
With respect to the proposed transaction, Goelzer analyzed several
valuation multiples implied by the offer price in comparison with the
multiples paid in the prior comparable transactions. The valuation
multiples examined include the following: (1) equity price paid to net
income, (2) Total Invested Capital (which equals equity price paid plus the
value of indebtedness assumed) to revenues, (3) Total Invested Capital to
EBITDA (earnings before interest, taxes, depreciation, and amortization),
(4) Total Invested Capital to EBIT (earnings before interest and taxes),
and (5) Total Invested Capital to assets. Goelzer also analyzed the stock
price premiums implied under the proposed transaction in relationship to
the premiums paid in prior comparable transactions. The stock price
premiums examined compared the offer price to the pre-announcement stock
price one day prior to announcement, five days prior to announcement and
thirty days prior to announcement. The ranges of these multiples and
premiums and their comparison to the merger are included in the following
table:
<PAGE>
CONNECTOR INDUSTRY TRANSACTION ANALYSIS (SIC CODE #3678)
<TABLE>
<CAPTION>
ROBINSON DISCOUNT
AVERAGE MINIMUM MAXIMUM NUGENT TO AVERAGE
---------- --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Equity Price ($ millions) 643.84 2.50 3,020.85 $112.77(1) 82%
Total Invested Capital (TIC)
($ millions) 755.26 2.90 3,420.85 $124.99(2) 83%
Equity Price/Net Income 27.7x 3.4x 57.6x 21.6x(3) 22%
TIC/Revenues 1.6x 0.5x 3.0x 1.3x 18%
TIC/EBITDA 12.7x 11.6x 14.5x 10.2x 20%
TIC/EBIT 23.2x 17.6x 32.6x 16.5x(4) 29%
TIC/Assets 3.3x 1.9x 4.7x 2.2x 35%
1 Day Market Premium 37.09% 23.37% 62.34% 16.92%(5) 54%
5 Day Market Premium 45.30% 21.22% 71.23% 34.22%(6) 24%
10 Day Market Premium 58.89% 36.44% 70.73% 11.56%(7) 80%
<FN>
Notes:
-----
(1) Equity Price is calculated using the $19 a share offer price
multiplied by fully diluted shares (5,935,244 equaling 5,112,799
shares outstanding as of 8/8/00 plus 822,445 options outstanding at
8/8/00 which became fully vested on the signing of the merger
agreement).
(2) TIC is calculated using the Equity Price plus interest bearing debt as
of 6/30/00.
(3) Calculated by multiplying the $19 a share offer price by the fully
diluted shares as of 8/8/00 and dividing by net income from continuing
operations in fiscal 2000 ($5.21 million).
(4) EBIT was calculated by adding operating income and special and unusual
expenses.
(5) Calculated using the offer price of $19 a share and the average stock
price of $16.25 a share (the range was $15.50-$17.00) on 9/29/00.
(6) Calculated using the offer price of $19 a share and the average stock
price of $14.1563 a share (the range was $14.50-$13.8125) on 9/22/00.
(7) Calculated using the offer price of $19 a share and the average stock
price of $17.0313 a share (the range was $17.50-$16.5625) on 8/29/00.
</FN>
</TABLE>
Goelzer also reviewed the following connector industry transaction
analyses provided in the February 1999 edition of The Bishop Report and
compared them to the terms of the merger. The Bishop Report analyses
included six transactions: Tyco International's purchase of AMP, Thomas &
Betts' acquisition of AFC Cable, Framatone's purchase of Berg Electronics,
KKR's purchase of Amphenol, Thomas & Betts' acquisition of Augat, and AMP's
acquisition of M/A Com.
<TABLE>
<CAPTION>
ROBINSON NUGENT DISCOUNT TO
AVERAGE HIGH LOW -3M MULTIPLES AVERAGE
------- ------ ------ --------------- -----------
<S> <C> <C> <C> <C> <C>
Total Invested Capital/Sales......... 1.99x 2.36x 0.95x 1.35x 32%
Total Invested Capital/Book value.... 4.47x 13.60x 2.75x 4.40x(1) 2%
Total Invested Capital/EBITDA........ 11.80x 12.30x 7.20x 10.15x 14%
Total Invested Capital/EBIT.......... 19.80x 22.30x 10.90x 16.48x 17%
Market Premium....................... 47.5% 62.3% 12.4% 16.9%(2) 64%
<FN>
Notes:
-----
(1) Book value for Robinson Nugent as of June 30, 2000.
(2) The $19.00 per share offer price is a 16.9% premium to the average
stock price of $16.25 a share on September 29, 2000.
</FN>
</TABLE>
Goelzer noted that most of the proposed mergers' calculated multiples
are at the lower end of the previously completed comparable transactions.
In Goelzer's opinion, Robinson Nugent's erratic historical financial
performance, which includes losses from continuing operations in two of the
last five years, explains the Total Invested Capital multiples, based on
the proposed merger price, being at the lower end of the range seen for the
previously completed transactions. The proposed transaction is also at the
low end of the range from a market premium standpoint, but Goelzer viewed
this outcome as consistent with Robinson Nugent's current competitive
position within the electronic connector industry and the responses
received by Robinson Nugent from others with whom it held discussions
during the course of negotiations with 3M.
<PAGE>
Goelzer further noted that the terms of the proposed merger reflect
transaction multiples that are within the range of the transactions that
have occurred in the recent past within the electronic connector industry.
However, due to the inherent differences between the operations and
financial conditions of Robinson Nugent and the selected companies and the
fact that the reasons for, and circumstances surrounding, each of the
comparable transactions analyzed were so diverse, Goelzer was of the view
that a purely quantitative analysis based on comparable transactions would
not be entirely appropriate in the context of the merger. Goelzer also was
of the view that an appropriate use of a comparable transaction analysis in
this instance involved qualitative judgments concerning the differences
between the characteristics of these transactions and the merger that would
affect the value of the acquired companies and Robinson Nugent, which
judgments were taken into account by Goelzer in rendering its opinion.
Comparable Company Trading Analysis. Using publicly available
information, Goelzer compared selected stock trading data and financial
information for Robinson Nugent with corresponding data and information of
similar publicly traded companies that have operations within the
electronic connector industry. The following companies were selected by
Goelzer based upon Goelzer's views as to the comparability of the financial
and operating characteristics of these companies to Robinson Nugent:
Amphenol, Methode, Molex, PCD, Woodhead Industries, and Thomas & Betts.
In order to analyze the fairness from a financial point of view of the
terms of the proposed merger, Goelzer compared Robinson Nugent's financial
trends and ratios to the corresponding trends and ratios of the comparable
companies. Furthermore, Goelzer examined the implied offer price multiples
(i.e., price to earnings, price to EBITDA and Total Invested Capital to
EBITDA) for Robinson Nugent common shares in comparison with the same
multiples for the comparable companies.
The following table compares certain financial ratios and statistics
of Robinson Nugent to the companies named above:
<PAGE>
COMPETITOR SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
ROBINSON THOMAS & WOODHEAD
NUGENT AMPHENOL METHODE MOLEX PCD BETTS INDUSTRIES
(RNIC) (APH) (METHA) (MOLX) (PCDI) (TNB)(12) (WDHD)
--------- -------- -------- -------- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales ($ millions) (1)..... $92.8 $1,161.5 $422.2 $2,217.1 $54.2 $2,569.7 $186.8
Sales Growth (%)........... +32.6% +22.7% +4.6% +29.5% -1.3% +11.8% +12.5%
EPS-Cont. Opns. (1)........ $0.99 $1.78 $0.95 $1.12 $0.11 $2.65 $1.13
EPS Growth (%)............. +230.0% +81.6% -2.1% +23.1% -73.8% -6.7% +34.5%
Current Ratio.............. 2.4:1 1.6:1 3.2:1 2.2:1 0.5:1 2.3:1 2.6:1
Debt/Equity (%)............ 43.0% Negative 0.4% 1.3% 72.7% 88.8% 51.8%
PE Ratio .................. 21.6(6) 33.1 51.1 42.1 71.6 7.3 16.8
Price/Book Ratio........... 4.0X(7) Negative 6.3X 5.5X 1.2X 1.0X 2.6X
Dividends per Share........ $0.00 $0.00 $0.20 $0.10 $0.00 $1.12 $0.36
R&D Expenses (2)........... $4.5 $18.5 $23.6 $128.8 N/A(11) $47.9 $6.2
Capital Expenditures (2)... $5.0 $23.5 $24.7 $337.3 $3.7 $133.1 $7.8
8/15/00 Share Price........ $19.00(8) $58.94 $48.56 $47.13 $7.88 $19.44 $19.00
52 Wk. High-Low............ $21.00- $70.38- $66.44- $63.75- $10.50- $53.69- $24.00
$4.38 $21.00 $13.50 $24.40 $3.00 $17.63 -$8.31
Equity Mkt. Cap (3)........ $112.8(9) $2,525.5 $1,736.1 $9,345.4 $70.7 $1,125.2 $225.9
Mkt. Cap.(w/Debt)(4)....... $125.0(10) $3,266.5 $1,737.3 $9,367.0 $113.9 $2,096.7 $270.9
EBITDA (5)................. $12.31 $236.84 $59.63 $455.39 $15.49 $289.86 $33.65
<FN>
Notes:
-----
(1) Last four quarters available.
(2) Based on most recent fiscal year.
(3) Calculated using the closing stock price on 8/15/00 multiplied by the
number of fully diluted shares outstanding as of the most recent
quarter.
(4) Calculated by adding the equity market capitalization figure and
interest bearing debt as of the most recent quarter.
(5) Calculated using the trailing four (4) quarters.
(6) Uses the $19.00 per share offer price, earnings from continuing
operations of $5.21 million in fiscal 2000, and fully diluted shares
outstanding of 5,935,244 shares as of 8/8/00 (5,112,799 shares
outstanding plus 822,445 options outstanding as of 8/8/00 which became
fully vested on the signing of the merger agreement).
(7) Uses the $19.00 per share offer price, stockholders' equity of $28.4
million as of 6/30/00, and fully diluted shares outstanding of
5,935,244 shares as of 8/8/00 (5,112,799 shares outstanding plus
822,445 options outstanding as of 8/8/00 which became fully vested on
the signing of the merger agreement).
(8) Offer price.
(9) Calculated by multiplying $19.00 per share offer price by fully
diluted shares (5,935,244 which equals 5,112,799 shares outstanding as
of 8/8/00 plus 822,445 options outstanding as of 8/8/00 which became
fully vested on the signing of the merger agreement).
(10) Calculated by adding Equity Market Cap and interest bearing debt as of
6/30/00.
(11) Information is not available.
(12) Thomas & Betts subsequently restated fiscal 1999 and YTD 2000 results.
The figures and ratios included herein are those that were available
to Goelzer when it provided its opinion.
</FN>
</TABLE>
Goelzer noted that the implied offer price for Robinson Nugent placed
two of Robinson Nugent's key financial ratios, price-to-earnings and
price-to-book, within the range of Robinson Nugent's publicly traded
competitors. Also, the table illustrates the fact that Robinson Nugent
spent less on research and development and capital expenditures in
comparison to almost all of Robinson Nugent's main competitors in the four
most recent quarters available. Goezler also noted that a merger with 3M
would strengthen Robinson Nugent's position within the industry due to the
fact that 3M has the financial resources to spend significantly more than
Robinson Nugent as a stand-alone company on research and development and
capital expenditures in order to expand Robinson Nugent's future operations
and product line. The table also shows that the offer price was very close
to Robinson Nugent's 52-week high trading price. Robinson Nugent's offer
price was closer to its 52-week high than its competitors' current trading
prices at the time Goezler gave its opinion were to their 52-week highs.
The following table compares certain financial ratios calculated from
the statistics provided in the table above of Robinson Nugent to those of
similar publicly traded companies named above:
<PAGE>
COMPETITOR VALUATION METRICS
ROBINSON
NUGENT
AVERAGE MINIMUM MAXIMUM (RNIC)(1)
------- ------- ------- ---------
Equity Mkt. Cap/EBITDA...... 12.6x 3.9x 29.1x 9.2X
Mkt. Cap. (w/Debt)/EBITDA... 14.4x 7.2x 29.1x 10.2X
Notes:
-----
(1) Figures based on $19.00 per share offer price.
Goelzer noted that the equity market capitalization-to-EBITDA ratio
(equivalent to the equity price-to-EBITDA ratio) of Robinson Nugent, based
on the terms of the merger agreement, is well within the range of Robinson
Nugent's publicly traded competitors. Furthermore, the equity market
capitalization plus debt-to-EBITDA ratio (equivalent to the Total Invested
Capital-to-EBITDA ratio) of Robinson Nugent is also within the range of
Robinson Nugent's competitors. Goelzer considered both of the
aforementioned multiples to be important for the purpose of comparison
because they most accurately reflect multiples of operating cash flow with
and without the effects of financing.
Goezler also noted that the terms of the proposed merger reflect
fundamental ratios and multiples that are within the range of those
applicable to Robinson Nugent's publicly traded competitors. However,
because of the inherent differences among the operations of Robinson Nugent
and the selected comparable companies, Goelzer was of the view that a
purely quantitative analysis based on comparable public company data would
not be entirely appropriate in the context of the merger. Goelzer further
believes that an appropriate use of a comparable company analysis in this
instance involves qualitative judgments concerning differences among the
financial and operating characteristics of Robinson Nugent and the selected
comparable companies, which judgments were taken into account by Goelzer in
rendering its opinion.
Purchase Price Analysis and Stock Trading History. Goelzer performed
analyses relating to the consideration to be received by the shareholders
of Robinson Nugent assuming various prices for 3M common stock. Goelzer
also examined the history of trading prices and volume for Robinson Nugent
common shares and 3M common stock.
Goezler noted that the implied offer price of $19.00 per share is
close to Robinson Nugent's 52-week trading price high (and within 10% of
the $21.00 per share price achieved in March 2000). Goezler also noted that
the offer price is considerably above Robinson Nugent's stock price trading
range over the prior ten calendar years (a high of $13.25 per share on
December 31, 1999 and a low of $1.88 per share on January 31, 1991). In
addition, Goelzer took into consideration the fact that Robinson Nugent's
stock price significantly underperformed the Nasdaq Composite Index and the
Nasdaq Industrial Index for the five years ending July 31, 2000.
Additionally, Goelzer analyzed the stock price performance of 3M over the
last ten years. 3M's stock price as of August 23, 2000 ($95.94 per share),
was near the top of 3M's stock price trading range over the prior ten
calendar years. The high of $105.50 per share was set on June 30, 1997 and
the low of $35.48 was set on October 31, 1990. Finally, Goelzer analyzed
the average trading volume of Robinson Nugent shares (less than 30,000
shares a day) and 3M (well over 1 million shares a day). In Goelzer's
opinion, the ability of Robinson Nugent shareholders to receive a more
liquid/marketable stock in the form of 3M shares in exchange for their
Robinson Nugent shares was another advantage of the proposed merger.
Other Factors and Analyses. In the course of preparing its opinion,
Goelzer performed other analyses and reviewed other matters including,
among other things, the expected trading characteristics of Robinson Nugent
common shares and 3M common stock. In reaching its conclusion, Goelzer also
relied in part upon a letter provided to it by the Chairman of the Robinson
Nugent board of directors describing
<PAGE>
his discussions with other possible purchasers of Robinson Nugent and the
conditions in the industry. Goelzer also considered its discussions with
members of the Robinson Nugent board of directors and its Chairman
regarding the results of Robinson Nugent's discussions with potential
acquirers other than 3M.
In summarizing its report, Goelzer noted a number of factors that
suggest the terms of the proposed merger are fair including:
o Robinson Nugent's erratic sales, earnings, and share price
history;
o the ability of Robinson Nugent shareholders to receive a much
more liquid/marketable investment in the form of 3M stock in
exchange for their Robinson Nugent common shares;
o 3M's ability to bring a litany of human and capital resources to
expand Robinson Nugent's operations much faster than Robinson
Nugent could on a stand-alone basis;
o 3M's ability to strengthen Robinson Nugent's position against
competitors; and
o a lack of product overlap between the two companies.
Considering all factors, it was the opinion of Goelzer, based upon and
subject to the matters stated in its opinion, that the terms of the
proposed merger are fair to the shareholders of Robinson Nugent from a
financial point of view.
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS OF ROBINSON NUGENT IN THE
MERGER
In considering the recommendations of the Robinson Nugent board of
directors with respect to the merger, shareholders of Robinson Nugent
should be aware that some directors and members of management of Robinson
Nugent have interests in the merger that are different from, or in addition
to, their interests as shareholders generally. The Robinson Nugent board of
directors was aware of these interests and considered them, among other
matters, in approving the merger agreement.
Robinson Nugent Options. On October 1, 2000, the directors and
executive officers of Robinson Nugent held options to purchase Robinson
Nugent common shares, some of which were unvested and unexercisable. Upon
the signing of the merger agreement on October 2, 2000, all unvested and
unexercisable options automatically vested and became exercisable. In
accordance with the stock option plan, Robinson Nugent sent holders of the
outstanding options notice that all options that were not exercised prior
to 5:00 p.m. on November 8, 2000 would cease to exist. As of October 1,
2000, Larry W. Burke, a director and the President of Robinson Nugent, and
the four other most highly compensated executive officers of Robinson
Nugent held 95,000 unexercised and unvested options each of which has been
exercised, and all of the Robinson Nugent executive officers and directors
as a group held 198,500 unexercised and unvested options each of which has
been exercised. Based on the average trading price of the 3M common stock
for the 20 consecutive trading days ending on September 29, 2000, which was
$88.506, Mr. Burke and the four other most highly compensated executive
officers of Robinson Nugent would have received a total of 20,397 shares of
3M common stock in exchange for the Robinson Nugent common shares they
received upon exercise of their previously unvested and unexercisable
options. Based on the same average trading price, all of the Robinson
Nugent executive officers and directors as a group would have received a
total of 42,618 shares of 3M common stock in exchange for the Robinson
Nugent common shares they received upon exercise of their previously
unvested and unexercisable options. See "The Merger Agreement--Employee
Benefit Plans" on page 46.
Voting and Stock Option Agreement. As an inducement to 3M to enter
into the merger agreement, on October 2, 2000, Samuel C. Robinson and James
W. Robinson, who are directors of Robinson Nugent, Patrick C. Duffy, the
Chairman of the board of directors of Robinson Nugent, and Larry W. Burke,
a director and President of Robinson Nugent, each of whom is a shareholder
of Robinson Nugent, entered
<PAGE>
into a voting and stock option agreement with 3M and Robinson Nugent under
which they have agreed, among other things, to vote all of the Robinson
Nugent common shares owned by them or to be acquired by them upon the
exercise of any options or otherwise (1) in favor of the merger agreement,
and (2) against any other acquisition proposal. The voting and stock option
agreement also grants 3M an irrevocable option to purchase all of their
common shares at a price of $19.00 per share. 3M may exercise the option at
any time prior to the earlier of the time at which the merger is completed
and fifteen days after the termination of the merger agreement. These
Robinson Nugent shareholders own a total of 1,815,301 Robinson Nugent
common shares representing approximately 30.7% of the Robinson Nugent
common shares outstanding on a fully diluted basis as of October 2, 2000.
See "The Voting and Stock Option Agreement" on page 51.
Dallas Manufacturing Facility Sale and Lease. At the closing of the
merger, Robinson Nugent will sell its manufacturing facility in Dallas,
Texas to a limited liability company, owned two-thirds by Samuel C.
Robinson and one-third by James W. Robinson, for $1,750,000 in cash. In
determining the purchase price, the parties relied in part upon an
independent third party appraisal made in conjunction with a prior
financing of the property. This transaction has been approved by the
Robinson Nugent board of directors. Samuel C. Robinson and James W.
Robinson did not participate in this vote. Simultaneously, this facility
will be leased back by Robinson Nugent for $220,000 per year, under a
three-year, triple-net lease. The gain on the sale will be deferred and
amortized over the life of the lease term.
Insurance and Indemnification. Under the merger agreement, 3M has
agreed to provide various continuing indemnification and insurance benefits
for officers, directors and employees of Robinson Nugent. See "The Merger
Agreement--Insurance and Indemnification" on page 46.
ACCOUNTING TREATMENT
The merger will be accounted for as a purchase by 3M for financial
reporting purposes. After completion of the merger, the results of
operations of Robinson Nugent will be included in the consolidated
financial statements of 3M. The purchase price will be allocated to
Robinson Nugent assets and liabilities based on the fair values of the
assets acquired and the liabilities assumed. Any excess of cost over the
fair value of the net tangible and intangible assets of Robinson Nugent
acquired will be recorded as goodwill and will be amortized by charges to
operations in accordance with accounting principles generally accepted in
the United States of America. These allocations will be made based upon
valuations and other studies that have not yet been finalized.
FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain of the material federal
income tax consequences of the merger to 3M, Robinson Nugent, and the
holders of Robinson Nugent common shares who are citizens or residents of
the United States or that are domestic corporations. The discussion below
is for general information only and does not address all aspects of federal
income taxation that may affect particular shareholders in light of their
particular circumstances, that are generally assumed to be known by
investors or that may affect shareholders subject to special treatment
under federal income tax laws. See "--Qualifications" on page 38. The
following discussion assumes that Robinson Nugent common shares are held as
capital assets. In addition, no information is provided in this document
with respect to the tax consequences of the merger under foreign, state or
local laws.
Neither 3M nor Robinson Nugent has requested a ruling from the
Internal Revenue Service with regard to any of the federal income tax
consequences of the merger. The opinion of counsel described below to be
delivered as a condition to the merger will not be binding on the Internal
Revenue Service
<PAGE>
and there can be no assurance that the Internal Revenue Service or the
courts will not take a contrary view.
Closing Tax Opinion. As conditions to their respective obligations to
complete the merger, 3M and Robinson Nugent must receive an opinion, dated
as of the date of the merger, of Fried, Frank, Harris, Shriver & Jacobson,
subject to the assumptions and qualifications set forth below, to the
effect that the merger will qualify as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code. 3M and Robinson Nugent do
not intend to waive this condition without resoliciting proxies from
shareholders of Robinson Nugent.
This opinion will be based on, among other things:
(1) current provisions of the Internal Revenue Code, currently
applicable Treasury regulations, and judicial and administrative
decisions and rulings, all of which are subject to change,
possibly with retroactive effect;
(2) certain factual representations and statements of 3M and Robinson
Nugent;
(3) the assumption that such representations and statements will be
complete and accurate as of the effective time of the merger; and
(4) the assumption that the merger and related transactions will be
completed on the terms and conditions of the merger agreement and
as described in this proxy statement/prospectus without waiver or
modification of any such terms or conditions.
The following discussion addresses certain material federal income tax
consequences of the merger assuming that the merger will qualify as a
reorganization.
Effect of Receipt of 3M Common Stock. Except as discussed below with
respect to cash received in lieu of a fractional share of 3M common stock,
Robinson Nugent shareholders who exchange Robinson Nugent common shares for
shares of 3M common stock will not recognize gain or loss as a result of
the merger. The tax basis of the shares of 3M common stock received by the
Robinson Nugent shareholders in the merger will be the same as the tax
basis of the Robinson Nugent common shares exchanged for those shares. The
holding period of the shares of 3M common stock received in the merger will
include the holding period of the Robinson Nugent common shares exchanged
for those shares.
Fractional Shares. If a Robinson Nugent shareholder receives cash in
lieu of a fractional share of 3M common stock in the merger, that cash
amount will be treated as received in exchange for the fractional share of
3M common stock. Gain or loss recognized as a result of that exchange will
be equal to the cash amount received for the fractional share of 3M common
stock less the proportion of the shareholder's tax basis in the Robinson
Nugent common shares exchanged and allocable to the fractional share of 3M
common stock.
Robinson Nugent Shareholder Reporting Requirements. A Robinson Nugent
shareholder who exchanges Robinson Nugent common shares for shares of 3M
common stock will be required to retain in such shareholder's records and
file with such shareholder's federal income tax return for the taxable year
in which the merger takes place a statement setting forth all relevant
facts in respect of the nonrecognition of gain or loss upon the exchange.
The statement is required to include:
(1) the shareholder's tax basis in the Robinson Nugent common shares
surrendered in the merger; and
(2) the fair market value of the shares of 3M common stock received
in the merger as of the effective time of the merger.
<PAGE>
Consequences to 3M, Robinson Nugent and Barbados Acquisition, Inc.
None of 3M, Robinson Nugent or Barbados Acquisition, Inc. will recognize
gain or loss as a result of the merger.
Qualifications. As noted above, the preceding discussion does not
address aspects of federal income taxation that may be relevant to Robinson
Nugent shareholders to which special provisions of the federal income tax
law may apply based on their particular circumstances or status. For
example, the discussion does not address aspects of federal income taxation
that may be relevant to:
o dealers in securities or currencies;
o traders in securities;
o financial institutions;
o tax-exempt organizations;
o insurance companies;
o persons holding Robinson Nugent common shares as part of a
hedging, straddle, conversion, synthetic security or other
integrated transaction;
o non-United States persons;
o persons whose functional currency is not the United States
dollar; or
o persons who acquired their Robinson Nugent common shares through
the exercise of employee stock options or otherwise as
compensation.
THE PRECEDING DISCUSSION SETS FORTH THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER BUT DOES NOT PURPORT TO BE A COMPLETE ANALYSIS
OR DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT TO THE MERGER. THUS,
ROBINSON NUGENT SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS
TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING TAX
RETURN REPORTING REQUIREMENTS, THE APPLICABILITY AND EFFECT OF FEDERAL,
STATE, LOCAL AND OTHER APPLICABLE TAX LAWS AND THE EFFECT OF ANY PROPOSED
CHANGES IN THE TAX LAWS.
REGULATORY MATTERS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules promulgated under that Act by the Federal Trade
Commission, in order to complete the merger we are required to give
notification and furnish information relating to the Robinson Nugent and 3M
businesses and the industries in which they operate to the Federal Trade
Commission and the Antitrust Division of the United States Department of
Justice, and a specified waiting period requirement has to be satisfied. 3M
and Robinson Nugent filed notification and report forms with the Federal
Trade Commission and the Antitrust Division on October 6, 2000. On November
5, 2000, the waiting period expired. Even after the expiration of the
waiting period, the Federal Trade Commission and the Antitrust Division
retain the authority to challenge the merger on antitrust grounds. In
addition, each state in which 3M or Robinson Nugent operates may also seek
to review the merger. Any of these authorities may seek to challenge the
merger.
The merger is also subject to German regulatory approval. On November
7, 2000, 3M made a filing with the German Cartel Office, whose clearance is
required before the merger may be completed. The initial review period by
the German Cartel Office is one month, subject to extension for up to an
additional three months if the German Cartel Office requests additional
information or determines that the merger may be anticompetitive.
<PAGE>
3M and Robinson Nugent each conduct business in numerous countries
throughout the world. Some of these countries have mandatory premerger
notification requirements. In some other countries the merger can be
completed, but the transaction cannot be implemented locally without
regulatory approval. The authorities in each country may review the merger
to determine if it is compatible with their national laws on merger
control. If a national authority concludes that the transaction is
incompatible with applicable law, it could withhold its approval or
condition its approval of the merger locally on the receipt of undertakings
by the parties, including the divestiture of assets or businesses.
There can be no assurance that a challenge to the merger on antitrust
grounds will not be made by antitrust authorities or, if a challenge is
made, of the result. Under the merger agreement, 3M and Robinson Nugent
have agreed to use their reasonable best efforts to take, or cause to be
taken, all actions, and or cause to be done all things necessary, proper or
appropriate to complete and make effective the merger and the other
transactions contemplated by the merger. With respect to other competition,
merger control, antitrust or similar approvals or waiting periods, the
merger agreement requires that these approvals or waiting periods be
obtained or expire or terminate before completion of the merger, if the
failure to obtain these approvals or have the waiting periods expire or be
terminated would reasonably be expected to result in a material adverse
effect or result in the commission of a criminal offense. If any other
approval or action is required, 3M and Robinson Nugent currently
contemplate that that approval or action will be sought.
Under the merger agreement, we have both agreed to use our reasonable
best efforts to take all actions to obtain all necessary regulatory and
governmental approvals necessary to complete the merger and to address any
concerns of regulators and governmental officials. Our obligations to
complete the merger are dependent on the condition that there be no law
enacted, and no judgment, injunction or decree of any court or governmental
entity in effect, that prohibits the merger.
It is a condition to the merger that the shares of 3M stock to be
issued in the merger be approved for listing on the New York Stock
Exchange, subject only to official notice of issuance. Since 3M intends to
use shares from its treasury, no filing with the New York Stock Exchange to
list these shares will be necessary. Following the merger, Robinson Nugent
common shares will no longer be registered under the Securities and
Exchange Act or quoted on the Nasdaq National Market.
FEDERAL SECURITIES LAWS CONSEQUENCES; STOCK TRANSFER RESTRICTIONS
This proxy statement/prospectus does not cover any resales of the 3M
common stock that Robinson Nugent shareholders will receive in the merger,
and no person is authorized to make any use of this proxy
statement/prospectus in connection with any resale of 3M common stock.
All shares of 3M common stock received by Robinson Nugent shareholders
in the merger will be freely transferable, except that shares received by
"affiliates" of Robinson Nugent under the Securities Act of 1933 at the
time of the Robinson Nugent special shareholders meeting may be resold only
in transactions permitted by Rule 145 under the Securities Act of 1933 or
as otherwise permitted under the Securities Act of 1933. Persons who may be
affiliates of Robinson Nugent for those purposes generally include
individuals or entities that control, are controlled by, or are under
common control with, Robinson Nugent, and would not include shareholders
who are not officers, directors or principal shareholders of Robinson
Nugent.
<PAGE>
THE MERGER AGREEMENT
The following summary of the merger agreement is qualified by
reference to the complete text of the merger agreement, which is
incorporated by reference and attached as Annex A to this proxy
statement/prospectus. We encourage you to read the merger agreement in its
entirety.
STRUCTURE OF THE MERGER
Under the merger agreement, Barbados Acquisition, Inc., a wholly owned
subsidiary of 3M, will merge with and into Robinson Nugent. As a
consequence of the merger, Robinson Nugent will become a wholly owned
subsidiary of 3M.
CLOSING; EFFECTIVE TIME
The merger will become effective when the articles of merger are filed
with the Secretary of State of the State of Indiana. However, we may agree
that the merger will become effective as of a later time, as we specify in
the articles of merger. We expect to file the articles of merger and
complete the merger shortly after the conditions in the merger agreement
are satisfied or waived. See "--Conditions to the Completion of the Merger"
on page 47.
WHAT SHAREHOLDERS WILL RECEIVE IN THE MERGER
If the "average trading price" of 3M common stock is between $82.00
and $100.00, for each Robinson Nugent common share you own you will receive
a number of shares of 3M common stock having a value of $19.00, based on
the average trading price. The average trading price is based on the
average closing price for a share of 3M common stock on the New York Stock
Exchange Composite Tape for the 20 consecutive trading days ending on the
business day before the closing of the merger. Within this range of average
trading prices, the actual number of shares of 3M common stock you will
receive will vary based on the formula contained in the merger agreement
which adjusts the number of shares you receive to maintain their value at
$19.00, based on the average trading price, subject to the collar described
below.
If the average trading price of shares of 3M common stock is below
$82.00, you will receive 0.2317 shares of 3M common stock for each Robinson
Nugent common share you own. In that case, the value of the 3M common stock
you receive in the merger will be less than $19.00 for each Robinson Nugent
common share you own, based on the average trading price.
If the average trading price of shares of 3M common stock is above
$100.00, you will receive 0.19 shares of 3M common stock for each Robinson
Nugent common share you own. In that case, the value of the shares of 3M
common stock you receive in the merger will be more than $19.00 for each
Robinson Nugent common share you own, based on the average trading price.
<PAGE>
This information is summarized in the table below:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF 3M COMMON STOCK YOU VALUE OF 3M COMMON STOCK YOU
AVERAGE TRADING PRICE OF 3M RECEIVE FOR EACH ROBINSON NUGENT COMMON RECEIVE FOR EACH ROBINSON
COMMON STOCK SHARE NUGENT COMMON SHARE
--------------------------- ------------------------------------------- ----------------------------
<S> <C> <C>
LESS THAN $82.00 0.2317 LESS THAN $19.00
BETWEEN $82.00 AND $100.00 $19.00 DIVIDED BY THE AVERAGE TRADING PRICE $19.00
MORE THAN $100.00 0.19 MORE THAN $19.00
</TABLE>
Immediately after the merger, former Robinson Nugent shareholders will
own less than 1% of 3M.
PROCEDURES FOR SURRENDER OF ROBINSON NUGENT CERTIFICATES; FRACTIONAL SHARES
As soon as reasonably practicable after the closing of the merger, 3M
will instruct the exchange agent for the merger to mail to each person who
holds Robinson Nugent common shares at the time of the merger, a letter of
transmittal and instructions with respect to the surrender of the person's
Robinson Nugent share certificates. The letter of transmittal will also
describe the procedures for electronic delivery of shares.
YOU SHOULD NOT SEND YOUR SHARE CERTIFICATES WITH THE ENCLOSED PROXY.
Commencing immediately after the closing of the merger, upon surrender
by Robinson Nugent shareholders of their share certificates representing
Robinson Nugent common shares in accordance with the instructions, Robinson
Nugent shareholders will receive share certificates representing shares of
3M common stock for which those Robinson Nugent common shares have been
exchanged, together with a cash payment instead of fractional shares, if
any, as described below.
No fractional share of 3M common stock will be issued for Robinson
Nugent common shares. Instead, the exchange agent will pay an amount in
cash determined by multiplying (x) the fractional share interest to which
the Robinson Nugent shareholder would otherwise be entitled by (y) the
closing price of a share of 3M common stock on the New York Stock Exchange
on the day upon which the merger becomes effective.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties by
Robinson Nugent to 3M and Barbados Acquisition Inc. relating to, among
other things:
o corporate organization, qualification, standing and power;
o articles of incorporation and by laws;
o capitalization;
o authority to enter into, approve, execute and deliver the merger
agreement;
o no conflict or violation of organizational documents, securities
laws or agreements;
o documents filed with the SEC including financial statements;
o absence of specified material changes or events since June 30,
2000;
o litigation and liabilities;
o compliance with applicable laws;
o employee benefit plan matters;
<PAGE>
o labor matters;
o environmental matters;
o required board action and shareholder votes;
o brokers;
o tax matters;
o intellectual property matters;
o insurance;
o material contracts;
o title to assets;
o state takeover laws;
o shareholder rights agreement;
o product warranty; and
o product liability.
The merger agreement contains representations and warranties by 3M and
Barbados Acquisition, Inc. to Robinson Nugent relating to among other
things:
o corporate organization, standing, power and valid issuance of the
3M common stock following the Merger;
o no conflict or violation of organizational documents, securities
laws or agreements;
o inapplicability of state takeover laws; and
o documents filed with the SEC including financial statements.
The representations and warranties will not survive the closing of the
merger.
CONDUCT OF BUSINESS
During the period from the date of the merger agreement to the
completion of the merger, Robinson Nugent must comply with agreements
relating to the conduct of its business, except as otherwise permitted by
the merger agreement or as consented to by 3M.
Robinson Nugent has agreed that it will:
o conduct its business in all material respects in the ordinary and
usual course;
o use its reasonable commercial efforts to preserve its business
organization intact in all material respects;
o maintain the services of its officers and employees as a group;
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.
<PAGE>
The merger agreement prohibits Robinson Nugent and its subsidiaries,
without the consent of 3M, from taking any action outside of the parameters
specified in the merger agreement relating to the following matters:
o issuing, delivering, granting or selling any capital stock or
options;
o amending its articles of incorporation or bylaws;
o amending or taking any action under its shareholder rights
agreement, or adopting any other shareholders rights plan;
o entering into any agreement with any of its shareholders;
o splitting, combining, subdividing or reclassifying its
outstanding shares of capital stock;
o declaring, setting aside or paying any dividend or distribution
payable in cash, stock or property in respect of any of its
capital stock;
o repurchasing, redeeming or otherwise acquiring or permitting any
of its subsidiaries to purchase, redeem or otherwise acquire, any
shares of its capital stock or options;
o taking any action that would prevent the merger from qualifying
as a "reorganization" under the Internal Revenue Code;
o taking any action that it knows would cause any of its
representations and warranties in the merger agreement to become
inaccurate in any material respect;
o entering into, adopting or amending any agreement or arrangement
relating to severance, or entering into, adopting or amending any
employee benefit plan or employment or consulting agreement, or
granting any options or other equity related awards;
o except for borrowings under existing lines of credit, issuing,
incurring or amending the terms of any indebtedness for borrowed
money or guarantee;
o making any capital expenditures in an aggregate amount in excess
of the amount previously budgeted by Robinson Nugent;
o other than in the ordinary course of business consistent with
past practice, and except pursuant to existing contracts,
transferring, leasing, licensing, selling, mortgaging, pledging,
encumbering or otherwise disposing of any of its or its
subsidiaries' property or assets material to Robinson Nugent and
its subsidiaries taken as a whole;
o issuing, delivering, selling or encumbering shares of any class
of its capital stock or any securities convertible into, or any
rights, warrants or options to acquire any capital stock except
under its benefit plans;
o acquiring any business, including any facilities, whether by
merger, consolidation, purchase of property or assets in excess
of a certain amount;
o changing its accounting policies, practices or methods except as
required by generally accepted accounting principles or by the
rules and regulations of the SEC;
o taking any action to cause its common stock to cease to be quoted
on the Nasdaq National Market System;
<PAGE>
o entering into or amending any distribution, supply, inventory
purchase, franchise, license, sales, agency or advertising
contracts outside of the ordinary course of business that have a
term which extends more than one year from the completion of the
merger;
o entering into any contract, lease, agreement, instrument or other
arrangement limiting the freedom of Robinson Nugent to engage in
any line of business or competing with anyone;
o entering into any joint venture or partnership agreement that is
material to Robinson Nugent and its subsidiaries taken as a
whole; or
o changing, other than in the ordinary course of business
consistent with past practice, or making any material tax
election, settling any audit or filing any amended tax returns.
NO SOLICITATION
The merger agreement provides that Robinson Nugent will not, nor will
it authorize or permit any of its subsidiaries or any of its subsidiaries'
directors, officers, employees, advisors, agents or representatives to,
directly or indirectly:
o solicit, initiate or encourage (including furnishing information)
or take any other action to facilitate any inquiries or the
making of any proposal which constitutes or may reasonably be
expected to lead to an acquisition proposal, as defined in the
merger agreement;
o engage in any discussion or negotiations relating to an
acquisition proposal; or
o enter into any contract or understanding requiring it to abandon,
terminate or fail to complete the merger with 3M.
In addition, Robinson Nugent agreed in the merger agreement that it
would immediately cease all existing solicitation, initiation,
encouragement, activity, discussion or negotiation with any persons
conducted prior to the execution of the merger agreement with respect to
any acquisition proposal and request the return or destruction of all
non-public information furnished in connection with any proposal.
However, Robinson Nugent has agreed that, if before its special
shareholders meeting takes place, it receives an unsolicited written
proposal with respect to an acquisition transaction, and the Robinson
Nugent board of directors determines, in good faith by a majority vote,
after advice from its outside legal counsel, that the failure to furnish
information and negotiate or otherwise engage in discussions would
constitute a breach of the fiduciary duties of its board of directors, and
after consultation with Robinson Nugent's independent financial advisors
that such proposal could reasonably be expected to lead to a superior
transaction, as defined in the merger agreement, then Robinson Nugent may:
o furnish information to the person making the proposal under a
customary confidentiality agreement; and
o participate in discussions or negotiations regarding the
proposal.
Robinson Nugent has agreed to notify 3M orally and in writing of any
inquiries, offers or acquisition proposals, including, without limitation,
the terms and conditions of any offer or proposal and the identity of the
person making it, as promptly as practicable following the receipt of the
inquiry, offer or proposal, and to keep 3M reasonably informed of the
status and material terms of the inquiry, offer or proposal.
If the board of directors of Robinson Nugent determines, based on the
written opinion from Robinson Nugent's independent financial advisors, that
the acquisition transaction is a superior transaction, and based on the
advice of Robinson Nugent's outside legal counsel, that the acquisition
transaction constitutes a superior transaction, and is in the best
interests of Robinson Nugent and its shareholders and
<PAGE>
failure to enter into the acquisition transaction would constitute a breach
of the fiduciary duties of the board of directors of Robinson Nugent, then,
first, Robinson Nugent must provide 3M three business days' written notice
that it intends to terminate the merger agreement and, second, on the date
of termination, Robinson Nugent must deliver to 3M:
o a written notice of termination of the merger agreement;
o a wire transfer in the amount of the termination fee of $3.45
million;
o a written acknowledgment from Robinson Nugent that the
termination of the merger agreement and the entry into the
superior transaction are events which entitle 3M to be paid the
termination fee; and
o a written acknowledgment from each other party to the superior
transaction that it has read the terminating Robinson Nugent
acknowledgment referred to above and will not contest the matters
acknowledged by Robinson Nugent, including the payment of the
termination fee.
An "acquisition proposal" is defined in the merger agreement as any
inquiry, proposal or offer from any person relating to any:
o direct or indirect acquisition or purchase of a business of
Robinson Nugent or any of its subsidiaries, that constitutes 15%
or more of the consolidated net revenues, net income or assets of
Robinson Nugent and its subsidiaries;
o direct or indirect acquisition or purchase of 15% or more of any
class of equity securities of Robinson Nugent and its
subsidiaries whose business constitutes 15% or more of the
consolidated net revenues, net income or assets of Robinson
Nugent and its subsidiaries;
o tender offer or exchange offer that if consummated would result
in any person beneficially owning 15% or more of the capital
stock of Robinson Nugent; or
o merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving
Robinson Nugent and its subsidiaries whose business constitutes
15% or more of the consolidated net revenues, net income or
assets of Robinson Nugent and its subsidiaries.
Each of the transactions in the immediately preceding bullet points is
referred to as an "acquisition transaction" in the merger agreement.
A "superior transaction" is defined in the merger agreement as an
acquisition transaction which the board of directors of Robinson Nugent,
reasonably determines is more favorable to Robinson Nugent and its
shareholders than the merger and which is not subject to any financing
condition. An acquisition transaction cannot constitute a superior
transaction unless, in the written opinion of Robinson Nugent's independent
financial advisors, the value of the consideration to be paid in the
acquisition transaction is more favorable to the shareholders of Robinson
Nugent from a financial point of view than the consideration being paid by
3M in the merger, taking into account any proposed alteration to the terms
of the merger agreement submitted in writing by 3M in response to an
acquisition proposal.
Robinson Nugent may not take any action to make any takeover laws or
its rights agreement inapplicable to any acquisition transaction in respect
of Robinson Nugent prior to the termination of the merger agreement.
<PAGE>
EMPLOYEE BENEFIT PLANS
As part of the merger Robinson Nugent will take all necessary action
to:
o cause the entire account balances of the participants in its
pension plan to vest as of the closing date of the merger and
will distribute the account balances to the participants upon
receipt of approval from the Internal Revenue Service;
o approve the merger of its 401(k) plan with 3M's voluntary
investment and employee stock option plan;
o cause all outstanding options granted under the Robinson Nugent
stock option plan to be exercised and satisfied in full or
terminated prior to 5:00 p.m. on November 8, 2000;
o cause the annual reports for Robinson Nugent's retirement plan
and 401(k) plan to be filed with the appropriate government
agency, pay any penalties associated with the late filings of
those reports, file reasonable cause statements with the Internal
Revenue Service related to the reports, and comply with the
summary annual report requirements of ERISA;
o file a registration statement with the SEC with respect to the
offering of Robinson Nugent common shares under the 401(k) plan;
o commence an offer to repurchase Robinson Nugent common shares
from each person who exercised options under the Robinson Nugent
stock option plan prior to August 31, 2000 or purchased Robinson
Nugent common shares under the 401(k) plan for the 12 months
prior to the filing of the registration statement relating to the
plan; and
o complete and furnish 3M with documentation of Robinson Nugent's
bonus plan in a form which is reasonably satisfactory to 3M.
Each of the holders of options to purchase Robinson Nugent common shares
has been given written notice of the execution of the merger agreement and
of Robinson Nugent's decision to terminate the options, as he or she is
entitled to receive under the terms of the 1993 Robinson Nugent, Inc.
Employee and Non-Employee Director Stock Option Plan. In accordance with
the terms of the plan, the holders of options were given until 5:00 p.m. on
November 8, 2000 to exercise their options or have them terminated.
INSURANCE AND INDEMNIFICATION
3M has agreed to maintain in effect, for three years following the
merger, Robinson Nugent's current directors' and officers' liability
insurance covering those persons currently covered by that insurance
policy, except that 3M need not pay more than two times the most recent
annual premium currently paid by Robinson Nugent for its existing coverage.
3M has also agreed to indemnify the current and former directors and
officers of Robinson Nugent or any of its subsidiaries for acts or
omissions occurring at or prior to the merger to the fullest extent
permitted by applicable law.
3M has agreed to keep in effect all provisions in Robinson Nugent's
articles of incorporation and bylaws that provide exculpation and
indemnification, and related advancement of expenses, for its past and
present officers and directors.
<PAGE>
EXPENSES
Whether or not the merger is completed, each party will pay its own
costs and expenses incurred in connection with the merger agreement except
that the expenses incurred in connection with the filing and printing of
the registration statement, the mailing of the proxy statement/prospectus
and all filing fees in connection with any filings under state securities
laws will be shared by 3M and Robinson Nugent equally, and the fee paid in
connection with the filings pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, will be paid by 3M.
CONDITIONS TO THE COMPLETION OF THE MERGER
The obligations of each party to complete the merger are subject to
the satisfaction or waiver of the following additional conditions:
o the Robinson Nugent shareholders have approved and adopted the
merger agreement and the merger;
o there is no order, decree or injunction in effect that prohibits
the completion of the merger;
o the registration statement on Form S-4 of which this proxy
statement/prospectus is a part is effective under the Securities
Act;
o all requirements under state securities or "blue sky" laws have
been satisfied;
o the shares of 3M common stock to be issued in the merger are
approved for listing on the New York Stock Exchange subject to
official notice of issuance;
o 3M and Robinson Nugent have received opinions from Fried, Frank,
Harris, Shriver & Jacobson that the merger will qualify for
federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code;
o the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, will have expired or been
terminated; and
o any other approval or waiting period required prior to the
completion of the merger under any other competition, merger
control, antitrust or similar law or regulation will have been
obtained or terminated or 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 materially
adverse affect or result in the commission of a criminal offense.
The obligation of 3M to complete the merger is subject to the
satisfaction or waiver of the following conditions:
o the representations and warranties of Robinson Nugent contained
in the merger agreement are true and correct on the date of the
merger as if made on the date of the merger, except where the
failure of the representations and warranties to be true and
correct, individually or in the aggregate, would not reasonably
be expected to have resulted in a material adverse effect;
o all agreements and covenants required to be performed and
complied with on or before the date of the merger will have in
all material respects been performed or complied with;
o 3M will have received a certificate of an executive officer of
Robinson Nugent that the conditions in the two immediately
preceding clauses have been satisfied;
o all of Robinson Nugent options will have either been exercised or
terminated;
<PAGE>
o 3M will have received the resignation of each director of
Robinson Nugent, with the resignation being effective upon
completion of the merger;
o the voting and stock option agreement between 3M and certain
Robinson Nugent shareholders will be in effect;
o Robinson Nugent's manufacturing facility in Dallas, Texas will
have been sold and leased back to Robinson Nugent; and
o the rescission offer made by Robinson Nugent to each person who
exercised options under the Robinson Nugent stock option plan or
purchased Robinson Nugent common shares under the 401(k) plan
will have been completed.
The obligation of Robinson Nugent to complete the merger is subject to
the satisfaction or waiver of the following conditions:
o the representations of 3M contained in the merger agreement are
true and correct on the date of the merger, as if made on the
date of the merger, except to the extent that any failure of the
representations and warranties to be true and correct would not,
individually or in the aggregate, have or reasonably be expected
to have a material adverse effect on 3M's ability to complete the
merger;
o all agreements and covenants required to be performed and
complied with on or before the date of the merger will have in
all material respects been performed or complied with;
o Robinson Nugent will have received a certificate of an executive
officer of 3M that the conditions in the two immediately
preceding clauses have been satisfied; and
o 3M will have obtained all consents, approvals, releases or
authorizations and will have made all filings and registrations
with governmental or other entities necessary to complete the
merger, unless the failure to do so would not individually or in
the aggregate have, or reasonably be expected to have, a material
adverse effect on 3M's ability to complete the merger or perform
its obligations under the merger agreement
TERMINATION
The merger agreement may be terminated:
o by mutual written consent of 3M and Robinson Nugent;
o by either 3M or Robinson Nugent:
o if the merger is not completed by February 28, 2001, except
that a party may not terminate the merger agreement if its
failure to fulfill its obligations is the cause of the
merger not being completed by that date;
o if a governmental entity issues an order, decree or
injunction making the completion of the merger illegal,
permanently prohibiting the completion of the merger and the
order, decree or injunction will become final and
non-applicable; or
o if there has been a material breach by the other party of
any of its representations, warranties, covenants or
agreements contained in the merger agreement, and the breach
would result in the failure to satisfy each respective
party's representations and warranties which are a condition
to the other completing the merger, and that breach is
incapable of being cured or,
<PAGE>
if capable of being cured, has not been cured within 30 days
after written notice was received by the party alleged to be
in breach.
o by 3M:
o if Robinson Nugent shareholders, at a duly held shareholders
meeting, fail to approve and adopt the merger agreement and
the merger;
o if the board of directors of Robinson Nugent (1) does not
recommend that Robinson Nugent shareholders vote in favor of
the merger agreement or withdraws its recommendation, (2)
modifies its recommendation in a manner adverse to 3M, or
(3) approves, recommends or fails to take a position that is
adverse to any proposed acquisition transaction involving
Robinson Nugent;
o if the board of directors of Robinson Nugent refuses to
affirm its recommendation of approval of the merger
agreement within five days after receipt of any reasonable
written request for such affirmation from 3M;
o if Robinson Nugent fails to hold the Robinson Nugent special
shareholders meeting when scheduled; or
o by Robinson Nugent:
o in order to enter into a superior acquisition transaction
that the Robinson Nugent board has determined, after
complying with the procedures contained in the merger
agreement, is a superior transaction.
Robinson Nugent has agreed that it will pay 3M a $3.45 million
termination fee if:
o 3M terminates the merger agreement because the board of directors
of Robinson Nugent:
o does not recommend that Robinson Nugent shareholders vote in
favor of the merger agreement and the merger or withdraws
its recommendation;
o modifies its recommendation in a manner adverse to 3M;
o approves, recommends or fails to take a position that is
adverse to any proposed competing transaction involving
Robinson Nugent;
o refuses to affirm to 3M its recommendation within five days
after receipt of any reasonable request to do so from 3M; or
o Robinson Nugent fails to hold its special shareholders
meeting when scheduled;
o 3M or Robinson Nugent terminates the merger agreement because (1)
the merger is not completed before February 28, 2001, or (2) 3M
terminates the merger agreement because either (x) there has been
a material breach by Robinson Nugent of any of its
representations, warranties, covenants or agreements contained in
the merger agreement, and the breach would result in the failure
to satisfy its representations and warranties which are a
condition to 3M completing the merger, and that breach is
incapable of being cured or, if capable of being cured, has not
been cured within 30 days after written notice was received by
Robinson Nugent or (y) the Robinson Nugent shareholders fail to
approve and adopt the merger agreement and the merger at the
Robinson Nugent special shareholders meeting, and, in either case
(1) or (2), an acquisition transaction is entered into, agreed
to, or completed by Robinson Nugent or any of its subsidiaries
within twelve months following termination of the merger
agreement;
<PAGE>
o 3M terminates the merger agreement because (x) there has been a
material breach by Robinson Nugent of any of its representations,
warranties, covenants or agreements contained in the merger
agreement, and the breach would result in the failure to satisfy
its representations and warranties which are a condition to 3M
completing the merger, and that breach is incapable of being
cured or, if capable of being cured, has not been cured within 30
days after written notice was received by Robinson Nugent or (y)
the Robinson Nugent shareholders fail to approve and adopt the
merger agreement and the merger at the Robinson Nugent special
shareholders meeting, and in either case, an acquisition proposal
was publicly proposed or announced prior to the Robinson Nugent
special shareholders meeting and in the case of (y) only, the
acquisition proposal has not been publicly rejected by Robinson
Nugent's board of directors;
o Robinson Nugent terminates the merger agreement to enter into a
superior transaction.
AMENDMENTS
The merger agreement may be amended prior to the time the merger is
completed if a writing to that effect is executed and delivered by 3M and
Robinson Nugent.
<PAGE>
THE VOTING AND STOCK OPTION AGREEMENT
The following summary of the voting and stock option agreement is
qualified by reference to the complete text of the voting and stock option
agreement, which is attached as Annex B to this proxy statement/prospectus.
You are encouraged to read the voting and stock option agreement in its
entirety.
3M VOTING AGREEMENT WITH ROBINSON NUGENT SHAREHOLDERS
As an inducement to 3M to enter into the merger agreement, on October
2, 2000, Samuel C. Robinson and James W. Robinson, who are directors of
Robinson Nugent, Patrick C. Duffy, the Chairman of the board of directors
of Robinson Nugent, and Larry W. Burke, a director and the President of
Robinson Nugent, each of whom is a Robinson Nugent shareholder, entered
into a voting and stock option agreement with 3M and Robinson Nugent under
which they have agreed, among other things, to vote all of the Robinson
Nugent common shares owned by them or to be acquired by them upon the
exercise of any options or otherwise (1) in favor of the merger agreement,
and (2) against any other acquisition proposal.
As part of the voting and stock option agreement, each of these
Robinson Nugent shareholders granted an irrevocable proxy to 3M to vote the
Robinson Nugent common shares owned by them in accordance with the voting
and stock option agreement. These Robinson Nugent shareholders own a total
of 1,815,301 Robinson Nugent common shares, representing approximately
30.7% of the Robinson Nugent common shares outstanding on a fully diluted
basis as of October 2, 2000.
The voting and stock option agreement also grants 3M an irrevocable
option to purchase all of the shareholders' Robinson Nugent common shares
at a price of $19.00 per share. 3M may exercise the option at any time
prior to the earlier of the time at which the merger is completed and 15
days after the termination of the merger agreement. Robinson Nugent has
also agreed to register shares obtained by 3M pursuant to the voting and
stock option agreement at the request of 3M up to two times during the two
years following exercise of the option by 3M, if such registration is
necessary to permit 3M to sell or dispose of those shares and to provide
unlimited piggyback registration rights to 3M.
In connection with the signing of the merger agreement, Robinson
Nugent amended its shareholder rights agreement to make it inapplicable to
the merger, the voting and stock option agreement and the transactions
contemplated by that agreement.
<PAGE>
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
MARKET PRICES AND DIVIDENDS
3M common stock is listed on the New York Stock Exchange under the
symbol "MMM." Robinson Nugent common shares are quoted on the Nasdaq
National Market under the symbol "RNIC."
The table below sets forth, for the periods indicated, the high and
low sale prices and the dividends declared per share of 3M common stock as
reported on the New York Stock Exchange and Robinson Nugent common shares
as quoted on the Nasdaq National Market, based on published financial
sources.
<TABLE>
<CAPTION>
ROBINSON NUGENT
3M COMMON STOCK COMMON SHARES
------------------------------- -------------------------------
DIVIDENDS DIVIDENDS
DECLARED DECLARED
HIGH LOW PER SHARE HIGH LOW PER SHARE
--------- --------- ----------- ------ ------- ----------
<S> <C> <C> <C> <C> <C> <C>
1999:
First Quarter $ 81.375 $69.313 $0.56 $ 4.500 $ 3.500 $--
Second Quarter 96.375 70.063 0.56 4.625 2.563 --
Third Quarter 100.000 85.000 0.56 5.250 3.875 --
Fourth Quarter 103.375 87.438 0.56 13.250 4.375 --
2000:
First Quarter 103.813 78.188 0.58 21.000 10.000 --
Second Quarter 98.313 80.438 0.58 16.250 9.063 --
Third Quarter 97.438 80.5 0.58 17.875 11.125 --
Fourth Quarter [ ] [ ] [ ] [ ] [ ] [ ]
(through _____, 2000)
</TABLE>
On October 2, 2000, the last full trading day prior to the public
announcement of the proposed merger, the closing prices of 3M common stock
as reported on the New York Stock Exchange and of Robinson Nugent common
shares as quoted on Nasdaq National Market were $91.688 and $16.625 per
share, respectively. On [ ], 2000, the last trading date prior to the date
of this proxy statement/prospectus, the closing prices of 3M common stock
as reported on the New York Stock Exchange and of Robinson Nugent common
stock as quoted on the Nasdaq National Market, were $[____] and $[____] per
share, respectively. Shareholders should obtain current market quotations
prior to making any decision with respect to the merger.
<PAGE>
THE BUSINESS OF MINNESOTA MINING AND MANUFACTURING COMPANY
3M is an integrated enterprise characterized by substantial
intercompany cooperation in research, manufacturing and marketing of
products. 3M's business has developed from its research and technology in
coating and bonding for coated abrasives, 3M's original product. Coating
and bonding is the process of applying one material to another, such as:
o abrasive granules to paper or cloth, namely, coated abrasives;
o adhesives to a backing, namely, pressure-sensitive tapes;
o ceramic coating to granular mineral, namely, roofing granules;
o glass beads to plastic backing, namely, reflective sheeting; and
o low-tack adhesives to paper, namely, repositionable notes.
3M is among the leading manufacturers of products for many of the
markets it serves. In all cases, 3M products are subject to direct or
indirect competition. Most 3M products involve expertise in product
development, manufacturing and marketing, and are subject to competition
from products manufactured and sold by other technically oriented
companies.
3M's strategic business units have been aggregated into six reportable
segments:
o Industrial Markets;
o Health Care Markets;
o Transportation, Graphics and Safety Markets;
o Consumer and Office Markets;
o Electro and Communications Markets; and
o Specialty Material Markets.
These segments bring together common or related 3M technologies, enhancing
the development of innovative products and services and providing for
efficient sharing of business resources. These segments have worldwide
responsibility for virtually all 3M product lines. A few miscellaneous
businesses and staff-sponsored products, as well as various corporate
assets and corporate overhead expenses, are not assigned to the segments.
<PAGE>
THE BUSINESS OF ROBINSON NUGENT, INC.
Robinson Nugent was organized as an Indiana corporation in 1955.
Robinson Nugent designs, manufactures and markets electronic devices used
to interconnect components of electronic systems. Robinson Nugent's
principal products are integrated circuit sockets: connectors used in
board-to-board, wire-to-board, and custom molded-on cable assemblies.
Robinson Nugent also offers application tooling that is used in applying
wire and cable to its connectors.
Robinson Nugent's products are used in electronic telecommunication
equipment, including:
o switching and networking equipment such as servers and routers,
mass storage devices, modems and PBX stations;
o data processing equipment such as mainframe computers, personal
computers, workstations, CAD systems;
o peripheral equipment such as printers, disk drives, plotters and
point-of-sale terminals;
o industrial controls and electronic instruments;
o consumer products; and
o a variety of other applications.
Major markets of Robinson Nugent include the United States, Europe,
Japan, and the Southeast Asian countries, including Singapore and Malaysia.
Manufacturing facilities are located in New Albany, Indiana; Dallas, Texas;
Reynosa, Mexico; Sungai Petani, Malaysia; Inchinnan, Scotland; and
Hamont-Achel, Belgium.
Robinson Nugent's corporate headquarters are located in New Albany,
Indiana, which also is the site for Robinson Nugent's corporate
engineering, research and development, preproduction, testing of new
products and North American distribution and warehousing. International
headquarters are located in s-Hertogenbosch, The Netherlands; Singapore;
and Tokyo, Japan.
<PAGE>
COMPARISON OF STOCKHOLDER RIGHTS
The rights of 3M stockholders are governed by 3M's certificate of
incorporation and bylaws and Delaware law. The rights of Robinson Nugent
shareholders are governed by Robinson Nugent's articles of incorporation
and bylaws and Indiana law. After the merger, the rights of Robinson Nugent
shareholders who become 3M stockholders will be governed by 3M's
certificate of incorporation, the 3M bylaws and Delaware law. The following
is a summary of the material differences between the rights of 3M
stockholders and Robinson Nugent shareholders. This summary is not a
complete statement of all differences between rights of the holders of 3M
common stock and Robinson Nugent common shares and is qualified by the full
text of each document and by Delaware law and Indiana law. For information
as to how to get those documents, see "Where You Can Find More Information"
on page 66.
AMENDMENT OF CHARTER DOCUMENTS
------------------------------
ROBINSON NUGENT
Under Indiana law, the amendment of a corporation's articles of
incorporation requires generally that, if a quorum is present, action on an
amendment is approved if the votes cast favoring the amendment exceed the
votes cast opposing the amendment, unless the articles of incorporation or
the Indiana law require a greater number of affirmative votes. In addition,
the amendment must be approved by a majority of the votes entitled to be
cast on the amendment by any voting group with respect to which the
amendment would create dissenters' rights. Robinson Nugent's articles of
incorporation do not provide otherwise.
3M
Under Delaware law, the amendment of a corporation's certificate of
incorporation requires the affirmative vote of a majority of votes entitled
to be cast thereon, unless a corporation's certificate of incorporation
provides otherwise. 3M's certificate of incorporation provides that the
certificate of incorporation may be amended in accordance with Delaware
law. 3M's certificate of incorporation specifies that Article Tenth,
election of directors, cannot be amended or repealed without the approval
of at least 80% of the voting power of all of the outstanding shares of
capital stock voting together as a single class.
AMENDMENT OF BYLAWS
-------------------
ROBINSON NUGENT
Under Indiana law, unless a corporation's articles of incorporation provide
otherwise, only a corporation's board of directors may amend or repeal a
corporation's bylaws. Robinson Nugent's articles of incorporation do not
provide otherwise.
3M
Under Delaware law, holders of a majority of the voting power of a
corporation and, when provided in the certificate of incorporation, the
directors of the corporation have the power to adopt, amend and repeal the
bylaws of a corporation. 3M's certificate of incorporation grants the
directors the power to adopt, amend or repeal the bylaws, provided that any
bylaws made by the directors may be amended or repealed by the directors
and by the stockholders by an affirmative vote of the holders of at least
eighty percent (80%) of the voting power of all of the outstanding shares
of capital stock of 3M entitled to vote generally in the election of
directors voting as a single class.
<PAGE>
PROVISIONS AFFECTING BUSINESS COMBINATIONS
------------------------------------------
ROBINSON NUGENT
Indiana law provides that a corporation may not engage in any "business
combination" with any "interested shareholder" for a period of five years
following the interested shareholder's share acquisition date, unless the
business combination or the purchase of shares made by the interested
shareholder is approved by the board of directors of the corporation before
the interested shareholder's share acquisition date. A "business
combination" under Indiana law is generally defined as any of the following
transactions involving the corporation and an interested shareholder
thereof:
(i) a merger or consolidation;
(ii) a sale, lease, exchange, mortgage, pledge, transfer, or other
disposition of 10% or more of the corporation's assets or representing
10% or more of the earning power or net income of the corporation;
(iii) an issuance or transfer of shares of the corporation's stock
representing 5% or more of the aggregate market value of all of such
corporation's outstanding stock;
(iv) the adoption of a plan of liquidation or dissolution proposed by or
under agreement with such interested shareholder;
(v) a transaction having the effect of directly or indirectly increasing
the proportionate share of the corporation's stock held by such
interested shareholder; or
(vi) any receipt by such interested shareholder of the benefit of any
loans, advances, guarantees, pledges, or other financial assistance or
any tax credits or other tax advantages.
An "interested shareholder" under Indiana law is generally defined as any
person owning 10% or more of the voting power of the outstanding voting
shares of the corporation.
3M
Delaware law provides generally that a corporation may not engage in a wide
range of "business combinations" with any person who acquires 15% or more
of a corporation's voting stock, thereby becoming an "interested
stockholder", for a period of three years following the date the person
became an interested stockholder, unless:
(i) the board of directors of the corporation has approved, prior to that
acquisition date, either the business combination or the transaction
that resulted in the person becoming an interested stockholder;
(ii) upon completion of the transaction that resulted in the person
becoming an interested stockholder, that person owns at least 85% of
the corporation's voting stock outstanding at the time the transaction
commenced, excluding shares owned by persons who are directors and
also officers and shares owned by employee stock plans in which
participants do not have the right to determine confidentially whether
shares will be tendered in a tender or exchange offer; or
(iii) the business combination is approved by the board of directors and
authorized by the affirmative vote, at an annual or special meeting
and not by written consent, of at least 66 2/3% of the outstanding
voting stock not owned by the interested stockholder.
<PAGE>
CONTROL SHARE ACQUISITION LAWS
------------------------------
ROBINSON NUGENT
Indiana law requires that, unless the articles of incorporation or bylaws
of a corporation exempt the corporation, which Robinson Nugent's articles
of incorporation and bylaws do not, any person who proposes to acquire or
has acquired, a "control share acquisition" ownership of, or the power to
direct the voting of shares representing one-fifth, one-third, or a
majority of the voting power of an issuing public corporation in the
election of directors, must provide the corporation with a statement
describing such acquisition, an "acquiring person statement". If the
acquiring person so requests at the time of delivery of such statement, and
undertakes to pay the expenses relating thereto, the corporation shall
cause a special meeting of its shareholders to be called for the purpose of
considering the voting rights to be accorded the shares acquired in the
control share acquisition. The shares so acquired must be accorded the same
voting rights as were accorded these shares before the control share
acquisition only to the extent granted by resolution of the shareholders of
such corporation. Shares acquired in a control share acquisition as to
which no acquiring person statement has been filed may be redeemed by the
corporation at the fair value thereof under certain circumstances. In the
event that shares acquired in a control share acquisition are accorded full
voting rights and the acquiring person has acquired shares representing a
majority or more of all voting power, all shareholders will be entitled to
appraisal rights.
3M
Delaware law does not contain a similar provision.
ANTI-TAKEOVER LAWS
------------------
ROBINSON NUGENT
Indiana law provides that a person shall not make a takeover offer unless
the following conditions are satisfied:
(i) a statement which consists of each document required to be filed with
the Commission is filed with the Indiana Securities Commissioner and
delivered to the president of the target company before making the
takeover offer;
(ii) a consent to service of process and the requisite filing fee
accompanies the statement filed with the Indiana Securities
Commissioner;
(iii) the takeover offer is made to all offerees holding the same class of
equity securities on substantially equivalent terms;
(iv) a hearing is held within 20 business days after the statement
described in clause (i) above is filed; and
(v) the Indiana Securities Commissioner must have approved the takeover
offer.
In addition, such section provides that no offeror may acquire any equity
security of any class of a target company within two years following the
conclusion of a takeover offer with respect to that class, unless the
holder of such equity security is afforded, at the time of that
acquisition, a reasonable opportunity to dispose of such securities to the
offeror upon substantially equivalent terms.
A "takeover offer" means an offer to acquire or an acquisition of any
equity security of a target company pursuant to a tender offer or request
or invitation for tenders if, after the acquisition, the offeror is
directly or indirectly a record or beneficial owner of more than ten
percent of any class of the outstanding equity securities of the target
company. A "target company" means an issuer of securities which is
organized under the laws of Indiana, has its principal place of business in
Indiana and has substantial assets in Indiana.
3M
Delaware law does not contain a comparable provision.
<PAGE>
RELATED PERSON TRANSACTIONS
---------------------------
ROBINSON NUGENT
Robinson Nugent's articles of incorporation do not contain a similar
provision.
3M
3M's certificate of incorporation requires the affirmative vote of at least
80% of the outstanding shares of common stock for a business transaction
with a related person, unless the continuing directors of 3M approve the
transaction, or the terms of the transaction provide that the amount of
cash per share to be paid by the related person is at least equal to the
highest consideration paid for any share of 3M common stock by the related
person since the time when he, she or it became a related person or during
the one year prior to such time.
A "business transaction" is:
o the merger or consolidation of 3M;
o the sale of substantially all of the assets of 3M;
o the issuance or sale of 3M's securities, a recapitalization of 3M's
securities; or
o a liquidation, spin-off or dissolution of 3M.
A "related person" is the beneficial owner of at least 10% of the voting
stock of 3M.
A "continuing director" is a director who either was a member of the board
of directors of 3M on May 13, 1986, or who became a director after that
date with the approval of the continuing directors.
RIGHTS AGREEMENT
----------------
ROBINSON NUGENT
Robinson Nugent entered into a shareholder rights agreement dated as of
April 21, 1988, as amended, which was intended to discourage a takeover of
Robinson Nugent. Under the shareholder rights agreement, Robinson Nugent
issued rights that attached to each outstanding Robinson Nugent common
share. The rights:
o represent the right of each holder of Robinson Nugent common shares to
purchase for $40 a number of additional Robinson Nugent common shares,
based on 50% of the market value of one Robinson Nugent common share,
subject to anti-dilution adjustments;
o will become exercisable and will trade separately from the common
shares on the earlier of the public announcement of the acquisition of
20% or more of outstanding Robinson Nugent common shares by any person
or group of affiliated persons or ten days after the commencement or
announcement of a tender or exchange offer for 30% or more of the
Robinson Nugent common shares; and
o will expire on April 15, 2008, unless redeemed earlier by the board of
directors.
The Robinson Nugent board of directors may redeem the rights in whole, at
$.01 per right until the earlier of 10 calendar days following the date of
initial public disclosure that a person has acquired 20% or more of the
Robinson Nugent common shares or the expiration date of the rights.
The Robinson Nugent board of directors has amended the shareholder rights
agreement to exempt the merger and the voting and stock option agreement
from triggering the shareholders rights under the shareholder rights
agreement.
3M
3M has not adopted a shareholder rights agreement.
RIGHT TO CALL SPECIAL MEETINGS
------------------------------
ROBINSON NUGENT
Robinson Nugent's bylaws provide that a special meeting of the Robinson
Nugent shareholders may be called by the Robinson Nugent board of
directors, the president, or by Robinson Nugent shareholders holding not
less than 55% of all outstanding common shares of Robinson Nugent entitled
to vote at that meeting.
<PAGE>
3M
3M's bylaws provide that a special meeting of the stockholders may be
called only by the chairman of its board of directors.
STOCKHOLDER ACTION WITHOUT A MEETING
------------------------------------
ROBINSON NUGENT
Under Indiana law, action permitted at a shareholders' meeting may be taken
without a meeting if the action is taken by all the shareholders entitled
to vote on the action and is evidenced by one or more written consents.
3M
3M's certificate of incorporation provides that any action permitted to be
taken at a stockholders' meeting must be effected at an annual or special
meeting of stockholders and may not be effected by written action in lieu
of a meeting.
DIVIDENDS AND REPURCHASES
-------------------------
ROBINSON NUGENT
Under Indiana law, a corporation may make distributions to its shareholders
as long as the corporation's total assets exceed the sum of its total
liabilities, plus any amount that would be needed, if the corporation were
to be dissolved at the time of the distribution:
o to satisfy the preferential rights upon dissolution of shareholders
whose preferential rights are superior to those receiving the
distribution;
o debts may be paid as they come due; and
o the payment of these distributions is consistent with the
corporation's articles of incorporation.
The board of directors may base its determination of whether the
corporation may make distributions either on financial statements prepared
on the basis of accounting practices and principals that are reasonable in
the circumstances or on a fair valuation or other method that is reasonable
in the circumstances.
3M
Under Delaware law, a corporation may pay dividends and repurchase stock
out of surplus or, if there is no surplus, out of any net profits for the
fiscal year in which the dividend was declared or for the preceding fiscal
year as long as no payment reduces capital below the amount of capital
represented by all classes of shares having a preference upon the
distribution of assets.
PREFERRED STOCK
---------------
ROBINSON NUGENT
Robinson Nugent's articles of incorporation only provides for the issuance
of common shares. The articles of incorporation do not provide for the
issuance of preferred shares.
3M
Under Delaware law, a corporation may issue more than one class or series
of stock with the rights and preferences set forth in the certificate of
incorporation. 3M's certificate of incorporation provides that 3M can issue
common stock and preferred stock. 3M's certificate of incorporation gives
the board of directors "blank check" authority to establish the rights,
preferences, powers, privileges and restrictions of the preferred stock,
including such terms as the designation, the dividend rate, the voting
rights, the liquidation rights and the conversion rights. 3M's board of
directors can, without stockholder approval, issue preferred stock with
voting and conversion rights that could adversely affect the voting power
or other rights of the holders of 3M common stock. The issuance of
preferred stock may have the effect of delaying, deferring or preventing a
change in control of 3M. There are currently no shares of preferred stock
outstanding.
<PAGE>
DISSENTERS' RIGHTS
------------------
ROBINSON NUGENT
Under Indiana law, if a corporation's shares are listed on a national
securities exchange, or on the Nasdaq National Market, there are no
dissenters' rights with respect to actions to be taken at a shareholders
meeting that would otherwise provide for dissenters' rights. Because the
Robinson Nugent common shares are quoted on the Nasdaq National Market,
Robinson Nugent shareholders are not entitled to exercise dissenters'
rights with respect to the proposed merger.
3M
Under Delaware law, unless the certificate of incorporation otherwise
provides, Delaware law does not provide for appraisal rights if (1) the
shares of the corporation are listed on a national securities exchange or
designated as a national market systems security on an interdealer
quotations system by the National Association of Securities Dealers, Inc.,
or are held of record by more than 2,000 stockholders, as long as the
stockholders receive in the merger shares of the surviving corporation or
of any other corporation, the shares of which are listed on a national
securities exchange or designated as a national market systems security on
an interdealer quotations system by the National Association of Securities
Dealers, Inc., or are held of record by more than 2,000 stockholders, or
(2) the corporation is the surviving corporation and no vote of its
stockholders is required for the merger. 3M's certificate of incorporation
does not provide otherwise.
SIZE OF BOARD
-------------
ROBINSON NUGENT
Under Indiana law, the board of directors must consist of one or more
individuals with the number specified in or fixed in accordance with the
corporation's articles of incorporation or bylaws. Robinson Nugent's bylaws
state that the number of directors shall be 10.
3M
Delaware law provides that unless the certificate of incorporation
specifies the number of directors, a board of directors may change the
authorized number of directors by an amendment to the bylaws if fixed by
the bylaws, or in such manner as may be provided by the bylaws. If the
certificate of incorporation specifies the number of directors, then that
number can be changed only by amending the certificate of incorporation.
3M's certificate of incorporation provides that the number of directors is
to be fixed by the bylaws. 3M's bylaws provide that the number of directors
is set by the majority vote of the board of directors. The current number
of directors is 10.
REMOVAL OF DIRECTORS
--------------------
ROBINSON NUGENT
Indiana law provides that directors may be removed in any manner provided
by a corporation's articles of incorporation and can be removed with or
without cause, unless a corporation's articles of incorporation provide
otherwise. A director may be removed by the shareholders only at a meeting
called for the purpose of removing the director. Robinson Nugent's bylaws
provide that any director may be removed with or without cause by action of
the holders of at least 55% of the votes entitled to be cast at any meeting
of the shareholders, the notice of which states that one of the purposes of
the meeting is the removal of the director. A removal is effective
immediately.
3M
Delaware law provides that directors may be removed from office, with or
without cause, by the holders of a majority of the voting power of all
outstanding voting stock of the corporation, unless the corporation has a
classified board, in which case directors may only be removed by
shareholder vote for cause or if its certificate of incorporation otherwise
provides. 3M's certificate of incorporation provides that no director may
be removed from office without cause.
<PAGE>
VACANCIES ON THE BOARD OF DIRECTORS
-----------------------------------
ROBINSON NUGENT
Under Indiana law, unless the articles of incorporation of a corporation
provide otherwise, vacancies on the board of directors may be filled by a
majority of the board of directors or, if the remaining directors
constitute less than a quorum, the majority of the remaining members may
fill the vacancy. Robinson Nugent's articles of incorporation do not
address vacancies on the board of directors. However, Robinson Nugent's
bylaws provide that the board of directors may fill any vacancy on the
board of directors, including a vacancy resulting from an increase in the
number of directors. If the directors remaining in office constitute fewer
than a quorum of the board, the directors remaining in office may fill the
vacancy by the affirmative vote of a majority of those directors. The term
of a director elected to fill a vacancy expires at the end of the term for
which the director's predecessor was elected.
3M
Delaware law provides that unless the governing documents of a corporation
provide otherwise, vacancies and newly created directorships resulting from
a resignation or any increase in the authorized number of directors may be
filled by a majority of the directors then in office. 3M's certificate of
incorporation provides that any vacancy in the board of directors occurring
by reason of an increase in the number of directors, or by reason of the
death, resignation or removal of a director, will be filled for the
unexpired portion of the term by a majority vote of the remaining
directors, though less than a quorum, or by the sole remaining director.
3M's certificate of incorporation also provides that if there is a class of
stock having preference over the common stock as to the election of
directors and there occurs a vacancy among those directors, then the
remaining directors elected by that class will fill the vacancy, and if
there are no remaining directors so elected, then the holders of that class
of stock shall vote to fill the vacancy in the same manner in which they
originally elected a director.
OTHER CORPORATE CONSTITUENCIES
------------------------------
ROBINSON NUGENT
Under Indiana law, in discharging his or her duties to the corporation and
in determining what he or she believes to be in the best interests of the
corporation, a director or officer may, in addition to considering the
effects of any action on shareholders, consider the effects of the action
on employees, suppliers, customers, the communities in which the
corporation operates and any other factors that the director or officer
considers pertinent.
3M
Delaware law does not contain a specific provision outlining the duties of
a board of directors with respect to the best interests of a corporation.
Delaware courts have permitted directors to consider various
constituencies, provided that there be some rationally related benefit to
stockholders.
DIRECTOR LIABILITY
------------------
ROBINSON NUGENT
Indiana law provides that a director is not liable for any action taken as
a director, or any failure to take any action, unless (i) the director has
breached or failed to perform the duties of the director's office in
compliance with Section 23-1-35-1 of the Indiana Business Corporation Law,
which requires, among other things, that a director discharge his duties as
a director in good faith, with the care an ordinarily prudent person in a
like position would exercise under similar circumstances and in a manner
the director reasonably believes to be in the best interests of the
corporation, and (ii) the breach or failure to perform constitutes willful
misconduct or recklessness.
Actions taken in connection with a proposed acquisition of control of the
corporation by directors in the good faith exercise of their business
judgment are not subject to a different or higher degree of scrutiny than
other actions of the directors.
3M
Delaware law allows a Delaware corporation to include in its certificate of
incorporation, and 3M's certificate of incorporation contains, a provision
eliminating the liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director, except:
<PAGE>
o liability for any breach of the director's duty of loyalty to the
corporation or its stockholders;
o for acts or omissions not in good faith or which involve intentional
misconduct or knowing violation of law, under Section 174 of Delaware
law, which deals generally with unlawful payments of dividends, stock
repurchases and redemptions; and
o for any transaction from which the director derived an improper
personal benefit.
INDEMNIFICATION
---------------
ROBINSON NUGENT
Indiana law authorizes Indiana corporations to indemnify officers and
directors for their conduct if such conduct was in good faith and was in
the corporation's best interests or, in the case of directors, was not
opposed to such best interests, and permits the purchase of insurance in
this regard. The indemnification provided by Indiana law is not exclusive.
The corporation may also provide other rights of indemnification in its
articles of incorporation and bylaws, a contract approved by the board of
directors or the shareholders, or any other authorization approved by the
shareholders. Rights of indemnification that may be provided in such
documents are limited only by the terms of such documents and public
policy.
Robinson Nugent's bylaws provide that Robinson Nugent may indemnify any
person who is or was a director, officer or employee of Robinson Nugent, or
is or was serving as a director, officer, or employee of another
corporation partnership, or other enterprise at the request of Robinson
Nugent, against expenses, including attorneys' fees, judgments, fines,
penalties, and amounts paid in settlement reasonably incurred by such
person in connection with or resulting from any claim, action, suit, or
proceeding, whether actual or threatened, civil, criminal, administrative,
or investigative, or in connection with an appeal relating thereto, in
which such person may be involved as a party or otherwise by reason of
being or having been a director, officer, or employee of Robinson Nugent or
of such other organization; provided, such person acted in good faith and
in a manner that he reasonably believed to be in, or not opposed to, the
best interests of Robinson Nugent and, with respect to any criminal action
or proceeding by judgment, order, settlement, whether with or without court
approval, conviction, or upon a plea of nolo contendere or its equivalent,
will not, of itself, create a presumption that the person did not act in
good faith and in a manner which he reasonably believed to be in, or not
opposed to, the best interests of Robinson Nugent and, with respect to any
criminal action, suit, or proceeding, in a manner which he or she had no
reasonable cause to believe was unlawful.
3M
Delaware law permits a Delaware corporation to indemnify directors,
officers, employees, and agents under certain circumstances and mandates
indemnification under certain circumstances. Delaware law permits a
corporation to indemnify an officer, director, employee or agent for fines,
judgments or settlements, as well as expenses:
o in the context of actions other than derivative actions, if such
person acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the
corporation; or
o in the case of a criminal proceeding, if such person had no reasonable
cause to believe that his or her conduct was unlawful.
Indemnification against expenses incurred by a director, officer, employee
or agent in connection with a proceeding against such person for actions in
such capacity is mandatory to the extent that such person has been
successful on the merits. If a director, officer, employee or agent is
determined to be liable to the corporation, indemnification for expenses is
not allowable, subject to limited exceptions when a court deems the award
of expenses appropriate.
Delaware law grants express power to a Delaware corporation to purchase
liability insurance for its directors, officers, employees, and agents,
regardless of whether any such person is otherwise eligible for
indemnification by the corporation. Advancement of expenses is permitted,
but a person receiving such advances must repay those expenses if it is
ultimately determined that he or she is not entitled to indemnification.
3M's bylaws provide that the corporation will indemnify, to the full extent
authorized or permitted by law, any person made or threatened to be made a
party to any action, suit, or proceeding, whether criminal, civil,
administrative, or investigative, by reason of the fact that such person or
such person's testator or intestate is or was a director, officer, or
employee of the corporation or serves or served at the request of the
corporation any other enterprise as a director, officer, or employee.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
3M has filed a registration statement on Form S-4 to register with the
SEC the 3M common stock to be issued to Robinson Nugent shareholders in the
merger. This proxy statement/prospectus is a part of that registration
statement and constitutes a prospectus of 3M in addition to being a proxy
statement of Robinson Nugent for its special shareholders meeting. As
allowed by SEC rules, this proxy statement/prospectus does not contain all
the information you can find in the registration statement or the exhibits
to the registration statement.
In addition, 3M and Robinson Nugent file reports, proxy statements and
other information with the SEC under the Exchange Act. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms.
You may read and copy this information at the following locations of the
SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. The SEC also maintains an
Internet World Wide Web site that contains reports, proxy statements and
other information about issuers, including 3M and Robinson Nugent, who file
electronically with the SEC. The address of that site is
http://www.sec.gov. You can also inspect reports, proxy statements and
other information about 3M at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005 and about Robinson Nugent at the
offices of the National Association of Securities Dealers, 1735 K Street,
N.W., Washington, D.C. 20006. 3M's and Robinson Nugent's SEC filings are
also available to the public over the Internet at EDGAR Online, Inc.'s web
site at http://freeedgar.com.
The SEC allows 3M to "incorporate by reference" information into this
proxy statement/prospectus. This means that 3M and Robinson Nugent can
disclose important information to you by referring you to another document
filed separately with the SEC. The information incorporated by reference is
considered to be a part of this proxy statement/prospectus, except for any
information that is superseded by information that is included directly in
this proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the
documents listed below that 3M and Robinson Nugent have previously filed
with the SEC. These documents contain important information about 3M,
Robinson Nugent and their finances. Some of these filings have been amended
by later filings, which are also listed below.
3M COMMISSION FILINGS (FILE NO. 1-3285) DATE/PERIOD
--------------------------------------- -----------
Description of 3M's common stock Dated July 31, 2000, as amended
contained in 3M's Registration on August 18, 2000
Statement on Form S-3
Annual Report on Form 10-K Year ended December 31, 1999
Quarterly Reports on Form 10-Q Quarters ended March 31, 2000,
June 30, 2000 and September 30, 2000
Current Reports on Form 8-K May 16, 2000, July 27, 2000, July
27, 2000 and October 23, 2000
<PAGE>
ROBINSON NUGENT COMMISSION FILINGS
(FILE NO. 0-9010) DATE/PERIOD
----------------- -----------
Annual Report on Form 10-K Year ended June 30, 2000, as
amended by Form 10-K/A
October 10, 2000
Current Reports on 8-K October 10, 2000
3M and Robinson Nugent incorporate by reference any additional
documents that either company may file with the SEC pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, between the date of this
proxy statement/prospectus and the date of the Robinson Nugent special
shareholders meeting. These documents include periodic reports, including
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as
proxy statements.
You can obtain any of the documents incorporated by reference in this
proxy statement/prospectus from the SEC through the SEC's web site at the
address provided above, as well as at EDGAR Online, Inc.'s web site at
http://freeedgar.com. Documents incorporated by reference are also
available from 3M and Robinson Nugent without charge, excluding any
exhibits to those documents, unless the exhibit is specifically
incorporated by reference as an exhibit in this proxy statement/prospectus.
You can obtain these documents by requesting them in writing or by
telephone from 3M and Robinson Nugent at the following addresses:
Robinson Nugent, Inc. Minnesota Mining and Manufacturing Company
800 East Eighth Street 3M Center
P.O. Box 1208 St. Paul, Minnesota 55144
New Albany, IN 47151 Attention: Investor Relations
Attention: Investor Relations Telephone number: (651) 736-1915
Telephone Number: (812) 945-0211
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM EITHER COMPANY, PLEASE DO
SO BY [ ], 2000, IN ORDER TO RECEIVE THEM BEFORE THE ROBINSON NUGENT
SPECIAL SHAREHOLDERS MEETING. If you request any incorporated documents
from Robinson Nugent or 3M, they will be mailed to you by first class mail,
or another equally prompt means, within one business day after receipt of
your request.
We have not authorized anyone to give any information or make any
representation about the merger of Robinson Nugent and 3M that differs
from, or adds to, the information in this proxy statement/prospectus or the
Robinson Nugent and 3M documents that are publicly filed with the SEC.
Therefore, if anyone does give you different or additional information, you
should not rely on it.
If you are in a jurisdiction where it is unlawful to offer to exchange
or sell, or to ask for offers of exchange or to buy, the securities offered
by this proxy statement/prospectus or to ask for proxies, or if you are a
person to whom it is unlawful to direct these activities, then the offer
presented by this proxy statement/prospectus does not extend to you.
The information contained in this proxy statement/prospectus speaks
only as of its date, unless the information specifically indicates that
another date applies. Information about 3M has been supplied by 3M, and
information about Robinson Nugent has been supplied by Robinson Nugent.
<PAGE>
EXPERTS
The consolidated financial statements of Minnesota Mining and
Manufacturing Company and Subsidiaries incorporated in this proxy
statement/prospectus by reference to the Annual Report on Form 10-K for the
year ended December 31, 1999, have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent auditors, given on the
authority of said firm as experts in auditing and accounting.
The financial statements and the related financial statement schedule
incorporated in this proxy statement/prospectus by reference from Robinson
Nugent, Inc.'s Annual Report on Form 10-K for the year ended June 30, 2000
have been audited by Deloitte & Touche LLP, independent auditors, as stated
in their report, which is incorporated in this proxy statement/prospectus
by reference, and have been so incorporated in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
INDEPENDENT AUDITORS
With respect to the unaudited consolidated financial information of
Minnesota Mining and Manufacturing Company and Subsidiaries for the
three-month periods ended March 31, 2000 and 1999, the three- and six-month
periods ended June 30, 2000 and 1999 and the three- and nine-month periods
ended September 30, 2000 and 1999, incorporated by reference in this proxy
statement/prospectus, PricewaterhouseCoopers LLP reported that they have
applied limited procedures in accordance with professional standards for a
review of such information. However, their separate reports dated April 25,
2000, July 26, 2000 and October 23, 2000, incorporated by reference herein,
state that they did not audit and they do not express an opinion on that
unaudited consolidated financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light
of the limited nature of the review procedures applied.
PricewaterhouseCoopers LLP is not subject to the liability provisions of
Section 11 of the Securities Act of 1933 for their reports on the unaudited
consolidated financial information because those reports are not a "report"
or a "part" of the registration statement prepared or certified by
PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the
Act.
LEGAL MATTERS
The validity of the issuance of 3M common stock being offered by this
document will be passed upon for 3M by Gregg M. Larson, Assistant General
Counsel and Assistant Secretary of 3M. Certain federal income tax matters
relating to the merger will be passed upon for 3M and Robinson Nugent by
Fried, Frank, Harris, Shriver & Jacobson, New York, New York, a partnership
that includes professional corporations.
SHAREHOLDER PROPOSALS FOR ANNUAL MEETINGS
If the merger agreement is terminated, Robinson Nugent will hold its
2000 annual meeting of shareholders in accordance with its bylaws. As
described in Robinson Nugent's proxy statement on Schedule 14A relating to
its 1999 annual meeting of shareholders, shareholder proposals to be
considered at the 2000 annual meeting must have been received by Robinson
Nugent at its principal executive offices no later than June 5, 2000. In
addition, the proxy solicited by Robinson Nugent's board of
directors for its 2000 annual meeting of shareholders will confer
discretionary authority to vote on any shareholder proposal presented at
that meeting, unless Robinson Nugent received notice of such proposal on or
before June 5, 2000. Robinson Nugent did not receive any notice of
shareholder proposals.
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF
OCTOBER 2, 2000
BY AND BETWEEN
MINNESOTA MINING AND MANUFACTURING COMPANY,
BARBADOS ACQUISITION, INC.
AND
ROBINSON NUGENT, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.................................................................1
Section 1.1 The Merger................................................1
Section 1.2 The Closing; Effective Time...............................2
Section 1.3 Subsequent Actions........................................2
Section 1.4 Articles of Incorporation; Bylaws; Directors and
Officers of the Surviving Corporation...................2
ARTICLE II................................................................3
Section 2.1 Effect of the Merger on Capital Stock; Conversion of
Securities..............................................3
Section 2.2 Exchange of Certificates..................................5
ARTICLE III...............................................................7
Section 3.1 Organization and Qualification; Subsidiaries..............7
Section 3.2 Articles of Incorporation and Bylaws......................8
Section 3.3 Capitalization............................................8
Section 3.4 Power and Authority; Authorization; Valid & Binding.......9
Section 3.5 No Conflict; Required Filings and Consents...............10
Section 3.6 SEC Reports; Financial Statements........................11
Section 3.7 Absence of Certain Changes...............................11
Section 3.8 Litigation and Liabilities...............................12
Section 3.9 No Violation of Law; Permits.............................12
Section 3.10 Employee Matters; ERISA.................................13
Section 3.11 Labor Matters...........................................15
Section 3.12 Environmental Matters...................................15
Section 3.13 Board Action; Vote Required.............................17
Section 3.14 Brokers.................................................18
Section 3.15 Tax Matters.............................................18
Section 3.16 Intellectual Property...................................19
Section 3.17 Insurance...............................................20
-i-
<PAGE>
Section 3.18 Contracts and Commitments...............................20
Section 3.19 Title to Assets.........................................21
Section 3.20 State Takeover Statutes.................................22
Section 3.21 Rights Agreement........................................22
Section 3.22 Product Warranty........................................22
Section 3.23 Product Liability.......................................23
ARTICLE IV...............................................................23
Section 4.1 Existence; Corporate Authority...........................23
Section 4.2 Authorization, Validity and Effect of Agreements.........23
Section 4.3 No Violation.............................................24
Section 4.4 Interested Stockholder...................................25
Section 4.5 Parent Public Reports; Financial Statements..............25
ARTICLE V................................................................25
Section 5.1 Interim Operations of The Company........................25
Section 5.2 No Solicitation..........................................28
ARTICLE VI...............................................................31
Section 6.1 Meetings of Stockholders.................................31
Section 6.2 Filings; Other Action....................................31
Section 6.3 Publicity................................................31
Section 6.4 Registration Statement...................................32
Section 6.5 Listing Application......................................32
Section 6.6 Further Action...........................................32
Section 6.7 Expenses.................................................33
Section 6.8 Notification of Certain Matters..........................33
Section 6.9 Access to Information....................................34
Section 6.10 Insurance; Indemnity....................................34
Section 6.11 Employee Benefit Plans..................................36
Section 6.12 Rights Agreement........................................37
-ii-
<PAGE>
ARTICLE VII..............................................................37
Section 7.1 Conditions to Obligations of the Parties to
Consummate the Merger..................................37
Section 7.2 Additional Conditions to Obligations of Parent
and Merger Sub.........................................38
Section 7.3 Additional Conditions to Obligations of the Company......39
ARTICLE VIII.............................................................40
Section 8.1 Termination..............................................40
Section 8.2 Effect of Termination and Abandonment....................42
Section 8.3 Amendment................................................43
ARTICLE IX...............................................................43
Section 9.1 Non-Survival of Representations, Warranties
and Agreements.........................................43
Section 9.2 Notices..................................................43
Section 9.3 Certain Definitions; Interpretation......................44
Section 9.4 Headings.................................................46
Section 9.5 Severability.............................................46
Section 9.6 Entire Agreement; No Third-Party Beneficiaries...........46
Section 9.7 Assignment...............................................46
Section 9.8 Governing Law............................................46
Section 9.9 Counterparts.............................................47
Section 9.10 Confidential Nature of Information......................47
Exhibit A - Voting and Stock Option Agreement...........................A-1
Exhibit B - Form of Articles of Incorporation...........................B-1
-iii-
<PAGE>
INDEX OF DEFINED TERMS
DEFINED TERM SECTION
401(k) Plan.........................................................6.11(b)
Acquisition Proposal.................................................5.2(c)
Acquisition Transaction..............................................5.2(c)
Action..............................................................6.10(b)
affiliate........................................................9.3(a)(ii)
Agreement..........................................................preamble
Audited Balance Sheet..................................................3.19
Average Price........................................................2.1(b)
Barbados Acquisition...............................................preamble
Board of Directors..............................................9.3(a)(iii)
Business Combination.................................................2.1(c)
Cap.................................................................6.10(a)
Certificates.........................................................2.2(b)
Closing..............................................................1.2(a)
Closing Date.........................................................1.2(a)
Code...............................................................recitals
Company............................................................preamble
Company Benefit Plan................................................3.10(a)
Company Common Shares..............................................recitals
Company Contracts......................................................3.18
Company Disclosure Letter.......................................Article III
Company Employee....................................................3.10(b)
Company Employees...................................................3.10(b)
Company ERISA Affiliate.............................................3.10(d)
Company Multiemployer Plan..........................................3.10(a)
Company Options......................................................2.1(e)
Company Pension Plan................................................3.10(c)
Confidentiality Agreement...............................................9.6
Control.........................................................9.3(a)(iii)
Dallas Facility......................................................7.2(g)
Effective Time.......................................................1.2(b)
Encumbrance............................................................3.16
Environmental Claim..............................................3.12(e)(i)
Environmental Laws..............................................3.12(e)(ii)
Environmental Permits...............................................3.12(b)
ERISA............................................................9.3(a)(iv)
Exchange Act.........................................................3.5(a)
Exchange Agent.......................................................2.2(a)
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<PAGE>
Exchange Ratio.......................................................2.1(b)
Form S-4................................................................6.4
GAAP.................................................................3.6(b)
Governmental Entity..................................................3.5(b)
Hazardous Materials............................................3.12(e)(iii)
HSR Act..............................................................3.5(b)
IBCL....................................................................1.1
Indemnified Party...................................................6.10(b)
Intellectual Property..................................................3.16
knowledge.........................................................9.3(a)(v)
Material Adverse Effect...........................................9.3(a)(i)
Merger.............................................................recitals
Merger Consideration.................................................5.2(e)
Merger Consideration.................................................2.2(b)
Merger Sub.........................................................preamble
Merger Sub Articles of Incorporation.................................1.4(a)
MPP Plan............................................................6.11(a)
NYSE.................................................................2.1(b)
Parent.............................................................preamble
Parent Common Stock..................................................2.1(b)
Parent Public Reports...................................................4.5
Paying Agent.........................................................2.2(b)
PCBs..............................................................3.12(iii)
Pension Plan........................................................3.10(c)
Person...........................................................9.3(a)(vi)
Proposing Party......................................................5.2(b)
Proxy Statement/Prospectus..............................................6.4
Recapitalization.....................................................2.1(c)
Release.........................................................3.12(e)(iv)
Rescission Offers........................................................37
Rights..................................................................3.3
Rights Agreement.......................................................3.21
SEC..................................................................3.5(b)
SEC Reports..........................................................3.6(a)
Securities Act.......................................................3.5(a)
Significant Subsidiary..........................................9.3(a)(vii)
Stock Option Agreement.............................................recitals
Stock Option Plan....................................................2.1(e)
Subsidiary.....................................................9.3(a)(viii)
Superior Transaction.................................................5.2(e)
Surviving Corporation...................................................1.1
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<PAGE>
Tax.................................................................3.15(i)
Tax Return..........................................................3.15(i)
Taxable.............................................................3.15(i)
Taxes...............................................................3.15(i)
Termination Date.....................................................8.1(b)
Termination Fee......................................................8.2(b)
Trading Day..........................................................2.1(b)
Triggering Event.....................................................8.2(b)
VIP.................................................................6.11(b)
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 2, 2000 (this
"Agreement"), by and among Minnesota Mining and Manufacturing Company a
Delaware corporation, Barbados Acquisition, Inc. an Indiana corporation and
a wholly owned Subsidiary of Parent ("Barbados Acquisition" or "Merger
Sub") and Robinson Nugent, Inc. (the "Company"), an Indiana corporation.
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have each determined that the merger of Merger Sub with and
into the Company (the "Merger") upon the terms and subject to the
conditions set forth in this Agreement is advisable, and in the best
interests of their respective corporations and stockholders and have
approved the Merger;
WHEREAS, it is intended that, for federal income tax purposes,
the Merger will qualify as a tax-free reorganization under Section 368 of
the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code");
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Parent's and Merger Sub's
willingness to enter into this Agreement, Parent and the stockholders of
the Company listed on Exhibit A have executed and delivered a Voting and
Stock Option Agreement (a "Stock Option Agreement"), dated as of this date,
pursuant to which those stockholders have agreed to vote in favor of the
Merger and, among other things, are granting to Parent an option to
purchase, under certain circumstances, all of the common shares, no par
value, of the Company (the "Company Common Shares") beneficially owned by
them, with an exercise price of $19.00 per share.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, the parties agree as follows (certain capitalized
terms used herein are defined in Section 9.3):
ARTICLE I
Section 1.1 The Merger. At the Effective Time and subject to and upon
the terms and conditions of this Agreement and in accordance with the
Indiana Business Corporation Law ("IBCL"), Merger Sub shall be merged with
and into the Company and the separate corporate existence of Merger Sub
-A-1-
<PAGE>
shall cease. The Company shall continue as the surviving corporation
(sometimes referred to as the "Surviving Corporation") in the Merger. The
Merger shall have the effects specified in Section 23-1-40-6 of the IBCL.
Section 1.2 The Closing; Effective Time. (a) The closing of the Merger
(the "Closing") shall take place (i) at the offices of Parent, 3M Center,
St. Paul, MN 55133 at 10:00 A.M. local time, on the second business day
following the date on which the last to be satisfied or waived of the
conditions set forth in Article VII (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the
satisfaction or, where permitted, waiver of those conditions) shall be
satisfied or waived in accordance with this Agreement or (ii) at such other
place, time and/or date as the Company and Parent shall agree (the date of
the Closing, the "Closing Date").
(b) On the Closing Date, the Company and Merger Sub shall cause
articles of merger in respect of the Merger to be properly executed and
filed with the Secretary of State of the State of Indiana as provided in
Section 23-1-40-5 of the IBCL. The Merger shall become effective at such
time at which the articles of merger shall be duly filed with the Secretary
of State of Indiana or at such later time reflected in the articles of
merger as shall be agreed by the Company and Parent (the time that the
Merger becomes effective, the "Effective Time").
Section 1.3 Subsequent Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to continue, vest, perfect or confirm of
record or otherwise the Surviving Corporation's right, title or interest
in, to or under any of the rights, properties, privileges, franchises or
assets of either of its constituent corporations acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the
Merger, or otherwise to carry out the intent of this Agreement, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of either of the constituent
corporations of the Merger, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of each of such
corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties, privileges,
franchises or assets in the Surviving Corporation or otherwise to carry out
the intent of this Agreement.
Section 1.4 Articles of Incorporation; Bylaws; Directors and Officers
of the Surviving Corporation. Unless otherwise agreed by Parent, Merger Sub
and the Company prior to the Closing, at the Effective Time:
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(a) The Articles of Incorporation of the Company (the "Company
Articles of Incorporation") shall be amended at the Effective Time to read
in the form of Exhibit B and, as so amended, such Articles of Incorporation
shall be the Articles of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law;
(b) The bylaws of the Company as in effect immediately prior to
the Effective Time shall be at and after the Effective Time (until amended
as provided by law, the Company Certificate of Incorporation and the bylaws
of the Company, as applicable) the bylaws of the Surviving Corporation;
(c) The officers of Merger Sub immediately prior to the Effective
Time shall continue to serve in their respective offices of the Surviving
Corporation from and after the Effective Time, until their successors are
elected or appointed and qualified or until their resignation or removal;
and
(d) The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation from and
after the Effective Time, until their successors are elected or appointed
and qualified or until their resignation or removal.
ARTICLE II
Section 2.1 Effect of the Merger on Capital Stock; Conversion of
Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of any holder of any capital stock of the Company,
Merger Sub or Parent:
(a) Cancellation of Certain Company Common Shares. Each Company
Common Share that is owned by the Company as treasury stock and all Company
Common Shares that are owned by Parent shall be canceled and shall cease to
exist, and no stock of Parent or other consideration shall be delivered in
exchange therefor. All references to Company Common Shares include the
Rights attached thereto.
(b) Conversion of Company Common Shares. Subject to the
provisions of this Section 2.1, each Company Common Share other than shares
canceled pursuant to Section 2.1(a), issued and outstanding immediately
prior to the Effective Time, shall by virtue of the Merger and without any
action on the part of the holder thereof be converted into, subject to
Section 2.1(c), the right to receive that number of fully paid,
non-assessable shares of common stock, $ 0.01 par value, of Parent ("Parent
Common Stock") equal to the Exchange Ratio. All such Company Common Shares
shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each certificate previously
evidencing any such shares shall thereafter represent the right
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only to receive the Merger Consideration (as defined in Section 2.2(b)).
The holders of such certificates previously evidencing such Company Common
Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Company Common Shares except as
otherwise provided herein or by law. Such certificates previously
evidencing Company Common Shares shall be exchanged for certificates
evidencing whole shares of Parent Common Stock issued in consideration
therefor upon the surrender of such certificates in accordance with the
provisions of Section 2.2. No fractional shares of Parent Common Stock
shall be issued, and, in lieu thereof, a cash payment shall be made
pursuant to Section 2.2(d). The "Exchange Ratio" shall be equal to $19.00
divided by either (i) the Average Price of Parent Common Stock if such
Average Price is no greater than $100.00 and no less than $82.00, (ii)
$100.00 if the Average Price of Parent Common Stock is greater than
$100.00, in which case the Exchange Ratio shall equal 0.19 or (iii) $82.00
if the Average Price of Parent Common Stock is less than $82.00, in which
case the Exchange Ratio shall equal 0.2317. "Average Price" means the
average of the closing prices as reported in The Wall Street Journal's New
York Stock Exchange Composite Transactions Reports for each of the 20
consecutive Trading Days in the period ending on the business day preceding
the Effective Time. "Trading Day" means a day on which the New York Stock
Exchange, Inc. (the "NYSE") is open for trading.
(c) Anti-Dilution Provisions. If between the date of this
Agreement and the Effective Time, the number of shares of Parent Common
Stock or Company Common Shares issued and outstanding changes as a result
of a stock split, reverse stock split, stock dividend, stock combination,
recapitalization, reclassification, reorganization or similar transaction
(a "Recapitalization") with a record date within such period, the Exchange
Ratio shall be proportionately adjusted to provide the holders of Company
Common Shares the same economic effect as contemplated by this Agreement.
If, between the date hereof and the Effective Time, Parent shall merge or
consolidate with or into any other corporation (a "Business Combination")
and the terms thereof shall provide that Parent Common Stock shall be
converted into or exchanged for the shares of any other corporation or
entity, then provision shall be made so that shareholders of the Company
who would be entitled to receive shares of Parent Common Stock pursuant to
this Agreement shall be entitled to receive, in lieu of each share of
Parent Common Stock issuable to such shareholders as provided herein, the
same kind and amount of securities or assets as shall be distributable upon
such Business Combination with respect to one share of Parent Common Stock
and the parties shall agree on an appropriate restructuring of the
transactions contemplated herein.
(d) Conversion of Common Stock of Merger Sub. At the Effective
Time, each share of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time, and all rights in respect thereof,
shall forthwith cease to exist
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and be converted into one validly issued, fully paid and nonassessable
common share of the Surviving Corporation.
(e) Options. In accordance with Section 6.11, as soon as
practicable but not more than five (5) days from the date hereof, the
Company shall provide written notice to each holder of a Company Option of
the execution of this Agreement which notice shall include the election by
the Company to terminate all Company Options as of the 30th day immediately
following the date of the sending of such notice as contemplated by the
provisions of the Company's 1993 Employee and Non-Employee Director Stock
Option Plan (the "Stock Option Plan"), so that as of the Closing Date all
Company Options will have been either exercised and satisfied in full or
terminated. For purposes of this Agreement, "Company Options" shall mean
subscriptions, options, 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 the capital stock of the Company.
Section 2.2 Exchange of Certificates. (a) Deposit with Exchange Agent.
As soon as practicable after the Effective Time, Parent shall deposit with
a bank or trust company mutually agreeable to Parent and the Company (the
"Exchange Agent"), pursuant to an agreement in form and substance
reasonably acceptable to Parent and the Company, when required,
certificates representing shares of Parent Common Stock required to effect
the conversion of Company Common Stock into Parent Common Shares in
accordance with Section 2.1(b) and an amount of cash in respect of
fractional shares pursuant to Section 2.2(d).
(b) Exchange and Payment Procedures. As soon as practicable after
the Effective Time, Parent shall cause Parent's transfer agent and
registrar as paying agent (the "Paying Agent") to mail to each holder of
record of a certificate or certificates representing Company Common Shares
(the "Certificates") that have been converted pursuant to Section 2.1: (i)
a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon actual delivery of the Certificates to Parent's Paying Agent) and (ii)
instructions for effecting the surrender of the Certificates and receiving
the Merger Consideration. Upon surrender of a Certificate to the Paying
Agent for cancellation, together with a duly executed letter of transmittal
and such other documents as the Paying Agent may require, the holder of
such Certificate shall be entitled to receive in exchange therefor (i) a
certificate representing that number of shares of Parent Common Stock into
which the Company Common Shares previously represented by such Certificate
are converted in accordance with Section 2.1(b) and (ii) the cash in lieu
of fractional shares of Parent Common Stock to which such holder has the
right to receive pursuant to Section 2.2(d) (the shares of Parent Common
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Stock and cash described in clauses (i) and (ii) above being referred to
collectively as the "Merger Consideration"). In the event the Merger
Consideration is to be delivered to any Person who is not the Person in
whose name the Certificate surrendered in exchange therefor is registered
in the transfer records of the Company, the Merger Consideration may be
delivered to a transferee if the Certificate is presented to the Paying
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence satisfactory to the Paying Agent that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate (other than a
certificate representing Company Common Shares to be canceled in accordance
with Section 2.1(a)) shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender the Merger
Consideration contemplated by this Section 2.2. No interest will be paid or
will accrue on any cash payable to holders of Certificates pursuant to
provisions of this Article II.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time
with respect to shares of Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock represented thereby and
no cash payment in lieu of fractional shares shall be paid to any such
holder pursuant to Section 2.2(d) until the holder of record of such
Certificate shall surrender such Certificate. Subject to the effect of
unclaimed property, escheat and other applicable laws, following surrender
of any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 2.2(d) and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective
Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of Parent Common Stock.
(d) No Fractional Securities. In lieu of the issuance of any
fractional securities in connection with the Merger, each holder of Company
Common Shares who would otherwise have been entitled to a fraction of a
share of Parent Common Stock upon surrender of Certificates for exchange
pursuant to this Article II will be paid an amount in cash (without
interest), rounded to the nearest cent, determined by multiplying (a) the
per share closing price on the NYSE of Parent Common Stock on the date of
the Effective Time by (b) the fractional interest to which such holder
would otherwise be entitled (after taking into account all Company Common
Shares then held of record by such holder).
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(e) Closing of Transfer Books. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for transfer, they
shall be canceled and exchanged for certificates representing the
appropriate number of shares of Parent Common Stock and the appropriate
amount of cash as provided in this Section 2.2.
(f) Termination of Exchange Agent. Any certificates representing
shares of Parent Common Stock deposited with the Exchange Agent pursuant to
Section 2.2(a) and not exchanged within six months after the Effective Time
pursuant to this Section 2.2 shall be returned by the Exchange Agent to
Parent, which shall thereafter act as Exchange Agent. All cash held by the
Exchange Agent for payment to the holders of unsurrendered Certificates and
unclaimed at the end of six months from the Effective Time shall be
returned to Parent, after which time any holder of unsurrendered
Certificates shall look as a general creditor only to Parent for payment of
such cash to which such holder may be due subject to applicable law.
(g) Escheat. The Company shall not be liable to any Person for
such shares or funds delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(h) Withholding Rights. Parent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this
Agreement such amounts as Parent is required to deduct and withhold with
respect to the making of such payment under the Code or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld
by Parent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Company Common Shares in
respect of which such deduction and withholding was made by Parent.
ARTICLE III
Except as set forth in the corresponding sections or subsections
of the disclosure letter, dated this date, delivered by the Company to
Parent (the "Company Disclosure Letter"), the Company hereby represents and
warrants to Parent and Merger Sub as follows:
Section 3.1 Organization and Qualification; Subsidiaries. (a) The
Company is a corporation duly organized and validly existing under the laws
of the State of Indiana and with respect to which no articles of
dissolution have been filed. Each of the Subsidiaries of the Company is a
corporation or other business entity duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization, and each of the Company and its Subsidiaries has the
requisite corporate or other organizational power and authority to own,
operate or lease its properties and to carry on its business as it is now
being conducted, and is duly qualified as a foreign
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corporation to do business, and is in good standing, in each jurisdiction
where the character of its properties owned, operated or leased or the
nature of its activities makes such qualification necessary, in each case
except as would not, individually or in the aggregate, have or reasonably
be expected to have a Material Adverse Effect.
(b) All of the outstanding shares of capital stock and other
equity securities of the Subsidiaries of the Company have been validly
issued and are fully paid and nonassessable, and are owned, directly or
indirectly, by the Company, free and clear of all pledges and security
interests. There are no subscriptions, options, warrants, calls,
commitments, agreements, conversion rights or other rights of any character
(contingent or otherwise) entitling any Person 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 or other
equity securities of any of the Subsidiaries of the Company. The Company
Disclosure Letter lists the name and jurisdiction of incorporation or
organization of each Subsidiary of the Company.
(c) Except for interests in its Subsidiaries, neither the Company
nor any of its Subsidiaries owns directly or indirectly any capital stock
of, or other equity or voting or similar interest (including a joint
venture interest) in any Person or has any monetary or other obligation or
made any commitment to acquire any such interest or make any such
investment.
Section 3.2 Articles of Incorporation and Bylaws. The Company has
furnished, or otherwise made available, to Parent a complete and correct
copy of the Company Articles of Incorporation and its bylaws, as amended to
the date of this Agreement. Such Articles of Incorporation and bylaws are
in full force and effect. The Company is not in violation of any of the
provisions of the Articles of Incorporation or bylaws.
Section 3.3 Capitalization. The authorized capital stock of the
Company consists of 15,000,000 Company Common Shares, and no shares of
preferred stock. As of October 2, 2000, (a) 5,128,740 Company Common Shares
were outstanding, (b) 5,128,740 rights to purchase Company Common Shares
("Rights") issued pursuant to the Company's Rights Agreement were
outstanding, (c) Company Options to purchase an aggregate of 785,235 shares
of Company Common Stock were outstanding, all of which were granted under
the Stock Option Plan, 785,235 Company Common Shares were reserved for
issuance upon the exercise of outstanding Company Options, 123,245 Company
Common Shares were reserved for future grants under the Stock Option Plan
and 5,128,740 Company Common Shares were reserved for issuance under the
Company's Rights Agreement, (d) 1,885,901 Company Common Shares were held
by the Company in its treasury, and (e) no shares of capital stock of the
Company were held by
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the Company's Subsidiaries. Except for the Rights, the
Company has no outstanding bonds, debentures, notes or other obligations
entitling the holders thereof to vote (or which are convertible into or
exercisable for securities having the right to vote) with the stockholders
of the Company on any matter. Since June 30, 2000, the Company (i) has not
issued any Company Common Shares other than upon the exercise of Company
Options, (ii) has granted no Company Options to purchase Company Common
Shares under the Stock Option Plan or otherwise, and (iii) has not split,
combined or reclassified any of its shares of capital stock. All issued and
outstanding Company Common Shares are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. Except for the
Rights, there are no other shares of capital stock or voting securities of
the Company, and no existing options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments which
obligate the Company or any of its Subsidiaries to issue, transfer or sell
any shares of capital stock of, or equity interests in, the Company or any
of its Subsidiaries and there are no stock appreciation rights or limited
stock appreciation rights outstanding other than those attached to such
Company Options. There are no outstanding obligations of the Company or any
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company and there are no performance awards
outstanding under the Stock Option Plan or any other outstanding stock
related awards. After the Effective Time, the Surviving Corporation will
have no obligation to issue, transfer or sell any shares of capital stock
of the Company, the Parent or the Surviving Corporation pursuant to any
Company Benefit Plan, including the Stock Option Plan. There are no voting
trusts or other agreements or understandings to which the Company or any of
its Subsidiaries is a party with respect to the voting of capital stock of
the Company or any of its Subsidiaries. No Company Common Shares have been
repurchased by the Company or any of its Subsidiaries since June 30, 2000.
Section 3.4 Power and Authority; Authorization; Valid & Binding. The
Company has the necessary corporate power and authority to enter into and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby, except that the Merger is
subject to the approval of this Agreement by the Company's stockholders as
required by the IBCL. The execution and delivery of this Agreement by the
Company, the performance by it of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action on the part of the
Company (other than with respect to the Merger and the adoption and
approval of this Agreement by its stockholders as required by the IBCL).
This Agreement has been duly executed and delivered by the Company and,
assuming the due authorization, execution and delivery of this Agreement by
Parent and Merger Sub, this Agreement constitutes a legal, valid and
binding obligation of the Company enforceable against it in accordance with
the terms hereof, subject to bankruptcy, insolvency, fraudulent transfer,
moratorium, reorganization
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and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
Section 3.5 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by the Company does not, and the
performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby, will
not (i) violate or conflict with the Articles of Incorporation or the
bylaws of the Company, (ii) subject to obtaining or making the notices,
reports, filings, waivers, consents, approvals or authorizations referred
to in paragraph (b) below, conflict with or violate any law, regulation,
court order, judgment or decree applicable to the Company or any of its
Subsidiaries or by which any of their respective property is bound or
affected, other than the filings required under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the Securities Act of 1933,
as amended (the "Securities Act"), (iii) require any consent, approval or
authorization of, or declaration, filing or registration with, any
Governmental Entity or (iv) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, cancellation,
vesting, modification, alteration or acceleration of any obligation under,
result in the creation of a lien, claim or encumbrance on any of the
properties or assets of the Company or any of its Subsidiaries pursuant to,
result in the loss of any material benefit under (including an increase in
the price paid by, or cost to, the Company or any of its Subsidiaries),
require the consent of any other party to, or result in any obligation of
the part of the Company or any of its Subsidiaries to repurchase (with
respect to a bond or a note), any agreement, contract, instrument, bond,
note, indenture, permit, license or franchise to which the Company or any
of its Subsidiaries is a party or by which the Company, any of its
Subsidiaries or any of their respective property is bound or affected,
except, in the case of clauses (ii) and (iii) above, as would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect.
(b) Except for applicable requirements, if any, under the
premerger notification requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the filing of
articles of merger with respect to the Merger as required by the IBCL,
filings with the Securities and Exchange Commission (the "SEC") under the
Securities Act, and the Exchange Act, any filings required pursuant to any
state securities or "blue sky" laws, or pursuant to the rules and
regulations of any stock exchange on which the Company Common Shares are
listed, neither the Company nor any of its Subsidiaries is required to
submit any notice, report or other filing with any Governmental Entity in
connection with the execution, delivery, performance or consummation of
this Agreement or the Merger. Except as set forth in the immediately
preceding sentence, no waiver, consent, approval or authorization of any
governmental or
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regulatory authority, court, agency, commission or other Governmental
Entity or any securities exchange or other self-regulatory body, domestic
or foreign ("Governmental Entity"), is required to be obtained by the
Company or any of its Subsidiaries in connection with its execution,
delivery, performance or consummation of this Agreement or the transactions
contemplated hereby except for such waivers, consents, approvals or
authorizations that, if not obtained or made, would not, individually or in
the aggregate, have or reasonably be expected to have a Material Adverse
Effect.
Section 3.6 SEC Reports; Financial Statements. (a) The Company has
filed all forms, reports and documents (including all exhibits, schedules
and annexes thereto) required to be filed by it with the SEC since June 30,
1997, including any amendments or supplements (collectively, including any
such forms, reports and documents filed after this date, the "SEC
Reports"), and, with respect to the SEC Reports filed by the Company after
the date hereof and prior to the Closing Date, will deliver or make
available to Parent all of its SEC Reports in the form filed with the SEC.
The SEC Reports (i) were (and any SEC Reports filed after this date will
be) in all material respects in compliance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations promulgated thereunder, and (ii) as of their respective filing
dates, did not (and any SEC Reports filed after this date will not) contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The financial statements, including all related notes and
schedules, contained in the SEC Reports (or incorporated therein by
reference) fairly present (or, with respect to financial statements
contained in the SEC Reports filed after this date, will fairly present)
the consolidated financial position of the Company and its consolidated
subsidiaries as of the respective dates and the consolidated results of
operations, retained earnings and cash flows of the Company and its
consolidated subsidiaries for the respective periods indicated, in each
case in accordance with generally accepted accounting principles ("GAAP"),
applied on a consistent basis throughout the periods involved (except for
changes in accounting principles disclosed in the notes) and the rules and
regulations of the SEC, except that interim financial statements are
subject to normal year-end adjustments which are not and are not expected
to be, individually or in the aggregate, material in amount and do not
include certain notes which may be required by GAAP but which are not
required by Form 10-Q of the SEC.
Section 3.7 Absence of Certain Changes. Except as disclosed in the SEC
Reports filed prior to this date, (a) since June 30, 2000, the Company and
each of its Subsidiaries has conducted its business in the ordinary and
usual course of its business
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consistent with past practice and there has not been any change in the
financial condition, business, prospects or results of operations of the
Company and its Subsidiaries, or any development or combination of
developments that, individually or in the aggregate, has had or would be
expected to have a Material Adverse Effect and (b) since June 30, 2000,
there has not been any action by the Company which if taken after the date
hereof would constitute a breach of Section 5.1 hereof.
Section 3.8 Litigation and Liabilities. (a) Except as disclosed in the
SEC Reports filed prior to this date, there are no civil, criminal or
administrative actions, suits or claims, proceedings (including
condemnation proceedings) or hearings or investigations, pending or, to the
knowledge of the Company, threatened against, or otherwise adversely
affecting the Company or any of its Subsidiaries or any of their respective
properties and assets, except for any of the foregoing which would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries has any
liabilities or obligations, (absolute, accrued, contingent or otherwise),
except (i) liabilities and obligations in the respective amounts reflected
or reserved against in the Company's consolidated balance sheet as of June
30, 2000 included in the SEC Reports, (ii) liabilities and obligations
incurred in the ordinary course of business since June 30, 2000 consistent
with past practice which individually or in the aggregate would not have or
reasonably be expected to have a Material Adverse Effect or (iii)
liabilities permitted to be incurred pursuant to Section 5.1.
Section 3.9 No Violation of Law; Permits. The business of the Company
and each of its Subsidiaries is not in violation of any statutes of law,
ordinances, regulations, judgments, orders or decrees of any Governmental
Entity, any permits, franchises, licenses, authorizations or consents
granted by any Governmental Entity, and the Company and each of its
Subsidiaries has obtained all permits, franchises, licenses, authorizations
or consents necessary for the conduct of its business, except, in each
case, as would not, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any of
its Subsidiaries is subject to any cease and desist or other order,
judgment, injunction or decree issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, is a
party to any commitment letter or similar undertaking to, is subject to any
order or directive by, or has adopted any board resolutions at the request
of, any Governmental Entity that restricts the conduct of its business
(whether the type of business, the location or otherwise) and which,
individually or in the aggregate, would have or reasonably be
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expected to have a Material Adverse Effect, nor has the Company been
advised that any Governmental Entity has proposed issuing or requesting any
of the foregoing.
Section 3.10 Employee Matters; ERISA. (a) Set forth in the Company
Disclosure Letter is a complete list of each Company Benefit Plan. The term
"Company Benefit Plan" shall mean (i) each plan, program, policy, contract
or agreement providing for compensation, severance, termination pay,
performance awards, stock or stock-related awards, fringe benefits or other
employee benefits of any kind, including, without limitation, any "employee
benefit plan," within the meaning of Section 3(3) of ERISA but excluding
any "multiemployer plan" within the meaning of Sections 3(37) or 4001(a)(3)
of ERISA, and (ii) each employment, severance, consulting, non-compete,
confidentiality, or similar agreement or contract, in each case, with
respect to which the Company or any Subsidiary of the Company has or may
have any liability (accrued, contingent or otherwise). As of the date
hereof, the Company is not a party to any Company Multiemployer Plan. The
term "Company Multiemployer Plan" shall mean any "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA in respect to which the
Company or any Subsidiary of the Company has or may have any liability
(accrued, contingent or otherwise).
(b) The Company has provided or made available, or has caused to
be provided or made available, to Parent (i) current, accurate and complete
copies of all documents embodying each Company Benefit Plan, including all
amendments, written interpretations (which interpretation could be regarded
as increasing the liabilities of the Company and its Subsidiaries taken as
a whole under the relevant Company Benefit Plan) and all trust or funding
agreements with respect thereto; (ii) the most recent annual actuarial
valuation, if any, prepared for each Company Benefit Plan; (iii) the most
recent annual report (Series 5500 and all schedules), if any, required
under ERISA in connection with each Company Benefit Plan or related trust;
(iv) the most recent determination letter received from the Internal
Revenue Service, if any, for each Company Benefit Plan and related trust
which is intended to satisfy the requirements of Section 401(a) of the
Code; (v) if any Company Benefit Plan is funded, the most recent annual and
periodic accounting of such Company Benefit Plan's assets; (vi) the most
recent summary plan description together with the most recent summary of
material modifications, if any, required under ERISA with respect to each
Company Benefit Plan; and (vii) all material communications to any one or
more current, former or retired employee, officer, consultant, independent
contractor, agent or director of the Company or any Subsidiary of the
Company (each, a "Company Employee" and collectively, the "Company
Employees") relating to each Company Benefit Plan (which communication
could be regarded as increasing the liabilities of the Company and its
Subsidiaries taken as a whole under the relevant Company Benefit Plan).
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(c) All Company Benefit Plans have been administered in all
respects in accordance with the terms thereof and all applicable laws
except for violations which, individually or in the aggregate, would not
have or reasonably be expected to have a Material Adverse Effect. Each
Company Benefit Plan which is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA ("Pension Plan") and which is intended to
be qualified under Section 401(a) of the Code (each, an " Company Pension
Plan"), has received a favorable determination letter from the Internal
Revenue Service, and the Company is not aware of any circumstances that
would reasonably be expected to result in the revocation or denial of this
qualified status. Except as otherwise set forth in the Company Disclosure
Letter or in the SEC Reports filed prior to this date, there is no pending
or, to the Company's knowledge, threatened, claim, litigation, proceeding,
audit, examination or investigation relating to any Company Benefit Plans
or Company Employees that, individually or in the aggregate, would have or
reasonably be expected to have a Material Adverse Effect.
(d) No material liability under Title IV of ERISA has been or is
reasonably expected to be incurred by the Company or any Subsidiaries of
the Company or any entity which is considered a single employer with the
Company or any Subsidiary of the Company under Section 4001(a)(15) of ERISA
or Section 414 of the Code (a "Company ERISA Affiliate"). No notice of a
"reportable event," within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to
be filed for any Company Pension Plan within the past twelve (12) months.
(e) All contributions, premiums and payments (other than
contributions, premiums or payments that are not material, in the
aggregate) required to be made under the terms of any Company Benefit Plan
have been made. No Company Pension Plan has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA. Neither the Company nor any Subsidiaries
of the Company nor any Company ERISA Affiliate has provided, or is required
to provide, security to any Company Pension Plan pursuant to Section
401(a)(29) of the Code.
(f) As of the Closing Date, neither the Company, any Subsidiary
of the Company nor any Company ERISA Affiliate will have incurred any
withdrawal liability as described in Section 4201 of ERISA for withdrawals
that have occurred on or prior to the Closing Date that has not previously
been satisfied. Neither the Company, any Subsidiary of the Company nor any
Company ERISA Affiliate has knowledge that any Company Multiemployer Plan
fails to qualify under Section 401(a) of the Code, is insolvent or is in
reorganization within the meaning of Part 3 of Subtitle E of Title IV of
ERISA nor of any condition that would reasonably be expected to result in a
Company Multiemployer Plan becoming insolvent or going into reorganization.
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(g) Except as set forth in the Company Disclosure Letter, the
execution of, and performance of the transactions contemplated in, this
Agreement will not (either alone or upon the occurrence of any additional
or subsequent events) (i) constitute an event under any Company Benefit
Plan, trust or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits
with respect to any Company Employee, or (ii) result in the triggering or
imposition of any restrictions or limitations on the right of the Company,
any Subsidiary of the Company or Parent to amend or terminate any Company
Benefit Plan. Except as set forth in the Company Disclosure Letter, no
payment or benefit which will or may be made by the Company, any Subsidiary
of the Company, Parent or any of their respective affiliates with respect
to any Company Employee will be characterized as an "excess parachute
payment," within the meaning of Section 280G(b)(1) of the Code.
(h) Set forth in the Company Disclosure Letter is a list of all
outstanding and unexercised options granted under the Company's Stock
Option Plan, specifying the name of each optionee, the date on which each
option was granted, the number of shares that may be purchased pursuant to
each option, the exercise price at which such shares may be purchased, the
vesting period for each option, and the expiration date of each option.
Immediately prior to the Closing, there will be no Company Options
outstanding.
Section 3.11 Labor Matters. Except as set forth in the SEC Reports
filed prior to this date, and except for those matters that would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect, there is no (i) work stoppage, slowdown, lockout
or labor strike against the Company or any Subsidiary of the Company by
Company Employees (or any union that represents them) pending or, to the
knowledge of the Company, threatened, or (ii) alleged unfair labor
practice, labor dispute (other than routine grievances), union organizing
activity or labor arbitration proceeding pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries
relating to their businesses. Neither the Company nor any of its
Subsidiaries is a party to, or bound by, any collective bargaining
agreement or other contracts with a labor union or labor organization. The
Company is in compliance with all laws regarding employment, employment
practices, terms and conditions of employment and wages and laws, except
for such noncompliance which, either individually or in the aggregate,
would not have or reasonably be expected to have a Material Adverse Effect.
Section 3.12 Environmental Matters. Except as set forth in the SEC
Reports filed prior to this date and except for those matters that would
not, individually or in the aggregate, have or reasonably be expected to
have a Material Adverse Effect:
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(a) The Company and each of its Subsidiaries is in compliance
with all applicable Environmental Laws, and neither the Company nor any of
its Subsidiaries has received any written communication from any Person or
Governmental Entity that alleges that the Company or any of its
Subsidiaries is not in compliance with applicable Environmental Laws.
(b) The Company and each of its Subsidiaries has obtained or has
applied for all applicable environmental, health and safety permits,
licenses, variances, approvals and authorizations required under
Environmental Laws (collectively, the "Environmental Permits") necessary
for the construction of its facilities or the conduct of its operations,
and all those Environmental Permits are in effect or, where applicable, a
renewal application has been timely filed and is pending agency approval,
and the Company and its Subsidiaries are in compliance with all terms and
conditions of such Environmental Permits.
(c) There is no Environmental Claim pending or, to the knowledge
of the Company, threatened (i) against the Company or any of its
Subsidiaries, (ii) against any Person whose liability for any Environmental
Claim has been retained or assumed contractually by the Company or any of
its Subsidiaries, or (iii) against any real or personal property or
operations which the Company or any of its Subsidiaries owns, leases or
operates, in whole or in part.
(d) There have been no Releases of any Hazardous Material that
would be likely to form the basis of any Environmental Claim against the
Company or any of its Subsidiaries, or against any Person whose liability
for any Environmental Claim has been retained or assumed contractually by
the Company or any of its Subsidiaries.
(e) None of the properties owned, leased or operated by the
Company, its Subsidiaries or any predecessor thereof are now, or were in
the past, listed on the National Priorities List of Superfund Sites or any
analogous state list (excluding easements that transgress those Superfund
sites).
For purposes of this Agreement:
(i) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of noncompliance or
violation (written or oral) by any Person (including any federal, state,
local or foreign governmental authority) alleging potential liability
(including, without limitation, potential responsibility for or liability
for enforcement, investigatory costs, cleanup costs, governmental response
costs, removal costs, remedial costs, natural resources damages, property
damages, personal injuries or penalties) arising out of, based on or
resulting from (A) the presence, or Release or threatened Release into the
environment, of any Hazardous Materials at any location,
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whether or not owned, operated, leased or managed by the Company or any of
its Subsidiaries; or (B) circumstances forming the basis of any violation
or alleged violation of any Environmental Law; or (C) any and all claims by
any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the presence or
Release of any Hazardous Materials.
(ii) "Environmental Laws" means all applicable foreign,
federal, state and local laws, rules, requirements and regulations relating
to pollution, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or
protection of human health as it relates to the environment including,
without limitation, laws and regulations relating to Releases of Hazardous
Materials, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials or relating to management of asbestos in buildings.
(iii) "Hazardous Materials" means (A) any petroleum or any
by-products or fractions thereof, asbestos or asbestos-containing
materials, urea formaldehyde foam insulation, any form of natural gas,
explosives, polychlorinated biphenyls ("PCBs"), radioactive materials,
ionizing radiation, electromagnetic field radiation or microwave
transmissions; (B) any chemicals, materials or substances, whether waste
materials, raw materials or finished products, which are now defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous substances," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," "pollutants,"
"contaminants," or words of similar import under any Environmental Law; and
(C) any other chemical, material or substance, whether waste materials, raw
materials or finished products, regulated or forming the basis of liability
under any Environmental Law.
(iv) "Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or migration
into the environment (including without limitation ambient air, atmosphere,
soil, surface water, groundwater or property).
Section 3.13 Board Action; Vote Required. (a) The Company's Board of
Directors has unanimously approved this Agreement and the transactions
contemplated hereby, including the Merger, has determined that the Merger
is advisable, fair to and in the best interests of the Company and its
stockholders and has resolved to recommend to stockholders that they vote
in favor of approving this Agreement and approving the Merger.
(b) Approval of this Agreement by a majority of the votes
entitled to be cast with respect thereto by the holders of Company Common
Shares is sufficient to
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constitute approval of this Agreement and the transactions contemplated
hereby on behalf of the stockholders of the Company. The Merger will give
rise to no dissenters' rights under the IBCL.
Section 3.14 Brokers. Set forth in the Company Disclosure Letter is a
list of each broker, finder or investment banker and other Person entitled
to any brokerage, finder's, investment banking or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company or
any of its Subsidiaries and the expected amounts of such fees and
commissions. The Company has previously provided to Parent copies of any
agreements giving rise to any such fee or commission.
Section 3.15 Tax Matters. (a) All Tax Returns required to be filed by
the Company or its Subsidiaries on or prior to the Effective Time have been
or will be prepared in good faith and timely filed with the appropriate
Governmental Entity on or prior to the Effective Time and all such Tax
Returns are (or, as to Tax Returns not filed on the date hereof, will be)
complete and accurate in all material respects.
(b) All material Taxes that are required to be paid by the
Company or its Subsidiaries, either (x) have been fully paid on a timely
basis (except with respect to matters contested in good faith as set forth
in the Company Disclosure Letter) or (y) are adequately reflected as a
liability on the Company's or its Subsidiaries' books and records and
financial statements and remitted to the appropriate Governmental Entity.
All Taxes required to be collected or withheld from third parties by the
Company or its Subsidiaries have been collected or withheld.
(c) The Company and its Subsidiaries have made due and sufficient
accruals and reserves for their respective liabilities for Taxes in their
respective books and records and financial statements.
(d) The Company and each of its Subsidiaries have not waived any
statute of limitations, or agreed to any extension of time, with respect to
Taxes or a Tax assessment or deficiency, which waiver or extension is in
effect.
(e) As of this date, (A) there are not pending or, threatened in
writing, any audits, examinations, investigations or other proceedings in
respect of Taxes or Tax matters and (B) there are not any unresolved
questions or claims concerning the Company's or any of its Subsidiary's Tax
liability that (i) were raised by any taxing authority in a communication
to the Company or any Subsidiary and (ii) would be individually or in the
aggregate, material to the Company and its Subsidiaries taken as a
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whole, after taking into account any reserves for Taxes set forth on the
most recent balance sheet contained in the SEC Reports filed prior to this
date.
(f) The Company has made available to Parent true and correct
copies of the United States federal income and all material state income or
franchise Tax Returns filed by the Company and its Subsidiaries for each of
its fiscal years ended on or about June 30, 1997, 1998 and 1999.
(g) The Company has not distributed the stock of a "controlled
corporation" (as defined in section 355(a) of the Code) in a transaction
subject to section 355 of the Code within the past two years or before such
time if the distribution was part of a plan (or series of related
transactions) of which the Merger is also a part.
(h) Neither Company nor any of its Subsidiaries (i) has any
liability under Treasury Regulation Section 1.1502-6 or analogous state,
local or foreign Law for any Taxes, other than for Taxes of Company or its
Subsidiaries or (ii) is a party to a Tax sharing or Tax indemnity contract
or any other contract of a similar nature with any entity other than
Company or any of its Subsidiaries that remains in effect.
(i) Neither the Company nor any of its Subsidiaries know of any
fact relating to the Company or its Subsidiaries that could reasonably be
expected to prevent the Merger from qualifying as a reorganization within
the meaning of Section 368(c) of the Code.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes" and "Taxable") includes all federal,
state, local and foreign income, profits, franchise, gross receipts,
license, premium, environmental (including taxes under Section 59A of the
Code), capital stock, severance, stamp, payroll, sales, employment,
unemployment, disability, use, transfer, property, withholding, excise,
production, occupation, windfall profits, customs duties, social security
(or similar), registration, value added, alternative or add-on minimum,
estimated, occupancy and other taxes, duties or governmental assessments of
any nature whatsoever, together with all interest, penalties and additions
imposed with respect to such amounts and any interest in respect of such
penalties and additions, and (ii) the term "Tax Return" includes all
returns and reports (including elections, declarations, disclosures,
schedules, estimates and information returns) required to be supplied to a
Tax authority relating to Taxes.
Section 3.16 Intellectual Property. Neither the Company nor any of its
Subsidiaries currently utilizes, any patented invention, trademark, trade
name, service mark, copyright, software, trade secret or know-how
(collectively, "Intellectual Property"), except for those which are owned,
possessed or lawfully used by the Company or its Subsidiaries in their
business operations, and neither the Company nor
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<PAGE>
any of its Subsidiaries infringes upon or unlawfully uses any patented
invention, trademark, trade name, service mark, copyright, or trade secret
owned or validly claimed by another Person except, in each case, as would
not, individually or in the aggregate, have or reasonably be expected to
have a Material Adverse Effect. The Company and its Subsidiaries own, have
a valid license to use or have the right validly to use all patented
inventions, trademarks, tradenames, service marks, copyrights, trade
secrets, know how and software necessary to carry on their respective
businesses except the failure of which to own, validly license or have the
right validly to use, individually or in the aggregate, would not have or
reasonably be expected to have a Material Adverse Effect. All ownership
rights, license rights and other rights to use any patented invention,
trademark, trade name, service mark, copyright, software, trade secret or
know-how necessary to carry on the businesses of the Company and its
Subsidiaries are transferable free of any lien, pledge, change, security
interest or other encumbrance (each, an "Encumbrance"), except the failure
of which to be freely transferable would not have or reasonably be expected
to have a Material Adverse Effect. Neither the Company nor its Subsidiaries
are aware of any third party infringement or misappropriation of any
patent, trademark, trade name, service mark, copyright, software, trade
secret or know-how owned by the Company or its Subsidiaries.
Section 3.17 Insurance. Except to the extent adequately accrued on the
most recent balance sheet contained in the SEC Reports filed as of this
date, neither the Company nor its Subsidiaries has any obligation
(contingent or otherwise) to pay in connection with any insurance policies
any retroactive premiums or "retro-premiums" that, individually or in the
aggregate, would have or reasonably be expected to have a Material Adverse
Effect. The Company and its Subsidiaries have obtained and maintained in
full force and effect insurance with insurance companies or associations in
such amounts, on such terms and covering such risks, as is customarily
carried by reasonably prudent persons conducting businesses or owning or
leasing assets similar to those conducted, owned or leased by the Company,
except where the failure to obtain or maintain such insurance, individually
or in the aggregate, would not have or be reasonably be expected to have a
Material Adverse Effect.
Section 3.18 Contracts and Commitments. Set forth in the Company
Disclosure Letter is a complete and accurate list of all of the following
contracts (written or oral), plans, undertakings, commitments or agreements
("Company Contracts") to which the Company or any of its Subsidiaries is a
party or by which any of them is bound as of the date of this Agreement:
(a) each distribution, supply, inventory purchase, franchise,
license, sales, agency or advertising contract involving annual
expenditures or liabilities in excess
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of $100,000 which is not cancelable (without material penalty, cost or
other liability) within one year;
(b) each promissory note, loan, agreement, indenture, evidence of
indebtedness or other instrument providing for the lending of money,
whether as borrower, lender or guarantor, in excess of $100,000;
(c) each contract, lease, agreement, instrument or other
arrangement containing any covenant limiting the freedom of the Company or
any of its subsidiaries to engage in any line of business or compete with
any person;
(d) each joint venture or partnership agreement that is material
to the Company and its Subsidiaries taken as a whole; and
(e) any contract that would constitute a "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC).
True and complete copies of the written Company Contracts, as
amended to date, that would be required to be filed as exhibits to the
Company's Form 10-K if such Form 10-K were being filed on this date, that
have not been filed prior to the date hereof as exhibits to the SEC Reports
have been delivered or made available to Parent.
Each Company Contract is valid and binding on the Company, and
any Subsidiary of the Company which is a party thereto and, to the
knowledge of the Company, each other party thereto and is in full force and
effect, and the Company and its Subsidiaries have performed and complied
with all obligations required to be performed or compiled with by them
under each Company Contract, except in each case as would not, individually
or in the aggregate, have or reasonably be expected to have a Material
Adverse Effect.
Section 3.19 Title to Assets. The Company and its Subsidiaries have
good and marketable title to all of their real and personal properties and
assets reflected in the audited consolidated balance sheet of the Company
as of June 30, 2000 (the "Audited Balance Sheet") (other than assets
disposed of since June 30, 2000 in the ordinary course of business, and
properties and assets acquired since June 30, 2000), in each case free and
clear of all Encumbrances except for (i) Encumbrances which secure
indebtedness reflected in the SEC Reports; (ii) liens for Taxes accrued but
not yet due; (iii) liens arising as a matter of law in the ordinary course
of business with respect to obligations incurred after the date of the
Audited Balance Sheet, provided that the obligations secured by such liens
are not delinquent; and (iv) such imperfections of title and Encumbrances,
if any, as would not have or reasonably be expected to have a Material
Adverse Effect. The Company and its Subsidiaries own, or have valid
leasehold interests in, all properties and
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assets used in the conduct of their business. Any real property and other
assets held under lease by the Company or any of its Subsidiaries are held
under valid, subsisting and enforceable leases with such exceptions which,
individually or in the aggregate, would not reasonably be expected to
interfere with the use made or proposed to be made by the Company or any of
its Subsidiaries of such property.
Section 3.20 State Takeover Statutes. The Board of Directors of the
Company has approved the Merger and this Agreement and such approval is
sufficient to render inapplicable to the Merger, this Agreement and the
transactions contemplated by this Agreement, the provisions of Section
23-1-43 of the IBCL to the extent, if any, such section is applicable to
the transactions contemplated by this Agreement. The Board of Directors of
the Company has amended the bylaws of the Company so as to render
inapplicable to the Stock Option Agreement and the other transactions
contemplated by this Agreement the provisions of IC 23-1-42. To the
Company's knowledge, no other state takeover statute or similar statute or
regulation applies to the Merger or the transactions contemplated hereby.
Section 3.21 Rights Agreement. No "Distribution Date" or "Triggering
Event" (as such terms are defined in the Rights Agreement, dated as of
April 21, 1998, between the Company and Compushare Investor Services, LLC,
as successor rights agent, as amended (the "Rights Agreement")) has
occurred as of this date. This Agreement and the Stock Option Agreement,
and the consummation of the transactions contemplated hereunder and
thereunder, including the Merger, have been approved by at least two-thirds
(2/3) of the Disinterested Directors (as defined in the Rights Agreement).
The Rights Agreement has been amended so that neither the execution or
delivery of this Agreement, nor the exchange of the Company Common Shares
for the shares of Parent Common Stock and cash in accordance with Article
II will cause (A) the Rights issued pursuant to the Rights Agreement to
become exercisable under the Rights Agreement, (B) Parent or Merger Sub to
be deemed an "Acquiring Person" (as defined in the Rights Agreement), or
(C) the "Shares Acquisition Date" or a "Triggering Event" (each as defined
in the Rights Agreement) to occur upon any such event. The execution and
delivery of this Agreement and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby will not
result in the ability of any Person to exercise any Rights or cause the
Rights to separate from the Company Common Shares to which they are
attached or to be triggered or become exercisable.
Section 3.22 Product Warranty. Each product manufactured, sold,
leased, or delivered by any of the Company and its Subsidiaries has been in
substantial conformity with all applicable contractual commitments and all
express and implied warranties, and none of the Company and its
Subsidiaries has any liability (and there is no basis for any
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present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of them giving rise to any
liability) for replacement or repair thereof or other damages in connection
therewith other than liabilities that would not have or reasonably be
expected to have a Material Adverse Effect, subject only to the reserve for
product warranty claims as adjusted for the passage of time through the
Closing Date in accordance with the past custom and practice of the Company
and its Subsidiaries. No product manufactured, sold, leased, or delivered
by any of the Company and its Subsidiaries is subject to any guaranty,
warranty, or other indemnity beyond the applicable standard terms and
conditions of sale or lease. The Company Disclosure Letter includes copies
of the standard terms and conditions of sale or lease for each of the
Company and its Subsidiaries (containing applicable guaranty, warranty, and
indemnity provisions).
Section 3.23 Product Liability. None of the Company and its
Subsidiaries has any liability (and there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any liability) arising
out of any injury to individuals or property as a result of the ownership,
possession, or use of any product manufactured, sold, leased, or delivered
by any of the Company and its Subsidiaries, other than liabilities that
would not have or reasonably be expected to have a Material Adverse Effect.
ARTICLE IV
Parent and Merger Sub hereby represent and warrant to the Company as
of the date of this Agreement as follows:
Section 4.1 Existence; Corporate Authority. Parent and Merger Sub are
corporations duly incorporated, validly existing and in good standing under
the laws of their jurisdiction of incorporation and have all requisite
corporate power and authority to own, operate and lease its properties and
carry on its business as now conducted, except where the failure to have
such power and authority, individually or in the aggregate, would not
materially adversely affect their ability to consummate the Merger. Merger
Sub is directly and wholly owned by Parent and has conducted no business
other than in connection with the transactions contemplated by this
Agreement.
Section 4.2 Authorization, Validity and Effect of Agreements. Parent
and Merger Sub have the necessary corporate power and authority to enter
into and deliver this Agreement and to perform their obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Parent and Merger Sub, the performance by
them of their respective obligations
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hereunder and the consummation by Parent and Merger Sub of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on their part. This Agreement has been duly executed and delivered
by Parent and Merger Sub and, assuming the due authorization, execution and
delivery of this Agreement by the Company, this Agreement constitutes a
legal, valid and binding obligation of Parent and Merger Sub enforceable
against each of them in accordance with the terms hereof, subject to
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The
Parent Company Stock, when issued and delivered in accordance with the
terms and conditions of this Agreement, will be validly issued and fully
paid and non-assessable.
Section 4.3 No Violation. (a) The execution and delivery of this
Agreement by Parent and Merger Sub does not, and the performance by Parent
and Merger Sub of their obligations hereunder and the consummation by
Parent and Merger Sub of the transactions contemplated hereby, will not (i)
violate or conflict with the Merger Sub's articles of incorporation,
Parent's certificate of incorporation or the bylaws of Parent or Merger
Sub, (ii) subject to obtaining or making the notices, reports, filings,
waivers, consents, approvals or authorizations referred to in paragraph (b)
below, conflict with or violate any law, regulation, court order, judgment
or decree applicable to Parent or any of its Subsidiaries (including Merger
Sub) or by which any of their respective property is bound or affected,
other than the filings required under the Exchange Act and the Securities
Act, except, in the case of clause (ii) above, as would not, individually
or in the aggregate, have or reasonably be expected to have a material
adverse effect on their ability to consummate the Merger.
(b) Except for applicable requirements, if any, under the
premerger notification requirements of the HSR Act, the filing of articles
of merger with respect to the Merger as required by the IBCL, filings with
the SEC under the Securities Act and the Exchange Act, any filings required
pursuant to any state securities or "blue sky" laws, or pursuant to the
rules and regulations of any stock exchange on which shares of Parent
Common Stock are listed, neither Parent nor any of its Subsidiaries
(including Merger Sub) is required to submit any notice, report or other
filing with any Governmental Entity in connection with the execution,
delivery, performance or consummation of this Agreement or the Merger,
except where the failure to submit such notice, report or other filing
would not, individually or in the aggregate, have or reasonably be expected
to have a material adverse effect on Parent's or Merger Sub's ability to
consummate the Merger or otherwise prevent Parent or Merger Sub from
performing its obligations under this Agreement. Except as set forth in the
immediately preceding sentence, no waiver, consent, approval or
authorization of any governmental or regulatory authority, court,
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agency, commission or other governmental entity or any securities exchange
or other self-regulatory body, domestic or foreign Governmental Entity is
required to be obtained by Parent or any of its Subsidiaries (including
Merger Sub) in connection with its execution, delivery, performance or
consummation of this Agreement or the transactions contemplated hereby
except for such waivers, consents, approvals or authorizations that, if not
obtained or made, would not, individually or in the aggregate, have or be
expected to have a material adverse effect on Parent's or Merger Sub's
ability to consummate the Merger or otherwise prevent Parent or Merger Sub
from performing their obligations under this Agreement.
Section 4.4 Interested Stockholder. As of the date hereof, (i) neither
Parent, Merger Sub nor any of their affiliates is, with respect to the
Company, an "Interested Shareholder", as such term is defined in Section
23-1-43-10 of the IBCL and (ii) neither Parent, Merger Sub nor any of their
affiliates beneficially owns any Company Common Shares.
Section 4.5 Parent Public Reports; Financial Statements. Parent has
delivered to the Company true and complete copies of, including all
amendments thereto, its Annual Report for the calendar year ended December
31, 1999, the annual report on Form 10-K for the year ended December 31,
1999, the quarterly reports on Form 10-Q for the quarters ended March 31,
2000 and June 30, 2000 (collectively, the "Parent Public Reports"). The
consolidated financial statements of and contained in the Parent Public
Reports present fairly the financial position of Parent and its
consolidated subsidiaries at the respective dates of the balance sheet and
the results of operations for the periods then ended, in conformity with
generally accepted accounting principles applied on a consistent basis. The
Parent Public Reports do not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they
will be made, not misleading.
ARTICLE V
Section 5.1 Interim Operations of The Company. The Company covenants
and agrees as to itself and its Subsidiaries that, after this date and
prior to the Effective Time (unless Parent shall otherwise approve in
writing, or unless as otherwise expressly contemplated by this Agreement or
expressly disclosed in the Company Disclosure Letter):
(i) the business of the Company and its Subsidiaries shall
be conducted in all material respects in the ordinary and usual course and,
to the extent
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consistent therewith, each of the Company and its Subsidiaries shall use
its 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;
(ii) the Company shall not issue, deliver, grant or sell any
additional Company Common Shares or any Company Options (other than the
issuance, delivery, grant or sale of Company Common Shares or Company
Options pursuant to the exercise or conversion of Company Options
outstanding as of this date);
(iii) the Company shall not (A) amend its Articles of
Incorporation or bylaws, amend or take any action under the Rights
Agreement, or adopt any other shareholders rights plan or enter into any
agreement with any of its stockholders 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; 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 would prevent the Merger
from qualifying as a "reorganization" within the meaning of Section 368 of
the Code or take any action that it knows would cause any of its
representations and warranties in this Agreement to become inaccurate in
any material respect;
(v) except as expressly permitted by this Agreement, and
except as required by applicable law or pursuant to contractual obligations
in effect on this date; 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 agreement (including, without limitation, the Company Benefit
Plans referred to in Section 3.10); or (C) grant any stock options or other
equity related awards;
(vi) except for borrowings under lines of credit existing as
of this date 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
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<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 Company 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 this date (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;
(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
Company Disclosure Letter;
(xi) The Company shall not change its accounting policies,
practices or methods except as required by GAAP or by the rules and
regulations of the SEC;
(xii) other than pursuant to this Agreement, the Company
shall not, and shall not permit any of its Subsidiaries to, take any action
to cause Company Common Shares 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, enter into any Company Contract described in clauses
(c) and (d) of Section 3.18, or 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 one year after the Closing Date;
(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
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past practice, make any material Tax election, settle any audit or file any
amended Tax Returns; or
(xv) 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.
Section 5.2 No Solicitation. (a) The Company shall immediately cease
and terminate any existing solicitation, initiation, encouragement,
activity, discussion or negotiation with any Persons conducted heretofore
by the Company, its Subsidiaries or any of their respective representatives
with respect to any proposed, potential or contemplated Acquisition
Transaction and request the return or destruction of all non-public
information furnished in connection therewith.
(b) From and after this date, without the prior written consent
of Parent, the Company will not, 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 any inquiries or the making of any proposal
which constitutes or may reasonably be expected to lead to an Acquisition
Proposal 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 this Agreement;
provided that, at any time prior to receipt of the stockholder approval
referred to in Section 6.1, the Company may, subject to compliance with
this Section 5.2(b), furnish information to, and negotiate or otherwise
engage in discussions with, any Person (a "Proposing Party") who (x)
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 this Agreement or otherwise resulted from a
breach of this Section 5.2, and (y) enters into an appropriate
confidentiality agreement with the Company (which agreement shall be no
less favorable to the Company than the Confidentiality Agreement and a copy
of which will be delivered to Parent promptly after the execution thereof),
if, but only if, the Board of Directors of the Company determines in good
faith by a majority vote, (i) after consultation with, and receipt of
advice from, its outside legal counsel, that failing to take such action
would constitute a breach of the fiduciary duties of such Board of
Directors under the IBCL, and (ii) after consultation with the Company's
independent financial advisors, that such proposal could reasonably be
expected to lead to a Superior Transaction.
(c) The Company shall notify Parent orally and in writing of any
such inquiries, offers or proposals (including, without limitation, the
terms and conditions of
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<PAGE>
any such offers or proposals, any amendments or revisions, and the identity
of the Person making it), as promptly as practicable following the receipt,
and shall keep Parent reasonably informed of the status and material terms
of any such inquiry, offer or proposal. For purposes of this Agreement,
"Acquisition Proposal" shall mean, with respect to the Company, any
inquiry, 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 business of the Company or any of its Subsidiaries, that
constitutes 15% or more of the consolidated net revenues, net income or
assets of Company and its Subsidiaries, (ii) direct or indirect acquisition
or purchase of 15% or more of any class of equity securities of the Company
or any of its Subsidiaries whose business constitutes 15% or more of the
consolidated net revenues, net income or assets of the Company and its
Subsidiaries, (iii) tender offer or exchange offer that if consummated
would result in any Person beneficially owning 15% 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 its Subsidiaries whose business constitutes 15% or
more of the consolidated net revenues, net income or assets of the Company
and its Subsidiaries. Each of the transactions referred to in clauses (i) -
(iv) of the definition of Acquisition Proposal, other than any such
transaction to which Parent or any of its Subsidiaries is a party, is
referred to as an "Acquisition Transaction".
(d) If, prior to the approval of this Agreement by the
stockholders of the Company, the Board of Directors of the Company
determines in good faith by a majority vote, with respect to any written
proposal from a Proposing Party for an Acquisition Transaction received
after the date hereof that was not solicited, initiated, encouraged or
facilitated by the Company, directly or indirectly, after the date of this
Agreement or did not otherwise result from a breach of this Section 5.2,
that, based upon (x) the written opinion (a copy of which shall have been
delivered to Parent) from the Company's independent financial advisors that
the Acquisition Transaction is a Superior Transaction and (y) the advice of
the Company's outside legal counsel, that such Acquisition Transaction is a
Superior Transaction and is in the best interest of the Company and its
stockholders and failure to enter into such Acquisition Transaction would
constitute a breach of the fiduciary duties of the Board of Directors of
the Company under the IBCL, then the Company may terminate this 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 this Agreement
pursuant to this Section 5.2(d), identifying the Superior Transaction and
the parties thereto 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 opinion and advice referred to in clauses
(x) and (y) above shall continue in effect without revocation, revision or
modification), the Company shall deliver to Parent (A) a written notice of
termination of this Agreement pursuant to this Section 5.2(d), (B) a wire
transfer of immediately
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<PAGE>
available funds in the amount of the Termination Fee, (C) a written
acknowledgment from the Company that the termination of this Agreement and
the entry into the Superior Transaction are a Triggering Event, 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.
(e) "Superior Transaction" shall mean an Acquisition Transaction
which the Board of Directors of the Company, reasonably determines is more
favorable to the Company and its stockholders than the Merger and which is
not subject to any financing condition; provided, however, that, without
limiting the foregoing, an Acquisition Transaction shall not constitute a
Superior Transaction unless, in the written opinion (with only customary
qualifications) of the Company's independent financial advisors, the value
of the consideration to be paid in the Acquisition Transaction is more
favorable to the stockholders of such company from a financial point of
view than the Merger Consideration. Reference in the foregoing definition
to the "Merger" and "Merger Consideration" shall include, as applicable,
any proposed alteration of the terms of this Agreement submitted by Parent
in writing in response to any Acquisition Proposal.
(f) Nothing in this Section 5.2 shall prevent the Board of
Directors of the Company, from taking, and disclosing to the Company's
stockholders, a position contemplated by Rule 14d-9 and Rule 14e-2(a)
promulgated under the Exchange Act or making any disclosure required under
the IBCL (subject, however, to compliance with the balance of this sentence
where applicable), and the Company's Board of Directors may prior to the
date of its stockholders meeting, withdraw, modify or change its
recommendation if, but only if and only to the extent that, the Board of
Directors determines in good faith that such withdrawal, modification or
change is required in order to comply with its fiduciary duties to its
stockholders under the IBCL after receiving advice from its outside legal
counsel; provided that in the case of a tender offer, the Board of
Directors of the Company shall not recommend that stockholders tender their
Company Common Shares in such tender offer unless (i) such tender offer is
determined to be a Superior Transaction in accordance with the provisions
of Section 5.2(d) and (ii) the Company has provided Parent with not less
than three business days, prior written notice of any such action;
provided, further, that in no event shall the Company or its Board of
Directors take, agree, or resolve to take any action prohibited by Section
5.2(b) or 5.2(d) except as expressly permitted by such Sections.
(g) Notwithstanding anything to the contrary contained herein,
the Company shall not take any action to make the provisions of IC 23-1-43
inapplicable to any Acquisition Transaction in respect of the Company
(including any Superior Transaction) or release any standstill agreements
or other similar restrictions prior to the termination of this Agreement in
accordance with its terms.
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<PAGE>
ARTICLE VI
Section 6.1 Meetings of Stockholders. The Company will take all action
necessary in accordance with applicable law and its Articles of
Incorporation and its bylaws to convene a meeting of its stockholders as
promptly as practicable to consider and vote upon the approval and
authorization of this Agreement and the Merger. The Board of Directors of
the Company shall recommend this approval and the Company shall take all
lawful action to solicit such approval including, without limitation,
timely mailing the Proxy Statement/Prospectus.
Section 6.2 Filings; Other Action. Subject to the terms and conditions
herein provided, the Company, Parent and Merger Sub shall: (a) make
promptly their respective filings, and any other submissions, under the HSR
Act with respect to the Merger and the other transactions contemplated
hereby, and (b) use their reasonable best efforts to cooperate with one
another in (i) determining which other filings are required to be made
prior to the expiration of the Effective Time with, and which consents,
approvals, permits or authorizations are required to be obtained prior to
the Effective Time from, Governmental Entities or other third parties in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (ii) timely making
all such filings and timely seek all such consents, approvals, permits,
authorizations and waivers; and (b) use their reasonable best efforts to
take, or cause to be taken, all other actions and do, or cause to be done,
all other things necessary, proper or appropriate to consummate and make
effective the transactions contemplated by this Agreement; provided,
however, that such reasonable best efforts shall not include (i) the sale
or divestiture of any assets of Parent (or its affiliates) or (ii) the
licensing of any Intellectual Property of Parent, or its affiliates or
Intellectual Property to be acquired under this Agreement. If, at any time
after the Effective Time, any further action is necessary or desirable to
carry out the purpose of this Agreement, the proper officers and directors
of Parent or the Surviving Corporation shall take all such necessary
action.
Section 6.3 Publicity. The initial press release relating to this
Agreement shall be issued jointly by the Company, Parent and Merger Sub.
Thereafter, subject to their respective legal obligations, the Company,
Parent and Merger Sub shall consult with each other, and use reasonable
efforts to agree upon the text of any press release, before issuing any
such press release or otherwise making public statements with respect to
the transactions contemplated hereby and in making any filings with any
Governmental Entity or with any national securities exchange with respect
thereto.
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Section 6.4 Registration Statement. The parties shall cooperate and
promptly prepare, and Parent shall file with the SEC as soon as
practicable, a Registration Statement on Form S-4 (the "Form S-4") under
the Securities Act with respect to the Parent Common Stock issuable in the
Merger, a portion of which Registration Statement shall also serve as the
joint proxy statement/prospectus with respect to the meeting of the Company
stockholders in connection with the Merger (the "Proxy
Statement/Prospectus"). The parties will cause the Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange
Act and the rules and regulations thereunder. Parent shall use its
reasonable best efforts to, and the Company will cooperate with Parent to,
have the Form S-4 declared effective by the SEC as promptly as practicable.
Parent shall use its reasonable best efforts to obtain, prior to the
effective date of the Form S-4, all necessary state securities law or "blue
sky" permits or approvals required to carry out the Merger (provided that
Parent shall not be required to qualify to do business in any jurisdiction
in which it is not now so qualified). Each of the parties agree that the
information provided by it for inclusion in the Proxy Statement/Prospectus
and each amendment or supplement thereto, at the time of mailing thereof,
at the time of the meeting of the Company stockholders, and at the time it
is filed or becomes effective, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 6.5 Listing Application. Parent shall as soon as reasonably
practicable prepare and submit to the NYSE and all other securities
exchanges on which the shares of Parent Common Stock are listed a listing
application with respect to the shares of Parent Common Stock issuable in
the Merger, and shall use its reasonable best efforts to obtain, prior to
the Effective Time, approval for the listing of such Parent Common Stock on
such exchanges, subject to official notice of issuance.
Section 6.6 Further Action. Each of the parties shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performance set forth in this Agreement or the waiver thereof, use its
reasonable best efforts to perform those further acts and execute those
documents as may be reasonably required to effect the transactions
contemplated hereby. Each of the parties agrees to use its reasonable best
efforts to obtain in a timely manner all necessary waivers, consents,
approvals and opinions and to effect all necessary registrations and
filings, and to use its reasonable best efforts to take, or cause to be
taken, all other actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly
as practicable the Merger. In furtherance of the foregoing, the Company
shall use its reasonable best efforts to procure the execution of
agreements between the Surviving
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Corporation and employees of the Company identified by Parent on terms
satisfactory to Parent and such employees.
Section 6.7 Expenses. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including the Merger) shall be paid by
the party incurring those expenses except as expressly provided in this
Agreement and except that (a) the filing fees in connection with the filing
of the Form S-4 and the Proxy Statement/Prospectus with the SEC, (b) all
filing fees in connection with any filings, permits or approvals required
under applicable state securities or "blue sky" laws, and (c) the expenses
incurred in connection with printing and mailing of the Form S-4 and the
Proxy Statement/Prospectus, shall be shared by Parent and the Company
equally, and the filing fees, if any, incurred by the Company in connection
with the filing of the Company notification under the HSR Act shall be paid
by Parent.
Section 6.8 Notification of Certain Matters. Each party shall give
prompt notice to the other parties of the following:
(a) the occurrence or nonoccurrence of any event whose occurrence
or nonoccurrence is reasonably expected to cause any of the conditions
precedent set forth in Article VII not to be satisfied; and
(b) any facts relating to that party which would make it
necessary or advisable to amend the Proxy Statement/Prospectus or the Form
S-4 in order to make the statements therein not untrue or misleading or to
comply with applicable law; provided, however, that the delivery of any
notice pursuant to this Section 6.8 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
(c) From time to time after the date of this Agreement and prior
to the Effective Time, the Company will promptly supplement or amend the
Disclosure Letter with respect to any matter hereafter arising which, if
existing or occurring at or prior to the date of this Agreement, would have
been required to be set forth or described in the Disclosure Letter which
is necessary to correct any information in the Disclosure Letter or in any
representation and warranty of the Company that has been rendered
inaccurate thereby. For purposes of determining the accuracy of the
representations and warranties of the Company contained in Article III in
order to determine the fulfillment of the conditions set forth in Sections
7.2(a), the schedules delivered by the Company shall be deemed to include
only that information contained therein on the date of this Agreement and
shall be deemed to exclude any information contained in any subsequent
supplement or amendment thereto.
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<PAGE>
Section 6.9 Access to Information. (a) From the date of this Agreement
until the Closing, upon reasonable notice, the Company shall, and shall
cause its Subsidiaries to, (i) give Parent and its authorized
representatives full access to all books, records, personnel, offices and
other facilities and properties of the Company and its Subsidiaries and
their accountants and accountants' work papers, (ii) permit Parent to make
such copies and inspections thereof as Parent may reasonably request and
(iii) furnish Parent with such financial and operating data and other
information with respect to the business and properties of the Company and
its Subsidiaries as Parent may from time to time reasonably request;
provided that no investigation or information furnished pursuant to this
Section 6.9 shall affect any representation or warranty made herein by the
Company or the conditions to the obligations of Parent and Merger Sub to
consummate the transactions contemplated by this Agreement. Parent will
endeavor to describe information requests with as much specificity as is
practicable. Each of Parent and the Company shall designate a
representative to coordinate information and other requests pursuant to
this Section 6.9. All access shall be subject to the condition that such
examinations shall be conducted during normal business hours and in a
manner designed to minimize to the extent practicable disruption to the
normal business operations of the Company.
Section 6.10 Insurance; Indemnity. (a) Parent will maintain in effect
for not less than three 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 this 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 hereof
(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.
(b) 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 hereof 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
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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. In the event
of any such claim, action, suit, proceeding or investigation (an "Action"),
the Parent shall control the defense of such Action with counsel selected
by the Parent, which counsel shall be reasonably acceptable to the
Indemnified Party; provided, however, that the Indemnified Party shall be
permitted to participate in the defense of such Action through counsel
selected by the Indemnified Party, which counsel shall be reasonably
acceptable to the Parent, at the Indemnified Party's expense.
Notwithstanding the foregoing, if there is any conflict between the Parent
and any Indemnified Parties or there are additional defenses available to
any Indemnified Parties, the Indemnified Parties shall be permitted to
participate in the defense of such Action with counsel selected by the
Indemnified Parties, which counsel shall be reasonably acceptable to the
Parent, and Parent shall cause Parent to pay the reasonable fees and
expenses of such counsel, as accrued and in advance of the final
disposition of such Action to the fullest extent permitted by applicable
law; provided, however, that the Parent shall not be obligated to pay the
reasonable fees and expenses of more than one counsel for all Indemnified
Parties in any single Action except to the extent that, in the opinion of
counsel for the Indemnified Parties, two or more of such Indemnified
Parties have conflicting interests in the outcome of such Action. The
Parent shall not be liable for any settlement effected without its written
consent, which consent shall not unreasonably be withheld.
(c) The Surviving Corporation shall keep in effect all provisions
in its articles of incorporation 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 IBCL 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.
(d) If the Surviving Corporation or any of its respective
successors or assigns (i) shall consolidate with or merge into any other
corporation or other entity and shall not be the continuing or surviving
corporation or entity of the consolidation or merger or (ii) shall transfer
all or substantially all of its properties and assets to any individual,
corporation or other entity, then and in each such case, proper provisions
shall be made so that the successors and assigns of the Surviving
Corporation shall assume all of the obligations set forth in this Section
6.10.
(e) The provisions of this Section 6.10 are intended to be for
the benefit of, and shall be enforceable by, each of the Indemnified
Parties, their heirs and their representatives.
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Section 6.11 Employee Benefit Plans. The Company agrees to promptly
take all actions necessary to cause the following to occur on or prior to
the Closing Date:
(a) Termination of Money Purchase Pension Plan. As the plan
sponsor, the Company will (i) adopt all amendments to the Robinson Nugent,
Inc. Retirement Plan (the "MPP Plan") necessary to make such Plan comply
with the applicable legal requirements as changed by the laws described in
Rev. Proc. 99-23 issued by the Internal Revenue Service, (ii) amend the MPP
Plan to fully vest the entire account balances of all the participants in
such Plan effective as of the Closing Date, (iii) take all actions
necessary to terminate the MPP Plan effective as of the Closing Date, and
(iv) direct the trustee of the MPP Plan to prepare for the distribution of
the account balances of all participants as soon as reasonably possible
following the receipt of a favorable determination letter from the Internal
Revenue Service.
(b) Merger of 401(k) Plan. As the plan sponsor, the Company will
(i) adopt all amendments to the Company's 401(k) plan (the "401(k) Plan")
necessary to make such Plan comply with the applicable legal requirements
as changed by the laws described in Rev. Proc. 99-23 issued by the Internal
Revenue Service, (ii) approve the merger of such 401(k) Plan with the 3M
Voluntary Investment Plan and Employee Stock Ownership Plan (the "VIP")
effective as of the Closing Date, and (iii) direct the trustee of the
401(k) Plan to prepare for the transfer of the assets and records of such
Plan to the trustee of the VIP as soon as reasonably possible following the
Closing Date.
(c) Termination of Stock Option Plan. As the plan sponsor, the
Company will cause all of the Company Options to be either exercised and
satisfied in full or terminated prior to the Closing Date. As soon as
practicable, but in no event later than 5 days from the date hereof, the
Company shall provide written notice to each holder of a Company Option of
the execution of this Agreement which notice shall be effective to
terminate all Company Options as of the 30th day immediately following the
date of the sending of the notice as contemplated in Section 6(i) of the
Stock Option Plan.
(d) Annual Reports. As the plan sponsor, the Company will (i)
cause to be filed with the appropriate government agency the annual reports
(Form 5500s) that have not been filed by the respective due dates with
respect to the MPP Plan and the 401(k) Plan, (ii) pay the appropriate
penalties for the late filing of such annual reports under the U.S.
Department of Labor's Delinquent Filer Voluntary Compliance Program, (iii)
file reasonable cause statements with the Internal Revenue Service with
respect to the late filing of such annual reports, and (iv) comply with the
summary annual report requirements of ERISA with respect to such annual
reports.
(e) Securities Registration. The Company will file and cause to
become effective the registration statement required by the Securities Act
with respect to the
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offering and purchase of Company Common Shares by participants in the
401(k) Plan with respect to the investment of the assets of their account
balances under such Plan.
(f) Rescission Offers. As soon as practicable, but in no event
later than five days after the date hereof, the Company shall commence an
offer to repurchase Company Common Shares from each individual who
exercised Company Options under the Stock Option Plan prior to August 31,
2000 and an offer to repurchase Company Common Shares from each individual
who purchased Company Common Shares under the Company's 401(k) Plan (the
"Rescission Offers") during the twelve month period prior to the filing of
the registration statement contemplated in Section 6.11(e) in respect of
such plan, each substantially on the terms furnished to Parent prior to the
date hereof and in compliance with all applicable federal and state
securities laws.
(g) Bonus Plan. The Company shall complete and furnish to Parent
the documentation of the Company's Bonus Plan for the fiscal year ending
June 30, 2001, which documentation shall be reasonably satisfactory to
Parent in both form and substance.
Section 6.12 Rights Agreement. The Board of Directors of the Company
shall take all action requested by Parent in order to render the Company
Rights inapplicable to the Merger and the other transactions contemplated
hereby.
ARTICLE VII
Section 7.1 Conditions to Obligations of the Parties to Consummate the
Merger. The respective obligation of each party to consummate the Merger
shall be subject to the satisfaction of each of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the holders of a majority of the
outstanding Company Common Shares in accordance with the IBCL and the rules
and regulations of the Nasdaq National Market System.
(b) Legality. No order, decree or injunction shall have been
entered or issued by any Governmental Entity which is in effect and has the
effect of making the Merger illegal or otherwise prohibiting consummation
of the Merger. Each party agrees that, in the event that any such order,
decree or injunction shall be entered or issued, it shall use its
reasonable best efforts to cause any such order, decree or injunction to be
lifted or vacated.
(c) Registration Statement Effective. The Form S-4 shall have
become effective prior to the mailing of the Proxy Statement/Prospectus to
the Company's
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stockholders and no stop order suspending the effectiveness of the Form S-4
shall then be in effect.
(d) Blue Sky Approvals. All such consents, approvals,
authorizations, orders, registrations, filings, qualifications, licenses or
permits as may be required under state securities or "blue sky" laws in
connection with the shares of Parent Common Stock to be issued pursuant to
the Merger have been obtained.
(e) Stock Exchange Listing. The shares of Parent Common Stock to
be issued pursuant to the Merger shall have been duly approved for listing
on the New York Stock Exchange, subject to official notice of issuance.
(f) Tax Opinion. Parent and the Company shall each have received
an opinion of Fried, Frank, Harris, Shriver & Jacobson, based on certain
factual representations of the Company, Parent, and Merger Sub, dated as of
the Closing Date, to the effect that the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code, in form and substance reasonably satisfactory to Parent
and the Company.
(g) Antitrust. The waiting period (and any extension thereof)
under the HSR Act applicable to the Merger shall have expired or been
terminated and any other approval or waiting period required prior to the
Effective Time under any other applicable competition, merger control,
antitrust or similar law or regulation 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 (x)
reasonably be expected to have a Material Adverse Effect (it being
understood for purposes of this clause (x) that no party may rely on the
failure of this condition to be satisfied if such failure was caused by
such party's failure to comply with the terms of Section 6.2) or (y) result
in the commission of a criminal offense.
Section 7.2 Additional Conditions to Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to consummate the Merger
shall also be subject to the satisfaction or waiver of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and
correct on and as of the Closing Date (except to the extent such
representations and warranties shall have been expressly made as of an
earlier date, in which case such representations and warranties shall have
been true and correct as of such earlier date) with the same force and
effect as if made on and as of the Closing Date, except to the extent that
any failures of such representations and warranties to be so true and
correct (determined without regard to
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materiality qualifiers or limitations contained therein), in the aggregate,
would not reasonably be expected to have resulted in a Material Adverse
Effect.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
before the Effective Time.
(c) Certificates. Parent shall have received a certificate of an
executive officer of the Company that the conditions set forth in
paragraphs (a) and (b) above have been satisfied.
(d) Options. All Company Options shall have been exercised or
terminated.
(e) Resignations. Parent shall have received the resignation of
each of the directors of the Company effective as of the Effective Time.
(f) Stock Option Agreement. The Stock Option Agreement shall be
in full force and effect.
(g) Lease Agreement. The sale of the Company's manufacturing
facility in Dallas, Texas (the "Dallas Facility") shall have taken place
and the Dallas Facility shall have been leased to the Company on the terms
described in the Contract for Purchase and Sale/Leaseback between the
Company and Sam & JB, LLC, an Indiana limited liability company, and the
lease agreement attached thereto as Exhibit B, each in the form attached to
the Disclosure Letter as Exhibit 7.2(g).
(h) Rescission Offers. The Rescission Offers shall have been
completed in accordance with Section 6.11(f).
Section 7.3 Additional Conditions to Obligations of the Company. The
obligations of the Company to consummate the Merger shall also be subject
to the satisfaction or waiver of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained in this Agreement shall be
true on and as of the Closing Date (except to the extent such
representations and warranties shall have been expressly made as of an
earlier date, in which case such representations and warranties shall have
been true and correct as of such earlier date) with the same force and
effect as if made on and as of the Closing Date, except to the extent that
any failures of such representations and warranties to be so true and
correct (determined without regard to materiality qualifiers or limitations
contained therein), would not, individually or in the aggregate, have or
reasonably be expected to have a material adverse effect on Parent's or
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Merger Sub's ability to consummate the Merger or otherwise prevent Parent
or Merger Sub from performing their obligations under this Agreement.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or before the Effective Time.
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(c) Certificates. The Company shall have received a certificate
of an executive officer of Parent and Merger Sub that the conditions set
forth in paragraphs (a) and (b) above have been satisfied.
(d) Consents. The Company shall have received evidence, in form
and substance reasonably satisfactory to it, that Parent and Merger Sub
shall have obtained (i) all consents, approvals, authorizations,
qualifications and orders of all Governmental Entities (including any in
connection with Environmental Laws) legally required in connection with
this Agreement and the transactions contemplated hereby and (ii) all
consents, approvals, authorizations and qualifications of third parties
required in connection with this Agreement and the transactions
contemplated hereby, except in the case of clauses (i) and (ii) for those
the failure of which to be obtained would not, individually or in the
aggregate reasonably be expected to have a material adverse effect on
Parent's and Merger Sub's ability to consummate the Merger or otherwise
prevent Parent and Merger Sub from performing their obligations under this
Agreement. This condition shall not be applicable to consents, approvals,
authorizations, qualifications and orders under any competition, merger
control antitrust or similar law or regulation, which are the subject of
Section 7.1(h).
ARTICLE VIII
Section 8.1 Termination. This Agreement may be terminated at any time
before the Effective Time (except as otherwise provided) as follows:
(a) by mutual written consent of each of the Company and Parent;
(b) by any party, if the Effective Time shall not have occurred
on or before February 28, 2001 (the "Termination Date"); provided, however,
that the right to terminate this Agreement under this Section 8.1(b) shall
not be available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date;
(c) by any party, if a Governmental Entity shall have issued an
order, decree or injunction having the effect of making the Merger illegal
or permanently prohibiting the consummation of the Merger, and such order,
decree or injunction shall have become final and nonappealable (but only if
such party shall have used its reasonable best efforts to cause such order,
decree or injunction to be lifted or vacated);
(d) by either Parent or the Company, if (x) there shall have been
a material breach by the other of any of its representations, warranties,
covenants or agreements contained in this Agreement, which breach would
result in the failure to satisfy one or more of the conditions set forth in
Section 7.2(a) or (b) (in the case of a breach by the Company) or Section
7.3(a) or (b) (in the case of a breach by Parent), and such breach shall be
incapable of being cured or, if capable of being cured, shall not have been
cured within 30 days after written notice thereof shall have been received
by the party alleged to be in breach.
(e) by Parent, if after a duly held stockholders' meeting,
including any adjournments or postponements, the condition set forth in
Section 7.1(a) has not been satisfied.
(f) by Parent, if (i) the Board of Directors of the Company shall
or shall resolve to (A) either not recommend that the Company's
stockholders vote in favor of this Agreement or withdraw its
recommendation, (B) modify its recommendation of approval of this Agreement
in a manner adverse to Parent or Merger Sub, or (C) approve, recommend or
fail to take a position that is adverse to any proposed Acquisition
Transaction (other than the Merger) involving the Company or any of its
Subsidiaries, or (ii) the Board of Directors of the Company shall have
refused to affirm to Parent its recommendation of approval of this
Agreement 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) the Company shall have failed as promptly as practicable
after the Form S-4 is declared effective by the SEC to call a special
stockholders meeting or mail the Proxy Statement/Prospectus to its
stockholders or failed to include its recommendation of approval of this
Agreement in the Proxy Statement/Prospectus or failed to hold the a special
stockholders meeting when scheduled.
(g) by the Company pursuant to, but only in compliance with,
Section 5.2; or
Notwithstanding anything herein to the contrary, no termination
by the Company pursuant to this Section 8.1 under circumstances requiring
payment of a Termination Fee shall be effective unless, concurrently with
such termination, the fee is paid in full by the Company, in accordance
with Section 8.2.
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Section 8.2 Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement pursuant to this Article VIII, this Agreement
shall become void (other than this Section 8.2) with no liability on the
part of either party (or of any of its representatives); provided, however,
no such termination shall relieve either party from any liability for
damages resulting from any willful or intentional breach of this Agreement
whether or not any fees contemplated by this Section 8.2 are payable.
(b) Upon the happening of a Triggering Event, the Company shall
pay to Parent (or to any Subsidiary of Parent designated in writing by
Parent to the Company) the amount of $3,450,000 (the "Termination Fee").
"Triggering Event" means any one of the following:
(i) a termination of this Agreement by Parent pursuant to
Section 8.1(f);
(ii) a termination of this Agreement by Parent pursuant to
Section 8.1(d) or 8.1(e), if any Acquisition Proposal is publicly
proposed or announced on or after the date hereof and prior to the
meeting of the Company's Stockholders and (in the case of Section
8.1(e) only) such Acquisition Proposal has not been publicly rejected
by the Board of Directors of the Company;
(iii) a termination of this Agreement by the Company
pursuant to Section 8.1(g); or
(iv) if any Acquisition Transaction is entered into, agreed
to or consummated by the Company within twelve months of a termination
of this Agreement by (A) Parent or the Company pursuant to Section
8.1(b), or (B) Parent pursuant to Section 8.1(d) or 8.1(e), the
entering into, agreeing to or consummation of such Acquisition
Transaction.
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, (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 the date a contract is entered into with respect to an
Acquisition Transaction or 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 under this Agreement.
(c) Any Termination Fee payable hereunder shall be payable by
wire transfer of immediately available funds.
(d) The parties acknowledge that the agreements contained in this
Section 8.2 are an integral part of the transactions contemplated by this
Agreement, and
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that, without these agreements, Parent would not enter into this Agreement.
Accordingly, if the Company fails to pay promptly amounts due pursuant to
this Section 8.2, and, in order to obtain such payment, Parent commences a
suit which results in a judgment against the Company for such amount (or
any portion thereof), the Company shall pay the costs and expenses
(including attorneys fees) of the other party in connection with such suit,
together with interest on such amount in respect of the period from the
date such amount became due until paid at the prime rate of The Chase
Manhattan Bank in effect from time to time during such period.
Section 8.3 Amendment. This Agreement may be amended at any time
before the Effective Time but only pursuant to a writing executed and
delivered by the Company and Parent.
ARTICLE IX
Section 9.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this
Agreement shall terminate at the Effective Time or upon the termination of
this Agreement pursuant to Section 8.1, as the case may be, except that (a)
the agreements set forth in Sections 1.3, 6.10 and 6.11 shall survive the
Effective Time, and (b) the agreements set forth in Sections 6.7, 8.2 and
this Article IX shall survive termination indefinitely.
Section 9.2 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date of receipt and shall be delivered
personally or mailed by registered or certified mail (postage prepaid,
return receipt requested), sent by overnight courier or sent by telecopy,
to the applicable party at the following addresses or telecopy numbers (or
at such other address or telecopy number for a party as shall be specified
by like notice):
(a) if to the Company:
Robinson Nugent, Inc.
880 East Eight Street
P. O. Box 1208
New Albany, IN 47151
Attention: Patrick Duffy
Telecopy No.: (317) 594-1836
with a copy to:
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Ice Miller
One American Square
Box 82001
Indianapolis, IN 46282-0002
Attention: Berkely W. Duck III, Esq.
Telecopy No.: (317) 592-4642
(b) if to Parent or Merger Sub:
Minnesota Mining and Manufacturing Company
3M Center
St. Paul, Minnesota 55114
Telecopy: (651) 736-9469
Attention: General Counsel
with a copy to
Minnesota Mining and Manufacturing Company
3M Center
St. Paul, Minnesota 55114
Telecopy: (651) 736-9469
Attention: Gregg Larson, Esq.
with a further copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Jean Hanson, Esq.
Telecopy No.: (212) 859-4000
Section 9.3 Certain Definitions; Interpretation. (a) For purposes of
this Agreement, the following terms shall have the following meanings:
(i) "Material Adverse Effect" means any change,
circumstance, event, effect or state of facts (x) that has or can
reasonably be expected to have a material adverse effect on the business,
operations, results of operations, assets, prospects, or conditions
(financial or otherwise) of the Company or any of its Subsidiaries having a
value of $150,000 individually or $1,500,000 in the aggregate (except for
purposes of Section 7.2(a), a value of $3,000,000 in the aggregate), or the
ability of the Company and
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its Subsidiaries to conduct their business after the closing consistent in
all material respects with the manner conducted in the past, or (y) that
will prevent or materially impair the Company's ability to consummate the
Merger; provided, however, that a Material Adverse Effect will not be
deemed to have occurred if the change, circumstance, event, effect or state
of facts results primarily from (i) changes in general business conditions
in the connector industry or (ii) the public announcement or pendency of
the Merger that reasonably would be expected to have only a temporary
effect on the Company.
(ii) "affiliate" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned Person.
(iii) "Board of Directors" of the Company includes any
committee thereof.
(iv) "control" (including the terms "controlled by" and
"under common control with") means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies
of a Person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise.
(v) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended and the rules and regulations promulgated
thereunder.
(vi) "knowledge" of the Company with respect to any matter
means actual knowledge of any of the Company's senior executive officers
after reasonable investigation and due diligence. Such Persons and their
respective areas of responsibility are set forth on Section 9.3 of the
Company Disclosure Letter.
(vii) "Person" means an individual, corporation,
partnership, limited liability company, association, trust, unincorporated
organization, entity or group (as defined in the Exchange Act).
(viii) "Significant Subsidiary" shall have the meaning set
forth in Rule 1-02 of Regulation S-X of the SEC.
(ix) "Subsidiary" of a Person means any corporation or other
legal entity of which that Person (either alone or through or together with
any other Subsidiary or Subsidiaries) is the general partner or managing
entity or of which at least a majority of the stock (or other equity
interests the holders of which are generally entitled to vote for the
election of the board of directors or others performing similar functions
of such corporation or other legal entity) is directly or indirectly owned
or controlled by that Person (either alone or through or together with any
other Subsidiary or Subsidiaries).
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(b) When a reference is made in this Agreement to Articles,
Sections, Company Disclosure Letter or Exhibits, this reference is to an
Article or a Section of, or an Exhibit to, this Agreement, unless otherwise
indicated. The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be
understood to be followed by the words "without limitation."
Section 9.4 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.5 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic
or legal substance of the transactions contemplated hereby is not affected
in any manner materially adverse to any party. Upon a determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the maximum extent possible.
Section 9.6 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Company Disclosure Letter and the Confidentiality Agreement
dated November 30, 1999 between Parent and the Company (the
"Confidentiality Agreement") constitute the entire agreement and supersede
any and all other prior agreements and undertakings, both written and oral,
among the parties hereto, or any of them, with respect to the subject
matter hereof and, except for Section 6.10 (Insurance; Indemnity), does
not, and is not intended to, confer upon any Person other than the parties
hereto any rights or remedies hereunder.
Section 9.7 Assignment. This Agreement shall not be assigned by any
party by operation of law or otherwise without the express written consent
of each of the other parties.
Section 9.8 Governing Law. This Agreement shall be governed by and
construed in accordance with, the laws of the State of Indiana without
regard to the conflicts of laws provisions thereof. Each of the parties
hereto hereby irrevocably and unconditionally waives any right it may have
to trial by jury in connection with any
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litigation arising out of or relating to this Agreement, the Merger or any
of the other transactions contemplated hereby or thereby.
Section 9.9 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties in separate counterparts,
each of which when executed shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 9.10 Confidential Nature of Information. Between the date of
this Agreement and the Effective Time the parties hereto will hold and will
cause their respective officers, directors, employees, representatives,
consultants and advisors to hold in strict confidence in accordance with
the terms of the Confidentiality Agreement, all documents and information
furnished to such party by or on behalf of the other party in connection
with the transactions contemplated by this Agreement. If the transactions
contemplated by this Agreement are not consummated, such confidence shall
be maintained in accordance with such Confidentiality Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first written above by their respective
officers thereunto duly authorized.
MINNESOTA MINING AND
MANUFACTURING COMPANY
By: /s/ Robert Burgstahler
------------------------------------
Name: Robert Burgstahler
Title: Vice President,
Chief Financial Officer
BARBADOS ACQUISITION, INC.
By: /s/ John Woodworth
------------------------------------
Name: John Woodworth
Title: President
ROBINSON NUGENT, INC.
By: /s/ Larry W. Burke
----------------------------
Name: Larry W. Burke
Title: President and CEO
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ANNEX B
VOTING AND STOCK OPTION AGREEMENT
VOTING AND STOCK OPTION AGREEMENT (this "Agreement"), dated as of
October 2, 2000, by and between Minnesota Mining and Manufacturing Company,
a Delaware corporation ("Parent"), Robinson Nugent, Inc., an Indiana
corporation (the "Company"), and the Stockholders listed on Schedule A
hereto (collectively, the "Stockholders").
RECITALS
A. Parent, Barbados Acquisition, Inc., ("Merger Sub") an Indiana
Corporation and wholly owned Subsidiary of Parent, and the Company, are
entering into an Agreement and Plan Merger of even date herewith (the
"Merger Agreement") providing for a business combination between Parent and
the Company.
B. As of the date of this Agreement, the Stockholders own
beneficially and of record the Common Shares of the Company ("Company
Common Shares") set forth opposite their respective names on Schedule A
(Company Common Shares owned by each Stockholder are referred to as such
Stockholder's "Owned Shares").
C. Subject to the terms and conditions of the Merger Agreement,
the Stockholders will receive shares ("Parent Shares") of the Parent's
common stock, par value $0.01 per share ("Parent Common Stock") in exchange
for the Shares (as defined in Section 1) held by them at the Effective
Time.
D. As an inducement and a condition to Parent's willingness to
enter into the Merger Agreement, Parent, the Company and the Stockholders
are entering into this Agreement.
E. Capitalized terms not defined herein shall have the meanings
set forth in the Merger Agreement.
F. This Agreement and the Merger Agreement are being entered into
simultaneously.
NOW, THEREFORE, in consideration of the execution and delivery by
Parent of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein, and intending to be legally bound
hereby, the parties agree as follows:
1. Voting Agreement. Each Stockholder agrees in accordance with
Section 23-1-32-1 of the IBCL that, at any meeting of the stockholders of
the Company (a
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"Company Stockholders' Meeting"), however called, and at every adjournment
or postponement thereof, he, she or it shall (i) appear at the meeting or
otherwise cause his, her or its Owned Shares, together with any Company
Common Shares acquired by the Stockholder after the date of this Agreement
whether upon the exercise of options or warrants conversion of convertible
securities or otherwise (the Stockholder's acquired shares, together with
the Stockholder's Owned Shares, are referred to as the Stockholder's
"Shares"), to be counted as present thereat for purposes of establishing a
quorum, (ii) vote, or execute consents in respect of, his, her or its
Shares, or cause his, her or its Shares to be voted, or consents to be
executed in respect thereof, in favor of the approval and adoption of the
Merger Agreement, and any action required in furtherance thereof and (iii)
for the period commencing the date hereof and ending 90 days after the date
of termination of the Merger Agreement, vote, or execute consents in
respect of, his, her or its Shares, or cause his, her or its Shares to be
voted, or consents to be executed in respect thereof, against any agreement
or transaction relating to any Acquisition Proposal presented for the
Stockholders of the Company or in respect of which vote of consent of the
Stockholder is requested or sought.
2. Irrevocable Proxy. As security for the Stockholders'
obligations under Section 1, each of the Stockholders hereby irrevocably
constitutes and appoints Parent as his, her or its attorney and proxy in
accordance with the provisions of Section 23-1-30-3 of the IBCL, with full
power of substitution and resubstitution, to cause the Stockholder's shares
to be counted as present at any Company Stockholders Meetings to vote his,
her or its Shares at any Company Stockholders' Meeting, however called, and
execute consents in respect of his, her or its shares as and to the extent
provided in Section 1. THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND
COUPLED WITH AN INTEREST. Each Stockholder hereby revokes all other proxies
and powers of attorney with respect to his, her or its Shares that he, she
or it may have heretofore appointed or granted, and no subsequent proxy or
power of attorney shall be granted (and if granted, shall not be effective)
by any Stockholder with respect thereto, other than for the sole purpose of
voting Shares as contemplated by, or other than in a manner inconsistent
with the Stockholders obligations under Section 1.
3. Option. (a) Subject to the terms and conditions set forth in
this Agreement, each of the Stockholders hereby grants to Parent an
irrevocable option (the "Option") to purchase (i) the number of Shares set
forth next to such Stockholder's name on Exhibit A hereto (as adjusted as
set forth herein) and any other Shares owned by such Stockholder
beneficially or acquired after the date of this Agreement, at a purchase
price of $19.00 (as adjusted as set forth herein) per Share (the "Purchase
Price").
(b) The Option may be exercised by Parent, in whole at any time
prior to the earlier of (i) the date upon which the Effective Time (as
defined in the Merger
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Agreement) occurs and (ii) the date fifteen business days after the date of
termination of the Merger Agreement.
(c) In the event that Parent wishes to exercise the Option, it
shall send to the Stockholders a written notice (the date of each such
notice being herein referred to as a "Notice Date") to that effect, which
notice also specifies a date not earlier than three business days nor later
than 30 business days from the Notice Date for the closing of such purchase
(an "Option Closing Date"); provided, however, that (i) if the closing of a
purchase and sale pursuant to the Option (an "Option Closing") cannot be
consummated by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which the restriction on
consummation has expired or been terminated and (ii) without limiting the
foregoing, if prior notification to or approval of any regulatory authority
is required in connection with the purchase, Parent and the Stockholders
shall promptly file the required notice or application for approval and
shall cooperate in the expeditious filing of such notice or application,
and the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which, as the case may be, (A) any
required notification period has expired or been terminated or (B) any
required approval has been obtained, and in either event, any requisite
waiting period has expired or been terminated. Each of Parent and the
Stockholders agrees to use commercially reasonable efforts to cooperate
with and provide information to the other, for the purpose of any required
notice or application for approval. Any exercise of the Option shall be
deemed to occur on the Notice Date relating thereto. The place of any
Option Closing shall be at the offices of Parent, 3M Center, St Paul, MN
55133 and the time of the Option Closing shall be 10:00 a.m. (Central Time)
on the applicable Option Closing Date.
(d) At any Option Closing, Parent shall pay to each Stockholder
in immediately available funds by wire transfer to a bank account
designated in writing by such Stockholder an amount equal to the Purchase
Price multiplied by the number of Shares being delivered by such
Stockholder; provided, that failure or refusal of any Stockholder to
designate a bank account shall not preclude Parent from exercising the
Option, in whole or in part.
(e) At any Option Closing, simultaneously with the delivery of
immediately available funds as provided above, each Stockholder shall
deliver to Parent a certificate or certificates representing its pro rata
portion of the Shares to be purchased at such Option Closing, which Shares
shall be free and clear of all liens, claims, charges and encumbrances of
any kind whatsoever.
(f) In the event of any change in the Company Common Shares by
reason of a stock dividend, split-up, merger, recapitalization,
combination, exchange of shares or similar transaction, the type and number
of Shares subject to the Option, and the Purchase
-B-3-
<PAGE>
Price therefor, shall be adjusted appropriately, so that Parent shall
receive upon exercise of the Option the number and class of shares or other
securities or property that Parent would have received in respect of the
Option Shares if the Option had been exercised immediately prior to such
event or the record date therefor, as applicable.
4. Registration Rights. The Company shall, if requested by Parent
at any time and from time to time within two years after the date of first
exercise of the Option, as expeditiously as possible prepare and file up to
two registration statements under the Securities Act if such registration
is necessary in order to permit the sale or other disposition of any or all
securities that have been acquired by exercise by Parent of the Option, in
accordance with the intended method of sale or other disposition stated by
Parent, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision; and the Company shall use
commercially reasonable efforts to qualify such securities under any
applicable state securities laws. Parent agrees to use reasonable best
efforts to cause, and to cause any underwriters of any sale or other
disposition to cause, any sale or other disposition pursuant to such
registration statement to be effected on a widely distributed basis. The
Company shall use reasonable best efforts to cause each such registration
statement to become effective, to obtain all consents or waivers of other
parties which are required therefor, and to keep such registration
statement effective for such period not in excess of 90 calendar days from
the day such registration statement first becomes effective as may be
reasonably necessary to effect such sale or other disposition. The
obligations of the Company to file a registration statement and to maintain
its effectiveness may be suspended for one or more periods of time not
exceeding 90 calendar days in the aggregate with respect to any
registration statement if the Board of Directors of the Company shall have
determined that the filing of such registration statement or the
maintenance of its effectiveness would require disclosure of nonpublic
information that would materially and adversely affect the Company or would
interfere with a planned merger, sale of material assets, recapitalization
or other significant corporate action (other than the issuance of equity
securities). Any registration statement prepared and filed under this
Section 4, and any sale covered thereby, shall be at the Company's expense
except for underwriting discounts or commissions and brokers' fees, which
shall be borne solely by Parent. Parent shall provide in writing all
information reasonably requested by the Company for inclusion in any
registration statement to be filed hereunder. If, during the time periods
referred to in the first sentence of this Section, the Company effects a
registration under the Securities Act of the Company's equity securities
for its own account or for any other of its stockholders (other than on
Form S-4 or Form S-8, or any successor form), it shall allow Parent the
right to participate in such registration; provided however, that, if the
managing underwriters of such offering advise the Company that in their
opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering on a
commercially reasonable basis, priority shall be given to the securities
intended to be included therein by the Company for its own
-B-4-
<PAGE>
account and, thereafter, the Company shall include the securities requested
to be included therein by Parent pro rata with the securities intended to
be included therein by other stockholders of the Company. In connection
with any registration pursuant to this Section, Parent and the Company
shall provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification, and contribution
in connection with such registration.
5. Representations and Warranties of Parent. Parent represents
and warrants to the Stockholders as follows:
(a) Organization; Due Authorization; Enforceability. Parent is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Parent has full corporate power and
authority to execute and deliver this Agreement. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of
Parent, and no other corporate proceedings on the part of Parent are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Parent and constitutes a valid and binding agreement of
Parent, enforceable against Parent in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and to general principles of equity.
(b) No Conflicts. No authorization, consent or approval of, or
filing with, any court or any public body or authority is necessary for the
consummation by Parent of the transactions contemplated by this Agreement.
The execution, delivery and performance of this Agreement by Parent will
not constitute a breach, violation or default (or any event which, with
notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any lien or encumbrance upon any of the properties or assets of
Parent under, any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument to which Parent is a party or by which
its properties or assets are bound, other than breaches, violations,
defaults, terminations, accelerations or creation of liens and encumbrances
which, in the aggregate, would not materially impair the ability of Parent
to perform its obligations hereunder.
(c) Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with
the transactions contemplated hereby based upon arrangements made by or on
behalf of Parent.
6. Representations and Warranties of the Stockholders. Each
Stockholder hereby severally and not jointly represents and warrants to
Parent as follows:
-B-5-
<PAGE>
(a) Organization; Due Authorization; Enforceability. If the
Stockholder is a corporation or other entity, the Stockholder is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. The Stockholder has full power and
authority to execute and deliver this Agreement. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary action on the
part of the Stockholder, and no other proceedings on the part of the
Stockholder are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Stockholder and constitutes a valid and
binding agreement of the Stockholder, enforceable against such Stockholder
in accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and to
general principles of equity.
(b) Ownership of Shares of Company Common Shares; Voting Rights.
Except as set forth on Schedule A, the Stockholder owns, of record and
beneficially, the shares of Company Common Shares set forth opposite the
Stockholder's name on Schedule A. The Stockholder has sole voting power
with respect to his, her or its Owned Shares. Except pursuant to this
Agreement or as set forth on Schedule A, the Stockholder's Owned Shares and
the Shares are not subject to any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding restricting or
otherwise relating to the voting, dividend rights or disposition of such
Owned Shares. Upon the exercise of the Option and the delivery to Parent by
Stockholder of a certificate or certificates evidencing the Shares, Parent
will receive good, valid and marketable title to the Shares, free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on Parent's voting rights, charges and
other encumbrances of any nature whatsoever.
(c) No Conflicts. No authorization, consent or approval of, or
filing with, any court or any public body or authority is necessary for the
consummation by such Stockholder of the transactions contemplated by this
Agreement. The execution, delivery and performance of this Agreement by
such Stockholder will not constitute a breach, violation or default (or any
event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien or encumbrance
upon any of the properties or assets of such Stockholder under, any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument to which such Stockholder is a party or by which his, her
or its properties or assets are bound, other than breaches, violations,
defaults, terminations, accelerations or creation of liens and encumbrances
which, in the aggregate, would not materially impair the ability of such
Stockholder to perform his, her or its obligations hereunder.
-B-6-
<PAGE>
(d) Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with
the transactions contemplated hereby based upon arrangements made by or on
behalf of the Stockholder.
7. Representations and Warranties of the Company. The Company
represents and warrants to Parent as follows:
(a) Organization; Due Authorization; Enforceability. The Company
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Indiana. The Company has full corporate
power and authority to execute and deliver this Agreement. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of the Company, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and to general principles
of equity.
(b) No Conflicts. No authorization, consent or approval of, or
filing with, any court or any public body or authority is necessary for the
consummation by the Company of the transactions contemplated by this
Agreement. The execution, delivery and performance of this Agreement by the
Company will not constitute a breach, violation or default (or any event
which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
result in the creation of any lien or encumbrance upon any of the
properties or assets of the Company under, any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument to
which the Company is a party or by which its properties or assets are
bound, other than breaches, violations, defaults, terminations,
accelerations or creation of liens and encumbrances which, in the
aggregate, would not materially impair the ability of the Company to
perform its obligations hereunder.
(c) Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with
the transactions contemplated hereby based upon arrangements made by or on
behalf of the Company.
(d) State Takeover Statutes. The Board of Directors of the
Company has approved the Merger and this Agreement and such approval is
sufficient to render inapplicable to the Merger, this Agreement and the
transactions contemplated by this Agreement, the provisions of IC 23-1-43
to the extent, if any, such section is applicable to
-B-7-
<PAGE>
the transactions contemplated by this Agreement. The Board of Directors of
the Company has amended the bylaws of the Company so as to render
inapplicable to this Agreement the provisions of IC 23-1-42. To the
Company's knowledge, no other state takeover statute or similar statute or
regulation applies to the transactions contemplated hereby.
(e) Rights Agreement. No "Distribution Date" or "Triggering
Event" (as such terms are defined in the Rights Agreement, dated as of
April 21, 1998, between the Company and Compushare Investor Services, LLC,
as successor rights agent, as amended (the "Rights Agreement")) has
occurred as of this date. This Agreement, and the consummation of the
transactions contemplated hereunder have been approved by at least
two-thirds (2/3) of the Disinterested Directors (as defined in the Rights
Agreement). The Rights Agreement has been amended so that neither the
execution or delivery of this Agreement, nor the exchange of the Company
Common Shares for the shares of Parent Common Stock and cash in accordance
with Article II of the Merger Agreement will cause (A) the Rights issued
pursuant to the Rights Agreement to become exercisable under the Rights
Agreement, (B) Parent or Merger Sub to be deemed an "Acquiring Person" (as
defined in the Rights Agreement), or (C) the "Shares Acquisition Date" or a
"Triggering Event" (each as defined in the Rights Agreement) to occur upon
any such event. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
ability of any Person to exercise any Rights or cause the Rights to
separate from the shares of Company Common Shares to which they are
attached or to be triggered or become exercisable.
8. Stockholder Covenants. Each Stockholder hereby severally
covenants and agrees as follows:
(a) Each Stockholder hereby agrees, during the period commencing
on the date hereof and ending 90 days after the termination of the Merger
Agreement, except as contemplated hereby, not to sell, transfer, pledge,
encumber, assign or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to the sale,
transfer, pledge, encumbrance, assignment or other disposition of (all of
the foregoing, "Sell", "Sold" or "Sale", as the case may be), any of the
Owned Shares or Shares, provided, however, that such Stockholder may
transfer, pledge, encumber, assign or otherwise dispose the Owned Shares or
Shares as a gift, in which case, as a condition of the gift, the
Stockholder must require the person to which any such Owned Shares or
Shares are to be transferred, pledged, encumbered, assigned or otherwise
disposed of to agree in writing, pursuant to an agreement reasonably
satisfactory to Parent to which Parent is an express third-party
beneficiary, that with respect to such Owned Shares or Shares such person
shall be subject to the restrictions and obligations hereunder as if such
person was a Stockholder hereunder, (ii) not to grant any proxies, powers
of attorney or other authorization or consent, deposit any shares of
capital stock of the Company into a
-B-8-
<PAGE>
voting trust or enter into a voting agreement with respect to any such
Shares and (iii) not to take any action that would make any representation
or warranty of such Stockholder contained in this Agreement untrue or
incorrect or have the effect of preventing or disabling such Stockholder
from performing his, her or its obligations under this Agreement.
(b) Such Stockholder hereby agrees, during the period commencing
on the date hereof and ending 90 days after the termination of the Merger
Agreement, to promptly notify Parent of the number of new shares of capital
stock of the Company acquired by such Stockholder, if any, after the date
of this Agreement.
(c) Such Stockholder shall immediately cease any discussions or
negotiations with any parties other than Parent that may be ongoing with
respect to an Acquisition Proposal. For so long as Section 5.2 of the
Merger Agreement is in effect, such Stockholder shall not (i) solicit,
initiate or encourage any inquiries or the making of any Acquisition
Proposal, or (ii) participate in any discussions or negotiations regarding
any Acquisition Proposal, except to the extent such discussions or
negotiations are participated in by the Stockholder in his or her capacity
as a director of the Company in accordance with the terms of the Merger
Agreement.
9. Non Competition; Non-Solicitation.
(a) Upon the terms and subject to the conditions set forth in
this Section 9, each Stockholder covenants and agrees that, as a material
consideration running to Parent for the Parent entering into the Merger
Agreement, for a period of five years from and after the earlier of the
exercise of the Option hereunder or the Effective Time, each Stockholder
will not engage in any business directly or indirectly in competition with
the business as carried on, or as proposed to be carried on, by the Company
or its subsidiaries or affiliates on the earlier of the exercise of the
Option hereunder or the Effective Time, in the United States of America, or
in any country or political subdivision of the world in which the Business
is located or conducts business.
(b) The term of the covenant contained in Section 9(a) hereof
shall be tolled with respect to any Stockholder for the period commencing
on the date any successful action is filed for injunctive relief or damages
arising out of a breach by such Stockholder of Section 9(a) hereof and
ending upon final adjudication (including appeals) of such action.
(c) If, in any judicial proceeding, the court shall refuse to
enforce the covenant contained in Section 9(a) hereof because the time
limit is too long, it is expressly understood and agreed between the
parties hereto that for purposes of such proceeding such time limitation
shall be deemed reduced to the extent necessary to permit enforcement of
such covenant. If, in any judicial proceeding, the court shall refuse to
-B-9-
<PAGE>
enforce the covenant contained in Section 9(a) hereof because it is more
extensive (whether as to geographic area, scope of business or otherwise)
than necessary to protect the business and goodwill of Parent, it is
expressly understood and agreed between the parties hereto that for
purposes of such proceeding the geographic area, scope of business or other
aspect shall be deemed reduced to the extent necessary to permit
enforcement of such covenant.
(d) Each Stockholder acknowledges that a breach of Section 9(a)
hereof would cause irreparable damage to Parent, and in the event of each
Stockholder's actual or threatened breach of the provisions of Section 9(a)
hereof, Parent shall be entitled to a temporary restraining order and an
injunction restraining each Stockholder from breaching such covenants
without the necessity of posting bond or proving irreparable harm, such
being conclusively admitted by each Stockholder. Nothing shall be construed
as prohibiting Parent from pursuing any other available remedies for such
breach or threatened breach, including the recovery of damages from each
Stockholder.
(e) Each Stockholder covenants and agrees that, for a period of
one year, following the earlier of the exercise of the Option hereunder or
the Effective Time, he or she will not, and will cause his or her
affiliates not to, directly or indirectly, solicit for employment any
employee of the Company or any of its affiliates who is engaged in the
business of the Company and was an employee of the Company as of the date
hereof to become an employee or otherwise provide services to such
Stockholder or any of its affiliates.
10. Miscellaneous.
(a) Fees and Expenses. Except as otherwise provided in the Merger
Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the
party incurring such expenses.
(b) Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
(c) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF INDIANA, WITHOUT
REGARD TO ITS CONFLICT OF LAWS RULES OR PRINCIPLES.
(d) Notices. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by cable,
telegram, telex or other standard form of telecommunications, or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
-B-10-
<PAGE>
If to a Stockholder:
to the address set
forth beneath the name
of such Stockholder on
Schedule A
If to Parent:
Minnesota Mining and Manufacturing Company
3M Center
St. Paul, Minnesota 55114
Telecopy: (651) 736-9469
Attention: General Counsel
With a copy to:
Minnesota Mining and Manufacturing Company
3M Center
St. Paul, Minnesota 55114
Telecopy: (651) 736-9469
Attention: Gregg Larson
with a further copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Jean Hanson, Esq.
Telecopy No.: (212) 859-4000
If to the Company:
To the address set
forth in the Merger Agreement
or to such other address as any party may have furnished to the other
parties in writing in accordance with this Section.
(e) Assignment; Binding Effect; No Third Party Beneficiaries.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the
other party. Subject to the preceding sentence, this Agreement (including
the obligations of each Stockholder under Sections 1 and 2 hereof) shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective
-B-11-
<PAGE>
successors and assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
(f) ENFORCEMENT. THE PARTIES HERETO AGREE THAT IRREPARABLE DAMAGE
WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE
NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE
BREACHED. IT IS ACCORDINGLY AGREED THAT, SUBJECT TO THE NEXT SENTENCE, THE
PARTIES SHALL BE ENTITLED TO AN INJUNCTION OR INJUNCTIONS TO PREVENT
BREACHES OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY THE TERMS AND
PROVISIONS HEREOF IN ANY COURT OF THE UNITED STATES OR ANY STATE HAVING
JURISDICTION, THIS BEING IN ADDITION TO ANY OTHER REMEDY TO WHICH THEY ARE
ENTITLED AT LAW OR IN EQUITY.
(g) Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed
by all of the parties hereto.
-B-12-
<PAGE>
IN WITNESS WHEREOF, Parent and the Stockholders have caused this
Agreement to be duly executed as of the day and year first above written.
Minnesota Mining and
Manufacturing Company
By: /s/ Robert J. Burgstahler
------------------------------------
Name: Robert J. Burgstahler
Title: Vice President, Finance and
Administrative Services
ROBINSON NUGENT, INC.
By: /s/ Larry W. Burke
---------------------------------------
Name: Larry W. Burke
Title: President & CEO
STOCKHOLDERS
/s/ Samuel C. Robinson
---------------------------------------
Samuel C. Robinson
/s/ James W. Robinson
---------------------------------------
James W. Robinson
/s/ Patrick C. Duffy
---------------------------------------
Patrick C. Duffy
/s/ Larry W. Burke
---------------------------------------
Larry W. Burke
-B-13-
<PAGE>
SCHEDULE A
STOCKHOLDER OPTIONS SHARES
----------- ------- ------
Samuel C. Robinson -0- 1,115,360
226 Barefoot Beach Blvd
Bonita Springs, FL 34134
James W. Robinson 34,000 280,741
7621 State Road 62
Lanesville, IN 47136
Patrick C. Duffy 88,000 37,099
583 Clubside Circle
Venice, FL 34293
Larry W. Burke 97,650 162,451
205 Ponder Way
Clarksville, IN 47129
-B-14-
<PAGE>
ANNEX C
October 2, 2000
Board of Directors
Attn: Mr. Patrick E. Duffy
Chairman
Robinson Nugent, Inc.
800 East Eighth Street
P.O. Box 1208
New Albany, IN 47150
Members of the Board:
You have requested Goelzer Investment Banking's ("Goelzer") opinion as to
the fairness, from a financial point of view, of the terms of the
stock-for-stock transaction between Robinson Nugent, Inc. (the "Company")
and Minnesota Mining & Manufacturing Company (the "acquirer" or "3M"). The
terms of the transaction, which have been presented to Goelzer by the
Company and its advisers, provide that for each share of Robinson Nugent
shareholders will receive $19.00 worth of fully registered, unrestricted
Minnesota Mining & Manufacturing Co. common stock if the average closing
trading price of 3M trades between a collar of $82.00 and $100.00 per
share. If the average price exceeds $100 per share, the exchange ratio will
be fixed at 0.19 shares of 3M for every share of the Company. If the
average price falls below $82.00 per share, the exchange ratio will be
fixed at 0.2317 shares of 3M for every share of the Company.
It should be noted that Goelzer has not rendered any investment banking or
other services to the Company in the past. For the purpose of this opinion,
Goelzer has undertaken analyses, investigations and interviews deemed
necessary and relevant. In the course of such activities Goelzer has among
other things:
1. Conducted detailed interviews with management concerning the Company's
history and operating record, the nature of the markets served,
competitive situation, financial condition, recent performance and
current outlook;
2. Analyzed trading data (stock price and volume trends) of the Company's
Common Shares for a period of ten years and analyzed the stock's total
return relative to appropriate indices over the last five years as
provided by Bloomberg Analytics;
3. Analyzed the Company's financial statements and studied its filings
under the Securities Exchange Act of 1934 including the latest Form
10-K and Form 10-Q and annual reports for the three fiscal years ended
June 30, 2000;
4. Conducted a search using Bloomberg Analytics and utilized a 6/26/00
Company Press Release in order to find publicly traded companies which
could be used as reasonable comparables in
<PAGE>
determining the fair value of the Company;
5. Conducted a search for merger and acquisition transactions involving
both publicly traded and privately held corporations within the
electronic connector/electrical interconnection industry using two
large proprietary databases (Mergerstat and World M&A Network's Done
Deals) and the February 1999 edition of The Bishop Report (a
publication of Bishop & Associates);
6. Analyzed trading data (stock price and volume trends), operating
record, the nature of the markets served, financial condition, recent
performance and current outlook of the potential acquirer; and
7. Performed such other studies, analyses and investigations as deemed
appropriate.
In rendering this opinion Goelzer has relied on the accuracy and
completeness of the information furnished and has not attempted to
independently verify such information nor has Goelzer made or caused to be
made any independent evaluation of the assets of the Company. In reaching
our conclusions we have also relied in part upon the letter provided to us
by the Chairman of the Board, Mr. Patrick Duffy, a copy of which is
included in the materials provided herein.
Based upon the foregoing, it is our opinion that the proposed
stock-for-stock transaction is fair, from a financial point of view, to the
shareholders of the Company.
Respectfully submitted,
/s/ GOELZER INVESTMENT BANKING
GOELZER INVESTMENT BANKING
-C-2-
<PAGE>
ANNEX D
RESTATED ROBINSON NUGENT, INC.
2000 ANNUAL REPORT ON FORM 10-K*
* Robinson Nugent, Inc. filed its Annual Report on Form 10-K for the
year ended June 30, 2000 on August 24, 2000. It subsequently filed an
amendment to its Annual Report on Form 10-K/A on October 10, 2000,
which restated Item 11 from its 10-K. For the reader's convenience,
the Form 10-K attached hereto has been restated to include the changes
made in the amendment on Form 10-K/A.
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission file number 0-9010
ROBINSON NUGENT, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
INDIANA 35-0957603
-------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
organization or incorporation) Identification Number)
800 EAST EIGHTH STREET, NEW ALBANY, INDIANA 47151-1208
-------------------------------------------- ----------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (812) 945-0211
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, Common Share
Without Par Value Purchase Rights
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days:
Yes X No
--- ---
The aggregate market value of Common Shares held by nonaffiliates of
the registrant, based on the closing price of the Common Shares of $13.75, as of
August 8, 2000, was approximately $28,956,000.
As of August 8, 2000, the registrant had outstanding 5,112,799 Common
Shares, without par value.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE:
PARTS OF FORM 10-K INTO WHICH
IDENTITY OF DOCUMENT DOCUMENT IS INCORPORATED
--------------------------------------- -----------------------------
No documents incorporated by reference
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
Amendment to this Form 10-K. [ ]
-D-2-
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Robinson Nugent, Inc. (the "Company") or ("RN"), an Indiana corporation
organized in 1955, designs, manufactures and markets electronic devices used to
interconnect components of electronic systems. The Company's principal products
are integrated circuit sockets; connectors used in board-to-board,
wire-to-board, and custom molded-on cable assemblies. The Company also offers
application tooling that is used in applying wire and cable to its connectors.
The Company's products are used in electronic telecommunication
equipment including switching and networking equipment such as servers and
routers, mass storage devices, modems and PBX stations; data processing
equipment such as mainframe computers, personal computers, workstations, CAD
systems; peripheral equipment such as printers, disk drives, plotters and
point-of-sale terminals; industrial controls and electronic instruments;
consumer products; and a variety of other applications.
Major markets are the United States, Europe, Japan, and the Southeast
Asian countries including Singapore and Malaysia. Manufacturing facilities are
located in New Albany, Indiana; Dallas, Texas; Reynosa, Mexico; Sungai Petani,
Malaysia; Inchinnan, Scotland; and Hamont-Achel, Belgium.
Corporate headquarters are located in New Albany, Indiana, which also
is the site for the Company's corporate engineering, research and development,
preproduction, testing of new products and North American distribution and
warehousing. International headquarters are located in s-Hertogenbosch, The
Netherlands; Singapore; and Tokyo, Japan.
PRODUCTS
The Company produces a broad range of sockets that accommodate a
variety of integrated circuit package styles. Sockets are offered for dual
in-line package (DIP) and pin grid array (PGA) devices, as well as plastic
leaded chip carriers (PLCC).
Sockets are used in a wide variety of applications within electronic
equipment, but are primarily used to connect integrated circuits, such as
microprocessors and memory devices, to an electronic printed circuit board
(PCB). In many applications, semiconductor devices have been subject to
replacement, which encouraged the use of a socket rather than soldering the
device directly to the printed circuit board. But, due to the improved
reliability of semiconductor technology, more and more semiconductor devices are
being soldered directly to PCB's. This trend will continue to reduce the
worldwide demand for integrated circuit sockets.
Dual in-line memory module (DIMM) sockets were introduced in fiscal
1992 and were designed to interconnect dual in-line memory modules with
electronic printed circuit boards. In addition to DIMM sockets, the Company
offers several other products that interconnect memory devices to electronic
printed circuit boards. These include small outline dual in-line memory module
sockets (SO-DIMM) and PCMCIA memory card headers, sockets and type II and III PC
card kits.
The Company provides a broad range of electronic connectors, such as
insulation displacement flat cable connectors (IDC), used in cable-to-board
applications. The use of insulation displacement connectors in electronic
hardware increases productivity by eliminating the labor involved in stripping
insulation from wires prior to attachment to the connector contacts. This
technology permits the automated manufacturing of cable assemblies. The range
-D-3-
<PAGE>
of connectors also includes several product styles that provide for
board-to-board or board-stacking (parallel-mounting) applications.
The Company offers several product families in the two-piece style
of connectors. These connectors are used to connect printed circuit boards
which are positioned either at right angles, in-line, or parallel stacked at
close intervals. The products offered include .025 inch square post
connectors and receptacle sockets; DIN series connectors; high-density,
high-pin-count connectors (HDC); half-pitch, high-density (RN
PAK-50-Registered Trademark-) connectors; and a higher pin count
2-millimeter-spaced connector (METPAK-Registered Trademark-2) used in
backplane applications. In addition, a line of high density .8mm (RN PAK
8-TM-) and .5mm (RN PAK 5-TM-) board stacking interconnects are offered by
the Company to address the growing demand for miniaturized connectors used in
the portable computers, mobile communication equipment and other markets.
The DIN series of connectors has many variations in connecting
configurations and pin count. The product is based on a European standard, but
has gained wide acceptance in the U.S. and other markets worldwide. While there
are a large number of producers of DIN connectors in Europe, the Company is one
of a limited number of manufacturers producing the product in the U.S.
The high-pin-count, high-density connector (HDC) includes pin counts
ranging from 60 to 492 in a three- and four-row configuration. This connector
family, along with DIN connectors, is widely used on backplane applications and
frequently requires the terminals to be press-fit to the backplane. This is
accomplished by forming a compliant section in the tails of the connector
contacts such that, when pressed into a plated through-hole on a backplane PCB,
forms a reliable gas-tight connection. The Company has become recognized as a
leader in press-fit backplane connectors and has focused marketing efforts in
promoting its products for this type of application.
The Company's half-pitch (PAK-50) connector family has been accepted as
one of the industry's most reliable .050 inch spaced connectors. The contact
design and compact shape has gained wide acceptance in applications, such as
small form factor computers that require connectors that are highly reliable yet
consume little space.
The METPAK-Registered Trademark-2 series of connectors includes four
and five row versions of both standard and inverse configurations. The
METPAK-Registered Trademark-2 is an industry standard connector style used in
board-to-board and board-to-back plane applications and over time has
displaced some of the more mature product types such as the DIN series and
HDC connectors. This product line has wide acceptance in many new
applications, primarily in the computer workstations, telecommunication and
data communication equipment and other networking equipment used to support
the Internet. The inverse METPAK-Registered Trademark-2 is a Company patented
design which has gained acceptance in high-end computer work stations,
networking and communications equipment.
Robinson Nugent introduced a new line of high-speed backplane
connectors in 1999 to the U.S., Europe, and Asian markets. These connectors are
known throughout the industry as Compact PCI connectors which comply with
existing industry standards for this type of product. Robinson Nugent is
marketing this product line as the next generation backplane connector for use
in data communication, telecommunication, and other high-speed, high-density
applications.
A new generation of high-speed backplane connectors was developed and
introduced to the market. This high-speed hard metric (HSHM) connector line
provides customers the capability to process electronic signals at transmission
speeds up to 5 gigahertz. This new product line provides for higher-speed signal
transmissions with greater signal integrity, at a higher contact density than
connectors currently available. This new HSHM product line provides the
-D-4-
<PAGE>
Company with a product that will generate future sales as customers seek the
next higher level of technical performance.
PAK-5-TM- and PAK-8-TM- connectors represent the latest high density,
surface mount, fine pitch board-to-board interconnect systems offered by the
Company. As electronic systems continue to downsize and the need for higher pin
counts continues to increase, electronic connector geometry will have to be
reduced. The PAK-5-TM- series is available with a "floating" contact,
accommodating potential torsional and positional discrepancies incurred with
tolerance build up when stacking connectors. The PAK-8-TM- series utilizes a
hermaphroditic two-point contact construction that maximizes contact wiping
action, minimizes contact resistance and insures a highly reliable contact
interface. These interconnects offer system designers the board-to-board
stacking solutions required for today's miniaturized electronic system designs.
Technology continues to drive the connector industry to an
ever-increasing number of circuits in less space to meet the increasing
complexity, capacity and processing speed of electronic and semiconductor
devices. This trend has caused increased demand for all types of high-density
connector products. The Company is focusing its new product development in
socket and connector products that meet these technology trends.
The Company also produces electronic cable assemblies of various types
including insulation displacement connector, fabricated and molded-on cable
assemblies. The Company utilizes its own connectors whenever possible, but also
provides cable assemblies with other manufacturers' connectors if the customer
is specific regarding its requirements.
In addition to standard products, the Company provides engineering
assistance, product design, and manufacturing of custom and derivative products.
These products may require special production tooling that, in some cases, is
paid for by the customer, shared, or amortized over future orders, depending
upon contractual agreements reached with the customer. Current trends in the
market indicate a growing demand for custom and derivative products. There is
also an increased demand for the Company's engineers to be involved in the early
development of the customer's product design.
RESEARCH, DEVELOPMENT AND ENGINEERING
The Company's worldwide engineering efforts are directed toward the
development of new products to meet customer needs, the improvement of
manufacturing processes and the adaptation of new materials to all products. New
products include new creations as well as the design of derivative products to
meet both the needs of the general market and customer proprietary custom
designs. Engineering development covers new or improved manufacturing processes,
assembly and inspection equipment, and the adaptation of new plastics and metals
to all products. In recent years, the Company's products have become more
sophisticated and complex in response to developments in semiconductors and
their applications. The Company has the engineering capability to analyze
customer designed, high-speed applications and to design connectors that reduce
electrical interference that can result from very high processing speeds of
newer and more powerful microprocessors.
The Company's expenditures for research, development and engineering
were approximately $4.5 million in 2000, $3.5 million in 1999 and $4.0 million
in 1998.
Consistent with industry direction, the Company is active in improving
manufacturing processes through automation and also designs and builds its
proprietary assembly equipment. The Company continues to apply advanced
technologies, such as laser and video devices, to automatically inspect products
during the assembly process. All new automated assembly machines are direct
microcomputer-controlled, which provides greater flexibility in the
manufacturing process.
-D-5-
<PAGE>
SALES AND DISTRIBUTION
The Company sells its products in the United States and international
markets. The primary market for Robinson Nugent is the United States, which
produces approximately 58 percent of the consolidated sales of the Company. Its
principal markets outside the United States are Europe, including the United
Kingdom and Scandinavia, Japan, Singapore, Malaysia, Hong Kong, and the emerging
market of China. The Company has begun doing business in China through a Hong
Kong distributor.
Sales outside the United States accounted for 42 percent of total sales
in 2000, 37 percent of total sales in 1999 and 36 percent in 1998. The Company
believes that the growth and development of its presence in global markets is
essential to support its customer base. The Company does not believe that its
international business presents any unusual risks. The following table sets
forth the percentage of Company sales by major geographical location for the
periods shown:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
---------------------------------------
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
United States 58% 63% 64%
Europe 27 25 25
Asia 10 9 9
Other 5 3 2
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
The lower percentage of sales in the United States in 2000 was a result
of a substantial growth in sales in Europe, and an accelerated shift of contract
manufacturing from the United States to countries in Southeast Asia. The Company
experienced sales growth in all geographical regions.
The Company had sales of approximately $14 million to Customer A, $11
million to Customer B and $10 million to Customer C in 2000 and $8.4 million to
Customer A in 1999. No sales to a single customer exceeded 10% of total sales in
1998.
Other financial data relating to domestic and foreign operations are
included in Note (16), Business Segment and Foreign Sales, of Notes to
Consolidated Financial Statements and the Management's Discussion and Analysis
of the Results of Operations and Financial Condition, included herein.
Principal markets in North America, Europe, and Asia are served by the
Company's direct sales force and a network of distributors serving the
electronics industry. The Company has U.S. regional sales offices located in the
San Francisco, California and Chicago, Illinois metropolitan areas. Other
Company sales offices are located in Japan, Singapore, England, Germany, France,
Sweden, and The Netherlands. These offices serve customers to whom the Company
sells directly, provide coordination between the plants and customers, and
technical training and assistance to distributors and manufacturers'
representatives in their respective territories. Additional marketing expertise
is provided by the product marketing specialists located in New Albany, Indiana;
Kent, England; Singapore; and s.Hertogenbosch, The Netherlands.
The Company engages independent manufacturers' representative firms in
the United States, Canada and several European and Far East countries. These
firms are granted exclusive territories and agree not to carry competing
products. These firms are paid on a commission basis on sales made to original
equipment manufacturers and to distributors. All representative relationships
are subject to termination by either party on short notice.
-D-6-
<PAGE>
The Company has an international network of distributors who are
responsible for serving their respective customers from an inventory of the
Company's products. Approximately one-third of the Company's worldwide sales are
made through the distributor network. No distributor is required to accept only
the franchise of the Company. All distributor agreements are subject to
termination by either party on short notice.
BACKLOG
The Company's backlog was approximately $23.4 million at June 30, 2000,
compared to $13.0 million at June 30, 1999 and $10.2 million at June 30, 1998.
These amounts represent orders with firm shipment dates acceptable to the
customers. The Company does not manufacture pursuant to long-term contracts, and
purchase orders are generally cancelable subject to payment by the customer for
charges incurred up to the date of cancellation.
COMPETITION
There is active competition in all of the Company's standard product
lines. The Company's competitors include both large corporations having
significantly more resources than the Company and smaller, highly specialized
firms. The Company competes on the basis of customer service, product
performance, quality, and price. Management believes that the Company's
capabilities in customer service, new product design and its continued efforts
to reduce cost of products are significant factors in maintaining the Company's
competitive position.
MANUFACTURING
The Company's manufacturing operations include plastic molding,
electroplating and assembly. The Company designs and builds the majority of its
automated and semi-automated assembly machines. Robinson Nugent manufactures
most of its goods in-house and utilizes subcontractors and brokered products on
a limited basis. The Company is continuing with its plan to relocate a major
portion of its high-labor content connector manufacturing processes from its
facilities in Dallas, Texas and Inchinnan, Scotland into its facilities in
Sungai Petani, Malaysia and Reynosa, Mexico. The Company is making these
transfers in order to take advantage of the high-quality, low-cost workforces
available in these existing low cost facilities.
RAW MATERIALS AND SUPPLIES
The Company utilizes copper alloys, precious metals, and plastics in
the manufacture of its products. Although some raw materials are available from
only a few suppliers, the Company believes it has adequate sources of supply for
most of its raw material and component requirements. Recently, the Company has
had to deal with a supply shortage of one of its critical raw materials,
berylium copper, which is used for various connector contacts. When possible,
the Company has purchased safety stock for use by its stamping suppliers, and
substituted similar copper alloys where possible. Moderate price increases are
expected in the near future on these materials. Management believes that the
current shortage of berylium copper contact material and expected price
increases should not have a significant negative impact on the Company's
operating results in future periods. Other raw material prices did not increase
or decrease materially during fiscal year 2000.
The use of gold, while still significant, has declined substantially
over the past several years. Plating processes using ROBEX-TM-, a palladium
nickel alloy, and tin have accelerated in demand from customers of the
Company. The cost of palladium has risen substantially in the past year and
could result in an industry wide price increase of connectors, if the trend
continues.
-D-7-
<PAGE>
HUMAN RESOURCES
As of June 30, 2000, the Company had approximately 826 full-time
employees; 478 in the United States, 210 in Europe and 138 in Asia and Japan.
PATENTS AND TRADEMARKS
Management believes that success in the electronic connector industry
is dependent upon engineering and production skills and marketing ability;
however, there is a trend in the industry toward more patent consideration and
protection of proprietary designs and knowledge. It is the policy of The Company
to pursue patent applications to protect its unique product features. The
Company reviews each new product design for possible patent application. The
Company has been granted patents over the past several years and is presently
awaiting acceptance on other pending applications. The Company has obtained
registration of its trade and service marks in the United States and in major
foreign markets.
ENVIRONMENT
The Company's manufacturing facilities are subject to several laws and
regulations designed to protect the environment. In the opinion of management,
the Company is complying with those laws and regulations in all material
respects and compliance has not had and is not expected to have a material
effect upon its operations or competitive position.
EXECUTIVE OFFICERS OF THE COMPANY
The current executive officers of the Company are:
<TABLE>
<CAPTION>
SERVED IN PRESENT
NAME AGE POSITIONS HELD CAPACITY SINCE
- ----------------------- --- ---------------- ------------------
<S> <C> <C> <C>
Larry W. Burke 60 President & Chief 1990
Executive Officer
Robert L. Knabel 42 Vice President, 1997
Treasurer & Chief
Financial Officer
W. Michael Coutu 49 Vice President - 1992
Information Technology
Raymond T. Wandell 52 Vice President Sales - 1999
North America
Dennis I. Smith 51 Vice President - 1999
Global Marketing
</TABLE>
The Bylaws of the Company provide that the corporate officers are to be
elected at each Annual Meeting of the Board of Directors. Under the Indiana
Business Corporation Law, officers may be removed by the Board of Directors at
any time, with or without cause.
-D-8-
<PAGE>
ITEM 2. PROPERTIES
The Company leases a 36,000-square-foot building used for its executive
offices, engineering, quality assurance and administrative operations, and an
adjacent 83,000-square-foot manufacturing facility located on approximately four
acres in New Albany, Indiana. A limited amount of manufacturing operations are
performed there, but most of the connector finished goods inventory sold in the
U.S. is held at the New Albany site. A major portion of the New Albany
manufacturing facility is utilized by the Company's engineering, research and
preproduction development groups. In addition, the New Albany facility is
instrumental in training plant personnel on new equipment and manufacturing
processes prior to their release to the manufacturing facilities in Dallas,
Scotland and Malaysia.
The Company owns a 60,000-square-foot manufacturing facility located on
approximately five acres in Dallas, Texas, an engineering design center,
distribution and warehousing facility with approximately 14,000 square feet in
Hamont-Achel, Belgium, and a facility with approximately 50,000 square feet in
Inchinnan, Scotland. The Company purchased this facility in Scotland for
approximately 1.2 million pounds sterling (approximately $1.8 million) in 2000.
Financing for this purchase was obtained from a bank in the United Kingdom.
Robinson Nugent owns a manufacturing facility with approximately 21,000 square
feet in Sungai Petani, Malaysia. Both cable assemblies and connectors are
manufactured in Malaysia.
In March 1999, Robinson Nugent sold its manufacturing facility in
Delemont, Switzerland for approximately $2.0 million in cash. The Company
currently leases a small amount of storage space in this facility.
The Company's primary electronic cable assembly operations are
currently located in a leased manufacturing facility, with approximately 44,000
square feet, in Reynosa, Mexico. Robinson Nugent began cable assembly operations
in Reynosa in September 1998. In 2000, a portion of the North American connector
assembly production was transferred into this facility.
The Company also leases a 40,000 square foot facility in Kings
Mountain, North Carolina. All operations in this facility were discontinued by
December 1998. The Company is currently obligated under a long-term lease on the
Kings Mountain facility through July 2012. Management intends to sublet this
facility to minimize the financial impact of this obligation.
Robinson Nugent also leases office space for customer service, sales
and administration in the The Netherlands; Germany; France; Sweden; the United
Kingdom; Tokyo, Japan; Singapore; Lake Zurich, Illinois and San Ramon,
California.
ITEM 3. LEGAL PROCEEDINGS.
Other than ordinary routine litigation incidental to the business,
there are no pending legal proceedings to which the Company is a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders of the Company
during the fourth quarter of the fiscal year covered by this report.
-D-9-
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
PRICE RANGE AND DIVIDEND INFORMATION
The following table sets forth the high and low closing price of the
Company's, which are traded over the Nasdaq National Market under the symbol:
RNIC, and the cash dividends declared per share in each of the quarters during
the past three fiscal years.
<TABLE>
<CAPTION>
Price Range Cash
High Low Dividends
- -------------------------------------------------------------------------------- ------------------------------------
<S> <C> <C> <C>
Fiscal 2000
First quarter ended September 30 $ 5 1/4 3 7/8 $ -
Second quarter ended December 31 13 1/4 4 3/8 -
Third quarter ended March 31 21 10 -
Fourth quarter ended June 30 16 1/4 9 1/16 -
Fiscal 1999
First quarter ended September 30 $ 5 3 1/8 $ -
Second quarter ended December 31 4 3 -
Third quarter ended March 31 4 1/2 3 1/2 -
Fourth quarter ended June 30 4 5/8 2 9/16 -
Fiscal 1998
First quarter ended September 30 $ 7 3/4 5 1/32 $ .03
Second quarter ended December 31 6 1/8 3 7/8 .03
Third quarter ended March 31 5 3/4 3 5/8 .03
Fourth quarter ended June 30 6 1/8 3 3/4 .03
</TABLE>
As of June 30, 2000, the Company had approximately 750 holders of record of
its common shares.
-D-10-
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
FIVE-YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>
Years ended June 30
Operating results: 2000 1999 1998 1997 1996
- ------------------------------------------------------------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net sales $92,839 69,992 74,146 84,840 80,964
Cost of sales 66,830 53,654 62,557 65,769 65,604
Gross profit 26,009 16,338 11,589 19,071 15,360
Selling, general and administrative expenses 18,423 13,796 14,565 15,598 16,749
Special and unusual charges 757 1,663 5,063 - -
Operating income (loss) 6,829 879 (8,039) 3,473 (1,389)
Other income (expense) (938) (791) (403) 376 (305)
Income (loss) before income tax expense (benefit) 5,891 88 (8,442) 3,849 (1,694)
Income tax expense (benefit) 1,261 (302) (2,261) 1,494 465
Net income (loss) $ 4,630 390 (6,181) 2,355 (2,159)
Return on net sales 5.0% 0.6% (8.3%) 2.8% (2.7%)
Per share information:
- ------------------------------------------------------------- ---------- ----------- ---------- ----------- ----------
Net income (loss), basic $ .93 .08 (1.26) .48 (.40)
Net income (loss), dilutive $ .88 .08 (1.26) .48 (.40)
Cash dividends - - .12 .12 .12
Basic weighted average shares outstanding 4,993 4,904 4,892 4,892 5,333
Dilutive weighted average shares outstanding 5,254 4,905 4,892 4,911 5,333
Book value at year-end* $ 5.57 4.76 4.73 6.37 6.13
Balance sheet:
- ------------------------------------------------------------- ---------- ----------- ---------- ----------- ----------
Working capital $24,281 14,690 10,740 16,581 10,328
Property, plant and equipment - net 15,989 18,539 19,424 21,188 23,618
Total assets 58,067 46,626 42,302 49,696 51,466
Long-term debt 12,220 9,016 7,607 5,926 3,036
Shareholders' equity 28,393 23,450 23,128 31,140 29,968
Other data:
- ------------------------------------------------------------- ---------- ----------- ---------- ----------- ----------
Current ratio to 1.0 2.4 2.1 1.9 2.4 1.6
Return on shareholders' average equity 17.8% 1.7% (22.8%) 7.8% (6.0%)
Capital expenditures $ 4,957 5,766 7,818 4,202 7,474
Depreciation and amortization $ 4,725 4,452 8,557 5,451 6,135
</TABLE>
*On the basis of year-end outstanding .
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND THE
RESULTS OF OPERATIONS.
Statements made in this annual report with respect to Robinson Nugent's
current plans, estimates, strategies and beliefs and other statements that are
not historical facts are forward-looking statements about the future performance
of RN. These statements are based on management's assumptions and beliefs in
light of the information currently available to it and therefore you should not
place undue reliance on them. RN cautions you that a number of important factors
could cause actual results to differ materially from those discussed in the
forward-looking statements.
-D-11-
<PAGE>
GENERAL
RN reported net income of $4.6 million on sales of $92.8 million for the
year ended June 30, 2000, compared to $0.4 million on sales of $70 million in
the prior year. The Company incurred a net loss of $6.2 million on sales of
$74.1 million in the year ended June 30, 1998.
Customer orders for the year increased 42 percent to $103 million
compared to $72.8 million in the prior year and $69.9 million in the year ended
June 30, 1998.
Revenues increased by 33% in 2000 compared to 1999. This increase was
driven by a twenty-two percent increase in the United States, a forty-five
percent increase in Europe and a fifty percent increase in Asia. Gross profit
margins increased to 27.9% compared to 23.3% in 1999 due to stronger profit
margins in Europe, and the increased sales of higher-margin connectors sold in
the United States.
Research, development and engineering expenses, which are included in
gross profit, were $4.5 million or 5% of sales in 2000 compared to $3.5 million
or 5% of sales in 1999 and $4.0 million or 5.4% of sales in 1998. RN intends to
continue to increase its engineering effort in the United States and Europe in
the coming year. The U.S. team will focus primarily on higher-margin connectors
for applications in electronic data communication and telecommunication
hardware. The European engineering team is focused primarily on developing new
applications for its custom, single and double smart card reader connectors for
our European and Asian customers.
SALES
Customer sales in the United States were $58.2 million in 2000 compared
to $46.3 million in 1999 and $48.7 million in 1998. RN experienced an increase
in sales of higher-margin PC board and telecom/data-com connectors in the United
States. These telecom/data-com connectors are used in high speed, high-end
computer network servers and other network and communication equipment. It is
estimated that the amount of data flowing over the Internet is doubling every
100 days. This explosive growth will require the expansion of the Internet's
speed and capacity, and thereby an increase in its hardware infrastructure. RN
is positioning itself to provide high performance, high-density connectors for
the electronic components and hardware used in that infrastructure.
Cable assembly sales in the United States increased ten percent compared
to the prior year. This increase was partially driven by the benefits resulting
from the relocation of the cable assembly facility from North Carolina to
Mexico. The Reynosa, Mexico facility allows RN access to high-quality, efficient
manufacturing at a lower labor cost, plus it is a location that is closer,
geographically, to a major portion of RN's cable assembly customer base.
European customer sales were $25.4 million in 2000 compared to $17.5
million in 1999 and $18.5 million in 1998, measured in U.S. dollars. This
increase was due primarily to an increase in its sales of newer designs of smart
card reader connectors and PCMCIA connectors used in digital satellite receiver
applications. The Company expects the demand for these types of products to
continue to grow, and will augment the sales generated by these products with
sales of a new proprietary double smart card reader connector.
Asian customer sales were $9.3 million in 2000 compared to $6.2 million
in 1999 and $7.0 million in 1998. Sales in Japan have been favorably impacted by
the strength of the Japanese Yen against the U.S. dollar. Most of the Company's
sales to customers in Southeast Asia are transacted in U.S. dollars.
-D-12-
<PAGE>
GROSS PROFITS
Gross profits were $26.0 million in 2000 compared to $16.3 million in
1999 and $11.6 million in 1998. Gross profit margins improved in all three
geographic regions. An increase in the sales volume of higher margin
telecom/data-com connectors increased U.S. gross profits over the prior years.
European gross profit margins, while lower than those generated in the U.S. and
Asia, improved significantly over 1999. Operations in Asia have shown steady
improvement in their gross profit margins over the past several years.
SPECIAL AND UNUSUAL EXPENSES
RN reported special and unusual expenses of $0.8 million in 2000. These
expenses related to the implementation of a new information and enterprise
resource planning system for the U.S. and Europe. Special and Unusual Expenses
in 1999 involved $1.1 million of system implementation costs and $0.5 million
required to relocate the cable assembly operations to Reynosa, Mexico. Special
and unusual expenses were $5.1 million in 1998. These charges included $3.1
million of restructuring and reorganization expenses as well as $2.0 million of
unusual charges related to a reduction in the carrying value of various pieces
of assembly equipment, mold tools and dies.
RN successfully implemented the PeopleSoft-Registered Trademark-
enterprise resource optimization software system in its operations in the
U.S. and Europe. This system was designed and implemented to satisfy Year
2000 requirements, enhance management and control systems, as well as improve
customer service and vendor communications. This software system includes
accounting, cost and inventory control, order processing, enterprise
planning, production planning and engineering management. It is an integrated
business system that has been installed on a Windows based client-server
architecture laid over a Windows NT backbone.
RN invested a total of $6.8 million to design and implement this new
information system. Approximately $0.9 million was invested in 1998, $4.6
million in 1999 and an additional $1.3 million in 2000 to complete the
implementation. U.S. connector operations implemented the system in 1999. The
U.S. cable assembly operations as well as European operations implemented the
system in the second quarter of 2000. Included in the project cost is
approximately $2.0 million of expenditures for computer hardware and the
PeopleSoft software. RN is leasing these information system assets under a long
term operating lease. Approximately $2.6 million of the project costs, related
to outside consulting support, are being capitalized as expended, and
depreciated over its useful life. RN is expensing in the respective accounting
periods the costs of using internal personnel on this project, as well as
training and travel expenses. The Company expensed approximately $0.3 million of
these costs in 1998, $1.1 million in 1999 and $0.8 million in 2000.
RN has recorded $2.1 million of expenses related to the relocation of its
primary custom cable assembly operations to Mexico. Approximately $1.6 million
of this cost was recorded in 1998 and was primarily related to the closure of
the North Carolina facility. An additional $0.5 million was expensed in the
first quarter of 1999 to complete the move.
RN recorded $5.1 million of special and unusual charges in 1998. These
charges included $3.1 million of restructuring expenses related to the
reorganization of the sales, management and manufacturing organizations in
Europe and North America, the closure and move of the cable assembly facility,
and the cost to discontinue several product lines. The additional $2.0 million
of unusual charges reflect a reduction in the carrying value of various pieces
of assembly equipment, mold tools and dies. These charges resulted from
management's evaluation of RN's ability to generate sufficient cash flow to
recover these asset costs given the existing market conditions.
-D-13-
<PAGE>
SELLING AND GENERAL ADMINISTRATIVE
Selling general and administrative expenses were $18.4 million in 2000
compared to $13.8 million in 1999 and $14.6 million in 1998. This increase is
due primarily to an increase in selling expenses in the U.S. and Europe
resulting from higher sales.
OTHER INCOME AND EXPENSES
RN recorded a net other expense of $1.0 million in 2000, $0.8 million in
1999 and $0.4 million in 1998. Other income and expense for each of these years
was comprised primarily of three components; interest expense, currency exchange
gains and losses, and royalty income. Interest expense increased from $756,000
in 1999 to $874,000 in 2000. This increase was due primarily to a higher level
of long term debt in the current year. In addition, interest rates have been
increasing over the last two years.
RN entered into a multi-year interest rate swap agreement with its
primary lending institution in 1999. This agreement covers $3.0 million of
floating rate long-term debt, and effectively fixes the interest rate on these
borrowings at 7.59%.
RN recorded currency exchange losses of $140,000 in 2000 and $258,000 in
1999, compared to a currency exchange gain of $105,000 in 1998. The current year
losses were incurred primarily by the European operations. These losses were
driven by the deterioration in the relative value of the Euro, compared to the
pound sterling and U.S. dollar over the last two years. Prior year currency
exchange gains were primarily related to intercompany accounts receivable and
accounts payable positions between RN's various operating subsidiaries.
RN received $168,000 of royalty income in 1999 and $17,000 in 2000 from
agreements to license the use of certain patent rights to several of its
competitors.
TAXES
The provision for income taxes was provided using the appropriate
effective tax rates on the pretax income of each of the tax jurisdictions in
which RN has operations. RN recorded a tax expense of $1.3 million in 2000,
including a tax benefit of $0.4 million related to the value of accumulated net
operating loss carry forwards of the company's operations in Belgium and Japan.
RN recorded a tax benefit of $302,000 in 1999, including a tax benefit of $0.5
million related to the value of accumulated net operating loss carry forwards of
the company's operations in Scotland. The decision to recognize the value of
these benefits in the current and previous year was based upon the earnings that
had been generated in these operations, and the anticipation of additional
taxable earnings in these operating divisions in the future. RN recorded an
income tax benefit of $2.3 million on pretax losses of $8.4 million in 1998.
This tax benefit includes the recognition of a $0.5 million benefit for deferred
tax assets related to the U. S. operations. RN maintains a valuation allowance
of approximately $0.4 million, at June 30, 2000, for tax benefits of prior
period net operating losses in Malaysia. At such time as management is able to
project the probable utilization of all or part of these net operating loss
carryforward provisions, the valuation allowances for these deferred tax assets
will be reversed, resulting in a tax benefit in that respective period.
NET INCOME AND EARNINGS PER SHARE
RN generated a net income of $4.6 million or 88 cents (dilutive) per
share in 2000 compared to $0.4 million or 8 cents (dilutive) per share in 1999.
The net loss was $6.2 million or $1.26 per share in 1998. Operations in the U.S.
generated $4.1 million of pretax profits in 2000 compared to $422,000 in 1999
and a loss of $6.3 million in 1998. European operations generated $1.1
-D-14-
<PAGE>
million on a pretax basis in 2000 compared to a loss of $249,000 in 1999. Asia
operations generated $791,000 in pretax profits in 2000 compared to $85,000 in
losses in 1999.
LIQUIDITY AND CAPITAL RESOURCES
Working capital as of June 30, 2000 was at $24.3 million compared to
$14.7 million at June 30, 1999. The Company's current ratio at June 30, 2000 was
2.4 to 1 compared to 2.1 to 1 at June 30, 1999. Cash balances at June 30, 2000
were $2.1 million compared to $0.8 million at year-end June 30, 1999. The
Company's long-term debt as a percentage of stockholders' equity was 43% at
year-end 2000 compared to 38.4% at year-end 1999.
Capital expenditures in 2000 were primarily for new mold tools, contact
dies and assembly equipment. Total capital expenditures were $5.0 million in the
fiscal year 2000 compared to $5.8 million in 1999.
The Company believes future cash requirements for capital expenditures
and working capital can be funded from operations, supplemented by proceeds from
the existing long-term credit agreement.
RN has a $10.0 million unsecured revolving credit facility with its
primary bank. Interest rates under this revolver are dependent on the type of
loan advance selected. The first type of basic advance rate is equal to the
London Interbank Offered Rate (LIBOR) plus 2.25%, (approximately 7.8% as of June
30, 2000). The second interest rate utilizing the bank's prime interest rate
minus 1/2 of 1%, (9.0% as of June 30, 2000) is also available. As of June 30,
2000, RN had borrowings of $8.9 million under this revolver, plus an additional
$0.6 million on standby letters of credit. This revolving credit agreement
includes various operating and financial covenants including minimum current
ratio, a maximum ratio of indebtedness to tangible net worth, a minimum fixed
charge coverage ratio and a maximum funded indebtedness to EBITDA ratio. This
agreement expires in December 2003 and can be extended by mutual consent of RN
and the bank. RN entered into a multi-year interest rate swap agreement with its
primary lending institution in 1999. This agreement covers $3.0 million of
floating rate long-term debt, and effectively fixes the interest rate on these
borrowings at 7.59%.
The Company currently has $1.1 million in unused and available credit
under the existing credit agreement at June 30, 2000.
RISK FACTORS THAT MAY AFFECT FUTURE RESULTS
NEW PRODUCTS AND TECHNOLOGICAL CHANGE
RN's results from operations and competitive strength depend upon the
successful and rapid development of new products and enhancements to existing
products. The market for the Company's products is characterized by rapid
technological advances and changes in customer demand, which necessitate
frequent product introductions and enhancements. These factors can result in
unpredictable product transition and shortened product life cycles, and can
render existing products obsolete or unmarketable. The Company must make
significant investments in research and product development and successfully
introduce competitive new products and enhancements on a timely basis. The
success of new product introductions is dependent on a number of factors,
including the rate at which a new product gains acceptance and RN's ability to
effectively manage product transitions. The development of new technology,
products, and enhancements is complex and involves uncertainties, which
increases the risk of delays in the introduction of new products and
enhancements. From time to time, RN has encountered delays that have adversely
affected the Company's financial results and competitive position in the market.
There can be no assurances that RN will not encounter development or production
delays, or that despite intensive testing by the Company, flaws in design or
production will not occur in the future. Design flaws could result in delays of
shipment or of product sales, could trigger substantial repair or
-D-15-
<PAGE>
replacement costs, could damage RN's reputation and cause material adverse
effect upon RN's financial results.
RN has historically generated its revenue and operating profits primarily
from the sale of products to the computer, network equipment and communications
industries. RN is focusing resources on expanding further into these markets, as
well as taking a more aggressive posture towards Internet related equipment.
There can be no assurance that the Company will be successful in expanding these
markets.
DEPENDENCE ON KEY CUSTOMERS
Some of RN's products are designed specifically for individual customers.
Future revenue from these products is therefore dependent on the customer's
continued need and acceptance of these products.
COMPETITION
The market for RN's products is intensely competitive and subject to
continuous, rapid technological change, frequent product performance
improvements and price reductions. In the connector marketplace, competition
comes from companies that have substantially greater resources, as well as
several other similarly sized companies. RN expects that the markets for its
products will continue to change as customer buying patterns continue to migrate
to emerging products and technologies. The Company's ability to compete will
depend to a considerable extent on its ability to continuously develop and
introduce new products and enhancements to existing products. Increased
competition may result in price reductions, reduced margins and declining market
share, which may have a material adverse effect on RN's business and financial
results.
INTELLECTUAL PROPERTY
RN's intellectual property rights are material assets and key to its
business and competitive strength. Robinson Nugent protects its intellectual
property rights through a combination of patents, trademarks, copyrights,
confidentiality procedures, trade secret laws and licensing arrangements. The
Company's policy is to apply for patents, or other appropriate proprietary or
statutory protection, when it develops new or improved technology that is
important to its business. Such protection, however, may not preclude
competitors from developing similar products. In addition, competitors may
attempt to restrict the Company's ability to compete by advancing various
intellectual property legal theories which could, if enforced by the courts,
restrict the Company's ability to develop and manufacture products. Also, the
laws of certain foreign countries do not protect the Company's intellectual
property rights to the same extent as the laws of the United States. RN also
relies on certain technology that is licensed from others. RN is unable to
predict whether its license arrangements can be renewed on acceptable terms. The
failure to successfully protect its intellectual property rights or obtain
licenses from others as needed could have a material adverse effect on RN's
business and financial results.
The connector industry is characterized by vigorous pursuit and
protection of intellectual property rights or positions, which in some instances
has resulted in significant litigation that is often protracted and expensive.
From time to time, Robinson Nugent has commenced actions against other companies
to protect or enforce its intellectual property rights. Similarly, from time to
time, RN has been notified that it may be infringing certain patent or other
intellectual property rights of others. Licenses or royalty agreements are
generally offered in such situations. Litigation by or against the Company may
result in significant expense and divert the efforts of RN's technical and
management personnel, whether or not such litigation results in any
determination unfavorable to RN. In the event of an adverse result, RN could be
required to pay substantial damages; cease the manufacture, use and
-D-16-
<PAGE>
sale of infringing products; expend significant resources to develop
non-infringing technology; or discontinue the use of certain processes if it is
unable to enter into royalty arrangements. There can be no assurances that
litigation will not be commenced in the future regarding patents, copyrights,
trademarks or trade secrets or that any license, royalty or other rights can be
obtained on acceptable terms, or at all.
MANUFACTURING RISKS; DEPENDENCE ON SUPPLIERS
The Company uses standard molding compounds and pin sockets for many of
its products and believes that, in most cases, there are a number of
alternative, competent vendors for these components. In addition, RN designs its
own custom stamped and formed connector contacts. Robinson Nugent enters into
agreements with custom stamping manufacturers to design and build stamping dies
to produce proprietary stamped and formed contacts for RN. The Company believes
that these stamping operations are currently the only suppliers of these
particular components that meet RN's specifications and design requirements.
Alternative sources are not readily available. An unanticipated failure of any
sole source supplier to meet the Company's requirements for an extended period,
or an interruption of the Company's ability to secure comparable components,
could have a material adverse effect on its revenue and results of operations.
In the event a sole source supplier was unable or unwilling to continue to
supply components, RN would have to identify and qualify other acceptable
suppliers. This process could take an extended period, and no assurance can be
given that any additional source would become available or would be able to
satisfy RN's production requirements on a timely basis.
EURO CONVERSION
Effective January 1, 1999, 11 of the 15 member countries of the European
Union adopted a single European currency, the euro, as their common legal
currency. Like many companies that operate in Europe, various aspects of RN's
business and financial accounting have been affected by the euro conversion and
the transitions in the business environment resulting from the convergence of
these currencies. RN will continue to evaluate the European pricing strategies
for its products and the implications of the euro on its contractual agreements,
tax strategy and foreign currency risk management strategy.
EARNINGS FLUCTUATIONS
The RN's reported earnings have fluctuated significantly in the past and
may continue to fluctuate significantly in the future from quarter to quarter
due to a variety of factors, including, among others, the effects of (i)
customers' historical tendencies to make purchase decisions in the second half
of the fiscal year, (ii) the timing of the announcement and availability of
products and product enhancements by the Company and its competitors, (iii)
fluctuating foreign currency exchange rates, (iv) changes in the mix of products
sold, (v) variations in customer acceptance periods for the Company's products,
and (vi) global economic conditions.
VOLATILITY OF STOCK PRICE
The trading price of the Company's Common Shares has fluctuated and in
the future may fluctuate substantially in response to anticipated or reported
operating results, industry conditions, new product or product development
announcements by the Company or its competitors, announced acquisitions and
joint ventures by the Company or its competitors, broad market trends unrelated
to the Company's performance, general market and economic conditions
international currency fluctuations and other events or factors. Further, the
volatility of the stock markets in recent years has caused wide fluctuations in
trading prices of stocks of companies independent of their individual operating
results. In the future, the Company's reported operating results may be below
the expectations of stock market analysts and investors, and in such events,
-D-17-
<PAGE>
there could be an immediate and significant adverse effect on the trading price
of the Company's Common Shares.
INTERNATIONAL OPERATIONS
In connection with its international operations, the Company is subject
to various risks inherent in foreign activities. These risks may include
unstable economic and political conditions, changes in trade policies and
regulations of countries involved, fluctuations in currency exchange rates and
requirements for letters of credit or bank guarantees. Most of the Company's
international operations are in western European countries, mainly Great
Britain, Belgium, and The Netherlands, and to a lesser degree in the Asian
countries of Japan, Singapore and Malaysia. The Company is exposed to risks
associated with fluctuations in exchange rates, including the euro, Swiss franc,
pound sterling, Deutsche mark, Malaysian ringgit and the Dutch guilder. The
Company limits its exposure to these risks by incurring and paying for its
expenses in the same currencies as those of its revenue. It is the Company's
policy not to enter into derivative financial instruments for speculative
purposes. There were no derivative foreign currency instruments outstanding as
of June 30, 2000.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities," establishes accounting and
reporting standards for hedging activities and for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives). It required that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. RN adopted the new
standard on July 1, 2000. The effect on the results of operations of adopting
this new standard will be insignificant.
The Securities and Exchange Commission Staff Accounting Bulletin No. 101
"Revenue Recognition" establishes accounting and reporting standards for the
recognition of revenues. The Company will adopt this new bulletin in 2001. The
Company does not expect the adoption of this bulletin will have a material
impact on its financial statements.
-D-18-
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Robinson Nugent, Inc.
New Albany, Indiana
We have audited the accompanying consolidated balance sheets of Robinson
Nugent, Inc. and subsidiaries (Company) as of June 30, 2000, 1999 and 1998, and
the related consolidated statements of operations and comprehensive income,
shareholders' equity, and cash flows for each of the three years in the period
ended June 30, 2000. Our audits also included the financial statement schedule
listed in the Index at Item 14. These financial statements and financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Robinson Nugent, Inc. and
subsidiaries as of June 30, 2000, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 2000, in conformity with accounting principles generally accepted in
the United States of America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Louisville, Kentucky
August 4, 2000
-D-19-
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000, 1999 AND 1998
In Thousands
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 2,114 $ 845 $ 959
Receivables, less allowance for doubtful
receivables of $584 in 2000, $581 in 1999,
and $571 in 1998 17,949 13,159 9,274
Inventories 18,985 10,632 10,062
Other 2,378 3,313 2,012
------- ------- -------
Total current assets $41,426 $27,949 $22,307
Property, Plant and Equipment, net 15,989 18,539 19,424
Other 652 138 571
------- ------- -------
TOTAL $58,067 $46,626 $42,302
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term debt $ 441 $ 449 $ 367
Short-term bank borrowings -- -- 570
Accounts payable 9,329 7,441 5,147
Accrued expenses 7,375 5,369 5,483
------- ------- -------
Total current liabilities $17,145 $13,259 $11,567
Long-term Debt 11,779 9,016 7,607
Other Liabilities 750 901 --
------- ------ -------
Total liabilities $29,674 $23,176 $19,174
Commitments and contingencies
Shareholders' Equity:
Common shares without par value,
15,000 authorized shares 21,562 20,950 20,950
Retained earnings 19,535 14,847 14,563
Equity adjustment from foreign currency
translation (134) 492 713
Employee stock purchase plan loans
and deferred compensation (22) (77) (106)
Less cost of common shares in treasury (12,548) (12,762) (12,992)
Total shareholders' equity 28,393 23,450 23,128
------- ------- -------
TOTAL $58,067 $46,626 $42,302
======= ======= =======
</TABLE>
See notes to consolidated financial statements.
-D-20-
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
In Thousands Except Per Share Data
<TABLE>
<CAPTION>
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
NET SALES $ 92,839 $ 69,992 $ 74,146
COST OF SALES 66,830 53,654 62,557
-------- -------- --------
GROSS PROFIT 26,009 16,338 11,589
SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES 18,423 13,796 14,565
SPECIAL AND UNUSUAL EXPENSES 757 1,663 5,063
-------- -------- --------
OPERATING INCOME (LOSS) 6,829 879 (8,039)
-------- -------- --------
OTHER INCOME (EXPENSES):
Interest income 59 55 84
Interest expense (874) (756) (592)
Currency exchange gain (loss) (140) (258) 105
Royalty income 17 168
-------- -------- --------
Other expenses, net (938) (791) (403)
-------- -------- --------
INCOME (LOSS) BEFORE
INCOME TAX EXPENSE (BENEFIT) 5,891 88 (8,442)
INCOME TAX EXPENSE (BENEFIT) 1,261 (302) (2,261)
-------- -------- --------
NET INCOME (LOSS) 4,630 390 (6,181)
======== ======== ========
OTHER COMPREHENSIVE INCOME -
Foreign currency translation (626) (221) (1,360)
-------- -------- --------
Comprehensive income (loss) $ 4,004 $ 169 (7,541)
======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE:
Basic $ 0.93 $ 0.08 $ (1.26)
======== ======== ========
Dilutive $ 0.88 $ 0.08 $ (1.26)
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
-D-21-
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
In Thousands
<TABLE>
<CAPTION>
Employee
Stock Purchase
Foreign Plan Loans
Common Shares Retained Currency and Deferred Treasury Shares
Shares Amount Earnings Translation Compensation Shares Amount
------ ------ -------- ----------- ------------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JULY 1, 1997 6,851 $ 20,950 $ 21,290 $ 2,073 $ (177) (1,959) $(12,996)
Net Income (6,181)
Dividends ($.12 per share) (587)
Equity adjustments from foreign
currency translation (1,360)
Stock purchase plan repayments 60
Amortization of deferred compensation 11
Stock purchase plan forfeitures 38 (7) (38)
Stock options exercised 5 32
Treasury shares 3 2 10
------ ------ ------ ------ ------ ------ ------
BALANCE AT JUNE 30, 1998 6,851 20,950 14,563 713 (106) (1,959) (12,992)
Net Income 390
Equity adjustments from foreign
currency translation (221)
Stock purchase plan repayments 26
Amortization of deferred compensation 3
Treasury shares (106) 33 230
------ ------ ------ ------ ------ ------ ------
BALANCE AT JUNE 30, 1999 6,851 20,950 14,847 492 (77) (1,926) (12,762)
Net Income 4,630
Equity adjustments from foreign
currency translation (626)
Stock purchase plan repayments 9 52
Amortization of deferred compensation 3
Stock options exercised 127 612
Treasury shares 49 32 214
-------- -------- -------- -------- -------- -------- --------
BALANCE AT JUNE 30, 2000 6,978 $ 21,562 $ 19,535 $ (134) $ (22) (1,894) $(12,548)
======== ======== ======== ======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
-D-22-
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
In Thousands
<TABLE>
<CAPTION>
2000 1999 1998
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss) $ 4,630 $ 390 $(6,181)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 4,725 4,452 8,557
Issuances of treasury shares as compensation 260 124
Deferred income taxes (784) 560 (1,409)
(Gain) loss on sales and disposals of property, plant and equipment 77 (76) 360
Changes in assets and liabilities:
Receivables (4,790) (3,885) 2,510
Inventories (8,353) (570) 1,038
Other current assets 1,179 (1,861) (498)
Accounts payable and accrued expenses 3,894 2,180 805
Other liabilities (151) 901 --
Income taxes payable -- -- (1,581)
------- ------- -------
Net cash provided by operating activities 687 2,215 3,601
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,957) (5,766) (7,818)
Proceeds from sales of property, plant and equipment 2,526 2,126 --
Other assets (20) 397 (47)
------- ------- -------
Net cash used in investing activities (2,451) (3,243) (7,865)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term bank borrowings -- 250 570
Repayments of short-term bank borrowings -- (820) --
Proceeds from long-term debt 6,641 5,220 3,250
Repayments of long-term debt (3,754) (3,738) (1,426)
Cash dividends -- -- (587)
Sales of treasury shares 122 -- 13
Repayments of employee stock purchase plan loans 61 26 60
Proceeds from exercised stock options 493 -- 32
------- ------- -------
Net cash provided by financing activities 3,563 938 1,912
------- ------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (530) (24) (807)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,269 (114) (3,159)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 845 959 4,118
------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 2,114 $ 845 $ 959
======= ======= =======
</TABLE>
See notes to consolidated financial statements.
-D-23-
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
IN THOUSANDS EXCEPT PER SHARE DATA
--------------------------------------------------------------------------------
1. NATURE OF OPERATIONS AND ORGANIZATIONS
Robinson Nugent, Inc. and its subsidiaries (Company) designs,
manufactures, and markets electronic connectors, integrated circuit
sockets and cable assemblies. Its products are sold throughout the world
for use by manufacturers of computers.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts of Robinson Nugent, Inc. and its subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents are defined as cash
in banks and investment instruments having maturities of ninety-one days
or less on their acquisition date.
INVENTORIES - Inventories are stated at the lower of cost (first in, first
out) or market (net realizable value).
PROPERTY, PLANT, AND EQUIPMENT - Property, plant and equipment is recorded
at cost. Depreciation is provided by the straight-line method over the
estimated useful lives of buildings, ranging from 30 to 45 years, and
machinery and equipment, ranging from 3 to 12 years. Depreciation expense
also includes the amortization of buildings capitalized under lease
obligations. Depreciation expense was approximately $4,676 in 2000, $4,405
in 1999, and $8,507 in 1998.
REVENUE RECOGNITION - Revenue from product sales is recognized upon
shipment or the date of receipt by the customer. Estimated returns and
other adjustments are provided for in the same period the related sales
are recorded.
-D-24-
<PAGE>
SPECIAL AND UNUSUAL EXPENSES - In 2000 and 1999, special and unusual
expenses primarily related to the implementation of a new information and
enterprise resource planning computer system. In 1998, such expenses were
primarily related to the restructuring and reorganization of the sales,
management and manufacturing operations in Europe and North America.
Selected information as to the restructuring and reorganization charges
are as follows:
<TABLE>
<CAPTION>
EMPLOYEE WRITE-DOWN RECOGNITION
TERMINATION OF OF LEASE
BENEFITS ASSETS LIABILITY OTHER TOTAL
-------- ------ --------- ----- -----
<S> <C> <C> <C> <C> <C>
1998 restructuring charge $ 200 $ 3,200 $ 1,100 $ 600 $ 5,100
Cash outlays
Write-down of assets -- (3,200) -- -- (3,200)
------- ------- ------- ------- -------
Restructuring liability
at June 30, 1998 200 -- 1,100 600 1,900
1999 restructuring charges 500 500
Cash outlays (200) -- (100) (1,100) (1,400)
------- ------- ------- ------- -------
Restructuring liability
at June 30, 1999 -- -- 1,000 -- 1,000
Cash outlays -- -- (100) -- (100)
------- ------- ------- ------- -------
Restructuring liability
at June 30, 2000 $ -- $ -- $ 900 $ -- $ 900
======= ======= ======= ======= =======
</TABLE>
INCOME TAXES - The Company follows Statement of Financial Accounting
Standards (SFAS) No.109 "Accounting for Income Taxes," which requires the
recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been recognized in the financial
statements or the income tax returns.
RESEARCH, DEVELOPMENT, AND ENGINEERING - Research, development, and
engineering expenditures for the creation and application of new and
improved products and manufacturing processes were approximately $4,500 in
2000, $3,500 in 1999, and $3,950 in 1998. Research, development and
engineering costs are charged to operations as incurred.
GOVERNMENT INCENTIVE GRANTS - The Company has received an incentive grant,
from the government in Scotland related to capital expenditures for
equipment and machinery over the period of 1995-1999. The Company's policy
is to defer this capital expenditure grant and amortize to income over the
estimated useful life of the equipment and machinery. The financial
statements include grant income of approximately $264 in 2000, $291 in
1999, and $254 in 1998.
DISCLOSURE OF CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES - The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the consolidated financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates. The
Company's periodic filings with the Securities and Exchange Commission
include, where applicable, disclosures of estimates, assumptions,
uncertainties and concentrations in products, sources of supply and
markets that could affect the consolidated financial statements and future
operations of the Company.
CONCENTRATION OF CREDIT RISK - Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally
of cash investments and trade receivables. The Company has cash investment
policies that limit the amount of credit exposure to any one issuer and
restrict placement of these investments to issuers evaluated as credit
worthy. Concentrations of credit risk with respect to trade receivables
are limited due to the large number of customers comprising the Company's
customer base and their dispersion across many different industries and
geographies.
-D-25-
<PAGE>
FOREIGN CURRENCY - The accounts of foreign subsidiaries are measured using
local currency as the functional currency. For these operations, assets
and liabilities are translated into U.S. dollars at period-end exchange
rates, and income and expense accounts are translated at average monthly
exchange rates. Net exchange gains or losses resulting from such
translation are excluded from net income and accumulated as other
comprehensive income. Gains and losses from completed foreign currency
transactions are included as a separate component of other income
(expense) in the consolidated statements of operations.
SEGMENT REPORTING - The Company operates in one industry. The Company
identifies operating segments by geographical location.
NEW ACCOUNTING STANDARDS - SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities," establishes accounting and reporting
standards for hedging activities and for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as derivatives). It requires that an entity recognize all
derivatives as other assets or liabilities in the statement of financial
position and measure those instruments at fair value. The Company adopted
the new standard on July 1, 2000. The effect on the results of operations
of adopting this new standard will be insignificant.
The Security and Exchange Commission Staff Accounting Bulletin No. 101
"Revenue Recognition" establishes accounting and reporting standards for
the recognition of revenues. The Company will adopt the new bulletin in
2001. The Company does not expect the adoption of this bulletin will have
a material impact on its financial statements.
INTERNATIONAL OPERATIONS - In connection with its international operations
the Company is subject to various risks inherent in foreign activities.
These risks may include unstable economic and political conditions,
changes in trade policies and regulations of countries involved,
fluctuations in currency exchange rates and requirements for letters of
credit or bank guarantees. Most of the Company's international operations
are in western European countries, mainly Great Britain, Belgium, and the
Netherlands, and to a lesser degree in the Asian countries of Japan,
Singapore and Malaysia. The Company is exposed to risks associated with
fluctuations in exchange rates, including the Euro, Swiss franc, pound
sterling, Deutsche mark, yen, Singapore dollar, Malaysian ringgit and the
Dutch guilder. The Company limits its exposure to these risks by incurring
and paying for its expenses in the same currencies as those of its
revenue. It is the Company's policy not to enter into derivative financial
instruments for speculative purposes. There were no derivative foreign
currency instruments outstanding as of June 30, 2000.
COMMON SHARE DATA - Per common share data for 2000, 1999 and 1998 is
presented using basic and dilutive weighted average number of common
shares outstanding.
-D-26-
<PAGE>
The following is the reconciliation of the numerators and denominators
used to compute the net income (loss) per common share, basic and
dilutive:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ -------
<S> <C> <C> <C>
Numerator
Income (loss) available to
common shareholders $4,630 $ 390 $(6,181)
Denominator
Basic-weighted shares outstanding
(in thousands) 4,993 4,904 4,892
Stock options 261 1
------ ------ -------
Dilutive-weighted shares outstanding
(in thousands) 5,254 4,905 4,892
------ ------ -------
Net income (loss) per common share:
Basic $0.93 $ 0.08 $ (1.26)
====== ====== =======
Dilutive $0.88 $ 0.08 $ (1.26)
====== ====== =======
</TABLE>
Options to purchase 4, 479 and 577 shares of common stock were outstanding
during 2000, 1999 and 1998, respectively, but were not included in the
computation of diluted earnings per share because the option exercise
price was greater than the average market price.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
2000 1999 1998
------- ------- -------
<S> <C> <C> <C>
Finished goods $ 9,434 $ 4,092 $ 2,970
Work in process 8,479 5,569 5,595
Raw materials and supplies 1,072 971 1,497
------- ------ -------
Total $18,985 $10,632 $10,062
======= ======= =======
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
2000 1999 1998
------- ------- -------
<S> <C> <C> <C>
Land $ 309 $ 737 $ 732
Buildings 7,049 9,481 12,942
Machinery and equipment 52,547 51,361 49,416
------- ------- -------
59,905 61,579 63,090
Less accumulated depreciation
and amortization 43,916 43,040 43,666
------- ------- -------
Net $15,989 $18,539 $19,424
======= ======= =======
</TABLE>
-D-27-
<PAGE>
5. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Compensation $2,212 $1,195 $ 955
Commissions 687 1,012 721
Distributor allowances 421 441 447
Deferred grant income 341 617
Provision for plant relocation 150 119 1,900
Income taxes 1,838
Other 1,726 1,985 1,460
------ ------ ------
Total $7,375 $5,369 $5,483
====== ====== ======
</TABLE>
In November of 1998, the Company moved its cable assembly operations
in Kings Mountain, North Carolina, to a leased facility in Reynosa,
Mexico. The 1998 provision for the relocation of this facility
included the present value of the remaining future lease payments
on the vacated building, plus accruals for severance payments and
other costs related to this relocation. In 1999, management
determined that $901 of the future lease payments were long-term in
nature.
6. DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
United States' obligations:
Loans under a long-term credit agreement $ 8,900 $6,800 $6,180
7.75% fixed rate real estate mortgage,
payable in monthly installments through
October 2005, with interest 1,156 1,242
Foreign obligations:
6.938% fixed-rate loan, payable in annual
installments through 2004, with interest 890 1,122 1,335
8.0% fixed-rate real estate mortgage,
payable in quarterly installments through
2015, with interest 1,138
Other long-term debt 136 301 459
------- ------ ------
Total 12,220 9,465 7,974
Less current installments of long-term debt 441 449 367
------- ------ ------
Long-term debt $11,779 $9,016 $7,607
======= ====== ======
</TABLE>
-D-28-
<PAGE>
In February 2000, the Company amended the long-term credit agreement
with its primary lending institution. This agreement provides for
up to $10 million in revolving credit loans and is secured by a
lien on U.S. inventories and receivables. The Company had $1.1
million in unused and available credit under this agreement and
additional standby letters of credit at June 30, 2000. Interest
rates under this revolver are dependent on the type of loan advance
selected. The first type of basic advance rate is equal to the
London Interbank Offered Rate (LIBOR) plus 2.25%, (approximately
7.8% as of June 30, 2000). Second interest rate utilizing the bank's
prime interest rate minus 1/2 of 1%, (9.0% as of June 30, 2000) is also
available. This agreement includes various operating and financial
covenants, including a minimum current ratio, a maximum ratio
of indebtedness to tangible net worth, a minimum fixed charge coverage
ratio and a maximum funded indebtedness to EBITDA ratio. The
agreement terminates in December 2003, and can be extended by mutual
consent of the Company and the bank.
The aggregate maturities of long-term debt for the five years ending June
30, 2005, amount to $441 in 2001, $379 in 2002, $341 in 2003, $9,241 in
2004, $341 in 2005 and $1,477 thereafter.
During 1999, the Company entered into a multi-year interest rate
swap agreement with its primary lending institution. This agreement
covers $3.0 million of floating rate long-term debt, and
effectively fixes the interest rate on these borrowings at 7.59%.
Total interest paid, including the interest rate swap agreement, under
the long-term debt agreements was $809 in 2000, $710 in 1999 and $539
in 1998.
In addition, the Company has short-term lines of credit available
in Malaysia and Belgium at interest rates of 13.80% and 8.75%,
respectively. Total unused and available credit under these agreements
was approximately $50, as of June 30, 2000.
Property, plant and equipment with an approximate net book value of
$2,840 is pledged as collateral under the various long-term debt
agreements.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of the Company's noncurrent financial liabilities
are shown below. The fair values of current assets and current
liabilities are assumed to be equal to their reported carrying amounts.
<TABLE>
<CAPTION>
2000 1999 1998
---------------------- ---------------------- ----------------------
CARRYING FAIR CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
<S> <C> <C> <C> <C> <C> <C>
Long-term debt $12,220 $12,505 $9,465 $9,372 $7,974 $7,872
</TABLE>
The valuations for long-term debt, including a $77 and $44 in 2000
and 1999, respectively, reduction in fair value for the interest
rate swap agreement, are determined based on the expected future
payments discounted at risk-adjusted rates.
-D-29-
<PAGE>
8. INCOME TAXES
The provision (benefit) for income taxes follows:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Current:
Federal $ 724 $(959) $(1,132)
State 328 (154) (38)
Foreign 993 251 318
------ ----- -------
Total current 2,045 (862) (852)
------ ----- -------
Deferred:
Federal 20 897 (1,149)
State 17 190 (173)
Foreign (821) (527) (87)
------ ----- -------
Total deferred (784) 560 (1,409)
------ ----- -------
Total $1,261 $(302) $(2,261)
====== ===== =======
</TABLE>
The following reconciles income taxes computed at the U.S. Federal
statutory rate to income taxes reported for financial reporting purposes:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Income tax expense (benefit) at
statutory rate $2,003 $ 30 $(2,870)
Non-U.S. tax-exempt (earnings) losses (1,165) 2 729
Foreign loss carryforwards (498) (483)
Foreign dividends 237
Foreign taxes, net of U.S. tax credit 327 118 197
State and local taxes, net of
U.S. Federal income tax 198 24 (139)
Research and experimentation credit (62) (58) (59)
Other 221 65 (119)
------ ----- -------
Income tax expense (benefit) $1,261 $(302) $(2,261)
====== ===== =======
</TABLE>
No U.S. Federal income taxes have been provided at June 30, 2000,
on approximately $6,400 of accumulated earnings of certain
foreign subsidiaries since the Company plans to reinvest such
amounts for an indefinite future period.
The Company made income tax payments, net of tax refunds received, of
approximately $1,100 in 2000, $265 in 1999 and $770 in 1998.
-D-30-
<PAGE>
The net current and non-current components of deferred income taxes
recognized in the balance sheet at June 30 follows:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Net current assets $ 857 $ 609 $ 745
Net non-current assets 540 4 428
------ ------ -------
Net assets $1,397 $ 613 $ 1,173
====== ====== =======
</TABLE>
The tax effect of the significant temporary differences that comprise the
deferred tax assets and liabilities at June 30 follows:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 972 $1,263 $ 1,504
Tax credit carryforwards 216 248
Employee compensation and benefits 312 311 355
Inventories and other current assets 80 363 247
State and local income taxes,
net of U.S. Federal income tax benefit 28 141
Plant closing settlement costs 306 333 541
Other accrued expenses 830 400 68
------ ------ -------
Total deferred tax assets 2,716 2,946 2,856
------ ------ -------
Deferred tax liabilities -
Depreciation and amortization 918 1,468 179
------ ------
Total deferred tax liabilities 918 1,468 179
------ ------ -------
Net deferred tax assets
before valuation allowance 1,798 1,478 2,677
Deferred tax assets valuation allowance (401) (865) (1,504)
------ ------ -------
Net deferred tax assets $1,397 $ 613 $ 1,173
====== ====== =======
</TABLE>
At June 30, 2000, certain foreign subsidiaries have accumulated
foreign net operating loss carryforwards of approximately $2,900 (tax
benefit of $972). Under foreign jurisdictions, these loss
carryforwards do not expire. Management is unable at this time to
project future taxable income that will utilize the deferred benefit of
these loss carryforwards. As a result, a valuation allowance has
been established of $401. The tax benefit of the remaining net
operating loss carryforwards will be recognized when management
is able to project future taxable income of these foreign
subsidiaries. Tax credit carryforwards begin to expire after June 30,
2004. Management anticipates future taxable income from U.S.
operations will utilize these tax credit carryforwards before
their expiration.
-D-31-
<PAGE>
9. LEASED ASSETS AND LEASE COMMITMENTS
The consolidated financial statements include land and buildings under a
capital lease as follows:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Land and buildings $553 $542 $497
Less accumulated amortization 154 121 89
---- ---- ----
Net assets under a capital lease $399 $421 $408
==== ==== ====
</TABLE>
The Company leases office and plant facilities, automobiles,
computer systems, and certain other equipment under noncancelable
operating leases, which expire at various dates. Taxes, insurance, and
maintenance expenses are normally obligations of the Company.
Rental expenses charged to operations under operating leases
amounted to approximately $1,490 in 2000, $1,540 in 1999 and $1,360
in 1998.
A summary of future minimum lease payments follows:
<TABLE>
<CAPTION>
Capital Operating
Year ending June 30 Lease Lease
------------------- ------- ---------
<S> <C> <C>
2001 $ 41 $1,672
2002 38 1,280
2003 823
2004 463
2005 386
Later years 495
---- ------
Total minimum lease payments 79 $5,119
======
Less amount representing interest 7
----
Present value of net minimum lease payments
(included in long-term debt) $ 72
====
</TABLE>
During 2000, the Company sold its corporate headquarter building in
New Albany, Indiana to a related party for approximately $2.2
million. The Company has entered into an agreement to lease back
the building for a two-year lease expiring February 2002 for
approximately $220 per year. The gain on such sale, which was
insignificant, was deferred and is being amortized over the life of
the lease.
10. EMPLOYEE BENEFITS
The Company has a defined contribution pension plan and a
defined contribution 401(k) plan for eligible employees in the
United States. Annual contributions by the Company to the defined
contribution pension plan are based upon specified percentages of the
annual compensation of participants. Under the terms of the 401(k)
plan, employees may contribute a portion of their compensation to the
plan and the Company makes matching contributions up to a specified
level. The contributions charged to expense under the defined
contribution plans were approximately $450 in 2000, $460 in 1999 and
$525 in 1998.
-D-32-
<PAGE>
Company personnel in Europe and Asia are provided retirement
benefits under various programs that are regulated by foreign
law. Annual contributions are generally regulated in amount and
shared equally by the Company and its employees. The Company's share
of annual contributions to the aforementioned foreign defined
contribution plans was approximately $100 in 2000, $100 in 1999 and
$250 in 1998.
11. STOCK OPTION PLANS
In September 1993, the Company adopted a stock option plan for
eligible employees and nonemployee directors. Under the terms of
the plan, the Board of Directors is authorized to grant options in
the aggregate of 500 common shares of the Company to eligible
employees and a predetermined annual number of shares to nonemployee
directors at prices not less than the market value at the date of
grant. In 1998, the Board of Directors authorized an additional 500
common shares to the pool of shares available for option grants
under the terms of the plan. Fifty percent of the options are
exercisable after the first anniversary of the date of grant. One
hundred percent of the options are exercisable after the second
anniversary date of the grant. All options expire ten years after the
date of the grant.
The following is a summary of the option transactions under the plan:
<TABLE>
<CAPTION>
Weighted average
option price
2000 Shares per share
---- ------ ----------------
<S> <C> <C>
Shares under option at beginning of year 559 $5.99
Granted 250 4.45
Expired (1) 6.63
Cancelled (28) 5.30
Exercised (127) 4.85
-----
Shares under option at end of year 653 5.65
=====
</TABLE>
<TABLE>
<CAPTION>
Weighted average
option price
1999 Shares per share
---- ------ ----------------
<S> <C> <C>
Shares under option at beginning of year 577 $6.30
Granted 120 4.13
Expired (28) 7.00
Cancelled (110) 5.33
------
Shares under option at end of year 559 5.99
=====
</TABLE>
<TABLE>
<CAPTION>
Weighted average
option price
1998 Shares per share
---- ------ ----------------
<S> <C> <C>
Shares under option at beginning of year 500 $ 6.56
Granted 144 6.25
Expired (19) 10.88
Cancelled (43) 7.09
Exercised (5) 6.17
------
Shares under option at end of year 577 6.30
=====
</TABLE>
A total of 358, 386 and 360 shares at an average option price per share
of $6.69, $6.52 and $6.59 were exercisable and 174, 441 and 532
shares were available for future grants at June 30, 2000, 1999 and
1998, respectively.
-D-33-
<PAGE>
The following table summarizes information about stock options outstanding at
June 30, 2000:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------- -------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
exercise Outstanding Contractual Life Exercise Exercisable Exercised
prices at 6/30/2000 (Years) Price at 6/30/2000 Price
<S> <C> <C> <C> <C> <C>
$4.00 to $5.875 414 8.44 $4.35 130 $4.64
$6.00 to $7.375 100 5.25 6.46 93 6.42
$8.625 to $9.25 135 4.36 8.84 135 8.84
$12.875 to $18.00 4 9.67 13.46
</TABLE>
The weighted average fair value of options granted during 2000, 1999 and
1998 was $2.94, $1.91 and $2.19, respectively.
The fair value of each stock option granted in 2000, 1999 and 1998 was
estimated as of the date of the grant using the Black-Scholes
option-pricing model with the following assumptions for 2000, 1999 and
1998, respectively: dividend yield of 0%, 0%, and 1.6% to 2.8%; volatility
factor of 47%, 45% and 37%; a range of risk-free interest rates of 6.2% to
6.8%, 4.7% to 5.1% and 5.5% to 6.0%; and expected lives of 10 years for all
years.
In accordance with Accounting Principle Board No. 25, the Company has not
recognized any compensation cost for the stock option plan. Had
compensation cost for the Company's stock option plans been determined
based on the fair value at the grant dates for awards under those plans
consistent with the method of SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company's net income and earnings per share would have
been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Net income (loss):
As reported $4,630 $390 $(6,181)
Pro forma 3,934 164 (6,471)
Earnings (loss) per share (dilutive):
As reported $0.88 $0.08 $ (1.26)
Pro forma 0.75 0.03 (1.32)
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts.
12. STOCK PURCHASE PLAN
The Company had an employee stock purchase plan for key employees that
provided for participants of the plan to purchase common shares of the
Company on the open market through an independent trustee. The plan
permitted the Board of Directors to authorize interest-free loans to the
participants for the purchase of stock. Shares are held in trust as
collateral for the loans, which are payable by the participants for the
plan over a period not to exceed ten years. The plan also provided for
participants to receive from the Company a matching number of common shares
of the Company, based upon a vesting schedule and the participants' level
of purchased shares. The plan terminated in 1994 with respect to new
participation. The loans ($20 in 2000, $72 in1999 and $98 in 1998) and
deferred compensation charges ($2 in 2000, $5 in 1999 and $8 in 1998)
associated with the plan are classified as a reduction of shareholders'
equity. The amortization of the deferred compensation charged to expense
was $3 in 2000, $3 in 1999 and $11 in 1998.
During 2000, the Company adopted the Discount Share Purchase Program for
certain key employees. Such program allowed certain key employees to
-D-34-
<PAGE>
purchase the Company's common stock at a 15% discount. The Company issued
approximately 18 shares as of June 30, 2000. Such plan was discontinued in
2000.
13. SHAREHOLDER RIGHTS PLAN
The Company has a shareholder rights plan for the purpose of deterring
coercive or unfair takeover tactics and encouraging a potential acquirer to
negotiate with the Board of Directors before attempting to gain control of
the Company. Under the terms of the plan, rights to purchase additional
common shares were distributed as a dividend to shareholders of record on
May 6, 1988, and are also distributed with respect to shares that were
issued after May 6, 1988. The rights are attached to each issued and
outstanding share and were to expire on April 15, 1998. The Plan was
amended in January 1998 to extend expiration date to April 15, 2008. At
issuance, the rights are not exercisable and are not detachable from common
shares. Accordingly, the rights do not provide any immediate value to
shareholders. The Company may redeem the rights for one cent per right at
any time prior to becoming exercisable. The rights become exercisable ten
days after public disclosure that a person acquired 20% or more, or
commenced a tender offer or exchange offer for 30% or more, of the issued
and outstanding common shares, unless such acquisition or tender offer was
approved in advance by the disinterested directors of the Company.
Thereafter, the rights will trade separately from the common shares, and
separate certificates representing the rights will be issued. Each right
grants an eligible holder the right to purchase for $40.00 additional
common shares of the Company, or in the event of certain mergers or
business combinations, additional shares of the survivor's common shares.
The number of common shares to be issued upon exercise of a right is based
upon the then current market value of the common shares, subject to certain
adjustments.
14. SIGNIFICANT CUSTOMER
The Company had sales of approximately $14,000 to Customer A, $11,000 to
Customer B and $10,000 to Customer C in 2000 and $8,400 to Customer A in
1999. No sales to a single customer exceeded 10% of total sales in 1998.
15. EMPLOYEE HEALTH INSURANCE PLAN
The Company maintains a self-insurance program for that portion of health
care costs not covered by insurance. The Company's costs are limited to
$100 a person each calendar year, with an aggregate annual limitation, for
the plan year ending December 31, 2000 of $900.
-D-35-
<PAGE>
16. BUSINESS SEGMENT AND FOREIGN SALES
The Company operates within the electronic connectors segment of the
electronic industry. Products are sold throughout the world for use by
manufacturers of computers, telecommunications equipment, automobiles,
industrial controls, medical instrumentation, and a wide variety of other
products to interconnect components of electronic systems. During 2000, the
Company had manufacturing operations located in the United States, Mexico,
Scotland, Belgium, and Malaysia.
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Sales
United States
Domestic $53,649 $44,042 $46,955
Export:
Europe 78
Asia 7
Rest of World 4,576 2,296 1,653
------- ------- -------
Total sales to customers 58,225 46,338 48,693
Intercompany 8,336 4,950 7,342
------- ------- -------
Total United States 66,561 51,288 56,035
------- ------- -------
Europe
Domestic 25,363 17,486 18,472
------- ------- -------
Total sales to customers 25,363 17,486 18,472
Intercompany 5,847 3,024 3,806
------- ------- -------
Total Europe 31,210 20,510 22,278
------- ------- -------
Asia
Domestic 9,251 6,168 6,981
------- ------- -------
Total sales to customers 9,251 6,168 6,981
-------
Intercompany 9,410 3,763 4,128
------- ------- -------
Total Asia 18,661 9,931 11,109
------- ------- -------
Eliminations (23,593) (11,737) (15,276)
------- ------- -------
Consolidated $92,839 $69,992 $74,146
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Identifiable Assets
United States $47,933 $39,990 $36,274
Europe 20,916 14,568 14,544
Asia 6,601 3,843 3,417
Eliminations (17,383) (11,775) (11,933)
------- ------ -------
Consolidated $58,067 $46,626 $42,302
======= ======= =======
Income (Loss) Before Income Tax Expense
(Benefit) United States $4,070 $ 422 $(6,298)
Europe 1,030 (249) (2,217)
Asia 791 (85) 73
------ -------- -------
Consolidated $5,891 $ 88 $(8,442)
====== ======== =======
</TABLE>
Intercompany sales of finished products were generally priced to "share"
profits based upon current market conditions. Items requiring further
processing were priced at cost plus a fixed percentage.
-D-36-
<PAGE>
17. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
For the year ended June 30, 2000 Sept. 30, 1999 Dec. 31, 1999 Mar. 31, 2000 June 30, 2000 Total
<S> <C> <C> <C> <C> <C>
Net sales $20,950 $22,778 $23,985 $25,126 $92,839
Gross profit 5,562 6,469 6,968 7,010 26,009
Net income 784 880 1,226 1,740 4,630
Net income per common share:
Basic 0.16 0.18 0.25 0.35 0.93
Dilutive 0.16 0.17 0.23 0.32 0.88
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
For the year ended June 30, 1999 Sept. 30, 1998 Dec. 31, 1998 Mar. 31, 1999 June 30, 1999 Total
<S> <C> <C> <C> <C> <C>
Net sales $14,914 $17,502 $18,657 $18,919 $69,992
Gross profit 2,828 3,877 4,808 4,825 16,338
Net income (loss) (1,317) 39 508 1,160 390
Net income (loss) per common share, basic
and dilutive (0.27) 0.01 0.10 0.24 0.08
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
For the year ended June 30, 1998 Sept. 30, 1997 Dec. 31, 1997 Mar. 31, 1998 June 30, 1998 Total
<S> <C> <C> <C> <C> <C>
Net sales $18,543 $19,576 $19,658 $16,369 $74,146
Gross profit 3,386 3,524 2,929 1,750 11,589
Net loss (132) (232) (3,288) (2,529) (6,181)
Net loss per common share, basic
and dilutive (0.03) (0.05) (0.67) (0.52) (1.26)
Dividends per common share 0.03 0.03 0.03 0.03 0.12
</TABLE>
Net income (loss) per share amounts are calculated independently for each
of the periods presented. The sum of the quarters may not equal the full
year net income (loss) per share amounts.
-D-37-
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no disagreements with the Company's independent auditors on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, or any reportable events.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Bylaws of the Company provide for ten directors, divided into two
classes of three persons and one class of four persons, each of whom is to be
elected for a three-year term.
The following table sets forth information with respect to each member of
the Board of Directors of the Company as of June 30, 2000:
<TABLE>
<CAPTION>
Served as Term of
Positions Held Director Office
Name Age With The Company Since Expires
---- --- ---------------- --------- --------
<S> <C> <C> <C> <C>
Patrick C. Duffy 63 Chairman of the 1991 2001
Board of Directors
Samuel C. Robinson 68 Director 1955 2000
James W. Robinson 66 Director 1955 2001
Larry W. Burke 60 President and 1990 2002
Chief Executive
Officer and
Director
Richard L. Mattox 66 Secretary and 1964 2001
Director
Jerrol Z. Miles 60 Director 1974 2000
Richard W. Strain 59 Director 1991 2000
Donald C. Neel 55 Director 1997 2002
Ben M. Streepey 44 Director 1997 2002
</TABLE>
- ------------------------------
BUSINESS EXPERIENCE OF DIRECTORS
Except as described below, the principal occupations of the directors have
not changed during the past five years.
Patrick C. Duffy was elected Chairman of the Board of Directors on January
23, 1998. He has been a management consultant since 1988 to various businesses
with emphasis on system management and electronics research, development and
manufacturing. Prior to 1988, Mr. Duffy was president of Chrysler Corporation
Space Division. Chrysler Corporation Space Division designed, manufactured and
performed launch operations for the Apollo space program. Mr. Duffy also
diversified the Space Division into the electrical/electronic automotive field
by initiating automotive wire harness design and production in Cape Canaveral,
Florida, and Juarez, Mexico. He established an electronics design and
manufacturing facility in Louisiana that supplied test equipment to automotive
outlets in the U.S. and Europe. He was the President and owner of Switches,
Inc., an Indiana company that designed and manufactured electronics for the
automotive industry. Mr. Duffy is a former Chairman of the Board of Acordia
-D-38-
<PAGE>
Southeast, an insurance brokerage firm covering Florida, Georgia and Louisiana,
with headquarters in Clearwater, Florida.
Samuel C. Robinson retired as Chief Executive Officer of the Company on
June 30, 1985, and retired as Chairman of the Board on January 23, 1998.
James W. Robinson served as Executive Vice President and Treasurer of the
Company until June 30, 1985, at which time he was elected as Chairman of the
Board. He served as Chairman of the Board of the Company until his resignation
on January 29, 1987. Mr. Robinson is active in various independent investments
unrelated to the activities of the Company. He is also a director of Caldwell
Group Ltd., Caldwell Energy & Environmental Inc., Caldwell Tanks, Inc.,
Community Bank of Southern Indiana, StemWood Corp., CT Services Corp., SCI
Broadcasting, Inc., Community Bank Shares of Indiana, Inc., Sunnyside
Communications, Inc., Neimco Fabricators, Inc., and 16th St. Associates, Inc.,
all of which are located in the Louisville, Kentucky metropolitan area.
Larry W. Burke has served as President and Chief Executive Officer of the
Company since March 6, 1990. He served as Executive Vice President of the
Company from April 1986 to March 1990. He also serves as a the Chairman of the
Board of Advisors of Indiana University Southeast, New Albany, Indiana.
Richard L. Mattox is a partner in the law firm of Mattox, Mattox and Wilson
in New Albany, Indiana and acted as legal counsel to the Company during fiscal
2000.
Jerrol Z. Miles is a Senior Vice President of National City Bank, Kentucky,
located in Louisville, Kentucky, where his primary responsibility is management
of commercial loans and special credit departments.
Donald C. Neel is president and CEO of Health Network International (HNI).
HNI develops software and services in the field of personal health management.
He was formerly an executive at Eli Lilly and Company holding a variety of
global positions in finance, information systems and general management. Mr.
Neel is a member of Ball State University's Advisory Board for the Center for
Information and Communication Sciences, and Chairman of Young Audiences of
Indiana, a not for profit arts education organization.
Ben M. Streepey is Vice President & General Manager Lexmark Electronics for
Lexmark International located in Lexington, Kentucky. Lexmark Electronics is an
integrated business unit providing worldwide contract electronic manufacturing
services.
Richard W. Strain has held a variety of positions with Eli Lilly and
Company. From July 1984 until 1990, he served as president of the Medical
Instrument Systems Division; and from 1990 to April 1992, he served as vice
president for Business Development and Pricing. In May 1992, Mr. Strain was
elected as president/CEO of Heart Rhythm Technologies, and in December 1993 he
returned to Eli Lilly and Company headquarters. Since his retirement from Eli
Lilly and Company, Mr. Strain has been president/CEO of a biotech company,
participated in healthcare consulting, and serves on several boards.
FAMILY RELATIONSHIPS
Samuel C. Robinson and James W. Robinson are brothers. There is no other
family relationship among the directors and executive officers of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the officers
and directors of the Company to file initial reports of ownership and reports of
changes in ownership of the Common Shares of the Company. The officers and
directors are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms filed by them.
-D-39-
<PAGE>
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all reports required by Section 16(a) of the Securities
Exchange Act of 1934 related to market transactions in the Common Shares of the
Company were timely filed.
ITEM 11. EXECUTIVE COMPENSATION.
Compensation of Directors
In 1999, members of the Board of Directors who were not employees of
the Company received annual remuneration in the amount of $8,000 per year,
plus an additional $1,200 for each meeting of the Board of Directors
attended. Patrick C. Duffy received, for his services as Chairman of the
Board of Directors, $2,000 per quarter and $1,700 per meeting. In 1999
Director compensation for annual remuneration and meeting fees was changed
from the payment in cash, to a grant of the Company's Common Shares. The
number of shares granted during 2000 was established by dividing the
quarterly compensation amount by the closing market price of the Company's
Common Shares as of November 4, 1999. Board members receive reimbursement
of expenses in cash. In 2001, the value of the annual remuneration will
increase to $10,000 per year, plus and additional $1,200 for each meeting
of the Board of Directors attended. Mr. Duffy will receive $1,700 per
meeting. This remuneration will continue to be paid in Common Shares. The
number of shares granted will be calculated utilizing the closing market
price of the Company's Common Shares as of July 28, 2000. Members of the
Board of Directors who are employees of the Company receive no separate
remuneration for their service as directors.
Audit and Compensation Committee members receive a minimum of $400 per
meeting attended plus $200 per hour for attendance beyond two hours.
Directors serving on the Ad-hoc committees, established at the April 1998
board meeting, receive $200 per hour for attendance during meetings of
these committees with a minimum of $600 per meeting, and an additional $150
per hour for attendance beyond three hours, plus reimbursement of expenses.
The Chairpersons of the Audit and Compensation Committees receive $500 for
their services in such capacities.
Mr. Duffy receives $1,200 per day, plus reimbursement of expenses, for
days spent working on Robinson Nugent business.
On July 28, 2000, the Board of Directors approved and awarded $10,000
performance bonuses for all non-employee directors. Mr. Duffy was awarded
an additional $40,000 for his contributions to the Company's performance
and profitability. Mr. Neel was awarded and additional $10,000 for his work
in the Information Technology area of the Company.
Under the provisions of the 1993 Employee and Non-Employee Director
Stock Option Plan approved by the shareholders in November, 1993,
Non-Employee directors were granted non-qualified stock options (NQSOs)
annually to purchase 4,000 Common Shares of the Company at the then current
market price. Such options were granted to non-employee directors on
September 13, 1993, September 13, 1994, September 13, 1995, September 13,
1996, September 13, 1997, September 13, 1998 and September 13, 1999, at an
exercise price of $8.75, $6.00, $8.625, $4.75, $7.375, $4.25 and $4.75 per
Common Share, respectively.
-D-40-
<PAGE>
The 1993 Employee and Non-Employee Director Stock Option Plan was
amended by the Board of Directors on July 28, 2000 to make certain changes
to the provisions related to NQSOS and to increase the non-discretionary
grants to non-employee directors. Under the Plan, as amended, on July 28,
2000, all non-employee members of the Board of Directors received stock
option grants for 6,000. The chairmen of the Audit Committee and the
Compensation and Stock Option Committee received additional stock option
grants for 1,000. The chairman of the Board of Directors received
additional stock option grants for 4,000. Such options were granted under
the Plan, as amended, on July 28, 2000. These stock option grants have an
exercise price of $14.00 (closing price as of July 28, 2000) per common
share. All of these options are exercisable as to one-half the shares after
the first anniversary of the date of grant and as to all the shares after
the second anniversary of the date of grant and expire ten years after date
of grant.
Compensation Committee Interlocks and Insider Participation
During fiscal year 2000, none of the members of the Compensation
Committee served nor have they previously served as officers of the Company
or any subsidiary, and none of the Company's executive officers serve as
directors of, or in any compensation-related capacity for, companies with
which members of the Compensation Committee are affiliated.
Executive Compensation
General
The following Summary Compensation Table sets forth certain
information with respect to the aggregate compensation paid during each of
the last three years to the Company's President and Chief Executive Officer
and each of the other top four executive officers of the Company whose
salary and bonus exceeded $100,000 during fiscal 2000.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------- ------------
Restricted
Other Annual Stock Options/ All Other
Salary Bonus Compensation Award(s) SAR's Compensation
Year ($) ($) ($)(1) ($) # of shares(2) ($) (3)
---- ------ ----- -------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Larry W. Burke, 2000 233,899 67,600 946 - 15,000 65,075
President and Chief 1999 208,028 - 2,614 - - 62,578
Executive Officer 1998 216,477 - 4,012 - 16,500 61,701
Raymond T. Wandell, 2000 216,922 36,000 - - 3,000 3,225
Vice President, Sales 1999 50,769 - - - 30,000 -
North America 1998 - - - - - -
W. Michael Coutu 2000 173,483 73,000 - - 30,000 14,363
Vice President 1999 162,184 - - - - 11,967
Information Technology 1998 142,837 10,000 - - 9,020 12,255
Leong Chun Kin, 2000 213,482 - - - 5,000 73,776(4)
Managing Director, 1999 215,013 - - - - -
Asia Pacific Operation 1998 198,137 - - - 8,800 -
Dennis I. Smith, 2000 238,574 36,000 - - 3,000 3,225
Vice President, 1999 50,135 - - - 30,000 -
Global Marketing 1998 -- - - - - -
<FN>
(1) Represents imputed interest attributable to interest-free loans
authorized by the Board of Directors in connection with the purchase
of Common Shares of the Company under the 1993 Employee Stock Purchase
Plan.
(2) Represents options granted under the 1993 Employee and Non-Employee
Director Stock Option Plan.
-D-41-
<PAGE>
(3) Includes contributions by the Company on behalf of the named persons
and the group to the Company's Retirement Plan and 401(k) Plan, and
pursuant to deferred compensation agreements. Effective May 10, 1990,
the Company entered into a deferred compensation agreement with Mr.
Burke. The deferred compensation agreement provides for payments of
$50,000 per year to a trust administered by Strong Retirement Plan
Services, Menomonee Falls, Wisconsin, as supplemental retirement
income benefits to Mr. Burke.
(4) Represents the compensation Mr. Leong received from the cash free
exercise of stock options in the current year.
Each of the officers listed in the Summary Compensation Table serves
for a term of one year.
</FN>
</TABLE>
Stock Options
There were 91,943 stock options exercised by the named executive
officers of the Company in fiscal 2000.
The following table sets forth the number of unexercised options held
at June 30, 2000 by each of the Company's executive officers named in the
Summary Compensation Table, and the related values of such options at June
30, 2000. The value of unexercised options at June 30, 2000 is based upon a
market value at June 30, 2000 of $12.50 per Common Share.
<TABLE>
<CAPTION>
Fiscal Year End Option Values
Number of Unexercised Options Value of Unexercised In-the-Money
at June 30, 2000 (# of shares) Options at June 30, 2000 ($)(1)
------------------------------ ------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
Larry W. Burke 72,650 15,000 $363,806 $125,625
W. Michael Coutu 40,820 30,000 $203,084 $251,250
Leong Chun Kin --- 5,000 --- $41,875
Raymond T. Wandell 15,000 18,000 $127,500 $152,625
Dennis I. Smith 15,000 18,000 $127,500 $152,625
<FN>
(1) Value is calculated by (i) subtracting the exercise price per share
from the fiscal year-end market value of $12.50 per share and (ii)
multiplying by the number of shares subject to the option. Options
that have an exercise price equal to or greater than the fiscal
year-end market value are not included in the value calculation.
</FN>
</TABLE>
Discounted Share Purchase Program
In November of 1999, the Board of Directors adopted the Robinson
Nugent, Inc., Discounted Share Purchase Program for Certain Key Employees
("Discounted Share Purchase Program") to enable certain key employees of
the Company to purchase Common Shares of the Company at a 15% discount. The
Discounted Share Purchase Program is available only to employees of the
Company who, on or after October 1, 1999, are awarded a Board-approved
bonus in a gross amount (i.e., before any deductions for applicable taxes)
of $1,500 or more in any given fiscal quarter. The Discounted Share
Purchase Program is not designed to comply to the tax-qualified stock
purchase programs within the meaning of Section 423 of the Internal Revenue
Code. As a result, the 15% discount on the purchase of Common Shares under
the program is taxable to the employee.
-D-42-
<PAGE>
Report of the Compensation and Stock Option Committees
The Compensation Committee and Stock Option Committee of the Board of
Directors has responsibility for the Company's executive compensation
program. The Committee is currently comprised solely of Non-Employee
directors. The Committee is chaired by Mr. Jerrol Z. Miles. The other
Committee members are Mr. Donald C. Neel and Mr. James W. Robinson. The
following report is submitted by the members of the Compensation Committee
and the Stock Option Committee.
* * *
The Company's executive compensation program is designed to align
executive compensation with financial performance, business strategies and
Company values and objectives. The Company's compensation philosophy is to
ensure that the delivery of compensation, both in the short- and long-term,
is consistent with the sustained progress, growth and profitability of the
Company and acts as an inducement to attract and retain qualified
individuals. This program seeks to enhance the profitability of the
Company, and thereby enhance shareholder value, by linking the financial
interests of the Company's executives with those of its long-term
shareholders. Under the guidance of the Company's Compensation Committee of
the Board of Directors, the Company has developed and implemented an
executive compensation program to achieve these objectives while providing
executives with compensation opportunities that are competitive with
companies of comparable size in related industries.
The Company's executive compensation program has been designed to
implement the objectives described above and is comprised of the following
fundamental three elements:
o a base salary that is determined by individual contributions and
sustained performance within an established competitive salary range.
Pay for performance recognizes the achievement of financial goals,
accomplishment of corporate and functional objectives, and performance
of individual business units of the Company.
o an annual incentive cash bonus that is directly tied to corporate and
business unit performance measures.
o a long-term incentive program that rewards executives when shareholder
value is created through increase in the market value of the Company's
Common Shares. Stock option grants focus executives on managing the
Company from the perspective of an owner with an equity position in
the business.
Base Salary. The salary, and any periodic increase thereof, of the
President and Chief Executive Officer was and is determined by the Board of
Directors of the Company based on recommendations made by the Compensation
Committee. The salaries, and any periodic increases thereof, of the other
executive officers were and are determined by the Board of Directors based
on recommendations made by the President and Chief Executive Officer and
approved by the Committee.
The Company, in establishing base salaries, levels of incidental
and/or supplemental compensation, and incentive compensation programs for
its officers and key executives, assesses periodic compensation surveys and
published data covering the electrical/electronics industry and industry in
general. The level of base salary compensation for officers and key
executives is determined by both their scope and responsibility and the
established salary ranges for officers and key executives of the Company.
Periodic increases in base salary are dependent on the executive's
proficiency of performance in the individual's position for a given period,
and on the executive's competency, skill and experience.
-D-43-
<PAGE>
Bonus Payments. The bonus compensation program for the Company's
officers is subject to annual review by the Compensation Committee and
requires annual approval of the Board of Directors.
Under the bonus plan for executive officers and key employees for
fiscal year 2000, executive officers were eligible for a bonus award
provided the consolidated pretax income of the Company and subsidiaries for
fiscal year 2000 exceeded 90% of the amount specified in fiscal year 2000
financial plan, in an amount equal to 10% of that excess (up to the plan
amount). When pretax income exceeded the amount specified in the fiscal
year 2000 financial plan, an amount equal to 20% of that excess was added
to the bonus pool.
Under the bonus plan for executive officers and key employees for
fiscal 2001, if consolidated pretax income exceeds the amount specified in
the 2001 financial plan, an amount equal to 10% of that excess, will be
available for the payment of bonuses. The bonus amount payable to each of
the executive officers and key employees will be determined by the
President and Chief Executive Officer of the Company.
Long-Term Incentive Plans. The Company's long-term incentive
compensation program is intended to align executive interest with the
long-term interests of shareholders by linking executive compensation with
enhancement of shareholder value. In addition, the program motivates
executives to improve long-term stock market performance by allowing them
to develop and maintain a significant long-term equity ownership position
in the Company's Common Shares.
Currently, the only long-term incentive plan of the Company is its
1993 Employee and Non-Employee Director Stock Option Plan. This Plan was
adopted by the Board of Directors on September 13, 1993, and approved by
the shareholders of the Company at the 1993 annual meeting of the
shareholders held on November 4, 1993. Pursuant to this Plan, 500,000
Common Shares were made available for the grant of stock options to
Non-Employee Directors of the Company and key employees of The Company and
its subsidiaries as determined by the Stock Option Committee. An amendment
authorizing an additional 500,000 Common Shares to be made available for
grants of stock options under the 1993 Employee and Non-Employee Director
Stock Option Plan was adopted by the Board of Directors and approved by the
shareholders in 1997.
On May 28, 1992, the Board of Directors adopted the 1993 Employee
Stock Purchase Plan to provide executive officers and other key employees
with the opportunity to purchase Common Shares and thereby establish or
increase their equity position in the Company. As an added incentive to
participants in this plan, the Company awarded a matching number of Common
Shares in proportion (not more than 50%) to the Common Shares purchased and
provided interest-free loans to the participants, subject to the discretion
of the Board of Directors. The Company's matching shares vest with the
participants who remain in the employment of the Company in three equal
annual installments starting in September 1994. Loans to employees are
payable over periods not to exceed ten years. Participation in the Plan was
completed in fiscal 1993 and the Plan expired with respect to new
participation on November 10, 1993.
SUBMITTED BY THE COMPENSATION AND STOCK OPTION COMMITTEES
Mr. Donald C. Neel
Mr. James W. Robinson
Mr. Jerol Z. Miles
-D-44-
<PAGE>
Stock Performance Graph
The following chart compares the yearly percentage change in the
cumulative total shareholder return on the Company's Common Shares with the
cumulative total return of the Nasdaq market composite (U.S. Companies) and
the Peer Group Index for the six years ending June 30, 2000. The Peer Group
consists of Methode Electronics, Inc., Molex Incorporated and Thomas &
Betts Corporation. The Peer Group consists of publicly-held companies, all
of which participate in the electronic connector industry in varying
degrees with respect to their total sales volume. All of these companies
are significantly larger than the Company in terms of sales and assets. The
comparison assumes that $100 was invested on June 30, 1994, in the
Company's Common Shares and in each of the foregoing indices and assumes
reinvestment of dividends.
-D-45-
<PAGE>
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG ROBINSON NUGENT, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX, AND A PEER GROUP
[GRAPHIC OMITTED]
* $100 INVESTED ON 6/30/95 IN STOCK OR INDEX-INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING JUNE 30.
ROBINSON NUGENT, INC. (RNIC)
<TABLE>
<CAPTION>
% PEER GROUP
WEIGHTED CUMULATIVE TOTAL RETURN MARKET CAP
-------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peer Group Cumulative Total Return 6/95 6/96 6/97 6/98 6/99 6/00 6/30/2000
(Weighted Average by Market Value)
Peer Group Weighted Average: 100 111 155 139 170 191
Methode Electrs Inc METHA 100 132 156 123 185 314 12.5%
Molex Inc MOLX 100 103 148 127 188 306 44.78%
Thomas & Betts Corp TNB 100 113 163 156 154 64 42.72%
</TABLE>
-D-46-
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
BENEFICIAL OWNERSHIP OF COMMON SHARES
The following table sets forth certain data with respect to those
persons known by the Company to be the beneficial owners of five percent or
more of the outstanding Common Shares of the Company as of August 8, 2000
and also sets forth such data with respect to each director of the Company,
each officer listed in the Summary Compensation Table, and all directors
and executive officers of the Company as a group. Except as otherwise
indicated in the notes to the table, each beneficial owner possesses sole
voting and investment power with respect to the shares indicated.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
SHARES (1) OF CLASS
---------- --------
<S> <C> <C>
PRINCIPAL SHAREHOLDERS
Samuel C. Robinson 1,137,258 (2) 20.8%
226 Barefoot Beach Blvd.
Bonita Springs, Florida 34134
ROI Capital Management, Inc. 574,855 (3) 10.5%
17 E. Sir Francis Drake Blvd.
Suite 225
Larkspur, California 94939
Lawrence Mazey 360,329(13) 6.6%
Declaration of Trust
140 Commodore Drive
Juniper, Florida 33477
James W. Robinson 302,741 (4) 5.5%
7527 State Road 62
Lanesville, Indiana 47136
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue
Santa Monica, California 90401 294,700 (3) 5.4%
DIRECTORS AND EXECUTIVE OFFICERS
Samuel C. Robinson 1,137,258 (2) 20.8%
James W. Robinson 302,741 (4) 5.5%
Larry W. Burke 242,601 (5) 4.4%
Patrick C. Duffy 89,099 (6) 1.6%
W. Michael Coutu 53,206 (8) 1.0%
Richard L. Mattox 55,947 (4) 1.0%
Jerrol Z. Miles 32,417 (4) *
Donald C. Neel 42,137 *
Ben M. Streepey 18,637 (7) *
Richard W. Strain 29,137 (14) *
Raymond T. Wandell 22,080 (9) *
Leong Chun Kin 14,442 (10) *
Dennis I. Smith 19,000 (11) *
All directors and executive officers 2,120,479 (12) 38.9%
as a group (16 persons)
</TABLE>
* Less than 1%.
-D-47-
<PAGE>
(1) The table includes certain shares owned of record by the Company's 401(k)
Plan and the 1993 Employee Stock Purchase Plan. The participants in these
Plans, as noted in the following footnotes, have voting rights but no
rights of disposition with respect to the shares allocated to their
respective accounts.
(2) Includes 16,398 shares owned of record by Mr. Robinson's wife, as to which
she possesses sole voting and investment power, and 5,500 shares owned of
record by National City Bank, Southern Indiana, as trustee for the benefit
of a child, as to which Mr. Robinson and the trustee share voting and
investment power. Mr. Robinson disclaims any beneficial interest in these
shares.
(3) The shareholder certified in Schedule 136 filed with the Securities and
Exchange Commission that these shares were acquired in the ordinary course
of business and were not acquired for the purpose of and do not have the
effect of changing or influencing the control of the Company, and were not
acquired in connection with or as a participant in any transaction having
such purpose or effect.
(4) Includes 22,000 shares which each named individual may acquire upon
exercise of stock options granted to non-employee members of the Board of
Directors under the 1993 Employee and Non-Employee Director Stock Option
Plan.
(5) Includes 6,354 shares owned of record by Mr. Burke's wife, as to which he
disclaims any beneficial interest; 80,150 shares subject to immediately
exercisable options granted pursuant to the Company's Employee Stock Option
Plans; and 68,050 shares allocated to Mr. Burke's account pursuant to the
Company's 401(k) Plan and the 1993 Employee Stock Purchase Plan.
(6) Includes 52,000 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(7) Includes 6,000 shares subject to immediately exercisable options granted to
non-employee members of the Board of Directors under the 1993 Employee and
Non-Employee Director Stock Option Plan.
(8) Includes 50,820 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(9) Includes 16,500 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(10) Includes 2,500 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(11) Includes 16,500 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(12) Includes in the aggregate 343,420 shares subject to immediately exercisable
options granted pursuant to the Company's 1993 Employee and Non-Employee
Stock Option Plan held by non-employee directors and executive officers,
and 68,050 shares allocated to the accounts of executive officers pursuant
to the Company's 401(k) Plan and the 1993 Employee Stock Purchase Plan.
(13) Mr. Mazey died on February 16, 1999. The Company has been advised that
these shares are currently owned by Richard M. Mazey, Janice M. Weiss and
Sally M. Wilder, as successor co-trustees under the Lawrence Mazey
Declaration of Trust dated January 26, 1993.
(14) Includes 1,000 shares owned of record by Mr. Strain's wife, as to which he
disclaims any beneficial interest, and 22,000 shares subject to immediately
-D-48-
<PAGE>
exercisable options granted pursuant to the Company's 1993 Employee and
Non-Employee Stock Option Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
CERTAIN TRANSACTIONS
Richard L. Mattox, Secretary, Corporate Counsel and a member of the Board
of Directors of the Company, is a partner in the law firm of Mattox, Mattox &
Wilson with offices in New Albany, Indiana. That firm was retained by the
Company as legal counsel during fiscal 2000, and it is anticipated that such
relationship will continue in the current fiscal year.
Jerrol Z. Miles, a director of the Company, is a Senior Vice President of
National City Bank, Kentucky, with which the Company maintains a commercial
banking relationship including a $10,000,000 credit facility. The Company
utilized this loan facility during fiscal 2000 and incurred interest charges of
$687,153 on borrowed funds. In fiscal 2000, the Company made periodic
investments in short-term securities administered by National City Bank,
Kentucky, and the Company received interest payments of approximately $19,340
thereon.
In February 2000, the Company sold the New Albany facility to a limited
liability company, owned two-thirds by Samuel C. Robinson and one-third by James
W. Robinson, for approximately $2.2 million in cash. The purchase price was
determined in relation to the net book value of the property, and was confirmed
by an appraisal by an independent third party. This transaction was approved by
the Board of Directors. Mr. Samuel C. Robinson and Mr. James W. Robinson did not
participate in this vote. This facility was simultaneously leased back by the
Company for $220,000 per year, under a two year, triple-net lease. The gain on
such sale, which was insignificant, was deferred and is being amortized over the
life of the related lease.
The Board of Directors believes that the transactions described above were
on terms no less favorable to the Company than would have been available in the
absence of the relationships described.
In September 1992, pursuant to the terms of the Company's Employee Stock
Purchase Plan, Mr. Burke borrowed $165,000 from the Company to purchase Common
Shares of the Company. These loans are non-interest bearing and are payable over
a period not to exceed ten years. At June 30, 1999, the principal balance of the
loan to Mr. Burke was $8,859.
-D-49-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) DOCUMENTS FILED AS A PART OF THIS REPORT.
(1) FINANCIAL STATEMENTS
Independent Auditors' Report
Consolidated Balance Sheets as of June 30, 2000, 1999 and 1998
Consolidated Statements of Operations and Comprehensive Income for
the years ended June 30, 2000, 1999 and 1998
Consolidated Statements of Shareholders' Equity for the years
ended June 30, 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the years ended June 30,
2000, 1999 and 1998
Notes to Consolidated Financial Statements
(2) FINANCIAL STATEMENT SCHEDULE
Schedule for the years ended June 30, 2000, 1999, and 1998:
II Valuation and Qualifying Accounts
All other schedules are omitted, as the required information is
inapplicable or the information is presented in the consolidated
financial statements or related notes.
(3) EXHIBITS
3.1 Articles of Incorporation of Robinson Nugent, Inc.
(Incorporated by reference to Exhibit 3.1 to Form
S-1 Registration Statement No. 2-62521.)
3.2 Articles of Amendment of Articles of Incorporation
of Robinson Nugent, Inc. filed September 1, 1978
(Incorporated by reference to Exhibit B(1) to Form
10-K Report for year ended June 30, 1980.)
3.3 Articles of Amendment of Articles of Incorporation
of Robinson Nugent, Inc. filed November 14, 1983
(Incorporated by reference to Exhibit 3.3 to Form
10-K Report for year ended June 30, 1984.)
3.4 Amended and Restated Bylaws of Robinson Nugent,
Inc. adopted November 7, 1991.
-D-50-
<PAGE>
(Incorporated by reference to Exhibit 19.1 to Form
10-K Report for year ended June 30, 1992).
4.1 Specimen certificate for Common Shares, without par
value. (Incorporated by reference to Exhibit 4 to
Form S-1 Registration Statement No. 2-62521.)
4.2 Rights Agreement dated April 21, 1988 between
Robinson Nugent, Inc. and Bank One, Indianapolis,
NA. (Incorporated by reference to Exhibit I to Form
8-A Registration Statement dated May 2, 1988.)
4.3 Amendment No. 1 to Rights Agreement dated September
26, 1991. (Incorporated by reference to Exhibit 4.3
to Form 10-K Report for year ended June 30, 1991.)
4.4 Amendment No. 2 to Rights Agreement dated June 11,
1992. (Incorporated by reference to Exhibit 4.4 to
Form 8-K Current Report dated July 6, 1992.)
4.5 Amendment No. 3 to Rights Agreement dated February
11, 1998 (Incorporated by reference to Exhibit 4.5
to Form 10-Q Report for the period ended December
31, 1998.)
10.1 Robinson Nugent, Inc. 1983 Tax-Qualified Incentive *
Stock Option Plan. (Incorporated by reference to
Exhibit 10.1 to Form 10-K Report for year ended
June 30, 1983.)
10.2 Robinson Nugent, Inc. 1983 Non Tax-Qualified *
Incentive Stock Option Plan. (Incorporated by
reference to Exhibit 10.2 to Form 10-K Report for
year ended June 30, 1983.)
10.3 1993 Robinson Nugent, Inc. Employee and *
Non-Employee Director Stock Option Plan.
(Incorporated by reference to Exhibit 19.1 to Form
10-K Report for the year ended June 30, 1993.)
10.4 Summary of The Robinson Nugent, Inc. Employee Stock *
Purchase Plan. (Incorporated by reference to
Exhibit 19.2 to Form 10-K Report for the year ended
June 30, 1993.)
-D-51-
<PAGE>
10.5 Deferred compensation agreement dated May 10, 1990 *
between Robinson Nugent, Inc. and Larry W. Burke,
President and Chief Executive Officer.
(Incorporated by reference to Exhibit 19.1 to Form
10-K Report for the year ended June 30, 1990.)
10.6 Trust Agreement dated July 1, 1999 between Robinson *
Nugent, Inc. and Strong Retirement Plan Services,
related to the deferred compensation agreement
between Robinson Nugent, Inc. and Larry W. Burke,
President and Chief Executive Officer (Incorporated
by reference to Exhibit 10.6 to Form 10-K Report
for the year ended June 30, 1999.)
10.7 Summary of the 1993 Robinson Nugent, Inc. Employee *
and Non-employee Director Stock Option Plan, as
amended. (Incorporated by reference to Exhibit 10.7
to Form 10-K Report for the fiscal year ending June
30, 1998).
10.8 Summary of Robinson Nugent, Inc. Bonus Plan for
fiscal year ended June 30, 2001.
16.0 No exhibit.
21.0 Subsidiaries of the registrant.
27.0 Financial Data Schedule.
* Management contracts or compensatory plans
(B) REPORTS ON FORM 8-K
None.
-D-52-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROBINSON NUGENT, INC.
Date: 8/24/00 By: /s/ Larry W. Burke
------- -------------------------------------
Larry W. Burke, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: 8/24/00 By: /s/ Samuel C. Robinson
------- -------------------------------------
Samuel C. Robinson, Director
Date: 8/24/00 By: /s/ Larry W. Burke
------- -------------------------------------
Larry W. Burke, Director,
President and Chief Executive Officer
(Principal Executive Officer)
Date: 8/24/00 By: /s/ Patrick C. Duffy
------- -------------------------------------
Patrick C. Duffy, Director
Date: 8/24/00 By: /s/ Richard L. Mattox
------- -------------------------------------
Richard L. Mattox, Director
Date: 8/24/00 By: /s/ Jerrol Z. Miles
------- -------------------------------------
Jerrol Z. Miles, Director
Date: 8/24/00 By: /s/ James W. Robinson
------- -------------------------------------
James W. Robinson, Director
-D-53-
<PAGE>
Date: 8/24/00 By: /s/ Richard W. Strain
------- -------------------------------------
Richard W. Strain, Director
Date: 8/24/00 By: /s/ Ben M. Streepey
------- -------------------------------------
Ben M. Streepey, Director
Date: 8/24/00 By: /s/ Donald C. Neel
------- -------------------------------------
Donald C. Neel, Director
Date: 8/24/00 By: /s/ Robert L. Knabel
------- -------------------------------------
Robert L. Knabel, Vice President,
Treasurer and Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
-D-54-
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
JUNE 30, 2000, 1999, AND 1998
Financial Statement Schedule for the years ended June 30, 2000, 1999, and
1998 is included herein:
II Valuation and Qualifying Accounts
All other schedules are omitted, as the required information is inapplicable or
the information is presented in the consolidated financial statements or related
notes.
-D-55-
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
ROBINSON NUGENT, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D Col. E
- ----------------------------------------------------------------------------------------------------------------------------
Additions
-------------------------
Balance Charged to Charged to Deductions Balance
Description at Beginning Costs and Other Describe at
of Period Expenses Accounts End of
Describe Period
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 2000
Deducted from asset accts
Allowance for doubtful
accounts $ 581 $ 253 $ -- $ 250(A) $ 584
Allowance for inventory
obsolescence & valuation 1,185 1,425 -- 1,564(B) 1,046
------ ---------------------- ------ ------
Total $1,766 $1,677 $ -- $1,814 $1,629
====== ====================== ====== ======
YEAR ENDED JUNE 30, 1999
Deducted from asset accts
Allowance for doubtful
accounts $ 571 $ 33 $ -- $ 23(A) $ 581
Allowance for inventory
obsolescence & valuation 1,243 640 -- 698(B) 1,185
------- ------ ------ --- ------
Total $ 1,814 $ 643 $ -- $ 721 $1,766
======= ====== ====== ====== ======
YEAR ENDED JUNE 30, 1998
Deducted from asset accts
Allowance for doubtful
accounts $ 564 $ 72 $ -- $ 65(A) $ 571
Allowance for inventory
obsolescence & valuation 1,565 1,212 -- 1,534(B) 1,243
------ ------ ------ ------ ------
Total $2,129 $1,284 $ -- $1,599 $1,814
====== ====== ====== ====== ======
</TABLE>
See footnotes on following page.
-D-56-
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (CONT'D.)
ROBINSON NUGENT, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
(A) Summary of activity in Column D follows:
Reduction of requirements in allowance
for doubtful accounts $ -0- $ -0- $ -0-
Uncollectible accounts written off,
net of recoveries 249 23 52
Currency Translation - losses 1 -0- 13
------ ------ ------
$ 250 $ 23 $ 65
====== ====== ======
(B) Summary of activity in Column D follows: Discontinued and
obsolete inventory written off, net of recoveries $1,536 $ 697 $1,919
Currency translation - (gains)/losses 28 1 (385)
------ ------ ------
$1,564 $ 698 $1,534
====== ====== ======
</TABLE>
-D-57-
<PAGE>
ROBINSON NUGENT, INC.
FORM 10-K FOR FISCAL YEAR
ENDED JUNE 30, 2000
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
NUMBER SEQUENTIAL
ASSIGNED IN NUMBERING SYSTEM
REGULATION S-K PAGE NUMBER
ITEM 601 DESCRIPTION OF EXHIBIT OF EXHIBIT
------------------- ---------------------- -----------------
<S> <C> <C>
(3) 3.1 Articles of Incorporation of Robinson
Nugent, Inc. (Incorporated by reference
to Exhibit 3.1 to Form S-1 Registration
Statement No. 2-62521.)
3.2 Articles of Amendment of Articles of Incorporation
of Robinson Nugent, Inc. filed September 1, 1978
(Incorporated by reference to Exhibit B(1) to Form
10-K Report for year ended June 30, 1980.)
3.3 Articles of Amendment of Articles of Incorporation
of Robinson Nugent, Inc. filed November 14, 1983
(Incorporated by reference to Exhibit 3.3 to Form
10-K Report for year ended June 30, 1984.)
3.4 Amended and Restated Bylaws of Robinson Nugent,
Inc. adopted November 7, 1991. (Incorporated by
reference to Exhibit 19.1 to Form 10-K Report for
year ended June 30, 1992).
(4) 4.1 Specimen certificate for Common Shares,
without par value. (Incorporated by
reference to Exhibit 4 to Form S-1
Registration Statement No. 2-62521.)
4.2 Rights Agreement dated April 21, 1988 between
Robinson Nugent, Inc. and Bank One, Indianapolis,
NA. (Incorporated by reference to Exhibit I to
Form 8-A Registration Statement dated May 2,
1988.)
4.3 Amendment No. 1 to Rights Agreement dated
September 26, 1991. (Incorporated by reference to
Exhibit 4.3 to Form 10-K Report for year ended
June 30, 1991.)
4.4 Amendment No. 2 to Rights Agreement dated
June 11, 1992. (Incorporated by reference
</TABLE>
-D-58-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
to Exhibit 4.4 to Form 8-K Current Report
dated July 6, 1992.)
4.6 Amendment No. 3 to Rights Agreement dated
February 11, 1998 (Incorporated by reference to
Exhibit 4.5 to Form 10-Q Report for the period
ended December 31, 1998.)
(9) No exhibit.
(10) 10.1 Robinson Nugent, Inc. 1983 Tax-Qualified *
Incentive Stock Option Plan.
(Incorporated by reference to Exhibit
10.1 to Form 10-K Report for year ended June 30,
1983.)
10.2 Robinson Nugent, Inc. 1983 Non Tax- *
Qualified Incentive Stock Option Plan.
(Incorporated by reference to Exhibit
10.2 to Form 10-K Report for year ended June 30,
1983.)
10.3 1993 Robinson Nugent, Inc. Employee and *
Non-Employee Director Stock Option Plan.
(Incorporated by reference to Exhibit 19.1 to Form
10-K Report for the year ended June 30, 1993.)
10.4 Summary of The Robinson Nugent, Inc. *
Employee Stock Purchase Plan.
(Incorporated by reference to Exhibit 19.2 to Form
10-K Report for the year ended June 30, 1993.)
10.5 Deferred compensation agreement dated *
May 10, 1990 between Robinson Nugent,
Inc. and Larry W. Burke, President and
Chief Executive Officer. (Incorporated
by reference to Exhibit 19.1 to Form 10-K
Report for year ended June 30, 1990.)
10.6 Trust Agreement dated July 1, 1999 *
between Robinson Nugent, Inc. and Strong
Retirement Plan Services, related to the
deferred compensation agreement between
Robinson Nugent, Inc. and Larry W. Burke,
President and Chief Executive Officer.
(Incorporated by reference to Exhibit 10.6
to Form 10-K Report for the year ended
June 30, 1999.)
10.7 Summary of the 1993 Robinson Nugent, Inc. *
Employee and Non-employee Director Stock
Option Plan, as amended. (Incorporated by
</TABLE>
-D-59-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
reference to Exhibit 10.7 to Form 10-K Report
for the fiscal year ending June 30, 1998).
10.8 Summary of Robinson Nugent, Inc. Bonus Plan
for fiscal year ended June 30, 2001.
(11) No exhibit.
(12) No exhibit.
(16) No exhibit.
(18) No exhibit.
(21) 21.0 The subsidiaries of the registrant.
</TABLE>
-D-60-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Robinson Nugent Interconnect Malaysia
(Malaysia) Sdn. Bhd.
(22) No exhibit.
(23) No exhibit.
(24) No exhibit.
(27) 27.0 Financial Data Schedule.
(28) No exhibit.
</TABLE>
* Management contracts or compensatory plans
-D-61-
<PAGE>
EXHIBIT 10.8
ROBINSON NUGENT, INC.
SUMMARY OF ROBINSON NUGENT, INC.
BONUS PLAN FOR FISCAL YEAR ENDING JUNE 30, 2001
The Board of Directors has adopted a bonus plan for executive officers
and key employees for fiscal year 2001. Under the bonus plan for executive
officers and key employees for fiscal 2001, if consolidated pretax income
exceeds the amount specified in the 2001 financial plan, an amount equal to 10%
of that excess will be available for payment of bonuses. The bonus amount
payable to each of the executive officers and key employees will be determined
by the President and Chief Executive Officer of the Company.
-D-62-
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
JURISDICTION
NAME OF ORGANIZATION
- ---- ----------------
<S> <C>
Cablelink, Incorporated Indiana
RNL, Inc. Indiana
Robinson Nugent-Dallas, Inc. Texas
Robinson Nugent S.a.r.l. France
Robinson Nugent GmbH Germany
Robinson Nugent Ltd. Great Britain
Nihon Robinson Nugent K.K. Japan
Robinson Nugent dba Cablelink Malaysia
(Malaysia) Sdn. Bhd.
Robinson Nugent (Malaysia) Sdn. Bhd. Malaysia
Robinson Nugent S.A. Switzerland
Robinson Nugent (Scotland) Limited Scotland
Robinson Nugent International, Inc. Virgin Islands
Robinson Nugent (Europe) B.V. The Netherlands
Robinson Nugent (Belgium) B.V.B.A. Belgium
Robinson Nugent (Asia Pacific) Pte. Ltd. Singapore
Robinson Nugent Nordic, filial-till Sweden
Robinson Nugent (Europe) B.V.
The Netherlands
Robinson Nugent S. de R.L. de C.V. Mexico
</TABLE>
<PAGE>
EXHIBIT 27
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ROBINSON
NUGENT, INC. 10-K FOR THE PERIOD ENDING JUNE 30, 2000 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[MULTIPLIER] 1,000
[PERIOD TYPE] YEAR
[FISCAL YEAR END] JUN-30-2000
[PERIOD START] JUL-01-1999
[PERIOD END] JUN-30-2000
[CASH] 2,137
[SECURITIES] 0
[RECEIVABLES] 18,533
[ALLOWANCES] 581
[INVENTORY] 18,849
[CURRENT-ASSETS] 41,054
[PP&E] 59,884
[DEPRECIATION] 43,916
[TOTAL ASSETS] 57,134
[CURRENT LIABILITIES] 16,436
[BONDS] 0
[PREFERRED MANDATORY] 21,443
[PREFERRED] 0
[COMMON] 0
[OTHER SE] 6,788
[TOTAL LIABILITY AND EQUITY] 57,134
[SALES] 92,839
[TOTAL-REVENUES] 92,839
[CGS] 66,966
[TOTAL COSTS] 66,966
[OTHER EXPENSES] 18,248
[LOSS PROVISION] 0
[INTEREST EXPENSE] 910
[INCOME PRETAX] 5,894
[INCOME TAX] 1,261
[INCOME CONTINUING] 4,633
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET INCOME] 4,633
[EPS BASIC] .93
[EPS DILUTED] .88
<PAGE>
PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145(a) of the Delaware corporate law provides that a Delaware
corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, other
than an action by or in the right of the corporation, by reason of the fact
that he or she is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct
was unlawful.
Section 145(b) of the Delaware corporate law provides that a Delaware
corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit
by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he or she acted in any of the capacities set forth
above, against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection with the defense or settlement of such
action or suit if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification may be made in respect of
any claim, issue or matter as to which such person shall have been adjudged
to be liable to the corporation unless and only to the extent that the
court in which such action or suit was brought shall determine that despite
the adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to be indemnified for
such expenses which the court shall deem proper.
Section 145 of the Delaware corporate law further provides that to the
extent a director or officer of a corporation has been successful in the
defense of any action, suit or proceeding referred to in subsections (a)
and (b) or in the defense of any claim, issue or matter therein, he or she
shall be indemnified against expenses (including attorney's fees) actually
and reasonably incurred by him or her in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive
of any other rights to which the indemnified party may be entitled; and
that the corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise
against any liability asserted against him or her or incurred by him or her
in any such capacity or arising out of his or her status as such, whether
or not the corporation would have the power to indemnify him or her against
such liabilities under Section 145.
Section 102(b)(7) of the Delaware corporate law provides that a
certificate of incorporation may contain a provision eliminating or
limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision shall not eliminate or limit the
liability of a director: (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders; (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) under Section 174 of the Delaware corporate law; or
(iv) for any transaction from which the director derived an improper
personal benefit.
Article Fourteenth of 3M's certificate of incorporation states that
the liability of 3M's directors will be eliminated to the fullest extent
permitted by the Delaware corporate law.
Article 34 of 3M's bylaws provides that 3M will indemnify, to the full
extent permitted by law, any person made or threatened to be made a party
to any action, suit, or proceeding, whether criminal, civil,
administrative, or investigative, by reason of the fact that such person or
such person's testator or intestate is or was a director, officer, or
employee of 3M or serves or served at the request of 3M in any other
enterprise as a director, officer, or employee. Expenses incurred by that
person in defending any such action, suit, or proceeding will be paid or
reimbursed by 3M promptly upon receipt by it of an undertaking of that
person to repay such expenses if it ultimately is determined that such
person is not entitled to be indemnified by 3M. The rights provided to any
person by the bylaws will be enforceable against 3M by that person who will
be presumed to have relied upon it in serving or continuing to serve as a
director, officer, or employee. Section 15 of 3M's bylaws also provides
that the indemnification provided by the bylaws will not be deemed
exclusive of any other rights to which those indemnified may be entitled by
any section of the bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity
and as to action in another capacity while holding office, and will
continue as to a person who has ceased to be a director, officer, or
employee and will inure to the benefit of the heirs, executors, and
administrators of such a person. Section 36 provides that 3M will have
power to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee, or agent of 3M, or is or was serving at
the request of the Corporation as a director, officer, employee, or agent
of another corporation, partnership, joint venture, trust, or other
enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity or arising out of his or her status as
such, whether or not 3M would have the power to indemnify him or her
against such liability under the provisions of the bylaws. Reference is
made to 3M's Restated Certificate of Incorporation and Bylaws incorporated
by reference into this proxy statement/prospectus as Exhibits 3.1 and 3.2.
3M has insured its directors and officers against losses arising from
any claim against them as such for wrongful acts or omission, subject to
certain limitations.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
Exhibit Number Description
-------------- -----------
2.1 Agreement and Plan of Merger, dated as of October 2,
2000, among Minnesota Mining and Manufacturing Company,
Barbados Acquisition, Inc. and Robinson Nugent, Inc.
(included in this proxy statement/prospectus as Annex
A)
* 3.1 Restated Certificate of Incorporation, as amended as of
May 13, 1997
** 3.2 Bylaws, as amended as of November 11, 1996
*** 4.1 Medium-term notes
5.1 Opinion of Gregg M. Larson, Assistant General Counsel
of 3M, as to the legality of the securities being
registered and consent to the use of the opinion in
this registration statement
8.1 Form of opinion of Fried, Frank, Harris, Shriver &
Jacobson regarding certain federal income tax
consequences described in the proxy statement
9.1 Voting and Stock Option Agreement among 3M, Robinson
Nugent, Inc., Samuel C. Robinson, James W. Robinson,
Patrick C. Duffy and Larry W. Burke, dated October 2,
2000 (included in this proxy statement/prospectus as
Annex B)
+ 10.1 1997 Management Stock Ownership Program
++ 10.2 Profit sharing plan, performance unit plan and other
compensation arrangements
15 Awareness letter from PricewaterhouseCoopers LLP,
independent auditors for Minnesota Mining and
Manufacturing Company, regarding unaudited interim
consolidated financial information
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Deloitte & Touche LLP (independent auditors
for Robinson Nugent, Inc.)
23.3 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in exhibit 8.1)
24 Power of Attorney
99.1 Form of proxy for the Special Meeting of Shareholders
of Robinson Nugent, Inc.
-------------------------
* Incorporated by reference to 3M's Current Report on Form 8-K, filed
with the SEC on June 30, 1997, as amended.
** Incorporated by reference to 3M's Current Report on Form 8-K filed
with the SEC on November 20, 1996.
*** Incorporated by reference to 3M's Registration Statement on Form S-3
filed with the SEC on June 15, 1999. (Registration No. 33-29329)
+ Incorporated by reference to 3M's Current Report on Form 8-K filed
with the SEC on July 2, 1997.
++ Incorporated by reference in written description contained in 3M's
Definitive Proxy Statement on Form 14A filed with the SEC on March 27,
2000.
ITEM 22. UNDERTAKINGS.
(A) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933 (the "Securities Act");
(ii)To reflect in the prospectus any facts or events arising
after the effective date of this registration
statement, or the most recent post-effective amendment
thereof, which, individually or in the aggregate,
represent a fundamental change in the information set
forth in this registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered, if the total dollar value of
securities offered would not exceed that which was
registered, and any deviation from the low or high end
of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) under the Securities
Act, if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
this registration statement or any material change to
such information in this registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment will be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(B) The undersigned Registrant hereby undertakes, that, for purposes
of determining any liability under the Securities Act, each
filing of the Registrant's Annual Report pursuant to Section
13(a) or 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement will be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(C) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
(D) The undersigned Registrant hereby undertakes:
(1) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a
part of this registration statement, by any person or party
who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the
applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable
form.
(2) That every prospectus (i) that is filed pursuant to
paragraph (1) immediately preceding, or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Act and
is used in connection with an offering of securities subject
to Rule 415, will be filed as part of an amendment to the
registration statement and will not be used until such
amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be initial bona fide offering
thereof.
(3) To respond to requests for information that is incorporated
by reference into the prospectus pursuant to Item 4, 10(b),
11 or 13 of this Form S-4, within one business day of
receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means.
This includes information contained in documents filed
subsequent to the effective date of the registration
statement through the date of responding to the request.
(4) To supply by means of a post-effective amendment all
information concerning a transaction, and 3M being acquired
involved therein, that was not the subject of and included
in the registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-4 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of St. Paul, and State of Minnesota,
on the 13th day of November, 2000.
MINNESOTA MINING AND MANUFACTURING COMPANY
By: /s/ Gregg M. Larson
---------------------------------------
Name: Gregg M. Larson
Title: Assistant General Counsel,
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1993, as
amended, this registration statement has been signed by the following
persons in the capacities and on the dates as indicated.
Signature Title
--------- -----
* Chairman of the Board, Chief Executive
----------------------------------- Officer and Director
Livio D. Desimone
* Vice President, Principal Financial
----------------------------------- and Accounting Officer
Robert J. Burgstahler
* Director
-----------------------------------
Linda G. Alvarado
* Director
-----------------------------------
Ronald O. Baukol
* Director
-----------------------------------
Edward M. Liddy
* Director
-----------------------------------
Aulana L. Peters
* Director
-----------------------------------
Rozanne L. Ridgway
* Director
-----------------------------------
Frank Schrontz
* Director
-----------------------------------
F. Alan Smith
* By: /s/ Gregg M. Larson
-----------------------------
Gregg M. Larson
Attorney-in-fact
Date: November 13, 2000
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
2.1 Agreement and Plan of Merger, dated as of October 2,
2000, among Minnesota Mining and Manufacturing Company,
Barbados Acquisition, Inc. and Robinson Nugent, Inc.
(included in this proxy statement/prospectus as Annex
A)
* 3.1 Restated Certificate of Incorporation, as amended as of
May 13, 1997
** 3.2 Bylaws, as amended as of November 11, 1996
*** 4.1 Medium-term notes
5.1 Opinion of Gregg M. Larson, Assistant General Counsel
of 3M, as to the legality of the securities being
registered and consent to the use of the opinion in
this registration statement
8.1 Form of opinion of Fried, Frank, Harris, Shriver &
Jacobson regarding certain federal income tax
consequences described in the proxy statement
9.1 Voting and Stock Option Agreement among 3M, Robinson
Nugent, Inc., Samuel C. Robinson, James W. Robinson,
Patrick C. Duffy and Larry W. Burke, dated October 2,
2000 (included in this proxy statement/prospectus as
Annex B)
+ 10.1 1997 Management Stock Ownership Program
++ 10.2 Profit sharing plan, performance unit plan and other
compensation arrangements
15 Awareness letter from PricewaterhouseCoopers LLP,
independent auditors for Minnesota Mining and
Manufacturing Company, regarding unaudited interim
consolidated financial information
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Deloitte & Touche LLP (independent auditors
for Robinson Nugent, Inc.)
23.3 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in exhibit 8.1)
24 Power of Attorney
99.1 Form of proxy for the Special Meeting of Shareholders
of Robinson Nugent, Inc.
-------------------------
* Incorporated by reference to 3M's Current Report on Form 8-K, filed
with the SEC on June 30, 1997, as amended.
** Incorporated by reference to 3M's Current Report on Form 8-K filed
with the SEC on November 20, 1996.
*** Incorporated by reference to 3M's Registration Statement on Form S-3
filed with the SEC on June 15, 1999. (Registration No. 33-29329)
+ Incorporated by reference to 3M's Current Report on Form 8-K filed
with the SEC on July 2, 1997.
++ Incorporated by reference in written description contained in 3M's
Definitive Proxy Statement on Form 14A filed with the SEC on March 27,
2000.
