- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
CONSENT STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by registrant / /
Filed by a party other than the registrant /X/ / / Confidential,
for Use of the
Check the appropriate box: Commission Only
/X/ Preliminary consent statement (as permitted by
/ / Definitive consent statement Rule 14a-6(e)(2))
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
LOTUS DEVELOPMENT CORPORATION
(Name of Registrant as Specified in its Charter)
WHITE ACQUISITION CORP.
(Name of Person(s) Filing Consent Statement)
-------------------
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/X/ $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
-------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
-----------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
-----------------------------------------------------------------------------
(3) Filing party:
-----------------------------------------------------------------------------
(4) Date filed:
-----------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PRELIMINARY COPY--SUBJECT TO COMPLETION
WHITE ACQUISITION CORP.
To the Stockholders of Lotus Development Corporation:
On June 6, 1995, White Acquisition Corp., a New York corporation ("White"),
which is a wholly owned subsidiary of International Business Machines
Corporation, a New York corporation ("IBM"), commenced an offer to purchase all
outstanding shares of common stock of Lotus Development Corporation (the
"Company"), together with the associated preferred share purchase rights, at a
price of $60 per share (and associated right), upon the terms and subject to the
conditions set forth in White's Offer to Purchase dated June 6, 1995 (the "Offer
to Purchase") and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"). The
purpose of the Offer is to acquire control of, and the entire equity interest
in, the Company.
There are a number of impediments to consummation of the Offer, including
the Company's "poison pill" shareholder rights plan pursuant to which the
associated preferred share purchase rights were issued. Based upon prior
conversations between management of IBM and management of the Company, White
believes the Company may be unwilling to redeem the "poison pill" and otherwise
permit the Offer to be consummated. Accordingly, White is today commencing a
solicitation of all the Company's stockholders to remove the Company's current
board of directors, to replace them with nominees of White (who intend to redeem
the "poison pill" (or amend it so that it will be inapplicable to the Offer) and
to take certain other actions to facilitate the consummation of the Offer) and
to make certain by-law amendments to expedite the prompt consummation of the
Offer. The specific features of White's proposal as well as the consent
procedure itself are described in the accompanying Consent Statement.
If you were a stockholder of record on June , 1995, but subsequently sold
your shares, you still retain voting rights in connection with this consent
solicitation. Your failure to vote may adversely affect those who continue to be
stockholders. In fairness to other stockholders, White urges you to vote all
shares that you were entitled to vote as of the June , 1995, record date on
your consent card.
WHITE ACQUISITION CORP.
IMPORTANT
1. If your shares of Company Common Stock are held in your own name, please
sign, date and mail the enclosed BLUE consent card to Morrow & Co., Inc. in
the post-paid envelope provided.
2. If your shares of Company Common Stock are held in the name of a brokerage
firm, bank nominee or other institution, only it can execute a consent with
respect to your shares and only upon receipt of your specific instructions.
Accordingly, you should contact the person responsible for your account and
give instructions for a BLUE consent card to be signed representing your
shares. White urges you to confirm in writing your instructions to the
person responsible for your account and provide a copy of those
instructions to White in care of Morrow & Co., Inc. so that White will be
aware of all instructions given and can attempt to ensure that such
instructions are followed.
If you have any questions or require any assistance in executing your
consent, please call:
MORROW & CO., INC.
909 Third Avenue, 20th Floor
New York, NY 10022
Toll Free (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
<PAGE>
PRELIMINARY COPY
SUBJECT TO COMPLETION
June 6, 1995
CONSENT STATEMENT
OF
WHITE ACQUISITION CORP.
This Consent Statement is furnished by White Acquisition Corp., a New York
corporation ("White"), which is a wholly owned subsidiary of International
Business Machines Corporation, a New York corporation ("IBM"), in connection
with the solicitation by White of written consents from the holders of Common
Stock, par value $.01 per share (the "Company Common Stock"), of Lotus
Development Corporation, a Delaware corporation (the "Company"), to take the
following actions without a stockholders' meeting, as permitted by Delaware law:
(1) Remove all six of the present members of the Board of Directors of
the Company (the "Company Board") and any person or persons elected or
designated by any of such directors to fill any vacancy or newly created
directorship;
(2) Amend Section 1 of Article III of the Company's By-laws (the
"Company By-laws") to fix the number of directors of the Company at three;
(3) Elect Mark G. Ewald, David S. Hershberg and John E. Sexton
(collectively, the "Nominees") as the directors of the Company;
(4) Amend Article II of the Company By-laws to eliminate Section 12
thereof (the "Control Share By-law"), which purports to make Chapter 110E of
the Massachusetts General Law (the "Massachusetts Control Share Acquisition
Statute") applicable to certain acquisitions of Company Common Stock; and
(5) Repeal each provision of the Company By-laws or amendment thereto
adopted subsequent to July 27, 1994 and prior to the effectiveness of the
Proposals (as defined below).
All the foregoing actions (collectively, the "Proposals") are designed to
expedite the prompt consummation of White's offer to acquire the Company, which
is described below. Stockholders of the Company are being asked to express their
consent to the Proposals on the accompanying BLUE consent card. The
effectiveness of each of the Proposals is subject to, and conditioned upon, the
adoption of each of the other Proposals by the holders of record, as of the
close of business on the Record Date (as hereinafter defined), of a majority of
the shares of Company Common Stock then outstanding (including the receipt of
consents from such holders to the removal of each member of the Company Board
and to the election of each Nominee). WHITE RECOMMENDS THAT YOU CONSENT TO EACH
OF THE PROPOSALS.
Section 4(b) of Article IX of the Company By-laws (the "Record Date By-law")
provides that any stockholder seeking to have the stockholders of the Company
authorize or take action by written consent is required to request that the
Company Board fix a record date. The Company Board is required to promptly, but
in all events within 10 days after the date on which the request is received,
adopt a resolution fixing the record date for the solicitation (which may not be
more than 10 days after the date
<PAGE>
of the resolution). If the Company Board does not fix a record date within 10
days after the receipt of the request, the record date for the solicitation will
be the date on which the first signed consent is delivered to the Company. On
June 6, 1995, CS First Boston Corporation ("CS First Boston"), the record holder
of Shares beneficially owned by White, requested on behalf of White that the
Company Board fix a record date. [On , 1995, the Company Board fixed
, 1995 as the record date for the solicitation made hereby (the
"Record Date").] [The Company Board did not fix a record date for the
solicitation made hereby prior to , 1995. On , 1995, CS
First Boston delivered a signed consent to the Company on behalf of White.
Accordingly, the record date for the solicitation made hereby (the "Record
Date") will be , 1995.]
On June 6, 1995, White commenced an offer to purchase all outstanding shares
of Company Common Stock, together with the associated preferred share purchase
rights (the "Rights") issued pursuant to the Rights Agreement dated as of
November 7, 1988, as amended (the "Rights Agreement"), between the Company and
The First National Bank of Boston, as Rights Agent (the Company Common Stock,
together (unless the context otherwise requires) with the associated Rights,
being herein referred to as the "Shares"), at a price of $60 per Share, net to
the seller in cash, without interest thereon (the "Offer Price"), upon the terms
and subject to the conditions set forth in the Offer to Purchase dated June 6,
1995 (the "Offer to Purchase") and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer").
Complete information about the Offer is contained in the Offer to Purchase,
which is available upon request from the Information Agent for the Offer, Morrow
& Co., Inc. ("Morrow"), and in the Tender Offer Statement on Schedule 14D-1,
which has been filed with the Securities and Exchange Commission (the
"Commission"). The Tender Offer Statement on Schedule 14D-1 and any amendments
thereto, including exhibits, should be available for inspection and copies
should be obtainable in the manner set forth under "CERTAIN INFORMATION
CONCERNING WHITE AND IBM" (except that such material will not be available at
the regional offices of the Commission or at the offices of the New York Stock
Exchange, Inc. ("NYSE")). Such material should also be available for inspection
at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington, DC 20006.
THIS CONSENT STATEMENT IS NEITHER A REQUEST FOR THE TENDER OF SHARES NOR AN
OFFER WITH RESPECT THERETO. THE OFFER IS BEING MADE ONLY BY MEANS OF THE OFFER
TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL.
The purpose of the Offer is to enable IBM to acquire control of, and the
entire equity interest in, the Company. The Offer, as the first step in the
acquisition of the Company, is intended to facilitate the acquisition of all the
Shares. IBM currently intends, as soon as practicable following consummation of
the Offer, to propose and seek to have the Company consummate a merger or
similar business combination with White or another direct or indirect wholly
owned subsidiary of IBM (the "Proposed Merger"). The purpose of the Proposed
Merger is to acquire all Shares not tendered and purchased pursuant to the Offer
or otherwise. Pursuant to the Proposed Merger, each then outstanding Share
(other than Shares owned by White, IBM or any of their subsidiaries, Shares held
in the treasury of the Company and Shares owned by stockholders who perfect any
available appraisal rights under the Delaware General Corporation Law (the
"DGCL")) would be converted into the right to receive an amount in cash equal to
the Offer Price.
The Offer is conditioned upon, among other things, (i) the Rights having
been redeemed by the Company Board or White being satisfied, in its sole
discretion, that the Rights have been invalidated or are otherwise inapplicable
to the Offer and the Proposed Merger (the "Rights Condition"), (ii) the
acquisition of Shares pursuant to the Offer and the Proposed Merger having been
approved pursuant to Section 203 of the DGCL ("Section 203") or White being
satisfied, in its sole discretion, that the provisions of Section 203 are
otherwise inapplicable to the acquisition of Shares pursuant to the Offer
2
<PAGE>
and the Proposed Merger (the "Business Combination Condition") and (iii) the
amendment of the Company By-laws to eliminate the Control Share By-law or White
being satisfied, in its sole discretion, that the Massachusetts Control Share
Acquisition Statute is invalid or otherwise inapplicable to White or IBM or any
of their associates or the acquisition of Shares by any of them (the "Control
Share Condition"). Based upon prior conversations between management of IBM and
management of the Company, White believes that the current Company Board may be
unwilling to redeem the Rights (or to amend the Rights Agreement to make the
Rights inapplicable to the Offer and the Proposed Merger), to approve the Offer
and the Proposed Merger under Section 203 and to eliminate the Control Share
By-law and thus to permit the Offer and the Proposed Merger to be consummated.
Accordingly, pursuant to the Proposals, White is seeking to elect to the
Company Board persons who intend to (a) redeem the Rights (or amend the Rights
Agreement to make the Rights inapplicable to the Offer and the Proposed Merger)
and approve the Offer and the Proposed Merger under Section 203, which would
satisfy the Rights Condition and the Business Combination Condition, and take
such other actions as may be required to expedite the prompt consummation of the
Offer and the Proposed Merger or (b) if any other transaction offering more
value to the Company's stockholders is proposed, take actions to facilitate such
a transaction, subject in all cases to fulfillment of the fiduciary duties that
they would have as directors of the Company. The elimination of the Control
Share By-law would satisfy the Control Share Condition. Accordingly, adoption of
the Proposals would expedite the prompt consummation of the Offer and the
Proposed Merger.
The Proposals will become effective when properly completed, unrevoked
consents are signed by the holders of record on the Record Date of a majority of
the shares of Company Common Stock then outstanding and such consents are
delivered to the Company. The effectiveness of each of the Proposals is subject
to, and conditioned upon, the adoption of each of the other Proposals by the
holders of record, as of the close of business on the Record Date, of a majority
of the shares of Company Common Stock then outstanding (including the receipt of
consents from such holders to the removal of each member of the Company Board
and to the election of each Nominee). See "CONSENT PROCEDURE."
This Consent Statement and the related BLUE consent card are first being
sent or given on or about , 1995 to all holders of record of shares
of Company Common Stock on the Record Date. On the Record Date, White and IBM
each was the beneficial owner of 50 shares of Company Common Stock.
ADOPTION OF THE PROPOSALS, INCLUDING THE REMOVAL OF THE CURRENT MEMBERS OF
THE COMPANY BOARD AND ELECTION OF THE NOMINEES, IS AN IMPORTANT STEP TOWARD
PROMPT CONSUMMATION OF THE OFFER AND THE PROPOSED MERGER. ACCORDINGLY, YOU ARE
URGED TO PROMPTLY SIGN, DATE AND MAIL THE ENCLOSED BLUE CONSENT CARD. YOU MUST
SEPARATELY TENDER YOUR SHARES PURSUANT TO THE OFFER IF YOU WISH TO PARTICIPATE
IN THE OFFER. EXECUTING A CONSENT DOES NOT OBLIGATE YOU TO TENDER YOUR SHARES
PURSUANT TO THE OFFER, AND YOUR FAILURE TO EXECUTE A CONSENT DOES NOT PREVENT
YOU FROM TENDERING YOUR SHARES PURSUANT TO THE OFFER.
Because the Proposals will become effective only if executed consents are
returned by holders of record on the Record Date of a majority of the total
number of shares of Company Common Stock then outstanding, the failure to
execute and return a consent will have the same effect as voting against the
Proposals.
White and IBM have retained Morrow to assist in the solicitation of consents
to the Proposals.
3
<PAGE>
If your shares of Company Common Stock are registered in your own name,
please sign, date and mail the enclosed BLUE consent card to Morrow in the
post-paid envelope provided. If your shares of Company Common Stock are held in
the name of a brokerage firm, bank nominee or other institution, only it can
sign a BLUE consent card with respect to your shares of Company Common Stock and
only upon receipt of specific instructions from you. Accordingly, you should
contact the person responsible for your account and give instructions for a BLUE
consent card to be signed representing your shares of Company Common Stock.
White urges you to confirm in writing your instructions to the person
responsible for your account and to provide a copy of such instructions to White
in care of Morrow & Co., Inc., 909 Third Avenue, 20th Floor, New York, NY 10022,
so that White will be aware of all instructions given and can attempt to ensure
that such instructions are followed.
If you have any questions about executing your consent or require
assistance, please contact:
MORROW & CO., INC.
909 Third Avenue, 20th Floor
New York, NY 10022
Toll Free (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
4
<PAGE>
TABLE OF CONTENTS
PAGE
-----
SUMMARY................................................................. 6
The Proposals......................................................... 6
The Offer and the Proposed Merger..................................... 6
Voting Securities and Principal Holders............................... 7
Consent Procedure..................................................... 7
REASONS FOR THE SOLICITATION............................................ 8
THE PROPOSALS........................................................... 8
THE OFFER AND THE PROPOSED MERGER....................................... 11
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF......................... 12
CERTAIN INFORMATION CONCERNING WHITE AND IBM............................ 13
CERTAIN TRANSACTIONS BETWEEN IBM AND THE COMPANY........................ 14
SOLICITATION OF CONSENTS................................................ 16
CONSENT PROCEDURE....................................................... 16
Effectiveness and Revocation of Consents.............................. 17
Special Instructions.................................................. 18
Appraisal Rights...................................................... 18
LITIGATION.............................................................. 19
ANNEX I................................................................. I-1
ANNEX II................................................................ II-1
ANNEX III............................................................... III-1
ANNEX IV................................................................ IV-1
5
<PAGE>
SUMMARY
The information in this summary is qualified in its entirety by reference to
the more detailed information appearing elsewhere in this Consent Statement.
THE PROPOSALS
White is soliciting written consents from the Company's stockholders to
remove all six of the present directors of the Company, amend the Company
By-laws to fix the number of directors of the Company at three, elect the
Nominees to serve as the directors of the Company, amend the Company By-laws to
eliminate the Control Share By-law and repeal each provision of the Company
By-laws or amendment thereto adopted subsequent to July 27, 1994 and prior to
the effectiveness of the Proposals. The Nominees intend to (a) redeem the Rights
(or amend the Rights Agreement to make the Rights inapplicable to the Offer and
the Proposed Merger) and approve the Offer and the Proposed Merger under Section
203, which would satisfy the Rights Condition and the Business Combination
Condition, and take such other actions as may be required to expedite the prompt
consummation of the Offer and the Proposed Merger or (b) if any other
transaction offering more value to the Company's stockholders is proposed, take
actions to facilitate such a transaction, subject in all cases to fulfillment of
the fiduciary duties that they would have as directors of the Company. The
elimination of the Control Share By-law would satisfy the Control Share
Condition. Accordingly, adoption of the Proposals would expedite the prompt
consummation of the Offer and the Proposed Merger.
THE OFFER AND THE PROPOSED MERGER
On June 6, 1995, White commenced the Offer, which provides for the purchase
of all outstanding Shares at the Offer Price ($60 per Share). The purpose of the
Offer is to enable IBM to acquire control of, and the entire equity interest in,
the Company. The Offer, as the first step in the acquisition of the Company, is
intended to facilitate the acquisition of all the Shares. IBM currently intends,
as soon as practicable following consummation of the Offer, to propose and seek
to have the Company consummate the Proposed Merger. The purpose of the Proposed
Merger is to acquire all Shares not tendered and purchased pursuant to the Offer
or otherwise. Pursuant to the Proposed Merger, each then outstanding Share
(other than Shares owned by White, IBM or any of their subsidiaries, Shares held
in the treasury of the Company and Shares owned by stockholders who perfect any
available appraisal rights under the DGCL) would be converted into the right to
receive an amount in cash equal to the Offer Price.
On June 2, 1995, the last full trading day before the first public
announcement of the intent to commence the Offer, the last reported sale
quotation of the Shares on the Nasdaq National Market (the "Nasdaq National
Market") operated by the National Association of Securities Dealers, Inc. was
$32 1/2.
Although the adoption of the Proposals is an important step toward prompt
consummation of the Offer and the Proposed Merger, stockholders of the Company
are not being asked to tender their Shares pursuant to this Consent Solicitation
or to consent to or vote on the Proposed Merger at this time.
6
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS
The Company Common Stock constitutes the only class of voting securities of
the Company. Accordingly, only holders of Company Common Stock are entitled to
execute consents. For information regarding the persons believed to be the
beneficial owners of more than 5% of the Company Common Stock, see "VOTING
SECURITIES AND PRINCIPAL HOLDERS THEREOF" below.
CONSENT PROCEDURE
White will pay all costs in connection with its solicitation of consents.
The consents are being solicited pursuant to the procedure established by
Sections 228 and 213 of the DGCL. Stockholders of the Company of record as of
the close of business on the Record Date are entitled to consent to the
Proposals. The Proposals will become effective when properly completed,
unrevoked consents are signed by the holders of record on the Record Date of a
majority of the shares of Company Common Stock then outstanding and such
consents are delivered to the Company. The effectiveness of each of the
Proposals is subject to, and conditioned upon, the adoption of each of the other
Proposals by the holders of record, as of the close of business on the Record
Date, of a majority of the shares of Company Common Stock then outstanding
(including the receipt of consents from such holders to the removal of each
member of the Company Board and to the election of each Nominee). To be
effective, the requisite consents must be delivered to the Company within 60
days of the earliest dated consent delivered to the Company.
7
<PAGE>
REASONS FOR THE SOLICITATION
White is soliciting written consents to the Proposals in order to expedite
the prompt consummation of the Offer and the Proposed Merger. The purpose of the
Offer is to enable IBM to acquire control of, and the entire equity interest in,
the Company. AS DESCRIBED BELOW, THE NOMINEES, IF ELECTED, INTEND TO SUPPORT THE
OFFER AND THE PROPOSED MERGER.
White believes that the Offer and the Proposed Merger are in the best
interests of the stockholders of the Company because, among other things, the
consideration that would be received by stockholders in the Offer and the
Proposed Merger reflects a substantial premium over the unaffected trading price
of the Shares immediately preceding the first public announcement of the Offer.
The Nominees intend to (a) redeem the Rights (or amend the Rights Agreement
to make the Rights inapplicable to the Offer and the Proposed Merger) and
approve the Offer and the Proposed Merger under Section 203, which would have
the effect of satisfying the Rights Condition and the Business Combination
Condition, and take such other actions as may be required to expedite the prompt
consummation of the Offer and the Proposed Merger or (b) if any other
transaction offering more value to the Company's stockholders is proposed, take
actions to facilitate such a transaction, subject in all cases to fulfillment of
the fiduciary duties that they would have as directors of the Company. The
elimination of the Control Share By-law would satisfy the Control Share
Condition. Accordingly, adoption of the Proposals would expedite the prompt
consummation of the Offer and the Proposed Merger.
THE PROPOSALS
White is seeking written stockholder consents without a meeting to the
Proposals, which consist of taking the following actions:
(1) Remove all six of the present members of the of the Company Board
and any person or persons elected by any of such directors to fill any
vacancy or newly created directorship;
(2) Amend Section 1 of Article III of the Company By-laws to fix the
number of directors of the Company at three;
(3) Elect the Nominees as the directors of the Company;
(4) Amend Article II of the Company By-laws to eliminate the Control
Share By-law; and
(5) Repeal each provision of the Company By-laws or amendment thereto
adopted subsequent to July 27, 1994 and prior to the effectiveness of the
Proposals.
The effectiveness of each of the Proposals is subject to, and conditioned
upon, the adoption of each of the other Proposals by the holders of record, as
of the close of business on the Record Date, of a majority of the shares of
Company Common Stock then outstanding (including the receipt of consents from
such holders to the removal of each member of the Company Board and to the
election of each Nominee).
WHITE RECOMMENDS THAT YOU CONSENT TO EACH OF THE PROPOSALS.
Removal of Directors. The Proposals include the removal of all the Company's
current directors and any other person who may be a director at the time the
action proposed to be taken by this consent procedure becomes effective. The
Company's current directors are Jim P. Manzi, Richard S. Braddock, Elaine L.
Chao, William H. Gray III, Michael E. Porter and Henri A. Termeer.
8
<PAGE>
By-law Amendment Fixing Number of Directors at Three. The Proposals include
an amendment to Section 1 of Article III of the Company By-laws to provide that
the number of directors be fixed at three. This amendment to the Company By-laws
is set forth in its entirety in Annex IV to this Consent Statement. The Company
By-laws currently provide that the Company Board consist of the number of
directors determined by the Company Board; if no such determination is made, the
number of directors is fixed at five. This By-law amendment is designed to
reduce the number of directors constituting the Company Board to the number to
be in office if the Proposal to remove the incumbent directors is approved and
the Nominees are elected.
Election of Nominees. The Proposals include the election as directors of the
Company of the three Nominees named in the table below, each of whom has
consented to serve as a director, if elected, until the next annual meeting of
stockholders and until his successor has been elected and qualified. White's
primary purpose in seeking to elect the Nominees to the Company Board is to
obtain the redemption of the Rights (or the amendment of the Rights Agreement to
make the Rights inapplicable to the Offer and the Proposed Merger) and the
approval of the Offer and the Proposed Merger under Section 203, thereby
facilitating the consummation of the Offer. However, if elected, the Nominees
would be responsible for managing the business and affairs of the Company. Each
director of the Company has an obligation under the DGCL to discharge his or her
duties as a director on an informed basis, in good faith, with the care an
ordinarily careful and prudent person in a like position would exercise under
similar circumstances and in a manner the director honestly believes to be in
the best interests of the Company. In this connection, circumstances may arise
in which the interests of White and its affiliates, on the one hand, and the
interests of other stockholders of the Company, on the other hand, may differ.
In any such case, the Nominees intend to discharge fully the obligations owing
to the Company and its stockholders under the DGCL. Although White has no reason
to believe that any of the Nominees will be unable or unwilling to serve as
directors, if any of the Nominees is not available for election, the persons
named on the BLUE consent card will vote for the election of such other nominee
or nominees as may be proposed by White.
<TABLE>
<CAPTION>
EMPLOYMENT HISTORY OR PRESENT
NAME, AGE AND PRINCIPAL OCCUPATION AND
BUSINESS ADDRESS FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------- ---------------------------------------------
<S> <C>
Mark G. Ewald (55)........................... Managing Director, BEM Management, Inc.
BEM Management, Inc. (investment management) (1990-present).
520 Madison Avenue
New York, NY 10022
David S. Hershberg (53)...................... Executive Vice President and Director,
Viatel Inc. Viatel, Inc. (international long distance
800 Third Avenue telephone company) (1993-1995); Vice
New York, NY 10022 Chairman and Director, Shearson Lehman
Brothers Inc. (investment bank)
(1986-1991).
John E. Sexton (52).......................... Dean, New York University School of Law
New York University School of Law (1988- present) and Professor of Law
40 Washington Square South (1981-present).
New York, NY 10012
</TABLE>
Annex III sets forth certain information relating to Shares owned by the
Nominees and certain transactions between any of them and the Company.
It is contemplated that each Nominee will be paid a fee of $25,000 by White
for agreeing to stand for election as a director of the Company. In addition, it
is anticipated that each Nominee, upon election, will receive director's fees,
consistent with the Company's past practice, for services as a director of the
Company. According to the Company's 1995 Proxy Statement, directors of the
Company received an annual retainer of $24,000 for the fiscal year ended
December 31, 1994, together with reimbursement of expenses incurred in attending
meetings of the Company Board. IBM has agreed to indemnify each Nominee, to the
fullest extent permitted by applicable law, from and against any and all
9
<PAGE>
expenses, liabilities or losses of any kind arising out of any threatened or
filed claim, action, suit or proceeding, whether civil, criminal, administrative
or investigative, asserted against or incurred by the Nominee in his capacity as
a nominee for election as a director of the Company, and, if elected, as a
director of the Company, or arising out of his status in either such capacity.
IBM has also agreed to reimburse each Nominee for his reasonable out-of-pocket
expenses, including reasonable fees and expenses of counsel.
By-law Amendment Deleting the Control Share By-law. The Proposals include an
amendment to Article II of the Company By-laws to delete the Control Share
By-law (which purports to make the Massachusetts Control Share Acquisition
Statute applicable to certain acquisitions of shares of Company Common Stock).
The Massachusetts Control Share Acquisition Statute provides, in general,
that shares of an "Issuing Public Corporation" acquired in a "Control Share
Acquisition" will not have voting rights if the Issuing Public Corporation's
charter or by-laws provides, at the time of the Control Share Acquisition, that
the Massachusetts Control Share Acquisition Statute will apply to Control Share
Acquisitions of shares of such Issuing Public Corporation, unless voting rights
for such shares are authorized at an annual or special meeting of stockholders
of the Issuing Public Corporation by the affirmative vote of the holders of a
majority of all the shares entitled to vote generally in the election of
directors, excluding "Interested Shares".
As used in the Massachusetts Control Share Acquisition Statute:
"Control Share Acquisition" means, in general, the acquisition (other than
pursuant to a merger agreement to which the Issuing Public Corporation is a
party) of beneficial ownership of shares of an Issuing Public Corporation which
(but for the provisions of the statute) would have voting rights and which, when
added to all other shares of such Issuing Public Corporation beneficially owned
by such person, would entitle such person, upon acquisition of such shares, to
vote or direct the voting of shares of such Issuing Public Corporation having
voting power in the election of directors within any of the following ranges of
such voting power: (i) one-fifth or more but less than one-third of all voting
power; (ii) one-third or more but less than a majority of all voting power; or
(iii) a majority of all voting power.
"Interested Shares" means shares of an Issuing Public Corporation that are
beneficially owned by any person who has acquired or proposes to acquire
beneficial ownership of shares of such Issuing Public Corporation in a Control
Share Acquisition, any officer of the Issuing Public Corporation or any employee
of the Issuing Public Corporation who is also a director of such corporation.
"Issuing Public Corporation" means a corporation, other than a Massachusetts
corporation, that has (1) 200 or more stockholders of record, (2) its principal
executive office in Massachusetts and more of its employees or assets, including
employees or assets of its majority-owned subsidiaries, employed or located in
Massachusetts than in any other state as of the end of its four fiscal quarters
immediately preceding the Control Share Acquisition and (3) either more than ten
percent of its stockholders of record residing within Massachusetts or more than
ten percent of its issued and outstanding shares owned of record by
Massachusetts residents.
Any person who proposes to make or has made a Control Share Acquisition may
deliver to the corporation at its principal office a statement (a "Control Share
Acquisition Statement") identifying the acquiring person, describing the terms
of the Control Share Acquisition and representing that the acquiring person has
the financial capacity to consummate the Control Share Acquisition. If the
acquiring person so requests at the time of delivery of a Control Share
Acquisition Statement, the board of directors of the Issuing Public Corporation
is required to call a special meeting of stockholders for the purpose of
considering the voting rights to be accorded to shares acquired or to be
acquired in the Control Share Acquisition. Such special meeting is required to
be called within 10 days after the corporation receives the request and must be
held within 50 days after the request has been received.
10
<PAGE>
The Control Share By-law currently provides that the provisions of the
Massachusetts Control Share Acquisition Statute apply to Control Share
Acquisitions of Shares. Accordingly, unless the Massachusetts Control Share
Acquisition Statute is rendered inapplicable to the Offer by elimination of the
Control Share By-law or judicially invalidated or White obtains approval of
voting rights for the Shares from stockholders of the Company at an annual or
special meeting of stockholders, the Shares acquired pursuant to the Offer would
not have voting rights. White does not presently intend to seek approval of
voting rights for the Shares from stockholders of the Company pursuant to the
provisions of the Massachusetts Control Share Acquisition Statute.
Pursuant to the Control Share Condition, the Offer is conditioned upon the
amendment of the Company By-laws to eliminate the Control Share By-law or White
being satisfied, in its sole discretion, that the Massachusetts Control Share
Acquisition Statute is invalid or otherwise inapplicable to White or IBM or any
of their associates or the acquisition of Shares by any of them.
If the Proposals become effective, the Control Share By-law will be
eliminated and the Control Share Condition will be satisfied.
Repeal of By-laws Adopted Subsequent to July 27, 1994 and Prior to the
Effectiveness of the Proposals. The Proposals include the repeal of each
provision of the Company By-laws or amendment thereto adopted subsequent to July
27, 1994 and prior to the effectiveness of the Proposals. This Proposal is
designed to prevent the Company Board from taking actions to amend the Company
By-laws to attempt to nullify the actions taken by the stockholders pursuant to
the Proposals or to create new obstacles to the consummation of the Offer and
the Proposed Merger. The By-laws filed as an exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994 (the most recent
publicly available version of the Company By-laws) state that they reflect all
amendments adopted through July 27, 1994. Accordingly, this Proposal would not
repeal any provision of the Company By-laws that has been publicly disclosed
prior to the date hereof (although, as noted above, other Proposals for which
consents are solicited hereby would amend Section 1 of Article III of the
Company By-laws and repeal the Control Share By-law). If, however, the Company
Board has adopted since July 27, 1994, or adopts prior to the effectiveness of
the Proposals, any amendment to the Company By-laws, this Proposal would repeal
such amendment so as to prevent the Company Board from creating new obstacles to
the consummation of the Offer and the Proposed Merger and to remove any existing
undisclosed obstacles to the consummation of the Offer and the Proposed Merger.
THE OFFER AND THE PROPOSED MERGER
On June 6, 1995, White commenced the Offer, which provides for the purchase
of all outstanding Shares at the Offer Price ($60 per Share). The purpose of the
Offer is to enable IBM to acquire control of, and the entire equity interest in,
the Company. The Offer, as the first step in the acquisition of the Company, is
intended to facilitate the acquisition of all the Shares. IBM currently intends,
as soon as practicable following consummation of the Offer, to propose and seek
to have the Company consummate the Proposed Merger. The purpose of the Proposed
Merger is to acquire all Shares not tendered and purchased pursuant to the Offer
or otherwise. Pursuant to the Proposed Merger, each then outstanding Share
(other than Shares owned by White, IBM or any of their affiliates, Shares held
in the treasury of the Company and Shares owned by stockholders who perfect any
available appraisal rights under the DGCL) would be converted into the right to
receive an amount in cash equal to the Offer Price.
11
<PAGE>
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
The shares of Company Common Stock constitute the only class of voting
securities of the Company. Accordingly, only holders of Company Common Stock are
entitled to execute consents. The Company stated in its Quarterly Report on Form
10-Q for the quarter ended April 1, 1995, that, as of April 29, 1995, there were
47,594,311 shares of Company Common Stock outstanding. Each share of Company
Common Stock entitles its record holder to one vote. Stockholders of the Company
do not have cumulative voting rights.
The following table sets forth as of December 31, 1994, the name of each
person who, based on publicly available information, owned beneficially more
than 5% of the shares of Company Common Stock outstanding at such date, the
number of shares owned by each such person and the percentage of the outstanding
shares represented thereby. The information below with respect to beneficial
ownership is based upon information filed with the Commission pursuant to
Sections 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and furnished to the Company by the respective stockholders.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- --------------------------------------------------------------- -------------------- ----------
<S> <C> <C>
The Capital Group Companies, Inc............................... 2,630,000(1) 5.51%
333 South Hope Street
Los Angeles, CA 90071
FMR Corp....................................................... 6,793,974(2) 14.23%
82 Devonshire Street
Boston, MA 02109
Manning and Napier Advisors, Inc............................... 3,241,506(3) 6.80%
1100 Charles Square
Rochester, NY 14604
Metropolitan Life Insurance Company............................ 3,561,300(4) 7.46%
One Madison Avenue
New York, NY 10010
State Street Research & Management Company..................... 3,537,500(5) 7.41%
One Financial Center
Boston, MA 02111
</TABLE>
- ------------
(1) Represents shares held by Capital Research and Management Company, a
registered investment adviser ("CRMC") and an operating subsidiary of The
Capital Group Companies, Inc. As of the date set forth above CRMC exercised
sole investment discretion with respect to all of such shares, all of which
were owned by various institutional investors. CRMC had no voting power with
respect to such shares and disclaims beneficial ownership of such shares.
(2) Represents shares beneficially owned by (i) FMR Corp. through its wholly
owned subsidiaries, Fidelity Management & Research Company, a registered
investment adviser ("Fidelity"), and Fidelity Management Trust Company, a
bank ("FMTC"), (ii) certain investment companies (including the Fidelity
Magellan Fund) for which Fidelity serves as investment adviser (the
"Fidelity Funds") and (iii) Edward C. Johnson, 3rd, as Chairman of FMR
Corp., and through certain members of his family and family trusts by virtue
of their controlling interest as a group in the voting stock of FMR Corp.
The Fidelity Magellan Fund beneficially owned 4,757,890 shares or 9.97% of
the shares of Company Common Stock outstanding as of the date set forth
above. FMTC is the beneficial owner of 109,190 shares or .23% of the shares
of Company Common Stock outstanding as a result of its serving as investment
manager of institutional account(s). Mr. Johnson and FMR Corp., through its
control of Fidelity, and the Fidelity Funds each had sole dispositive power
with respect to the 6,684,784 shares owned by the Fidelity Funds. Mr.
Johnson and FMR Corp., through its control of FMTC, had sole dispositive
power over 109,190 shares and sole voting power with respect to 7,990 of
these shares and no voting power with respect to 101,200 shares owned by
institutional accounts managed by FMTC. Neither FMR Corp. nor Mr. Johnson
12
<PAGE>
has the sole power to vote or direct the voting of the shares owned directly
by the Fidelity Funds, which power resides with the Funds' Board of
Trustees.
(3) The beneficial owner, a registered investment adviser, possessed sole voting
power with respect to 3,170,281 of such shares and sole dispositive power
with respect to all such shares as of the date stated above.
(4) The beneficial owner, a registered investment adviser and insurance company,
possessed sole voting power with respect to 3,430,700 of such shares and
sole dispositive power with respect to all such shares as of the date stated
above.
(5) The beneficial owner, a registered investment adviser, possessed sole voting
power with respect to 3,407,100 of such shares and sole dispositive power
with respect to all such shares as of the date stated above.
For information relating to the ownership of Company Common Stock by
directors and executive officers of the Company, see Annex I hereto.
CERTAIN INFORMATION CONCERNING WHITE AND IBM
White, a New York corporation, which is a wholly owned subsidiary of IBM,
was organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal office of White is located at
the principal office of IBM. All outstanding shares of capital stock of White
are owned by IBM.
IBM is a New York corporation with its principal office located at Old
Orchard Road, Armonk, NY 10504, telephone number (914) 765-1900.
IBM has two fundamental missions. First, IBM strives to lead in the
creation, development and manufacture of the industry's most advanced
information technologies, including computer systems, software, networking
systems and microelectronics. Second, IBM translates these advanced technologies
into value for its customers worldwide through its sales and professional
services units in North America, Europe/Middle East/Africa, Asia Pacific and
Latin America.
Set forth below is certain selected consolidated financial information with
respect to IBM and its subsidiaries excerpted from the information contained in
IBM's 1994 Annual Report to Stockholders (the "IBM 1994 Annual Report") and
IBM's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 (the
"IBM 1995 10-Q"). More comprehensive financial information is included in the
IBM 1994 Annual Report, the IBM 1995 10-Q and other documents filed by IBM with
the Commission, and the following summary is qualified in its entirety by
reference to the IBM 1994 Annual Report, the IBM 1995 10-Q and such other
documents and all the financial information (including any related notes)
contained therein. The IBM 1994 Annual Report, the IBM 1995 10-Q and such other
documents should be available for inspection at the public reference facilities
of the Commission at 450 Fifth Street, N.W., Washington, DC 20549, and at the
regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, NY 10048 and Citicorp Center, 500 West Madison Street, (Suite
1400), Chicago, IL 60661. Copies of the IBM 1994 Annual Report, the IBM 1995
10-Q and such other documents should be obtainable, by mail, upon payment of the
Commission's customary charges, by writing to the Commission's principal office
at 450 Fifth Street, N.W., Washington, DC 20549. Copies of the IBM 1994 Annual
Report, the IBM 1995 10-Q and such other documents should also be available for
inspection at the offices of the NYSE, 20 Broad Street, New York, NY 10005.
13
<PAGE>
INTERNATIONAL BUSINESS MACHINES CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------- ------------------
1994 1993 1992 1995 1994
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SUMMARY OF EARNINGS DATA:
Total revenue............................... $64,052 $62,716 $64,523 $15,735 $13,373
Gross profit................................ 25,284 24,148 29,454 6,664 4,940
Operating income............................ 5,005 (8,637) (8,239) 2,118 691
Net earnings (loss)......................... 3,021 (8,101) (4,965) 1,289 392
Net earnings (loss) per share of common
stock..................................... 5.02 (14.22) (8.70) 2.12 0.64
BALANCE SHEET DATA: (1)
Total current assets........................ $41,338 $39,202 $41,031
Total assets................................ 81,091 81,113 80,880
Total current liabilities................... 29,226 33,150 27,890
Total liabilities........................... 57,678 61,375 56,794
Total stockholders' equity.................. 23,413 19,738 24,086
</TABLE>
- ------------
(1) At period end.
Certain information about the directors and executive officers of White and
IBM and certain employees and other representatives of White or IBM who may also
assist Morrow in soliciting consents is set forth in the attached Annex II.
Annex III sets forth certain information relating to Shares owned by White, IBM,
their directors and executive officers, such employees and other representatives
and certain transactions between any of them and the Company.
CERTAIN TRANSACTIONS BETWEEN
IBM AND THE COMPANY
For the past several years, IBM and its subsidiaries have been parties to
various transactions with the Company that have generally involved (i) acquiring
the Company's products for internal use by IBM and its subsidiaries, (ii)
marketing and distribution of the Company's products and (iii) development
transactions designed to enable products from IBM and the Company to function
together more effectively. The following is a description of certain of such
transactions that have occurred since January 1, 1994 or that are currently
proposed.
Various operating units within IBM and its subsidiaries regularly acquire
the Company's products for internal use. IBM estimates that, in 1994, it
acquired approximately $20 million of the Company's products worldwide for
internal use by IBM and its subsidiaries. These products were purchased directly
from the Company or one of the Company's alternate channels of distribution, or
they were acquired as royalty free copies pursuant to the SmartSuite agreement
described below. It is anticipated that IBM and its subsidiaries' acquisition of
the Company's products will continue in 1995 at approximately the 1994 level.
IBM and certain of its subsidiaries have agreements with the Company for the
marketing of certain of the Company's products for a fee, which agreements
resulted in payments to them by the Company estimated by IBM at approximately $6
million for 1994. Other IBM subsidiaries have reseller agreements with the
Company under which the IBM subsidiary purchases the Company's products for
resale. Aggregate purchases under these reseller agreements are estimated by IBM
at approximately $18.5 million for 1994. Additional IBM subsidiaries are
contemplating entering into such reseller agreements with the Company. It is
anticipated that these marketing and reseller
14
<PAGE>
agreements will continue in 1995 at the 1994 level or higher. Other distribution
agreements between the Company and IBM provide for IBM to pre-load certain of
the Company's software products on IBM's computer products prior to sale of the
computer. Payments made with respect to these agreements by IBM to the Company
are estimated at approximately $8 million for 1994. It is estimated that these
distribution agreements will generate payments aggregating approximately $15
million in 1995.
IBM and the Company also have an agreement that permits IBM and IBM's
subsidiaries to remarket the Company's SmartSuite product for a $100 per copy
royalty to be paid to the Company. As a result of a separate agreement between
IBM and the Company under which IBM exchanged rights it held to receive fee
payments with respect to the Company's Notes and cc:Mail products, the
remarketing agreement provides for the first 400,000 copies of SmartSuite
distributed in each of 1994 and 1995 to be royalty free. As of the date hereof,
no royalties have been earned or paid to the Company under that agreement.
Advantis, an IBM subsidiary, has a contract with the Company that permits
Advantis to provide network facilities for remote users of the Company's cc:Mail
products. This contract was recently expanded to include similar facilities in
Europe. IBM paid $75,000 under this contract in 1994 and is required to pay
minimum royalties of $150,000 in each of 1995 and 1996.
The Company transferred ownership of certain software technology to IBM in
1995 for $2.5 million to be paid in two installments. IBM paid the Company
approximately $1 million in 1994 for contract programming and various consulting
services. Another contract will shortly be signed to cover an additional
$375,000. IBM's Korean subsidiary had an agreement with the Company in 1994 for
translation work for which the Company was guaranteed approximately $800,000.
IBM and the Company are currently discussing a proposed transaction pursuant
to which IBM would provide access to the Company's Notes product on IBM's
networking facilities for remote users. IBM would pay $3 million advanced
royalties for license, maintenance and support fees.
IBM has provided in the past, and will continue to provide, technical
support and resources to assist the Company in porting its Notes product to
IBM's AIX operating system platform. In addition, the Company and IBM have been
discussing a series of proposals for potential marketing and development
transactions. Various marketing and licensing arrangements have been discussed,
including the pre-loading of certain of the Company's products on IBM's computer
products and the packaging of certain of the Company's products with certain of
IBM's products. The development aspects have included, among other things,
collaborating on future development of various of the Company's products.
Numerous products and packaging alternatives at various royalty rates have been
discussed. The value of these various proposals have varied widely and some of
the most recent ones have included guaranteed minimum payments from IBM to the
Company that range from approximately $50 million to $150 million for each of
several years. The Company and IBM have been unable to reach agreement on any of
these various proposals, except that they have generally agreed that any
marketing and development transaction would include as a component thereof the
payment by IBM to the Company of approximately $14 million to upgrade the
functionality of the Company's SmartSuite product by the end of 1995.
IBM is not aware of any transactions or proposed transactions between its
associates (other than subsidiaries of IBM) and the Company other than
transactions in the ordinary course of business.
For information regarding certain other transactions between the Company and
its affiliates and White, IBM, the Nominees, the directors and executive
officers of White and IBM and certain employees or other representatives of
White or IBM, see Annex III hereto.
Lotus, Notes, Notes Express, SmartSuite and cc:Mail are trademarks of the
Company. IBM and AIX are trademarks of IBM. Advantis is a trademark of Advantis.
15
<PAGE>
SOLICITATION OF CONSENTS
Solicitation of consents may be made by the directors, officers, investor
relations personnel and other employees of White and its affiliates, including
IBM. Consents will be solicited by mail, advertisement, telephone or telecopier
and in person. No such persons will receive additional compensation for such
solicitation.
In addition, IBM and White have retained Morrow to assist in the
solicitation, for which Morrow will be paid a fee of $ and will be
reimbursed for its reasonable out-of-pocket expenses. IBM has also agreed to
indemnify Morrow against certain liabilities and expenses, including certain
liabilities and expenses under the Federal securities laws. It is anticipated
that approximately 125 persons will be employed by Morrow to solicit
stockholders. Morrow is also acting as Information Agent in connection with the
Offer, for which Morrow will be paid customary compensation in addition to
reimbursement of reasonable out-of-pocket expenses.
Banks, brokers, custodians, nominees and fiduciaries will be requested to
forward solicitation material to beneficial owners of the shares of Company
Common Stock. White and its affiliates will reimburse banks, brokers,
custodians, nominees and fiduciaries for their reasonable expenses for sending
solicitation material to the beneficial owners.
CS First Boston is acting as Dealer Manager in connection with the Offer and
as financial advisor to White and IBM in connection with IBM's effort to acquire
the Company. IBM has agreed to pay to CS First Boston for its services the
following fees: (i) financial advisory and other related fees aggregating
$3,000,000, which were payable or became payable upon commencement of the Offer,
and (ii) a transaction fee of $9,000,000, payable upon the acquisition of 50% or
more of the Company Common Stock in the Offer. IBM has also agreed to reimburse
CS First Boston for its reasonable out-of-pocket expenses, including the
reasonable fees and expenses of its counsel and any other advisor retained by CS
First Boston in connection with its engagement and to indemnify CS First Boston
and certain related persons against certain liabilities and expenses, including
certain liabilities and expenses under the Federal securities laws.
In connection with CS First Boston's engagement as financial advisor, White
anticipates that certain employees of CS First Boston may communicate in person,
by telephone or otherwise with a limited number of institutions, brokers or
other persons who are stockholders of the Company for the purpose of assisting
in the solicitation of consents. CS First Boston will not receive any fee for or
in connection with such solicitation activities by employees of CS First Boston
apart from the fees it is otherwise entitled to receive as described above.
The cost of the solicitation of consents to the Proposals will be borne by
White and its affiliates, including IBM. White will not seek reimbursement of
the costs of this solicitation from the Company. Costs related to the Offer and
to the solicitation of consents to the Proposals include expenditures for
attorneys, accountants, financial advisors, consent solicitors, public relations
advisors, printing, advertising, postage, litigation and related expenses and
filing fees and, other than the payment for Shares pursuant to the Offer, are
expected to aggregate approximately $ million. The portion of such costs
allocable solely to the solicitation of consents to the Proposals is not readily
determinable.
CONSENT PROCEDURE
Section 228 of the DGCL states that, unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action that may be taken at any annual
or special meeting of stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, is signed by the holders of outstanding stock having
not less than the minimum number of votes that would
16
<PAGE>
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, and those consents are
delivered to the corporation by delivery to its registered office in Delaware,
its principal place of business or an officer or agent of the corporation having
custody of the books in which proceedings of meetings of stockholders are
recorded. The Company's certificate of incorporation does not prohibit
stockholder action by written consent.
Section 213(b) of the DGCL provides that if no record date has been fixed by
the board of directors, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the board of directors is required, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the corporation by delivery to its registered office in Delaware,
its principal place of business or an officer or agent of the corporation having
custody of the books in which proceedings of meetings of the stockholders are
recorded. No prior action is required by the Company Board with respect to the
Proposals. The Record Date By-law provides that any stockholder seeking to have
the stockholders of the Company authorize or take action by written consent is
required to request that the Company Board fix a record date. The Company Board
is required to promptly, but in all events within 10 days after the date on
which the request is received, adopt a resolution fixing the record date for the
solicitation (which may not be more than 10 days after the date of the
resolution). If the Company Board does not fix a record date within 10 days
after the receipt of the request, the record date for the solicitation will be
the date on which the first signed consent is delivered to the Company. On June
6, 1995, CS First Boston, the record holder of Shares beneficially owned by
White, requested on behalf of White that the Company Board fix a record date.
[On , 1995, the Company Board fixed , 1995 as the
Record Date.] [The Company Board did not fix a record date for the solicitation
made hereby prior to , 1995. On , 1995, CS First
Boston, delivered a signed consent to the Company on behalf of White.
Accordingly, the Record Date will be , 1995.]
If the Proposals are adopted pursuant to the consent procedure, prompt
notice will be given pursuant to Section 228(d) of the DGCL to stockholders who
have not executed consents.
EFFECTIVENESS AND REVOCATION OF CONSENTS
The corporate actions proposed herein will be adopted when properly
completed, unrevoked consents are signed by the holders of record on the Record
Date of a majority of the shares of Company Common Stock then outstanding and
such consents are delivered to the Company, provided that the requisite consents
are so delivered within 60 days of the earliest dated consent delivered to the
Company. The effectiveness of each of the Proposals is subject to, and
conditioned upon, the adoption of each of the other Proposals by the holders of
record, as of the close of business on the Record Date, of a majority of the
shares of Company Common Stock then outstanding (including the receipt of
consents from such holders to the removal of each member of the Company Board
and to the election of each Nominee).
White plans to present the results of a successful solicitation with respect
to the corporate actions proposed herein to the Company as soon as possible.
An executed consent card may be revoked at any time before expiration by
marking, dating, signing and delivering a written revocation before the time
that the action authorized by the executed consent becomes effective. A
revocation may be in any written form validly signed by the record holder as
long as it clearly states that the consent previously given is no longer
effective. The delivery of a subsequently dated consent card which is properly
completed will constitute a revocation of any earlier consent. The revocation
may be delivered either to White in care of Morrow & Co., Inc., 909 Third
Avenue, 20th Floor, New York, NY 10022 or to the Company at 55 Cambridge
Parkway, Cambridge, MA 02142 or any other address provided by the Company.
Although a revocation is effective if delivered to the Company, White requests
that either the original or photostatic copies of all revocations
17
<PAGE>
of consents be mailed or delivered to White in care of Morrow & Co., Inc. at the
address set forth above, so that White will be aware of all revocations and can
more accurately determine if and when consents to the actions described herein
have been received from the holders of record on the Record Date of a majority
of outstanding shares of Company Common Stock.
SPECIAL INSTRUCTIONS
If you were a record holder of shares of Company Common Stock as of the
close of business on the Record Date, you may elect to consent to, withhold
consent to or abstain with respect to each Proposal by marking the "CONSENTS",
"DOES NOT CONSENT" or "ABSTAIN" box, as applicable, underneath each such
Proposal on the accompanying BLUE consent card and signing, dating and returning
it promptly in the enclosed post-paid envelope.
In addition, you may withhold consent to the removal of any individual
member of the Company Board or to the election of any individual Nominee by
writing such person's name on the consent card. However, the effectiveness of
each of the Proposals is subject to, and conditioned upon, the receipt of
consents from the holders of record on the Record Date of a majority of the
shares of Company Common Stock then outstanding to the removal of each member of
the Company Board and to the election of each Nominee.
If the stockholder has failed to check a box marked "CONSENTS", "DOES NOT
CONSENT" or "ABSTAIN" for one or more of the Proposals, such stockholder will be
deemed to have consented to such Proposal or Proposals, except that such
stockholder will not be deemed to have consented to the removal of any member of
the Company Board or the election of any Nominee whose name is written-in on the
consent card.
WHITE RECOMMENDS THAT YOU CONSENT TO EACH OF THE PROPOSALS.
YOUR CONSENT IS IMPORTANT. PLEASE MARK, SIGN AND DATE THE ENCLOSED BLUE
CONSENT CARD AND RETURN IN THE ENCLOSED POST-PAID ENVELOPE PROMPTLY. FAILURE TO
RETURN YOUR CONSENT WILL HAVE THE SAME EFFECT AS VOTING AGAINST THE PROPOSALS.
If your shares of Company Common Stock are held in the name of a brokerage
firm, bank nominee or other institution, only it can execute a consent with
respect to your shares of Company Common Stock and only upon receipt of specific
instructions from you. Accordingly, you should contact the person responsible
for your account and give instructions for the BLUE consent card to be signed
representing your shares of Company Common Stock. White urges you to confirm in
writing your instructions to the person responsible for your account and provide
a copy of those instructions to White in care of Morrow & Co., Inc. at the
address set forth above so that White will be aware of all instructions given
and can attempt to ensure that such instructions are followed.
APPRAISAL RIGHTS
The stockholders of the Company are not entitled to appraisal rights in
connection with the Proposals. However, if the Proposed Merger is consummated,
holders of Shares at the effective time of the Proposed Merger will have certain
rights pursuant to the provisions of Section 262 of the DGCL to dissent and
demand appraisal of their Shares. Under Section 262, dissenting stockholders who
comply with the applicable statutory procedures will be entitled to receive a
judicial determination of the fair value of their Shares (exclusive of any
element of value arising from the accomplishment or expectation of the Proposed
Merger) and to receive payment of such fair value in cash, together with a fair
rate of interest, if any. Any such judicial determination of the fair value of
Shares could be based upon factors other than, or in addition to, the price per
Share to be paid in the Proposed Merger or the market value
18
<PAGE>
of the Shares. The value so determined could be more or less than the price per
Share to be paid in the Proposed Merger. If the Company and IBM enter into a
merger agreement (other than with respect to the Proposed Merger) stockholders
of the Company may or may not have appraisal rights under the DGCL in connection
with the consummation of the merger contemplated thereby depending upon the
terms of any such merger. EXECUTING A WRITTEN CONSENT IN FAVOR OF THE PROPOSALS
WILL NOT PREVENT A STOCKHOLDER FROM SUBSEQUENTLY DEMANDING APPRAISAL OF HIS
SHARES IN CONNECTION WITH THE CONSUMMATION OF ANY MERGER.
LITIGATION
On June 5, 1995, White commenced litigation against the Company and Jim P.
Manzi, its Chairman of the Board, President and Chief Executive Officer, in
United States District Court for the District of Delaware seeking, among other
things, an order compelling the Company Board to redeem the Rights or to amend
the Rights Agreement to make the Rights inapplicable to the Offer and the
Proposed Merger on the grounds that failure to do so would constitute a breach
of fiduciary duty to the Company's stockholders, compelling the Company Board to
approve the Offer and the Proposed Merger for purposes of Section 203 on the
grounds that failure to do so would constitute a breach of fiduciary duty to the
Company's stockholders and enjoining enforcement of the Massachusetts Control
Share Acquisition Statute on the grounds that such statute is unconstitutional.
WHITE ACQUISITION CORP.
If you have any questions about giving your Consent or require assistance,
please contact:
MORROW & CO., INC.
909 Third Avenue, 20th Floor
New York, NY 10022
Toll Free (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
Dated: , 1995
19
<PAGE>
ANNEX I
SHARES HELD BY THE COMPANY'S DIRECTORS
AND EXECUTIVE OFFICERS
Based upon White's review of the Company's Proxy Statement dated March 20,
1995, to White's knowledge, the directors and five most highly compensated
executive officers of the Company (and the directors and executive officers as a
group) beneficially owned as of February 1, 1995 the following amounts of the
outstanding shares of Company Common Stock:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS
- --------------------------------------------------------- ------------------------ ----------------
<S> <C> <C>
Jim P. Manzi**........................................... 1,217,072(2) 2.54%
Richard S. Braddock**.................................... 8,000(3) *
Elaine L. Chao**......................................... 0 *
William H. Gray III**.................................... 0 *
Michael E. Porter**...................................... 11,083(4) *
Henri A. Termeer**....................................... 7,083(5) *
Edwin J. Gillis.......................................... 101,759(6) *
John B. Landry........................................... 42,556(7) *
June L. Rokoff........................................... 65,471(8) *
Robert K. Weiler......................................... 83,248(9) *
All directors and executive officers as a group (14
persons) 1,595,572(10) 3.30%
</TABLE>
- ------------
* Ownership is less than 1% of the class.
** Director.
(1) Except where expressly stated otherwise, each named person possesses sole
voting and investment power with respect to the shares of Company Common
Stock.
(2) Includes 26,201 shares of Company Common Stock held in the Jim P. Manzi
1993 Irrevocable Trust for the benefit of Mr. Manzi's children. Includes
46,666 shares of Company Common Stock that Mr. Manzi has the right to
acquire within 60 days of February 1, 1995 by the exercise of stock
options.
(3) Includes 7,500 shares of Company Common Stock that Mr. Braddock has the
right to acquire within 60 days of February 1, 1995 by the exercise of
stock options.
(4) Includes 7,083 shares of Company Common Stock that Mr. Porter has the right
to acquire within 60 days of February 1, 1995 by the exercise of stock
options.
(5) Includes 7,083 shares of Company Common Stock that Mr. Termeer has the
right to acquire within 60 days of February 1, 1995 by the exercise of
stock options.
(6) Includes 99,479 shares of Company Common Stock that Mr. Gillis has the
right to acquire within 60 days of February 1, 1995 by the exercise of
stock options. Includes 780 shares of Company Common Stock held in trust
for the benefit of Mr. Gillis under the Company's 401k and Profit Sharing
Plan.
(7) Includes 31,270 shares of Company Common Stock that Mr. Landry has the
right to acquire within 60 days of February 1, 1995 by the exercise of
stock options. Includes 112 shares of Company Common Stock held in trust
for the benefit of Mr. Landry under and 1,200 shares of Company Common
Stock over which Mr. Landry exercises investment discretion as custodian of
such shares of Company Common Stock held for the benefit of his minor
children.
(8) Includes 48,541 shares of Company Common Stock that Ms. Rokoff has the
right to acquire within 60 days of February 1, 1995 by the exercise of
stock options. Includes 7,430 shares of Company Common Stock held in trust
for the benefit of Ms. Rokoff under the Company's 401k and Profit Sharing
Plan.
(9) Includes 81,979 shares of Company Common Stock that Mr. Weiler has the
right to acquire within 60 days of February 1, 1995 by the exercise of
stock options.
(10) Includes 387,760 shares of Company Common Stock that directors and
executive officers of the Company have the right to acquire within 60 days
of February 1, 1995 by the exercise of stock options and 8,463 shares of
Company Common Stock held in trust by the Company's Profit Sharing and 401k
Plan.
I-1
<PAGE>
ANNEX II
INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF IBM AND WHITE
AND CERTAIN EMPLOYEES AND OTHER REPRESENTATIVES OF
IBM OR WHITE
The following table sets forth the name and the present principal occupation
or employment, and the name, principal business and address of any corporation
or other organization in which such employment is carried on, of (1) the
directors and executive officers of IBM and White and (2) certain employees and
other representatives of IBM or White who may also assist Morrow in soliciting
consents from the Company's stockholders. Unless otherwise indicated, the
principal business address of each director, executive officer, employee or
representative is International Business Machines Corporation, Old Orchard Road,
Armonk, NY 10504.
DIRECTORS AND EXECUTIVE OFFICERS OF IBM
<TABLE>
<CAPTION>
PRESENT OFFICE
NAME AND OR OTHER PRINCIPAL
PRINCIPAL BUSINESS OCCUPATION OR
ADDRESS EMPLOYMENT
- --------------------------------------------- ---------------------------------------------
<S> <C>
Louis V. Gerstner, Jr........................ Chairman of the Board and Chief Executive
Officer of IBM.
Harold Brown................................. Director of IBM. Counselor, Center for
Center for Strategic and Strategic and International Studies and a
International Studies general partner in Warburg, Pincus &
Suite 400 Company.
1800 K Street, N.W.
Washington, DC 20006
Fritz Gerber................................. Director of IBM. Chairman and Chief Executive
Zurich Insurance Company Officer of Roche Holding Ltd. He is also
P.O. Box CH-8022 Executive Chairman of Zurich Insurance
Zurich Company.
Switzerland
Nannerl O. Keohane........................... Director of IBM. President and professor of
Office of the President political science at Duke University.
207 Allen Building
Box 90001
Duke University
Durham, NC 27708-0001
Charles F. Knight............................ Director of IBM. Chairman and Chief Executive
Emerson Electric Co. Officer of Emerson Electric Co.
8000 West Florissant Avenue
P.O. Box 4100
St. Louis, MO 63136-8506
Lucio A. Noto................................ Director of IBM. Chairman and Chief Executive
Mobil Corporation Officer of Mobil Corporation.
3225 Gallows Road
Fairfax, VA 22037
John B. Slaughter............................ Director of IBM. President of Occidental
Office of the President College.
Occidental College
1600 Campus Road
Los Angeles, CA 90041
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT OFFICE
NAME AND OR OTHER PRINCIPAL
PRINCIPAL BUSINESS OCCUPATION OR
ADDRESS EMPLOYMENT
- --------------------------------------------- ---------------------------------------------
<S> <C>
Alex Trotman................................. Director of IBM. Chairman and Chief Executive
Ford Motor Company Officer of the Ford Motor Company.
American Road
Dearborn, MI 48121-1899
Lodewijk C. van Wachem....................... Director of IBM. Chairman of the supervisory
Royal Dutch Petroleum Company board of Royal Dutch Petroleum Company.
P.O. Box 162
2501 AN The Hague
Netherlands
Charles M. Vest.............................. Director of IBM. President and professor of
Massachusetts Institute of Technology mechanical engineering at the Massachusetts
President's Office Institute of Technology.
Room 3-208
77 Massachusetts Avenue
Cambridge, MA 02139
Jerome B. York............................... Director of IBM. Senior Vice President and
Chief Financial Officer of IBM.
J. Thomas Bouchard........................... Senior Vice President, Human Resources of IBM.
Nicholas M. Donofrio......................... Senior Vice President and Group Executive of IBM.
Ned C. Lautenbach............................ Senior Vice President and Group Executive,
Worldwide Sales and Services and Chairman
of World Trade Corporation of IBM.
James C. McGroddy............................ Senior Vice President, Research of IBM.
Lawrence R. Ricciardi........................ Senior Vice President and General Counsel of IBM.
G. Richard Thoman............................ Senior Vice President and Group Executive of IBM.
John M. Thompson............................. Senior Vice President and Group Executive of
IBM and Chairman, IBM Canada.
Patrick A. Toole............................. Senior Vice President and Group Executive of IBM.
John E. Hickey............................... Vice President, Secretary and Assistant
General Counsel of IBM.
Jeffrey D. Serkes............................ Vice President and Treasurer of IBM.
<CAPTION>
DIRECTORS AND EXECUTIVE OFFICERS OF WHITE
PRESENT OFFICE
NAME AND OR OTHER PRINCIPAL
PRINCIPAL BUSINESS OCCUPATION OR
ADDRESS EMPLOYMENT
- --------------------------------------------- ---------------------------------------------
<S> <C>
Lee A. Dayton................................ Director and President of White. General
Manager, Real Estate and Business
Development of IBM.
Donald D. Westfall........................... Director, Vice President and Secretary of
White. Associate General Counsel of IBM.
Archie W. Colburn............................ Director, Vice President, Treasurer and
Assistant Secretary of White. Business
Development Consultant of IBM.
</TABLE>
II-2
<PAGE>
CERTAIN EMPLOYEES AND OTHER REPRESENTATIVES OF IBM OR WHITE
WHO MAY ALSO SOLICIT CONSENTS
<TABLE>
<CAPTION>
PRESENT OFFICE
NAME AND OR OTHER PRINCIPAL
PRINCIPAL BUSINESS OCCUPATION OR
ADDRESS EMPLOYMENT
- --------------------------------------------- ---------------------------------------------
<S> <C>
Michael A. Feder............................. Managing Director of CS First Boston
CS First Boston Corporation Corporation.
55 East 52nd Street
New York, NY 10055
J. Craig Oxman............................... Managing Director of CS First Boston
CS First Boston Corporation Corporation.
55 East 52nd Street
New York, NY 10055
Alan H. Howard............................... Director of CS First Boston Corporation.
CS First Boston Corporation
55 East 52nd Street
New York, NY 10055
</TABLE>
II-3
<PAGE>
ANNEX III
SHARES HELD BY WHITE, IBM, THEIR
DIRECTORS AND EXECUTIVE OFFICERS, CERTAIN EMPLOYEES AND
OTHER REPRESENTATIVES OF WHITE OR IBM AND THE NOMINEES AND
CERTAIN TRANSACTIONS BETWEEN ANY OF THEM AND THE COMPANY
IBM purchased 100 Shares on May 5, 1995 for $32 per share (excluding
mark-ups or commissions). On June 2, 1995, IBM transferred beneficial ownership
of 50 of such Shares to White. No part of the purchase price or market value of
any of the Shares described in this paragraph was represented by funds borrowed
or otherwise obtained for the purpose of acquiring or holding such Shares. CS
First Boston is the record owner of the Shares beneficially owned by White and
IBM. White and IBM disclaim beneficial ownership of any Shares owned by any
pension plan of IBM or any affiliate of IBM.
In the ordinary course of its business, CS First Boston engages in
securities trading, market-making and brokerage activities and may, at any time,
hold long or short positions and may trade or otherwise effect transactions in
securities of the Company. As of June 2, 1995, CS First Boston had a long
position of 6,956 Shares held for its own account. CS First Boston acted as
advisor to the Company in mid-1994 in connection with an acquisition carried out
by the Company, for which CS First Boston received a fee of $200,000.
Mr. Gerber, a director of IBM, is also a director of Credit Suisse. Credit
Suisse is a party to a Multicurrency Revolving Credit Agreement dated as of June
7, 1994, among the Company, The First National Bank of Boston, as Agent, and the
lenders named therein. Credit Suisse's commitment thereunder is $14 million. In
addition, Credit Suisse has outstanding to the Company and Lotus Development BV
(Ireland) an uncommitted trading facility for foreign exchange transactions, and
to the Company an uncommitted trading facility for derivative transactions,
aggregating 25 million Swiss Francs. Credit Suisse is an affiliate of CS First
Boston, the financial advisor to White and IBM.
In August 1994, Lawrence R. Ricciardi, currently the Senior Vice President
and General Counsel of IBM, and his wife purchased 1,000 Shares. All such Shares
were sold in September 1994. At the time of such purchase and sale, Mr.
Ricciardi was President and General Counsel of RJR Nabisco Holdings Corp. and
was not an officer or employee of IBM.
Except as disclosed in this Consent Statement, none of White, IBM, their
directors or executive officers, the Nominees or the employees or other
representatives of White or IBM named in Annex II owns any securities of the
Company or any parent or subsidiary of the Company, beneficially or of record,
has purchased or sold any such securities within the past two years or is or was
within the past year a party to any contract, arrangement or understanding with
any person with respect to such securities. Except as disclosed in this Consent
Statement, to the best knowledge of White, IBM, their directors or executive
officers, the Nominees and the employees and other representatives of White or
IBM named in Annex II, none of their associates beneficially owns, directly or
indirectly, any securities of the Company.
Except as disclosed in this Consent Statement, none of White, IBM, their
directors or executive officers, the Nominees, the employees or other
representatives of White or IBM named in Annex II, or, to their best knowledge,
their associates has any arrangement or understanding with any person (1) with
respect to any future employment by the Company or its affiliates (except that
the son of Ned C. Lautenbach, the Senior Vice President and Group Executive,
Worldwide Sales and Services and Chairman of World Trade Corporation of IBM,
will join the Company as an employee in July 1995 following his graduation from
business school) or (2) with respect to future transactions to which the Company
or any of its affiliates will or may be a party, nor any material interest,
direct or indirect, in any transaction that has occurred since January 1, 1994
or any currently proposed transaction, or series of similar transactions, which
the Company or any of its affiliates was or is to be a party and in which the
amount involved exceeds $60,000. Certain Nominees, directors and executive
officers of IBM or the Purchaser and/or their respective associates may also be
directors or officers of other companies and organizations that have engaged in
transactions with the Company or its subsidiaries in the ordinary course of
business since January 1, 1994, but IBM believes that the interest of such
persons in such transactions is not of material significance.
III-1
<PAGE>
ANNEX IV
FORM OF PROPOSED AMENDMENT
TO SECTION 1 OF ARTICLE III
OF THE COMPANY BY-LAWS
Section 1. General Powers, Number and Tenure.
The business of the Corporation shall be managed by its Board of Directors,
which may exercise all powers of the Corporation and perform all lawful acts
that are not by law, the Certificate of Incorporation or these By-laws directed
or required to be exercised or performed by the stockholders. The number of
directors shall be three. The directors shall be elected at the annual meeting
of the stockholders, except as provided in Section 2 of this Article, and each
director elected shall hold office until his/her successor is elected and shall
qualify. Directors need not be stockholders.
IV-1
<PAGE>
[FORM OF CONSENT CARD]
PRELIMINARY COPY--SUBJECT TO COMPLETION
BLUE WHITE ACQUISITION CORP. IN OPPOSITION TO THE
CONSENT BOARD OF DIRECTORS
CARD OF LOTUS DEVELOPMENT CORPORATION
Unless otherwise indicated below, the undersigned, a stockholder of record of
Lotus Development Corporation (the "Company") on , 1995 (the "Record
Date"), hereby consents pursuant to Section 228(a) of the Delaware General
Corporation Law with respect to all shares of common stock of the Company (the
"Company Common Stock") held by the undersigned to the taking of the following
actions without a meeting of the stockholders of the Company:
1. The removal of each incumbent director of the Company as follows: Jim P.
Manzi, Richard S. Braddock, Elaine L. Chao, William H. Gray III, Michael E.
Porter and Henri A. Termeer, and any other person who is a director of the
Company at the time the action taken by this written consent becomes
effective.
/ / CONSENTS / / DOES NOT CONSENT / / ABSTAIN
INSTRUCTION: TO CONSENT, WITHHOLD CONSENT OR ABSTAIN FROM CONSENTING TO THE
REMOVAL OF ALL THE ABOVE-NAMED DIRECTORS AND ANY OTHER PERSON
WHO IS A DIRECTOR OF THE COMPANY AT THE TIME THE ACTION TAKEN BY
THIS WRITTEN CONSENT BECOMES EFFECTIVE, CHECK THE APPROPRIATE
BOX ABOVE. IF YOU WISH TO CONSENT TO THE REMOVAL OF CERTAIN OF
THE ABOVE-NAMED DIRECTORS AND/OR CERTAIN OF THE DIRECTORS NOT
NAMED ABOVE WHO ARE DIRECTORS OF THE COMPANY AT THE TIME THE
ACTION TAKEN BY THIS WRITTEN CONSENT BECOMES EFFECTIVE, BUT NOT
ALL OF THEM, CHECK THE "CONSENTS" BOX ABOVE AND WRITE THE NAME
OF EACH PERSON YOU DO NOT WISH REMOVED IN THE FOLLOWING SPACE:
________________________________________________________________________________
IF NO BOX IS MARKED ABOVE WITH RESPECT TO THIS PROPOSAL, THE
UNDERSIGNED WILL BE DEEMED TO CONSENT TO SUCH PROPOSAL, EXCEPT
THAT THE UNDERSIGNED WILL NOT BE DEEMED TO CONSENT TO THE
REMOVAL OF ANY INCUMBENT DIRECTOR WHOSE NAME IS WRITTEN-IN IN
THE SPACE PROVIDED ABOVE.
2. Amendment of Section 1 of Article III of the Company's By-laws to fix the
number of directors at three.
/ / CONSENTS / / DOES NOT CONSENT / / ABSTAIN
3. The election of the following persons as directors of the Company to hold
office until their successors are elected and qualified: Mark G. Ewald, David
S. Hershberg and John E. Sexton (the "Nominees").
/ / CONSENTS / / DOES NOT CONSENT / / ABSTAIN
(CONTINUED AND TO BE DATED AND SIGNED ON REVERSE SIDE)
<PAGE>
INSTRUCTION: TO CONSENT, WITHHOLD CONSENT OR ABSTAIN FROM CONSENTING TO THE
ELECTION OF ALL THE ABOVE-NAMED PERSONS, CHECK THE APPROPRIATE BOX
ABOVE. IF YOU WISH TO CONSENT TO THE ELECTION OF CERTAIN OF THE
ABOVE-NAMED PERSONS, BUT NOT ALL OF THEM, CHECK THE "CONSENTS" BOX
ABOVE AND WRITE THE NAME OF EACH SUCH PERSON YOU DO NOT WISH
ELECTED IN THE FOLLOWING SPACE:
________________________________________________________________________________
IF NO BOX IS MARKED ABOVE WITH RESPECT TO THIS PROPOSAL, THE
UNDERSIGNED WILL BE DEEMED TO CONSENT TO SUCH PROPOSAL, EXCEPT THAT
THE UNDERSIGNED WILL NOT BE DEEMED TO CONSENT TO THE ELECTION OF
ANY CANDIDATE WHOSE NAME IS WRITTEN-IN IN THE SPACE PROVIDED ABOVE.
4. Amendment of Article II of the Company's By-laws to delete Section 12 thereof
(the "Control Share By-law" described in the accompanying Consent Statement),
which purports to make Chapter 110E of the Massachusetts General Law--the
Massachusetts Control Share Acquisition Statute--applicable to certain
acquisitions of Company Common Stock.
/ / CONSENTS / / DOES NOT CONSENT / / ABSTAIN
5. Repeal each provision of the Company By-laws or amendment thereto adopted
subsequent to July 27, 1994 and prior to the effectiveness of the Proposals.
/ / CONSENTS / / DOES NOT CONSENT / / ABSTAIN
The provisions of the Consent Statement dated , 1995 of White Acquisition
Corp., which more fully set forth the amendments to the By-laws of the Company
described in Items 2, 4 and 5 above, including the precise wording of such
amendments, are incorporated herein by reference.
IN THE ABSENCE OF DISSENT OR ABSTENTION BEING INDICATED ABOVE, THE UNDERSIGNED
HEREBY CONSENTS TO EACH ACTION LISTED ABOVE.
The effectiveness of each of the proposals set forth above is subject to, and
conditioned upon, the adoption of each of the other proposals set forth above by
the holders of record as of the close of business on the Record Date of a
majority of the shares of Company Common Stock then outstanding (including the
receipt of consents from such holders to the removal of each member of the Board
of Directors of the Company and to the election of each Nominee).
Please sign exactly as name appears on stock
certificates or on label affixed hereto.
When shares are held by joint tenants, both
should sign. In case of joint owners, EACH
joint owner should sign. When signing as
attorney, executor, administrator, trustee,
guardian, corporate officer, etc., give full
title as such.
DATED: _____________________________________
__________________________________________
Signature
__________________________________________
Signature, if held jointly
__________________________________________
Title or Authority
IN ORDER FOR YOUR CONSENT TO BE VALID, IT MUST BE DATED.
PLEASE SIGN, DATE AND MAIL YOUR CONSENT PROMPTLY IN THE POSTAGE-PAID ENVELOPE
ENCLOSED
