<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
IMPACT SYSTEMS, INC.
(NAME OF SUBJECT COMPANY)
------------------------
VOITH SULZER ACQUISITION CORP.
VOITH SULZER PAPER TECHNOLOGY
NORTH AMERICA INC.
J.M. VOITH AG
(BIDDERS)
------------------------
COMMON STOCK, WITHOUT PAR VALUE
(TITLE OF CLASS OF SECURITIES)
452913 10 6
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
PAUL BOUTHILET, VICE PRESIDENT, TREASURER AND SECRETARY
VOITH SULZER ACQUISITION CORP.
C/O VOITH SULZER PAPER TECHNOLOGY NORTH AMERICA INC.
2200 N. ROEMER ROAD
APPLETON, WISCONSIN 54913
TELEPHONE: (920) 731-7724
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
------------------------
Copy to:
RALF R. BOER
FOLEY & LARDNER
777 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202
(414) 271-2400
DECEMBER 18, 1997
CALCULATION OF FILING FEE
Transaction Valuation* Amount Of Filing Fee**
- --------------------------------------------------------------------------------
$32,209,865 $6,442
- --------------------------------------------------------------------------------
* The Transaction Valuation is calculated by multiplying $2.75, the per share
tender offer price, by 11,712,678, the sum of 10,511,576 shares of Common
Stock outstanding and the 1,201,102 shares of Common Stock subject to
options outstanding.
** The amount of the filing fee, calculated in accordance with Section 14(g)
and Rule 0-11(d) of the Securities Exchange Act of 1934, as amended, equals
1/50th of one percent of the value of the aggregate shares of Common Stock
purchased.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and date of its filing.
AMOUNT PREVIOUSLY PAID: NONE
FORM OR REGISTRATION NO.: NOT APPLICABLE
FILING PARTY: NOT APPLICABLE
DATE FILED: NOT APPLICABLE
================================================================================
<PAGE> 2
CUSIP NO. 452913 10 6
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
J.M. Voith AG
I.R.S. No.: Not Applicable
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions) (a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCES OF FUNDS (SEE INSTRUCTIONS)
WC
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(E)
OR 2(F)
[ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
The Federal Republic of Germany
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,334,706*
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS)
[ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
60.3%*
10. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
2
<PAGE> 3
CUSIP NO. 452913 10 6
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Voith Sulzer Paper Technology of North America Inc.
I.R.S. No.: Not Applicable
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions) (a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCES OF FUNDS (SEE INSTRUCTIONS)
AF
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(E)
OR 2(F)
[ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,334,706*
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
(See Instructions) [ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
60.3%*
10. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
3
<PAGE> 4
CUSIP NO. 452913 10 6
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Voith Sulzer Acquisition Corp.
I.R.S. No.: Not Applicable
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions) (a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCES OF FUNDS (SEE INSTRUCTIONS)
AF
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(E)
OR 2(F)
[ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
California
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,334,706 *
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
(See Instructions) [ ]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
60.3%*
10. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
- ---------------
* On December 11, 1997, Voith Sulzer Acquisition Corp. (the "Purchaser") and
Voith Sulzer Paper Technology North America Inc. ("Parent") entered into
Stockholder Agreements (the "Stockholder Agreements") with certain
shareholders (the "Selling Shareholders") of Impact Systems, Inc. (the
"Company") pursuant to which, upon the terms set forth therein, the Selling
Shareholders have agreed to validly tender (and not to withdraw), in
accordance with the terms of the tender offer described in this statement
(the "Offer"), 3,047,384 shares (excluding shares issuable upon the
exercise of outstanding options) of common stock, without par value, of the
Company (the "Common Stock"), owned (beneficially or of record) by the
Selling Shareholders. In addition, the Selling Shareholders have granted
the Purchaser an option to purchase all but not less than all such Shares
and Parent has an irrevocable proxy to vote such Shares in favor of the
Merger and related transactions and against certain other transactions.
These Shares are reflected in Rows 7 and 9 in each of the tables above.
On December 11, 1997, the Purchaser, Parent and the Company also entered
into a Stock Option Agreement (the "Stock Option Agreement") pursuant to
which, upon the terms set forth therein, the Company granted to the
Purchaser an irrevocable option (the "Stock Option") to purchase up to the
number of shares of Common Stock (the "Option Shares") that, when added to
the number of shares of Common Stock owned by the Purchaser and its
affiliates immediately following consummation of the Offer, would
constitute 90% of the shares of Common Stock then outstanding on a fully
diluted basis (assuming the issuance of the Option Shares). The maximum
number of shares of Common Stock subject to the Stock Option, as reflected
in Rows 7 and 9 in each of the tables above, equals 8,287,322 (which is the
maximum number of authorized shares available for issuance).
The Stockholder Agreements and the Stock Option Agreement are described in
more detail in Section 10 of the Offer to Purchase dated December 18, 1997.
The Purchaser, Parent and J.M. Voith AG disclaim beneficial ownership of
the shares reflected in Rows 7 and 9 of the tables above.
4
<PAGE> 5
This joint Schedule 14D-1 Tender Offer Statement and Schedule 13D Statement
(this "Statement") relates to the offer by Voith Sulzer Acquisition Corp., a
California corporation (the "Purchaser") and a wholly owned subsidiary of Voith
Sulzer Paper Technology North America Inc., a Delaware corporation (the
"Parent"), to purchase all outstanding shares of common stock, without par value
(the "Common Shares" or "Shares"), of Impact Systems, Inc., a California
corporation (the "Company"), at a price of $2.75 per Share, net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated December 18, 1997 (the "Offer to
Purchase") and in the related Letter of Transmittal (which, as amended from time
to time, together constitute the "Offer"). Copies of the Offer to Purchase and
the Letter of Transmittal are annexed hereto as Exhibits (a)(1) and (a)(2),
respectively. Parent is a subsidiary of J.M. Voith AG, a corporation organized
under the laws of the Federal Republic of Germany ("Voith").
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Impact Systems, Inc., a California
corporation. The address of the Company's principal executive offices is 14600
Winchester Boulevard, Los Gatos, California 95030.
(b) The class of equity securities being sought is all the outstanding
Shares. The information set forth in the Introduction and Section 1 ("Terms of
the Offer; Proration in Certain Circumstances; Expiration Date") of the Offer to
Purchase is incorporated herein by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market set forth in Section 6 ("Price Range of Shares; Dividends on Shares") of
the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) -- (d) and (g) This Statement is being filed by or on behalf of the
Purchaser, Parent and Voith. The information concerning the name, state or other
place of organization, principal business and address of the principal office of
each of the Purchaser, Parent, Voith and Familiengesellschaft J.M. Voith GbR
("Familiengesellschaft"), and the information concerning the name, business
address, present principal occupation or employment and the name, principal
business and address of any corporation or other organization in which such
employment or occupation is contracted, material occupations, positions, offices
or employments during the last five years and citizenship of each of the
executive officers and directors of the Purchaser, Voith and
Familiengesellschaft are set forth in the Introduction, Section 8 ("Certain
Information Concerning the Purchaser, Parent, Voith and Familiengesellschaft")
and Schedule I ("Directors and Executive Officers of Familiengesellschaft, Voith
and the Purchaser") of the Offer to Purchase and are incorporated herein by
reference.
(e) and (f) During the last five years, none of the Purchaser, Parent,
Voith and Familiengesellschaft, nor, to the best knowledge of the Purchaser,
Parent, Voith and Familiengesellschaft, the persons listed in Schedule I
("Directors and Executive Officers of Familiengesellschaft, Voith and the
Purchaser") of the Offer to Purchase, has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction, Section 7
("Certain Information Concerning the Company"), Section 8 ("Certain Information
Concerning the Purchaser, Parent, Voith and Familiengesellschaft"), Section 9
("Background of the Offer"), Section 10 ("The Merger Agreement and Related
Documents") and Section 11 ("Purpose of the Offer; Plans for the Company After
the Offer and the Merger") of the Offer to Purchase is incorporated herein by
reference.
5
<PAGE> 6
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 12 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a) and (b) The information set forth in the Introduction, Section 9
("Background of the Offer"), Section 10 ("The Merger Agreement and Related
Documents") and Section 11 ("Purpose of the Offer; Plans for the Company After
the Offer and the Merger") of the Offer to Purchase is incorporated herein by
reference.
(c) The information set forth in Section 10 ("The Merger Agreement and
Related Documents") of the Offer to Purchase is incorporated herein by
reference.
(d) and (e) The information set forth in Section 9 ("Background of the
Offer"), Section 10 ("The Merger Agreement and Related Documents"), Section 11
("Purpose of the Offer; Plans for the Company After the Offer and the Merger")
and Section 14 ("Dividends and Distributions") of the Offer to Purchase is
incorporated herein by reference.
(f) and (g) The information set forth in Section 11 ("Purpose of the Offer;
Plans for the Company After the Offer and the Merger") and Section 13 ("Effect
of the Offer on the Market for the Shares; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction, Section 8
("Certain Information Concerning the Purchaser, Parent, Voith and
Familiengeschaft") and Section 9 ("Background of the Offer") of the Offer to
Purchase and the Stockholder Agreements and the Stock Option Agreement, copies
of which are attached hereto as Exhibits (c)(2), (c)(3) and (c)(4),
respectively, are incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning the Purchaser, Parent, Voith and Familiengeschaft"),
Section 9 ("Background of the Offer"), Section 10 ("The Merger Agreement and
Related Documents") and Section 11 ("Purpose of the Offer; Plans for the Company
After the Offer and the Merger") of the Offer to Purchase and the Stockholder
Agreements and the Stock Option Agreement, copies of which the attached hereto
as Exhibits (c)(2), (c)(3) and (c)(4), respectively, are incorporated herein by
reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction, Section 9 ("Background of
the Offer") and Section 17 ("Fees and Expenses") of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning the
Purchaser, Parent, Voith and Familiengeschaft") of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 7 ("Certain Information Concerning
the Company"), Section 8 ("Certain Information Concerning the Purchaser, Parent,
Voith and Familiengeschaft"), Section 10 ("The
6
<PAGE> 7
Merger Agreement and Related Documents") and Section 11 ("Purpose of the Offer;
Plans for the Company After the Offer and the Merger") of the Offer to Purchase
is incorporated herein by reference.
(b), (c) and (e) The information set forth in Section 10 ("The Merger
Agreement and Related Documents") and Section 16 ("Certain Legal Matters") of
the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 10 ("The Merger Agreement and
Related Documents") Section 11 ("Purpose of the Offer; Plans for the Company
After the Offer and the Merger") and Section 13 ("Effect of the Offer on the
Market for the Shares; Exchange Act Registration; Margin Regulations") of the
Offer to Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<C> <C> <S>
(a)(1) -- Form of Offer to Purchase dated December 18, 1997.
(a)(2) -- Form of Letter of Transmittal.
(a)(3) -- Form of Notice of Guaranteed Delivery.
(a)(4) -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) -- Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) -- Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9.
(a)(7) -- Text of Joint Press Release issued by Parent and the Company on December 12, 1997.
(a)(8) -- Summary Advertisement dated December 18, 1997.
(b) -- Not applicable.
(c)(1) -- Agreement and Plan of Merger among Parent, the Purchaser and the Company dated
December 11, 1997.
(c)(2) -- Stockholder Agreement among Parent, the Purchaser and Elsag International N.V.
dated December 11, 1997.
(c)(3) -- Stockholder Agreement among Parent, the Purchaser and Kenneth P. Ostrow dated
December 11, 1997.
(c)(4) -- Stock Option Agreement among Parent, the Purchaser and the Company dated December
11, 1997.
(c)(5) -- Noncompetition Agreement between Parent and Kenneth P. Ostrow dated December 11,
1997.
(d) -- Not applicable.
(e) -- Not applicable.
(f) -- Not applicable.
</TABLE>
7
<PAGE> 8
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: December 18, 1997
VOITH SULZER ACQUISITION CORP.
By: /s/ PAUL BOUTHILET
------------------------------------
Title: Vice President, Treasurer and
Secretary
VOITH SULZER PAPER TECHNOLOGY
NORTH AMERICA INC.
By: /s/ PAUL BOUTHILET
------------------------------------
Title: Chief Financial Officer and
Secretary
J.M. VOITH AG
By: /s/ HANS MULLER
------------------------------------
Title: Member of Corporate
Management Board
8
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<S> <C>
(a)(1) Form of Offer to Purchase dated December 18, 1997.
(a)(2) Form of Letter of Transmittal
(a)(3) Form of Notice of Guaranteed Delivery
(a)(4) Form of Letter to Brokers, Commercial Banks, Trust Companies and Other Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9.
(a)(7) Text of Joint Press Release issued by Parent and the Company on December 12, 1997.
(a)(8) Summary Advertisement dated December 18, 1997.
(b) Not applicable.
(c)(1) Agreement and Plan of Merger among Parent, the Purchaser and the Company dated
December 11, 1997.
(c)(2) Stockholder Agreement among Parent, the Purchaser and Elsag International N.V. dated
December 11, 1997.
(c)(3) Stockholder Agreement among Parent, the Purchaser and Kenneth P. Ostrow dated
December 11, 1997.
(c)(4) Stock Option Agreement among Parent, Purchaser and the Company dated December 11,
1997.
(c)(5) Noncompetition Agreement between Parent and Kenneth P. Ostrow dated December 11,
1997.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
9
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
IMPACT SYSTEMS, INC.
AT
$2.75 NET PER SHARE
BY
VOITH SULZER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
VOITH SULZER PAPER TECHNOLOGY NORTH AMERICA INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JANUARY 20, 1998,
UNLESS THE OFFER IS EXTENDED
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF DECEMBER 11, 1997 (THE "MERGER AGREEMENT"), BY AND AMONG VOITH SULZER
PAPER TECHNOLOGY NORTH AMERICA INC. ("PARENT"), VOITH SULZER ACQUISITION CORP.
(THE "PURCHASER") AND IMPACT SYSTEMS, INC. (THE "COMPANY"). THE BOARD OF
DIRECTORS OF THE COMPANY HAS (A) APPROVED THE MERGER AGREEMENT, THE STOCK OPTION
AGREEMENT DESCRIBED BELOW, THE OFFER AND THE MERGER AND THE OTHER TRANSACTIONS
CONTEMPLATED THEREBY, (B) DETERMINED THAT THE OFFER PRICE TO BE RECEIVED BY THE
SHAREHOLDERS OF THE COMPANY PURSUANT TO THE OFFER AND THE MERGER IS FAIR TO THE
SHAREHOLDERS AND (C) RECOMMENDS THAT SHAREHOLDERS TENDER THEIR SHARES PURSUANT
TO THE OFFER.
------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER THAT NUMBER
OF SHARES OF COMMON STOCK WHICH WILL REPRESENT AT LEAST 90% OF THE OUTSTANDING
SHARES ON A FULLY DILUTED BASIS (AFTER GIVING PRO FORMA EFFECT TO THE POTENTIAL
ISSUANCE OF ANY SHARES ISSUABLE UNDER THE STOCK OPTION AGREEMENT) ON THE DATE OF
PURCHASE (THE "MINIMUM CONDITION"). THE PURCHASER WILL NOT BE REQUIRED TO ACCEPT
FOR PAYMENT OR PAY FOR ANY TENDERED SHARES OF COMMON STOCK UNTIL THE EXPIRATION
OF ALL APPLICABLE WAITING PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE SATISFACTION OF CONDITIONS UNDER
ANY OTHER APPLICABLE ANTITRUST, COMPETITION OR TRADE REGULATORY LAWS, RULES OR
REGULATIONS OF ANY DOMESTIC OR FOREIGN GOVERNMENT OR GOVERNMENTAL AUTHORITY OR
ANY MULTINATIONAL AUTHORITY. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND
CONDITIONS DESCRIBED IN SECTION 15. THE OFFER IS NOT CONDITIONED ON THE RECEIPT
OF FINANCING.
------------------
IN THE EVENT THAT MORE THAN 50% OF THE SHARES OF COMMON STOCK THEN
OUTSTANDING ARE TENDERED PURSUANT TO THE OFFER AND NOT WITHDRAWN, BUT LESS THAN
90% OF THE SHARES OF COMMON STOCK THEN OUTSTANDING ON A FULLY DILUTED BASIS ARE
SUBJECT TO ACQUISITION BY THE PURCHASER PURSUANT TO THE OFFER AND THE STOCK
OPTION DESCRIBED BELOW, THE PURCHASER WILL WAIVE THE MINIMUM CONDITION AND AMEND
THE OFFER TO REDUCE THE NUMBER OF SHARES OF COMMON STOCK SUBJECT TO THE OFFER TO
SUCH NUMBER OF SHARES AS EQUALS 49.9999% OF THE SHARES OF COMMON STOCK THEN
OUTSTANDING (THE "REVISED MINIMUM NUMBER") AND, IF A GREATER NUMBER OF SHARES OF
COMMON STOCK ARE TENDERED INTO THE OFFER AND NOT WITHDRAWN, PURCHASE, ON A PRO
RATA BASIS, THE REVISED MINIMUM NUMBER OF SHARES (IT BEING UNDERSTOOD THAT THE
PURCHASER MAY, BUT SHALL NOT IN ANY EVENT BE REQUIRED TO ACCEPT FOR PAYMENT, OR
PAY FOR, ANY SHARES OF COMMON STOCK IF LESS THAN THE REVISED MINIMUM NUMBER OF
SHARES ARE TENDERED PURSUANT TO THE OFFER AND NOT WITHDRAWN AT THE APPLICABLE
EXPIRATION DATE OF THE OFFER).
------------------
<PAGE> 2
IMPORTANT
Any Shareholder (as defined below) desiring to tender all or any portion of
such Shareholder's Shares (as defined below) should either (i) complete and sign
the Letter of Transmittal (or a manually signed facsimile thereof) in accordance
with the instructions in the Letter of Transmittal, have such Shareholder's
signature thereon guaranteed if required by Instruction 1 to the Letter of
Transmittal, mail or deliver the Letter of Transmittal (or such manually signed
facsimile) and any other required documents to the Depositary (as defined below)
and either deliver the certificates for such Shares to the Depositary along with
the Letter of Transmittal (or manually signed facsimile) or deliver such Shares
pursuant to the procedure for book-entry transfer as set forth in Section 2
hereof or (ii) request such Shareholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such Shareholder. A
Shareholder having Shares registered in the name of a broker, dealer, commercial
bank, trust company or other nominee must contact such broker, dealer,
commercial bank, trust company or other nominee if such Shareholder desires to
tender such Shares. As used herein, "Shares" means shares of Common Stock,
without par value, of the Company, and "Shareholders" means holders of Shares,
unless the context indicates otherwise.
If a Shareholder desires to tender Shares and such Shareholder's
certificates for Shares are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date (as defined below), such Shareholder's tender may be effected by following
the procedure for guaranteed delivery set forth in Section 2.
Questions and requests for assistance may be directed to D.F. King & Co.,
Inc., the Information Agent, or ChaseMellon Shareholder Services, L.L.C., the
Depositary, at their respective addresses and telephone numbers set forth on the
back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other
related materials may be obtained from the Information Agent or from brokers,
dealers, commercial banks, trust companies and other nominees.
------------------
DECEMBER 18, 1997
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Introduction........................................................................... 1
Section 1. Terms of the Offer; Proration in Certain Circumstances; Expiration Date.... 4
Section 2. Procedures for Tendering Shares............................................ 6
Section 3. Withdrawal Rights.......................................................... 8
Section 4. Acceptance for Payment and Payment......................................... 9
Section 5. Certain Federal Income Tax Consequences.................................... 10
Section 6. Price Range of Shares; Dividends on the Shares............................. 11
Section 7. Certain Information Concerning the Company................................. 11
Section 8. Certain Information Concerning the Purchaser, Parent, Voith and
Familiengesellschaft....................................................... 14
Section 9. Background of the Offer.................................................... 16
Section 10. The Merger Agreement and Related Documents................................. 17
Section 11. Purpose of the Offer; Plans for the Company After the Offer and the
Merger............................................................................... 25
Section 12. Source and Amount of Funds................................................. 27
Section 13. Effect of the Offer on the Market for the Shares; Exchange Act
Registration; Margin Regulations........................................... 27
Section 14. Dividends and Distributions................................................ 29
Section 15. Certain Conditions of the Offer............................................ 29
Section 16. Certain Legal Matters...................................................... 30
Section 17. Fees and Expenses.......................................................... 32
Section 18. Miscellaneous.............................................................. 32
Schedule I. Directors and Executive Officers of Familiengesellschaft, Voith and the
Purchaser............................................................................ I-1
</TABLE>
<PAGE> 4
To the Holders of Common Stock
of Impact Systems, Inc.:
INTRODUCTION
Voith Sulzer Acquisition Corp., a California corporation (the "Purchaser")
and a wholly owned subsidiary of Voith Sulzer Paper Technology North America
Inc., a Delaware corporation ("Parent"), hereby offers to purchase all
outstanding shares of common stock, without par value (the "Common Shares" or
"Shares"), of Impact Systems, Inc., a California corporation (the "Company"), at
a price of $2.75 per Share (such price or any greater price per Share paid
pursuant to the Offer (as defined below), being hereinafter referred to as the
"Offer Price"), net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer"). Unless the context indicates otherwise, as used herein
the term "Shareholders" shall mean holders of Shares. Parent is an indirect
subsidiary of J.M. Voith AG, a corporation organized under the laws of the
Federal Republic of Germany ("Voith").
Tendering Shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by the
Purchaser pursuant to the Offer. However, any tendering Shareholder or other
payee who fails to complete and sign the Substitute Form W-9 that is included in
the Letter of Transmittal may be subject to a required backup federal income tax
withholding of 31% of the gross proceeds payable to such Shareholder or other
payee pursuant to the Offer. See Section 2. The Purchaser will pay all charges
and expenses of ChaseMellon Shareholder Services, L.L.C., as Depositary (the
"Depositary"), and D.F. King & Co., Inc., as Information Agent (the "Information
Agent"), incurred in connection with the Offer. See Section 17.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS (A) APPROVED THE
MERGER AGREEMENT (AS DEFINED BELOW), THE STOCK OPTION AGREEMENT (AS DEFINED
BELOW), THE OFFER AND THE MERGER (AS DEFINED BELOW) AND THE OTHER TRANSACTIONS
CONTEMPLATED THEREBY, (B) DETERMINED THAT THE OFFER PRICE TO BE RECEIVED BY THE
SHAREHOLDERS PURSUANT TO THE OFFER AND THE MERGER IS FAIR TO THE SHAREHOLDERS
AND (C) RECOMMENDS THAT SHAREHOLDERS TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER THAT NUMBER
OF SHARES WHICH WILL REPRESENT AT LEAST 90% OF THE OUTSTANDING SHARES ON A FULLY
DILUTED BASIS (AFTER GIVING PRO FORMA EFFECT TO THE POTENTIAL ISSUANCE OF ANY
SHARES ISSUABLE UNDER THE STOCK OPTION AGREEMENT) ON THE DATE OF PURCHASE (THE
"MINIMUM CONDITION"). THE PURCHASER WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT
OR PAY FOR ANY TENDERED SHARES UNTIL THE EXPIRATION OF ALL APPLICABLE WAITING
PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR ACT"), AND THE SATISFACTION OF
CONDITIONS UNDER ANY OTHER APPLICABLE ANTITRUST, COMPETITION OR TRADE REGULATORY
LAWS, RULES OR REGULATIONS OF ANY DOMESTIC OR FOREIGN GOVERNMENT OR GOVERNMENTAL
AUTHORITY OR ANY MULTINATIONAL AUTHORITY ("ANTITRUST LAWS"). THE OFFER IS ALSO
SUBJECT TO OTHER TERMS AND CONDITIONS DESCRIBED IN SECTION 15. THE OFFER IS NOT
CONDITIONED ON THE RECEIPT OF FINANCING.
IN THE EVENT THAT MORE THAN 50% OF THE SHARES THEN OUTSTANDING ARE TENDERED
PURSUANT TO THE OFFER AND NOT WITHDRAWN, BUT LESS THAN 90% OF THE SHARES THEN
OUTSTANDING ON A FULLY DILUTED BASIS ARE SUBJECT TO ACQUISITION BY THE PURCHASER
PURSUANT TO THE OFFER AND THE STOCK OPTION (AS DEFINED BELOW), THE PURCHASER
WILL WAIVE THE MINIMUM CONDITION AND
<PAGE> 5
AMEND THE OFFER TO REDUCE THE NUMBER OF SHARES SUBJECT TO THE OFFER TO SUCH
NUMBER OF SHARES AS EQUALS 49.9999% OF THE SHARES THEN OUTSTANDING (THE "REVISED
MINIMUM NUMBER") AND, IF A GREATER NUMBER OF SHARES ARE TENDERED INTO THE OFFER
AND NOT WITHDRAWN, PURCHASE, ON A PRO RATA BASIS, THE REVISED MINIMUM NUMBER OF
SHARES (IT BEING UNDERSTOOD THAT THE PURCHASER MAY, BUT SHALL NOT IN ANY EVENT
BE REQUIRED TO ACCEPT FOR PAYMENT, OR PAY FOR, ANY SHARES IF LESS THAN THE
REVISED MINIMUM NUMBER OF SHARES ARE TENDERED PURSUANT TO THE OFFER AND NOT
WITHDRAWN AT THE APPLICABLE EXPIRATION DATE OF THE OFFER).
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of December 11, 1997, by and among Parent, the Purchaser and the Company (the
"Merger Agreement"), which provides, among other things, for the commencement of
the Offer by the Purchaser and further provides that upon the terms and subject
to the satisfaction or waiver of the conditions of the Offer (including the
Minimum Condition or, if applicable, the Revised Minimum Number of Shares), the
Purchaser will purchase all Shares validly tendered pursuant to the Offer. The
Merger Agreement also provides that following consummation of the Offer, and in
accordance with the General Corporation Law of the State of California ("GCL"),
the Purchaser will be merged with and into the Company (the "Merger"). Following
consummation of the Merger, the separate corporate existence of the Purchaser
will cease and the Company will continue as the surviving corporation (the
"Surviving Corporation") and will become a wholly owned subsidiary of Parent. At
the effective time of the Merger (the "Effective Time"), each Share issued and
outstanding immediately prior to the Effective Time (other than Shares held by
Parent, the Purchaser, any wholly owned subsidiary of Parent or the Purchaser,
in the treasury of the Company or by any wholly owned subsidiary of the Company
and other than Shares held by Shareholders who shall have properly exercised
their dissenters' rights, if any, under the GCL) will be converted into the
right to receive in cash the Offer Price (the "Merger Price"). The Merger
Agreement is more fully described in Section 10.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval of the Merger Agreement by the
requisite vote, if any, of the Shareholders. See Sections 10 and 11.
Under the GCL, if the Purchaser acquires, pursuant to the Offer, the Stock
Option or otherwise, at least 90% of the Shares then outstanding, the Purchaser
will be able to approve the Merger Agreement and the transactions contemplated
thereby, including the Merger, without a vote of the Shareholders. In such
event, Parent, the Purchaser and the Company have agreed in the Merger Agreement
to take, subject to the satisfaction of the conditions set forth in the Merger
Agreement, all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the acquisition of such 90% without a
meeting of the Shareholders, in accordance with Section 1110 of the GCL. If,
however, the Purchaser does not acquire at least 90% of the then outstanding
Shares on a fully diluted basis pursuant to the Offer, the Stock Option or
otherwise and the Purchaser instead waives the Minimum Condition and amends the
Offer to reduce the number of Shares subject to the Offer to the Revised Minimum
Number of Shares, the Purchaser would own upon consummation of the Offer
49.9999% of the Shares then outstanding and would thereafter solicit the
approval of the Merger and the Merger Agreement by a vote of the Shareholders.
Under such circumstances, a significantly longer period of time will be required
to effect the Merger. See Sections 10 and 11.
Under the GCL, the Merger may not be accomplished for cash paid to the
Shareholders if the Purchaser or Parent owns directly or indirectly more than
50% but less than 90% of the then outstanding Shares unless either all the
Shareholders consent or the Commissioner of Corporations of the State of
California approves, after a hearing, the terms and conditions of the Merger and
the fairness thereof. Accordingly, concurrently with the execution of the Merger
Agreement, and as an inducement to Parent and the Purchaser to enter into the
Merger Agreement, the Company entered into a Stock Option Agreement with Parent
and the Purchaser, dated as of December 11, 1997 (the "Stock Option Agreement").
Pursuant to the Stock Option Agreement, the Company granted to the Purchaser an
irrevocable option (the "Stock Option") to purchase up to the number of Shares
(the "Option Shares") that, when added to the number of Shares owned by the
Purchaser and its affiliates immediately following consummation of the Offer,
would constitute 90% of the Shares then
2
<PAGE> 6
outstanding on a fully diluted basis (assuming the issuance of the Option
Shares) at a cash purchase price per Option Share equal to the Offer Price (the
"Option Price"), subject to the terms and conditions set forth in the Stock
Option Agreement, including, without limitation, (i) that the Purchaser shall
have accepted for payment Shares constituting more than 50% of the Shares then
outstanding and (ii) that the number of Shares to be issued under the Stock
Option shall not exceed the number of authorized Shares available for issuance.
If the Stock Option is exercised by the Purchaser (resulting in the
Purchaser owning 90% or more of the outstanding Shares), the Purchaser will be
able to effect a short-form merger under the GCL, subject to the terms and
conditions of the Merger Agreement. The Purchaser currently intends to effect a
short-form merger if it is able to do so.
Concurrently with the execution of the Merger Agreement, and as an
inducement to Parent and the Purchaser to enter into the Merger Agreement,
Parent and the Purchaser executed the Stockholder Agreements, dated December 11,
1997 (the "Stockholder Agreements"), with certain Shareholders (the "Selling
Shareholders"). Pursuant to the Stockholder Agreements, upon the terms set forth
therein, the Selling Shareholders have agreed to validly tender (and not to
withdraw), in accordance with the terms of the Offer, 3,047,384 Shares
(excluding Shares issuable upon the exercise of outstanding options) owned
(beneficially or of record) by the Selling Shareholders. The Shares subject to
the Stockholder Agreements represent approximately 29% of the Shares
outstanding. See Section 10.
The Merger Agreement provides that, promptly upon payment by the Purchaser
for the tendered Shares, subject to certain limitations, the Purchaser shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board as is equal to the product of the total number of directors
on the Board (giving effect to any increase in the number of directors pursuant
to the Merger Agreement) multiplied by the percentage that the aggregate number
of Shares beneficially owned by the Purchaser or its affiliates bears to the
total number of Shares then outstanding; provided, however, that the Purchaser
will be entitled to designate a number of directors equal to or greater than 50%
of the total number of directors only if the Purchaser acquires 90% or more of
the outstanding Shares pursuant to the Offer or otherwise. In the Merger
Agreement, the Company has agreed, upon the request of the Purchaser, to
promptly take all actions necessary to cause the Purchaser's designees to be so
elected, including, if necessary, seeking the resignations of one or more
existing directors. If the Purchaser's designees are so elected, prior to the
Effective Time, the Board shall always have at least two members who are neither
officers, directors, stockholders or designees of the Purchaser or any of its
affiliates.
The Company has represented and warranted that, as of December 10, 1997,
there were (i) 10,511,576 Common Shares issued and outstanding, (ii) no shares
of preferred stock, without par value, of the Company outstanding and (iii)
1,201,102 Shares reserved for issuance pursuant to outstanding stock options.
The Merger Agreement provides, among other things, that the Company will not,
without the prior written consent of Parent, issue any additional Shares (except
on the exercise of outstanding stock options).
Based on the foregoing and assuming no additional Shares (or options or
other rights exercisable for, or securities convertible into, Shares) have been
issued (other than Shares issued pursuant to the exercise of outstanding stock
options), if the Purchaser were to purchase approximately 10,541,411 Shares
(9,460,419 Shares assuming no outstanding stock options are exercised) pursuant
to the Offer (including the 3,047,384 Shares held by the Selling Shareholders
who have previously agreed to tender such shares), the Minimum Condition would
be satisfied. 5,255,788 Shares would constitute 50% of the Shares issued and
outstanding (assuming no outstanding stock options are exercised).
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
3
<PAGE> 7
SECTION 1. TERMS OF THE OFFER; PRORATION IN CERTAIN CIRCUMSTANCES; EXPIRATION
DATE
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not withdrawn as permitted by
Section 3. The term "Expiration Date" means 12:00 midnight, New York City time,
on Tuesday, January 20, 1998, unless and until the Purchaser, in accordance with
the terms and conditions of the Merger Agreement, shall have extended the period
of time during which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date at which the Offer, as so extended by
the Purchaser, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition and the expiration of all applicable waiting periods under the
HSR Act and the satisfaction of conditions under any other applicable Antitrust
Laws. See Section 15. If such conditions are not satisfied prior to the
Expiration Date, in addition to the Purchaser's right to amend the Offer to
purchase the Revised Minimum Number of Shares, the Purchaser also reserves the
right (but shall not be obligated) to (i) decline to purchase any of the Shares
tendered and terminate the Offer, subject to the terms of the Merger Agreement,
(ii) waive any of the conditions to the Offer, to the extent permitted by
applicable law and the provisions of the Merger Agreement, and, subject to
complying with applicable rules and regulations of the Securities and Exchange
Commission (the "Commission"), purchase all Shares validly tendered or (iii)
extend the Offer, subject to the terms of the Merger Agreement, and, subject to
the right of Shareholders to withdraw Shares until the Expiration Date, retain
the Shares which will have been tendered during the period or periods for which
the Offer is extended. The Merger Agreement provides that if the conditions to
the Offer are not satisfied, or waived by the Purchaser, as of the initial
Expiration Date (or any subsequently scheduled expiration date), the Purchaser
may extend the Offer at its discretion for up to ten business days after the
initial Expiration Date and may extend the Offer thereafter for longer periods
not to exceed 90 calendar days from the date of commencement (unless the Company
requests a further extension of up to a maximum of 120 calendar days).
In the event the Purchaser amends the Offer as described above such that
the Purchaser offers to purchase the Revised Minimum Number of Shares, such
decrease in the number of Shares being sought will be applicable to all
Shareholders whose Shares are accepted for payment pursuant to the Offer and, if
at the time notice of any such decrease in the number of Shares being sought is
first published, sent or given to holders of such Shares the Offer is scheduled
to expire at any time earlier than the period ending on the tenth business day
from and including the date that such notice is first so published, sent or
given, the Offer will be extended at least until the expiration of such ten
business day period. Upon the terms and subject to the conditions of such
amended Offer, if more than the Revised Minimum Number of Shares shall be
validly tendered and not withdrawn prior to the Expiration Date, the Shares so
tendered shall be purchased as provided in Section 2 on a pro rata basis
(adjusted to avoid the purchase of fractional shares). Because of the difficulty
of determining the precise number of Shares properly tendered, the Purchaser
does not expect to be able to announce the final proration factor until
approximately five New York Stock Exchange ("NYSE") trading days after the
Expiration Date. Preliminary results of proration will be announced by press
release as promptly as practicable after the Expiration Date. Shareholders can
obtain such information from their brokers. The Purchaser will not pay for any
Shares accepted for payment pursuant to the Offer until the final proration
factor is known.
Subject to the Merger Agreement and the applicable rules and regulations of
the Commission, the Purchaser reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in Section 15 hereof shall have occurred or shall have been determined
by the Purchaser to have occurred, to (i) extend the period of time during which
the Offer is open, and thereby delay acceptance for payment of, or payment for,
any Shares by giving oral or written notice of such extension and delay to the
Depositary or (ii) waive or reduce any condition or amend the Offer in any other
respect by giving oral or written notice of such waiver or amendment to the
Depositary. During any such extension, all Shares previously tendered and not
properly withdrawn will remain subject to the Offer, subject to the right of a
tendering Shareholder to withdraw such Shareholder's Shares. See Section 3.
Under no circumstances will interest be paid on the purchase price for tendered
Shares, whether or not the Purchaser
4
<PAGE> 8
exercises its right to extend the Offer. Without the prior written consent of
the Company, the Purchaser will not (i) decrease the Offer Price or change the
form of consideration payable in the Offer, (ii) decrease the number of Shares
sought to be purchased in the Offer (except as otherwise contemplated in the
Merger Agreement), (iii) change the conditions to the Offer set forth in Section
15 of this Offer to Purchase, (iv) extend the Expiration Date of the Offer,
except as required by applicable rules and regulations of the Commission and
except that the Purchaser may in its discretion extend the Expiration Date for
up to ten business days after the initial Expiration Date and may extend the
Offer thereafter for longer periods not to exceed 90 calendar days from the date
of commencement (unless the Company requests a further extension of up to a
maximum of 120 calendar days) in the event that any condition to the Offer set
forth in Section 15 of this Offer to Purchase is not satisfied or waived, (v)
impose additional conditions to the Offer or (vi) amend any other term of the
Offer in any manner adverse to the Shareholders.
If by the Expiration Date any or all of the conditions to the Offer have
not been satisfied or waived, the Purchaser reserves the right (but shall not be
obligated), subject to the Merger Agreement and the applicable rules and
regulations of the Commission, to (i) terminate the Offer and not accept for
payment or pay for any Shares and return all tendered Shares to tendering
Shareholders, (ii) waive or reduce all the unsatisfied conditions and accept for
payment and pay for all Shares validly tendered prior to the Expiration Date,
(iii) extend the Offer and, subject to the right of Shareholders to withdraw
Shares until the Expiration Date, retain the Shares that have been tendered
during the period or periods for which the Offer is extended or (iv) amend the
Offer.
The rights reserved by the Purchaser in the two preceding paragraphs are in
addition to the Purchaser's rights pursuant to Section 15. There can be no
assurance that the Purchaser will exercise its right to extend the Offer. Any
extension, amendment, delay, waiver or termination will be followed as promptly
as practicable by public announcement. In the case of an extension, Rule
14e-l(d) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires that the announcement be issued no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date, or the first opening of the Nasdaq National Market ("NNM") on
the next business day after the previously scheduled Expiration Date, in
accordance with the public announcement requirements of Rule 14e-1 under the
Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Exchange Act, which require that any material change in the
information published, sent or given to Shareholders in connection with the
Offer be promptly disseminated to Shareholders in a manner reasonably designed
to inform Shareholders of such change), and without limiting the manner in which
the Purchaser may choose to make any public announcement, the Purchaser will not
have any obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to the Dow Jones News
Service or as otherwise may be required by law. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms. For information with
respect to a change in price or a change in the percentage of securities sought,
a minimum period of ten business days is generally required to allow for
adequate dissemination to Shareholders and investor response. If the Purchaser
should decide to change the price offered or the percentage of Shares sought,
such change will be applicable to all Shareholders who hold any of such
respective class of securities.
The Company has provided the Purchaser with the Company's shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares whose names
appear on the Company's shareholders list and will be furnished to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the shareholder list,
5
<PAGE> 9
or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
SECTION 2. PROCEDURES FOR TENDERING SHARES
Valid Tender. For a Shareholder validly to tender Shares pursuant to the
Offer, either (i) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), together with any required signature
guarantees, or in the case of a book-entry transfer, an Agent's Message (as
defined below), and any other required documents, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date and either (x) certificates for tendered
Shares ("Share Certificates") must be received by the Depositary at one of such
addresses or (y) such Shares must be delivered pursuant to the procedures for
book-entry transfer set forth below (and a Book-Entry Confirmation (as defined
below) received by the Depositary), in each case prior to the Expiration Date,
or (ii) the tendering Shareholder must comply with the guaranteed delivery
procedures set forth below.
Book-Entry Transfer. The Depositary will establish accounts with respect
to the Shares at the Depository Trust Company ("DTC") and the Philadelphia
Depository Trust Company (collectively, the "Book-Entry Transfer Facilities")
for purposes of the Offer. Any financial institution that is a participant in
the system of any of the Book-Entry Transfer Facilities may make book-entry
delivery of Shares by causing a Book-Entry Transfer Facility to transfer such
Shares into the Depositary's account in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message, and any other required documents,
must, in any case, be transmitted to, and received by, the Depositary at one of
its addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering Shareholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at a Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation." DELIVERY
OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH
BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
The term "Agent's Message" means a message transmitted by electronic means
by a Book-Entry Transfer Facility to, and received by, the Depositary and
forming a part of a Book-Entry Confirmation, which states that such Book-Entry
Transfer Facility has received an express acknowledgment from the participant in
such Book-Entry Transfer Facility tendering the Shares that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Purchaser may enforce such agreement against such participant.
Participants in DTC may tender their Shares in accordance with DTC's
Automated Tender Offer Program ("ATOP"), to the extent it is available to such
participants for the Shares they wish to tender. A Shareholder tendering through
ATOP must expressly acknowledge that the Shareholder has received and agreed to
be bound by the Letter of Transmittal and that the Letter of Transmittal may be
enforced against such Shareholder.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARE
CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS WILL BE
DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN
THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
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<PAGE> 10
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Section, includes any participant in any of
the Book-Entry Transfer Facilities systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (ii) if such Shares are tendered for the account of a
member firm of a national securities exchange registered with the Commission or
of the National Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United States (an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 to the Letter of Transmittal. If Share Certificates are registered in the
name of a person other than the signer of the Letter of Transmittal, or if
payment is to be made or Share Certificates for Shares not tendered or not
accepted for payment are to be returned to a person other than the registered
holder of the Share Certificates surrendered, the tendered Share Certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holders appear on the
Share Certificates, with the signatures on the Share Certificates or stock
powers guaranteed as described above. See Instructions 1 and 5 to the Letter of
Transmittal.
Guaranteed Delivery. If a Shareholder desires to tender Shares pursuant to
the Offer and such Shareholder's Share Certificates are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such Shareholder's tender may
nevertheless be effected provided all the following conditions are met:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Purchaser, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the Share Certificates, representing all tendered Shares, in
proper form for transfer (or a Book-Entry Confirmation with respect to all
such Shares), together with a properly completed and duly executed Letter
of Transmittal (or a manually signed facsimile thereof), with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other required documents are received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which the NYSE is open
for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, telex, facsimile transmission or mail to
the Depositary and must include a guarantee by an Eligible Institution in the
form set forth in such Notice of Guaranteed Delivery made available by the
Purchaser.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) Share Certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) a Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and (iii) any other documents required by the Letter of
Transmittal. Accordingly, tendering Shareholders may be paid at different times
depending upon when Share Certificates or Book-Entry Confirmations with respect
to Shares are actually received by the Depositary. Under no circumstances will
interest be paid on the purchase price of the Shares to be paid by the
Purchaser, regardless of any extension of the Offer or any delay in making such
payment.
The Purchaser's acceptance for payment of Shares validly tendered pursuant
to the Offer will constitute a binding agreement between the tendering
Shareholder and the Purchaser upon the terms and subject to the conditions of
the Offer.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering Shareholder irrevocably appoints designees of the Purchaser
as such Shareholder's attorneys-in-fact and proxies in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of such
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<PAGE> 11
Shareholder's rights with respect to the Shares tendered by such Shareholder and
accepted for payment by the Purchaser. All such proxies will be irrevocable and
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts such
Shares for payment pursuant to the Offer. Upon such acceptance for payment, all
prior powers of attorney, proxies and consents given by such Shareholder with
respect to such Shares or other securities or rights will, without further
action, be revoked and no subsequent powers of attorney, proxies, consents or
revocations may be given (and, if given or executed, will not be deemed
effective). The designees of the Purchaser will thereby be empowered to exercise
all voting and other rights with respect to such Shares and other securities or
rights in respect of any annual, special, adjourned or postponed meeting of the
Shareholders, actions by written consent in lieu of any such meeting or
otherwise, as they in their sole discretion deem proper. The Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of such Shares, the
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares and other securities or rights, including voting at any
meeting of Shareholders.
The foregoing proxies are effective only upon acceptance for payment of
Shares pursuant to the Offer. The Offer does not constitute a solicitation of
proxies, absent a purchase of Shares, for any meeting of the Shareholders, which
will be made only pursuant to separate proxy solicitation materials complying
with the Exchange Act.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Purchaser, in its sole discretion, whose
determination will be final and binding on all parties. The Purchaser reserves
the absolute right to reject any or all tenders determined by it not to be in
proper form or the acceptance for payment of or payment for which may, in the
opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the
absolute right to waive any defect or irregularity in the tender of any Shares
of any particular Shareholder whether or not similar defects or irregularities
are waived in the case of other Shareholders. No tender of Shares will be deemed
to have been validly made until all defects or irregularities relating thereto
have been cured or waived. None of the Purchaser, Parent, Voith, the Depositary,
the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. The Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding on all parties.
Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a Shareholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such Shareholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such Shareholder is not subject to backup withholding. If a
Shareholder does not provide such Shareholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service may impose a
penalty on such Shareholder and the payment of cash to such Shareholder pursuant
to the Offer may be subject to backup withholding of 31% of the amount of such
payment. All Shareholders surrendering Shares pursuant to the Offer should
complete and sign the main signature form and the Substitute Form W-9 included
as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and the
Depositary).
SECTION 3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares pursuant
to the Offer are irrevocable except that Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior to
the Expiration Date and, unless theretofore accepted for payment by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after
February 15, 1998.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address set forth on the back cover of this Offer to Purchase.
8
<PAGE> 12
Any such notice of withdrawal must specify the name of the person who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder of the Shares to be withdrawn, if different from the name
of the person who tendered the Shares. If Share Certificates evidencing Shares
to be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the release of such Share Certificates, the tendering
shareholders must also submit to the Depository the serial numbers shown on the
particular Share Certificates evidencing the Shares to be withdrawn and, unless
such Shares have been tendered by an Eligible Institution, the signatures on the
notice of withdrawal must be guaranteed by an Eligible Institution. If Shares
have been delivered pursuant to the procedure for book-entry transfer as set
forth in Section 2, any notice of withdrawal must also specify the name and
number of the account at the appropriate Book-Entry Transfer Facility to be
credited with the withdrawn Shares and otherwise comply with such Book-Entry
Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may be re-tendered by again following
one of the procedures described in Section 2 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. None
of the Purchaser, Parent, Voith, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
SECTION 4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn
promptly after the latest to occur of (i) the Expiration Date, (ii) the
expiration of all applicable waiting periods under the HSR Act and the
satisfaction of conditions under any other applicable Antitrust Laws and (iii)
the satisfaction or waiver of the conditions to the Offer set forth in Section
15. All questions as to the satisfaction of such terms and conditions will be
determined by the Purchaser, in its sole discretion, whose determination will be
final and binding on all parties. See Sections 1, 10 and 15. Notwithstanding the
foregoing and subject to applicable rules of the Commission and the terms of the
Merger Agreement, the Purchaser expressly reserves the right, in its sole
discretion, to delay acceptance for payment of, or payment for, Shares pending
receipt of any regulatory approvals specified in Section 16 or in order to
comply in whole or in part with any other applicable law. Any such delays will
be effected in compliance with Rule 14e-l(c) under the Exchange Act (relating to
a bidder's obligation to pay for or return tendered securities promptly after
the termination or withdrawal of such bidder's Offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) Share
Certificates for (or a timely Book-Entry Confirmation with respect to) such
Shares, (ii) the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and (iii) any
other documents required by the Letter of Transmittal. The per Share
consideration paid to any Shareholder pursuant to the Offer will be the highest
per Share consideration paid to any other Shareholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered to the Purchaser as,
if and when the Purchaser gives oral or written notice to the Depositary of the
Purchaser's acceptance for payment of such Shares. Upon the terms and subject to
the conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for validly tendering Shareholders for the
purpose of receiving payment from the Purchaser and transmitting payment to
tendering Shareholders.
9
<PAGE> 13
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE
SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering Shareholders, the Purchaser's obligation to make such
payments shall be satisfied and tendering Shareholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer. The Purchaser will pay
any stock transfer taxes with respect to the transfer and sale to it or its
order pursuant to the Offer, except as otherwise provided in Instruction 6 of
the Letter of Transmittal, as well as any charges and expenses of the Depositary
and the Information Agent.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-l(c) under the Exchange Act),
the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent tendering
Shareholders are entitled to exercise, and duly exercise, withdrawal rights as
described in Section 3.
If any tendered Shares are not accepted for payment pursuant to the Offer
for any reason, Share Certificates evidencing unpurchased Shares will be
returned, without expense to the tendering Shareholder (or, in the case of
Shares delivered by book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 2, such Shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility), as promptly as practicable after the
expiration, termination or withdrawal of the Offer.
SECTION 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash for Shares pursuant to the Offer or in the Merger will
be a taxable transaction for federal income tax purposes under the Internal
Revenue Code of 1986, as amended (the "Code"), and may also be a taxable
transaction under applicable state, local or foreign income or other tax laws.
Generally, for federal income tax purposes, a tendering Shareholder will
recognize gain or loss equal to the difference between the amount of cash
received by the Shareholder pursuant to the Offer or the Merger and the
aggregate tax basis in the Shares tendered by the Shareholder and purchased
pursuant to the Offer or converted in the Merger, as the case may be. Gain or
loss will be calculated separately for each block of Shares tendered and
purchased pursuant to the Offer or converted in the Merger, as the case may be.
If Shares are held by a Shareholder as capital assets, gain or loss
recognized by the Shareholder will be capital gain or loss, which will be
long-term capital gain or loss subject to a maximum rate of 20% if the
Shareholder's holding period for the Shares exceeds 18 months. Under present
law, an individual will be taxed on his or her net capital gain at a rate of 28%
for property held 18 months or less, but more than one year. Special rules (and
generally lower maximum rates) apply for individuals in lower tax brackets.
Long-term capital gains recognized by a corporate Shareholder will be taxed at a
maximum federal marginal tax rate of 35%.
THE FOREGOING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS
BASED UPON PRESENT LAW AND MAY NOT BE APPLICABLE WITH RESPECT TO SHARES RECEIVED
AS COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL
TAX TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE
COMPANIES, TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT
APPLY TO A HOLDER OF SHARES IN LIGHT OF INDIVIDUAL CIRCUMSTANCES. SHAREHOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
10
<PAGE> 14
SECTION 6. PRICE RANGE OF SHARES; DIVIDENDS ON THE SHARES
The Common Shares are listed on the NNM under the symbol "MPAC." The
following table sets forth the high and low closing sales prices per Share, as
reported in publicly available sources for the periods indicated. The Company
did not pay any cash dividends on the Common Shares during such periods.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
FISCAL YEAR ENDED MARCH 31, 1996:
First quarter.............................................................. $ 2 3/16 $ 1 15/16
Second quarter............................................................. 3 1/16 2
Third quarter.............................................................. 2 15/16 2 1/16
Fourth quarter............................................................. 3 9/16 2 1/2
FISCAL YEAR ENDED MARCH 31, 1997:
First quarter.............................................................. 3 3/4 2 3/4
Second quarter............................................................. 3 1/8 1 11/16
Third quarter.............................................................. 2 1/4 1 9/32
Fourth quarter............................................................. 2 3/8 1 3/8
FISCAL YEAR ENDING MARCH 31, 1998
First quarter.............................................................. 1 1/2 1 1/8
Second quarter............................................................. 2 1/32 1 7/32
Third quarter (through December 11, 1997).................................. 2 1 19/32
</TABLE>
On December 11, 1997, the last full trading day prior to the announcement
of the execution of the Merger Agreement, the Stockholder Agreements and the
Stock Option Agreement and of the Purchaser's intention to commence the Offer,
the closing sales price of the Shares as reported on the NNM was $1.75. On
December 17, 1997, the last full trading day prior to the commencement of the
Offer, the closing sales price of the Shares as reported on the NNM was $2.625.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE COMMON
STOCK.
SECTION 7. CERTAIN INFORMATION CONCERNING THE COMPANY
Except as otherwise set forth herein, the information concerning the
Company contained in this Offer to Purchase, including financial information,
has been furnished by the Company or has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. None of the Purchaser, Parent or Voith assumes any responsibility for
the accuracy or completeness of the information concerning the Company furnished
by the Company or contained in such documents and records or for any failure by
the Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to the
Purchaser, Parent or Voith.
General. The Company is a California corporation with its principal
offices at 14600 Winchester Boulevard, Los Gatos, California 95030. According to
the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
1997 (the "Company 10-K"), the Company develops, manufactures, sells and
services a wide spectrum of computer-based measurement and control systems to
the paper industry. The Company's cross-direction ("CD") measurement and control
systems reduce CD variations in key variables occurring in the production of
virtually all grades of paper. Actuators and sensors primarily improve quality
and reduce operating costs which are important in market-limited situations. The
Spectrum(TM) drying products are primarily used to improve production. Control
of these variables is critical to improving paper quality, increasing production
capacity and reducing rejects, energy consumption and raw material costs. The
Company's products have been specifically designed for integration with existing
paper machine measurement and control systems.
11
<PAGE> 15
The Company has stated that its paper industry expertise and specialized
applications knowledge of CD controls substantially enhance the development and
marketing of its products. The Company's principal customers are among the
larger worldwide paper companies normally with sales exceeding $1 billion
annually. Additionally, the Company sells its products directly to large paper
machine and coater manufacturers.
Selected Financial Information. Set forth below is certain selected
consolidated financial information relating to the Company and its subsidiaries
which has been excerpted or derived from the audited financial statements
contained in the Company 10-K and the unaudited financial statements contained
in the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1997 (the "Company 10-Q"). More comprehensive financial information is
included in the Company 10-K, the Company 10-Q and other documents filed by the
Company with the Commission. The financial information that follows is qualified
in its entirety by reference to such reports and other documents, including the
financial statements and related notes contained therein. Such reports and other
documents may be examined and copies may be obtained from the offices of the
Commission in the manner set forth below.
IMPACT SYSTEMS, INC.
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
SEPTEMBER 30, FISCAL YEAR ENDED MARCH 31,
------------------ -----------------------------
1997 1996 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Net Revenues.................................... $9,113 $9,649 $19,756 $17,765 $15,709
Costs and expenses:
Cost of goods sold............................ 4,432 5,139 10,691 8,627 7,603
Research and development...................... 1,087 931 1,982 1,752 1,758
Selling, general and administrative........... 3,302 3,069 6,049 5,908 5,217
Provision for legal expenses.................. -- -- 1,000 -- --
------- ------- ------- ------- -------
Total costs and expenses........................ 8,821 9,139 19,722 16,287 14,578
------- ------- ------- ------- -------
Operating income................................ 292 510 34 1,478 1,131
Interest income, net............................ 185 160 346 333 284
Foreign currency gain (loss), net............... 8 7 70 (19) (23)
Equity in net income (loss) of investee......... 7 29 (2) 199 50
------- ------- ------- ------- -------
Income before income taxes and extraordinary
credit........................................ 492 706 448 2,029 1,442
Income taxes.................................... -- -- -- -- --
------- ------- ------- ------- -------
Net income...................................... $ 492 $ 706 $ 448 $ 2,029 $ 1,442
======= ======= ======= ======= =======
Net income per common share..................... $ .05 $ .06 $ .04 $ .19 $ .14
======= ======= ======= ======= =======
Weighted average common and common equivalent
shares........................................ 10,631 11,025 10,909 10,949 10,677
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT MARCH 31,
------------------ -----------------------------
1997 1996 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital................................. $10,746 $13,053 $11,096 $12,120 $ 9,897
Total assets.................................... $19,665 $18,201 $18,937 $18,120 $15,134
Long-term obligations, less current portion..... -- -- -- -- --
Stockholders' equity............................ $14,816 $14,735 $14,321 $13,975 $11,875
</TABLE>
12
<PAGE> 16
Projected Financial Information. Prior to entering into the Merger
Agreement, Parent and the Purchaser conducted a due diligence review of the
Company and in connection with such review received certain non-public business
and financial information from the Company. Such non-public information
included, among other things, projected income statement data for the fiscal
years ending March 31, 1998 to 2000. This projected financial information was
prepared by the Company's management based on numerous assumptions, including
among others, certain market factors and economic assumptions and assumptions
regarding revenue growth and gross margins. Set forth below is a summary of
projected income statement items for fiscal years ending March 31, 1998 to 2000.
IMPACT SYSTEMS, INC.
SUMMARY BUSINESS PLAN
1998 TO 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACTUAL PLAN
------- -------------------------------
1997 1998 1999 2000
------- ------- ------- -------
<S> <C> <C> <C> <C>
SCANNER/SENSORS................................... $ 4,609 $ 5,000 $ 6,500 $10,000
ACTUATORS
Electric IR....................................... 2,708 2,500 2,500 3,000
Caliper........................................... 2,117 2,000 2,500 3,000
Basis Weight...................................... 599 500 1,000 1,500
Remoisturizer..................................... 289 500 1,000 1,000
Addons/Upgrades................................... 1,334 600 500 1,000
GAS SYSTEMS....................................... 3,740 3,500 4,000 5,000
Total-Systems..................................... 15,396 14,600 18,000 24,500
Spares/Service.................................... 4,360 4,500 5,000 5,500
------ ------ ------ -------
Total Revenue..................................... 19,756 19,000 23,000 30,000
------ ------ ------ -------
GROSS MARGIN
Systems........................................... 6,057 6,200 8,000 11,025
Spares/Service.................................... 3,008 3,100 3,400 3,850
------ ------ ------ -------
Total............................................. 9,065 9,300 11,500 14,875
------ ------ ------ -------
Operating Expenses................................ 8,031 8,500 9,000 9,600
------ ------ ------ -------
Operating Income.................................. 34 800 2,400 5,275
Other Income...................................... 414 400 600 800
------ ------ ------ -------
Pretax Income..................................... 448 1,200 3,000 6,075
Taxes............................................. 0 0 0 1,375
------ ------ ------ -------
Net Income........................................ $ 448 $ 1,200 $ 3,000 $ 4,700
====== ====== ====== =======
Per Share......................................... $ .04 $ .12 $ .27 $ .43
====== ====== ====== =======
</TABLE>
PROJECTED INFORMATION OF THIS TYPE IS BASED ON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY
OF WHICH ARE BEYOND THE COMPANY'S CONTROL. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE PROJECTED RESULTS WILL BE REALIZED OR THAT ACTUAL RESULTS
WOULD NOT BE SIGNIFICANTLY HIGHER OR LOWER THAN THOSE SET FORTH ABOVE. IN
ADDITION, THESE PROJECTIONS DO NOT GIVE EFFECT TO THE OFFER OR THE MERGER, WERE
NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED
GUIDELINES OF THE
13
<PAGE> 17
COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED
PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND FORECASTS AND ARE INCLUDED IN THIS
OFFER TO PURCHASE ONLY BECAUSE SUCH INFORMATION WAS MADE AVAILABLE TO PARENT AND
THE PURCHASER BY THE COMPANY. NONE OF PARENT, THE PURCHASER, VOITH, THE COMPANY
OR ANY OTHER PARTY ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OR VALIDITY OF
THE FOREGOING PROJECTIONS.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's shareholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and also should be
available for inspection at the Commission's regional offices located at Seven
World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. The
Commission also maintains an Internet site at http://www.sec.gov that contains
reports, proxy statements and other information. Copies of such materials may
also be obtained by mail, upon payment of the Commission's customary fees, by
writing to its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. The information may also be available for inspection at the offices of
The Nasdaq Stock Market, Reports Section, at 1735 K Street, N.W., Washington,
D.C. 20006.
SECTION 8. CERTAIN INFORMATION CONCERNING THE PURCHASER, PARENT, VOITH AND
FAMILIENGESELLSCHAFT
The Purchaser is a newly incorporated California corporation and a wholly
owned subsidiary of the Parent organized in connection with the Offer and the
Merger which to date has not conducted any business other than in connection
with the Offer and the Merger. The principal executive offices of the Purchaser
are located at c/o Voith Sulzer Paper Technology North America Inc., 2200 N.
Roemer Road, Appleton, Wisconsin 54913.
Until immediately prior to the time that the Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that the Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger.
Parent is a Delaware corporation with its principal executive offices
located at 2200 N. Roemer Road, Appleton, Wisconsin 54913. Parent is a paper
technology company specializing in stock preparation, paper machinery and
finishing.
Voith is a corporation organized under the laws of the Federal Republic of
Germany. Its principal offices are located at Sankt Poltener StraSSe 43, D-89522
Heidenheim, Germany. Voith is a privately held international technology
corporation active in the fields of paper technology, power generation equipment
and power transmission. Familiengesellschaft J.M. Voith GbR
("Familiengesellschaft") is a family holding company which owns a controlling
interest in Voith. Its principal office is located in Mannheim, Germany.
14
<PAGE> 18
Voith is not subject to the informational reporting requirements of the
Exchange Act, and, accordingly, does not file reports or other information with
the Commission relating to its business, financial condition and other matters.
Set forth below is certain selected consolidated financial information relating
to Voith and its subsidiaries for the fiscal years ended September 30, 1996 and
1995. Financial information for the year ended September 30, 1997 is not
currently available. The selected consolidated financial information is
denominated in Deutsche Marks and prepared in accordance with Sections 290 et.
seq. of the German Commercial Code (i.e., generally accepted accounting
principles in the Federal Republic of Germany ("German GAAP")). Although German
GAAP differs in certain significant respects from generally accepted accounting
principles in the United States, Parent believes that the differences are not
material to a decision by a holder of Shares whether to sell, tender or hold any
Shares because any such differences would not affect the ability of the
Purchaser to obtain sufficient funds to pay for the Shares to be acquired
pursuant to the Offer.
J.M. VOITH AG
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN DEUTSCHE MARKS ("DM"))
<TABLE>
<CAPTION>
AT OR FOR THE
YEAR ENDED SEPTEMBER 30,
----------------------------
1996 1995
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
INCOME STATEMENT DATA:
Amounts in accordance with German GAAP:
Sales.......................................................... DM 3,557,516 DM 2,897,040
Net income(1).................................................. 120,108 27,482
BALANCE SHEET DATA:
Amounts in accordance with German GAAP:
Current assets................................................. 2,275,754 2,118,694
Total assets................................................... 3,106,966 2,946,420
Shareholders' equity(1)........................................ 786,526 669,459
</TABLE>
- -------------------------
(1) Including minority interests.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of the Purchaser, Voith and Familiengesellschaft and certain other
information are set forth in Schedule I hereto.
Except as described in this Offer to Purchaser, (i) none of Purchaser,
Parent, Voith, Familiengesellschaft or, to the knowledge of the Purchaser,
Parent, Voith and Familiengesellschaft, any of the persons listed in Schedule I
to this Offer to Purchase or any associate or majority-owned subsidiary of such
persons (collectively, the "Purchaser Entities"), beneficially owns or has any
right to acquire, directly or indirectly, any equity security of the Company and
(ii) no Purchaser Entity or, to the knowledge of any Purchaser Entity, any of
the persons or entities referred to above nor any director, executive officer or
subsidiary of any of the foregoing has effected any transaction in any equity
security of the Company during the past 60 days.
Except as provided in the Merger Agreement, the Stock Option Agreement and
the Stockholder Agreements and as otherwise described in this Offer to Purchase,
no Purchaser Entity or, to the knowledge of any Purchaser Entity, any of the
persons listed in Schedule I to this Offer to Purchase, has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies. Except as set forth in this Offer to Purchase, since April 1, 1994, no
Purchaser Entity or, to the best knowledge of any Purchaser Entity, any of the
persons listed on Schedule I hereto, has had any business relationship or
transaction with the Company or any of its executive officers, directors or
affiliates that is required to be reported under the rules and regulations
15
<PAGE> 19
of the Commission applicable to the Offer. Except as set forth in this Offer to
Purchase, since April 1, 1994, there have been no contacts, negotiations or
transactions between any Purchaser Entity, or any of their respective
subsidiaries or, to the best knowledge of any Purchaser Entity, any of the
persons listed in Schedule I to this Offer to Purchase, on the one hand, and the
Company or its affiliates, on the other hand, concerning a merger, consolidation
or acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
SECTION 9. BACKGROUND OF THE OFFER
In May 1997, Parent and its affiliates completed a strategic review of the
opportunities and challenges facing them in the paper industry. As a result of
this review, Parent determined that it would be desirable for Parent to gain
further competence in the field of paper technology process automation and
control. After considering numerous alternatives, Parent concluded that the most
efficient way for Parent to further gain such competence was to seek an alliance
with an entity that had already developed expertise in the field.
Following the strategic review, Parent began the process to initiate
discussions with several potential business partners, including the Company. On
June 20, 1997, Parent sent a letter to Mr. Kenneth P. Ostrow, President and
Chief Executive Officer of the Company, to request a meeting in order to discuss
a potential strategic relationship between the Company and Parent and its
affiliates.
In late July 1997, representatives of Parent met for two days with
representatives of the Company at the Company's offices in Los Gatos,
California. At the end of the two-day session, Parent indicated that it was
interested in pursuing an equity investment in the Company.
On August 1, 1997, Parent and the Company entered into a confidentiality
agreement. Following execution of the confidentiality agreement, the Company
provided Parent with certain information to facilitate Parent's further review
and evaluation of the Company.
In mid-September 1997, representatives of Parent met with a representative
of the Company in Los Gatos, California, to discuss potential business
combination strategies, including a possible acquisition of the Company for
$2.20 to $2.25 per Share subject to certain conditions including the retention
of key personnel. The Company representative indicated to Parent that he did not
believe that the Company would be interested in pursuing any potential
transactions at that price level.
Following its initial proposal, Parent continued its review of the Company
and thereafter approached a representative of the Company and indicated its
willingness to increase the acquisition price subject to additional discussions
and further due diligence.
On October 10, 1997, representatives of Parent visited the Company to
discuss the terms of a possible business combination. At this meeting, Parent
indicated its willingness to pay a purchase price of $2.75 per Share subject to
Parent's continuing due diligence review of the Company.
During this time, Parent contacted Elsag Bailey Process Automation N.V.
("Elsag Bailey"), which, through an affiliate, is a 23% shareholder of the
Company, to determine whether Elsag Bailey would consider supporting a business
combination between Parent and the Company. M.N. Zaharna, an officer of Elsag
Bailey, is a director of the Company.
From June to November 1997, representatives of Parent had also participated
in two parallel discussions regarding a strategic alliance between affiliates of
Parent and several competitors of the Company and Elsag Bailey. In neither case
could the parties reach agreement.
During this time, and following the execution of a confidentiality
agreement, representatives of Parent and Elsag Bailey, which is a supplier of
distributed control systems ("DCS") to various industries, also discussed a
possible strategic alliance in the field of machine controls and DCS. On
December 3, 1997, Elsag Bailey and an affiliate of Parent entered into a
strategic alliance (the "Alliance") which generally provides for a working
relationship that integrates Elsag Bailey's DCS into the product line offered by
affiliates of Parent, and in particular paper machinery, and which is not
contingent upon any potential business combination
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between Parent and the Company. In addition to other arrangements, under the
Alliance, an affiliate of Parent and Elsag Bailey will pursue joint research and
development of each parties' respective products and technologies, cross
marketing of their respective products and the cross purchase of each other's
products where appropriate.
In mid-November 1997, Parent's legal counsel delivered drafts of the Merger
Agreement, the Stockholder Agreements and the Stock Option Agreement to the
Company and its legal counsel and other representatives. During the next several
weeks, representatives of Parent's legal counsel and the Company's legal counsel
discussed various issues concerning the drafts of the Merger Agreement, Stock
Option Agreement and Stockholder Agreements. Parent also distributed a draft of
the Stockholder Agreements to the two largest shareholders of the Company (Mr.
Ostrow and Elsag Bailey), and requested that such parties enter into the
Stockholder Agreements in connection with the proposed business combination.
Over the next several weeks, representatives of the respective parties discussed
various terms and conditions of the proposed form of the Stockholder Agreement.
All remaining issues under discussion were resolved by a meeting of Parent,
its legal counsel, the Company and its legal counsel during the week of December
8, 1997. In addition, during this time, Parent and the parties to the
Stockholder Agreements resolved the remaining issues related thereto. Parent
also discussed with the Company various arrangements to facilitate the retention
of key employees following consummation of the business combination.
On December 11, 1997, the Company advised Parent that the Board met and
approved the Merger Agreement and the Stock Option Agreement. Following approval
thereof, the parties executed and delivered the Merger Agreement and the Stock
Option Agreement. On December 11, 1997, the Stockholder Agreements were executed
by Parent, the Purchaser and other parties thereto.
Following execution of the foregoing documents, a joint press release
announcing the execution of the definitive agreements was issued by Parent and
the Company.
SECTION 10. THE MERGER AGREEMENT AND RELATED DOCUMENTS
The following is a summary of certain provisions of the Merger Agreement,
the Stockholder Agreements, the Stock Option Agreement and the Noncompetition
Agreement (as defined below). This summary is qualified in its entirety by
reference to the Merger Agreement, the Stockholder Agreements, the Stock Option
Agreement and the Noncompetition Agreement which are incorporated by reference
in this Offer to Purchase and copies of which have been filed with the
Commission as exhibits to the Schedule 14D-1. The Merger Agreement, the
Stockholder Agreements, the Stock Option Agreement and the Noncompetition
Agreement may be examined and copies may be obtained at the places set forth in
Section 7 of the Offer to Purchase.
THE MERGER AGREEMENT
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as practicable after the date thereof, but in any event not later
than December 18, 1997. The obligation of the Purchaser to, and of Parent to
cause the Purchaser to, commence the Offer and accept for payment, and pay for,
the Shares validly tendered pursuant to the Offer is subject to the satisfaction
of the Minimum Condition prior to the expiration of the Offer and certain other
conditions described in Section 15. The Purchaser agrees to purchase all such
Shares at a price of $2.75 per Share. The Merger Agreement provides that,
without the prior written consent of the Company, the Purchaser will not (i)
decrease the Offer Price or change the form of consideration payable in the
Offer, (ii) decrease the number of Shares sought to be purchased in the Offer
(except as otherwise contemplated in the Merger Agreement), (iii) change the
conditions set forth in the Offer, (iv) extend the Expiration Date of the Offer,
except as required by applicable rules and regulations of the Commission and
except that the Purchaser may in its discretion extend the Expiration Date for
up to ten business days after the initial Expiration Date and may extend the
Offer thereafter for longer periods not to exceed 90 calendar days from the date
of commencement (unless the Company requests a further extension of up to a
maximum of 120 calendar days) in the event that any condition to the Offer set
forth in Section 15 of this Offer to Purchase is not satisfied or waived, (v)
impose additional conditions to the Offer or (vi) amend any other term of the
Offer in any manner adverse to the holders of any Shares.
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<PAGE> 21
Subject to the limitations set forth in clause (iv) in the immediately
preceding paragraph, in the event the Minimum Condition is not satisfied on any
scheduled expiration date of the Offer, the Purchaser may either extend the
Offer pursuant to such clause (iv) or amend the Offer to provide that, in the
event (i) the Minimum Condition is not satisfied at the next scheduled
expiration date of the Offer (after giving pro forma effect to the potential
issuance of any Shares under the Stock Option Agreement) and (ii) the number of
Shares tendered pursuant to the Offer and not withdrawn as of such next
scheduled expiration date is more than 50% of the then outstanding Shares, the
Purchaser must waive the Minimum Condition and amend the Offer to reduce the
number of Shares subject to the Offer to the Revised Minimum Number of Shares
and, if a greater number of Shares is tendered in the Offer and not withdrawn,
purchase, on a pro rata basis, the Revised Minimum Number of Shares (it being
understood that the Purchaser may, but shall not in any event be required to
accept for payment, or pay for, any Shares if less than the Revised Minimum
Number of Shares are tendered pursuant to the Offer and not withdrawn at the
applicable expiration date of the Offer).
Recommendation. The Merger Agreement provides that the Board has (i)
approved the Merger Agreement, the Stock Option Agreement, the Offer and the
Merger and the other transactions contemplated thereby, (ii) determined that the
Offer Price to be received by the Shareholders pursuant to the Offer and the
Merger is fair to the Shareholders and (iii) recommends that the Shareholders
tender their Shares pursuant to the Offer.
The Merger. Following the consummation of the Offer, the Merger Agreement
provides that, subject to the terms and conditions thereof, and in accordance
with the GCL, at the Effective Time the Purchaser will be merged with and into
the Company. As a result of the Merger, the separate corporate existence of the
Purchaser will cease and the Company will continue as the Surviving Corporation.
The Merger Agreement provides that Parent, the Purchaser and the Company shall
use their commercially reasonable best efforts to consummate the Merger as soon
as practicable.
Pursuant to the Merger Agreement, the Company will, if required by the
Company's Amended and Restated Articles of Incorporation and/or applicable
California law in order to consummate the Merger, duly call, give notice of,
convene and hold a special meeting of its Shareholders (the "Shareholders'
Meeting") as soon as practicable following the acceptance for payment and
purchase of the Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the Merger Agreement. The Merger Agreement
provides that the Company will (i) prepare and file with the Commission a
preliminary proxy statement relating to the Merger and the Merger Agreement and
(ii) use its commercially reasonable best efforts to (x) obtain and furnish the
information required to be included by the Commission in the definitive proxy
statement and (y) obtain the necessary approvals of the Merger and the Merger
Agreement from the Shareholders. The Board, subject to the fiduciary obligations
of the Board under applicable law, will include in the proxy statement the
recommendation of the Board that the Shareholders vote in favor of the approval
of the Merger and the adoption of the Merger Agreement. Parent agrees that it
will vote, or cause to be voted, all of the Shares then owned by Parent, the
Purchaser or any of its other subsidiaries in favor of the Merger and adoption
of the Merger Agreement and take, or cause to be taken, all additional corporate
actions necessary for the Purchaser to adopt and approve the Merger Agreement
and the transactions contemplated thereby.
The Merger Agreement provides that in the event that Parent, the Purchaser
or any other subsidiary of Parent acquires at least 90% of the outstanding
Shares on a fully diluted basis pursuant to the Offer or otherwise, Parent, the
Purchaser and the Company will, at the request of Parent and subject to the
terms and conditions of the Merger Agreement, take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of Shareholders of the Company, in accordance
with Section 1110 of the GCL.
Conversion of Securities. At the Effective Time, each Share issued and
outstanding immediately prior to the Effective Time (other than Shares held by
Parent, the Purchaser, any wholly owned subsidiary of Parent or the Purchaser,
in the treasury of the Company or by any wholly owned subsidiary of the Company,
which Shares, by virtue of the Merger and without any action on the part of the
holder thereof, shall be canceled and retired and shall cease to exist with no
payment being made with respect thereto, and other than
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Shares held by Shareholders who perfect any applicable dissenters' rights under
the GCL) shall be converted into the right to receive in cash the Merger Price.
See Section 11 for information regarding dissenters' rights. At the Effective
Time, the issued and outstanding shares of the Purchaser will be converted into
and become the number of validly issued, fully paid and nonassessable shares of
common stock of the Surviving Corporation equal to the number of Shares
outstanding on a fully diluted basis immediately prior to the Effective Time.
Pursuant to the Merger Agreement, immediately prior to the Effective Time,
(a) each outstanding option to purchase Common Shares (an "Option") granted
under the Company's Discount Stock Option Plan, 1995 Incentive Stock Option
Plan, 1985 Incentive Stock Option Plan and 1982 Incentive Stock Option Plan
(collectively, the "Option Plans"), whether or not exercisable or vested, will
become fully exercisable and vested, (b) each Option which is then outstanding
will be canceled and (c) in consideration of such cancellation, and except to
the extent that Parent or the Purchaser and the holder of any such Option
otherwise agree, immediately following consummation of the Merger, the Company
will promptly pay to such holders of Options an amount in respect thereof equal
to the product of (x) the excess of the Merger Price over the exercise price
thereof and (y) the number of Common Shares subject thereto; provided that the
foregoing shall be subject to the obtaining of any necessary consents of the
holders of Options, it being agreed that the Company and Parent will use their
commercially reasonable best efforts to obtain any such consents.
Board of Directors. The Merger Agreement provides that, promptly upon
payment by the Purchaser for the tendered Shares pursuant to the Offer, subject
to certain limitations, the Purchaser shall be entitled to designate such number
of directors, rounded up to the next whole number, on the Board as is equal to
the product of the total number of directors on the Board (giving effect to any
increase in the number of directors pursuant to the Merger Agreement) multiplied
by the percentage that the aggregate number of Shares beneficially owned by the
Purchaser or its affiliates bears to the total number of Shares then
outstanding; provided, however, that the Purchaser will be entitled to designate
a number of directors equal to or greater than 50% of the total number of
directors only if the Purchaser acquires 90% or more of the outstanding Shares
pursuant to the Offer or otherwise. In the Merger Agreement, the Company has
agreed, upon the request of the Purchaser, to promptly take all actions
necessary to cause the Purchaser's designees to be so elected, including, if
necessary, seeking the resignations of one or more existing directors. If the
Purchaser's designees are so elected, prior to the Effective Time, the Board
shall always have at least two members who are neither officers, directors,
stockholders or designees of the Purchaser or any of its affiliates. The
Company's obligation to appoint the Purchaser's designees to the Board is
subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder.
Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Parent and the
Purchaser with respect to, among other things, its organization and
qualifications, capitalization, authority, financial statements, public filings,
tax matters, litigation, compliance with laws, employee benefit plans,
intellectual property, granting of certain approvals, information in the proxy
statement, year 2000 compliance and the absence of any undisclosed material
adverse effects on the Company since March 31, 1997. The Parent and the
Purchaser have made customary representations and warranties to the Company with
respect to, among other things, its organization and qualifications, authority
and financing.
Covenants. The Merger Agreement contains certain restrictive covenants as
to the conduct of the Company, Parent, the Purchaser and the Surviving
Corporation in contemplation of the Merger including, without limitation, access
by Parent and the Purchaser to information concerning the Company, use of
commercially reasonable best efforts to consummate the Merger, use of
commercially reasonable best efforts to obtain all consents necessary for the
consummation of the Merger, maintenance by the Surviving Corporation of certain
employee benefit arrangements and notification of the other parties of certain
matters.
Conduct of Business of the Company. The Company agrees that, except with
the prior written consent of the Parent, during the period from execution of the
Merger Agreement to the Effective Time, the Company and its subsidiaries will
conduct operations only in the ordinary course of business consistent with past
practice and will use its best efforts to preserve intact the business
organization of the Company and each of its
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subsidiaries, to keep available the services of its and their present officers
and key employees and to preserve the goodwill of those having business
relationships with it.
Solicitation. Pursuant to the Merger Agreement, the Company represents and
warrants to, and covenants and agrees with, Parent and the Purchaser that
neither the Company nor any of its subsidiaries has any agreement, arrangement
or understanding with any potential acquiror that, directly or indirectly, would
be violated, or require any payments, by reason of the execution, delivery
and/or consummation of the Merger Agreement and the Stock Option Agreement. The
Company shall, and shall use its commercially reasonable best efforts to cause
its subsidiaries and their officers, directors, employees, investment bankers,
attorneys and other agents and representatives to, immediately cease any
existing discussions or negotiations with any person (including a "person" as
defined in Section 13(d)(3) of the Exchange Act) other than Parent or the
Purchaser (a "Third Party") heretofore conducted with respect to any Acquisition
Transaction (as hereinafter defined). The Company shall not, and shall use its
commercially reasonable best efforts to cause its subsidiaries and their
officers, directors, employees, investment bankers, attorneys and other agents
and representatives not to, directly or indirectly, (i) solicit, initiate,
continue, facilitate or encourage (including by way of furnishing or disclosing
non-public information) any inquiries, proposals or offers from any Third Party
with respect to, or that could reasonably be expected to lead to, any
acquisition or purchase of a material portion of the assets or business of, or
any significant equity interest in (including by way of a tender offer), or any
amalgamation, merger, consolidation or business combination with, or any
recapitalization or restructuring, or any similar transaction involving, the
Company or any of its subsidiaries (the foregoing being referred to collectively
as an "Acquisition Transaction") or (ii) negotiate, explore or otherwise
communicate in any way with any Third Party with respect to any Acquisition
Transaction or enter into, approve or recommend any agreement, arrangement or
understanding requiring the Company to abandon, terminate or fail to consummate
the Offer and/or the Merger or any other transaction contemplated thereby or by
the Stock Option Agreement. Notwithstanding anything to the contrary in the
foregoing, the Company may in response to an unsolicited written proposal with
respect to an Acquisition Transaction involving the acquisition of all of the
Shares (or all or substantially all of the assets of Company and its
subsidiaries) from a Third Party, (which proposal (x) is not subject to a
financing condition and is from a person that a nationally recognized investment
bank advises in writing is financially capable of consummating such proposal or
(y) is subject to financing, but is from a person that a nationally recognized
investment bank advises in writing is financially capable of achieving such
financing to consummate such proposal), (i) furnish or disclose non-public
information to such Third Party and (ii) negotiate, explore or otherwise
communicate with such Third Party, in each case only if (a) after being advised
in writing by its outside counsel with respect to its fiduciary obligations to
the Shareholders under applicable law, the Board determines in good faith that
taking such action is necessary in the exercise of its fiduciary obligations
under applicable law (the proposal with respect to an Acquisition Transaction
meeting such requirements being a "Superior Proposal"), (b) prior to furnishing
or disclosing any non-public information to, or entering into discussions or
negotiations with, such Third Party, the Company receives from such Third Party
an executed confidentiality agreement with terms no less favorable in the
aggregate to Company than those contained in the confidentiality agreement
between an affiliate of Parent and the Company, but which confidentiality
agreement shall not provide for any exclusive right to negotiate with Company or
any payments by the Company and (c) the Company advises Parent of all such
non-public information delivered to such Third Party concurrently with such
delivery; provided, however, that the Company shall not, and shall cause its
affiliates not to, enter into a definitive agreement with respect to a Superior
Proposal unless (x) the Company concurrently terminates the Merger Agreement in
accordance with the terms thereof, pays any amounts required under Article VIII
of the Merger Agreement and (y) such agreement permits the Company, subject to
the fiduciary duties of the Board, to terminate it if it receives a Superior
Proposal, such termination and related provisions to be on terms no less
favorable to the Company, including as to fees and reimbursement of expenses, as
those contained in the Merger Agreement.
The Merger Agreement provides that the Company shall promptly (but in any
event within one business day of the Company becoming aware of same) advise
Parent of the receipt by the Company, any of its subsidiaries or any of the
Company's bankers, attorneys or other agents or representatives of any inquires
or proposals relating to an Acquisition Transaction and any actions taken
pursuant to the immediately preceding paragraph. The Company shall promptly (but
in any event within three business days of the Company
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becoming aware of same) provide Parent with a copy of any such inquiry or
proposal in writing and a written statement with respect to any such inquiries
or proposals not in writing, which statement shall include the identity of the
parties making such inquiries or proposal and the material terms thereof;
provided, however, that the Company shall not be obligated to provide a copy of,
or a written statement with respect to, any such inquiry if, after being advised
in writing by its outside legal counsel with respect to its fiduciary
obligations, the Board determines that not providing such copy or written
statement is necessary to allow the Board to fulfill its fiduciary duties to the
Shareholders under applicable law. The Company shall, from time to time,
promptly (but in any event within one business day of the Company becoming aware
of same) inform Parent of the status and content of and material developments
(including calling meetings of the Board to take action with respect to such
Acquisition Transaction) with respect to any discussions regarding any
Acquisition Transaction with a Third Party; provided, however, that the Company
shall not be obligated to make such disclosure if, after being advised in
writing by its outside legal counsel with respect to its fiduciary obligations,
the Board determines that not providing such disclosure is necessary to allow
the Board to fulfill its fiduciary duties to the Shareholders under applicable
law. For the avoidance of doubt, the Company agrees that it will not enter into
any agreement with respect to a Superior Proposal unless and until Parent has
been given the opportunity at least six business days prior to the entering into
such agreement to match the terms of such agreement.
Indemnification and Insurance. The Merger Agreement provides as follows:
(a) The Purchaser and Parent agree that until six years from the date
the Shares are purchased by Parent or the Purchaser in the Offer (the
"Acceptance Date"), the Purchaser will maintain all rights to
indemnification now existing in favor of the directors, officers,
employees, fiduciaries and agents of the Company as provided in the
Company's Amended and Restated Articles of Incorporation and Bylaws or
otherwise in effect under any agreement on the date of the Merger Agreement
and that the Amended and Restated Articles of Incorporation and Bylaws of
the Purchaser shall not be amended to reduce or limit the rights of
indemnity afforded to the present and former directors and officers of the
Company, or the ability of the Purchaser to indemnify them, nor to hinder,
delay or make more difficult the exercise of such rights of indemnity or
the ability to indemnify.
(b) The Purchaser will at all times exercise the powers granted to it
by its Amended and Restated Articles of Incorporation, its Bylaws, and by
applicable law to indemnify and hold harmless to the fullest extent
possible present or former directors, officers, employees, fiduciaries and
agents of the Company against any threatened or actual claim, action, suit,
proceeding or investigation made against them arising from their service in
such capacities (or service in such capacities for another enterprise at
the request of the Company) prior to, and including the Acceptance Date for
at least six years from the Acceptance Date. Parent shall assume and
perform the obligations of the Purchaser under this section of the Merger
Agreement, provided, that any indemnified party shall make a good faith
effort (which shall not include any requirement to bring any suit, claim,
action, or other proceeding) to cause the Purchaser to perform its
obligations under this section of the Merger Agreement before requesting
Parent to assume and perform such obligations.
(c) Should any threatened or actual claim, action, suit, proceeding or
investigation be made against any present or former director, officer,
employee, fiduciary or agent of the Company, arising from his services as
such, within six years from the Effective Time, the indemnification
provisions of the Merger Agreement shall continue in effect until the final
disposition of all such claims.
(d) Any indemnified party wishing to claim indemnification under the
Merger Agreement, upon learning of any such action, suit, claim, proceeding
or investigation, shall notify Parent and the Purchaser within 15 days
thereof; provided, however, that any failure so to notify Parent and the
Purchaser of any obligation to indemnify such indemnified party or of any
other obligation imposed by the Merger Agreement shall not affect such
obligations except to the extent Parent and/or the Purchaser is actually
prejudiced thereby. Parent and the Purchaser shall be entitled to assume
the defense of any such action, suit, claim, proceeding or investigation
with counsel of its choice, unless there is, under applicable standards of
professional conduct, a conflict of any significant issue between the
positions of Parent and the Purchaser, on the one hand, and the indemnified
parties, on the other hand, in which event the
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indemnified parties as a group may retain one law firm to represent them
with respect to such matter. Neither Parent or the Purchaser, on the one
hand, nor the indemnified parties, on the other hand, may settle any such
action, suit, claim, proceeding or investigation without the prior written
consent of the other party, which consent shall not be unreasonably
withheld or delayed.
(e) In addition to the foregoing, Parent shall cause the Purchaser to
honor in accordance with their terms any indemnification agreements in
existence on the date of the Merger Agreement between the Company and any
present or former director, officer, employee, fiduciary or agent of the
Company.
(f) The parties agree that the indemnification provisions of the
Merger Agreement will not require Parent or the Purchaser to maintain
directors' and officers' insurance coverage in favor of the Company's
present and former directors and officers.
(g) Notwithstanding anything in the Merger Agreement to the contrary,
in the event the Merger Agreement is terminated in accordance with its
terms before the consummation of the Merger, the Purchaser's and Parent's
obligations under the indemnification provisions of the Merger Agreement
shall cease upon such termination.
Waiver. Subject to Section 1.03(c) of the Merger Agreement, at any time
prior to the Effective Time, the parties may (i) extend the time for performance
of any obligations or other acts of any other party, (ii) waive any inaccuracies
in the representations and warranties contained in the Merger Agreement by any
other party or (iii) waive compliance with any of the agreements of any other
party or with any conditions of its own obligations.
Termination. The Merger Agreement provides that the Merger Agreement may
be terminated and the Merger contemplated thereby may be abandoned at any time
prior to the Effective Time, whether or not approval thereof by the Shareholders
has been obtained:
(a) by the mutual written consent of Parent, the Purchaser and the
Company prior to the date on which Parent's designees constitute a majority
of the Board; or
(b) by the Company if the Company is not in material breach of any of
its representations, warranties, covenants or agreements contained in the
Merger Agreement and the Stock Option Agreement and if (i) the Purchaser
fails to commence the Offer as provided in Section 1.01 of the Merger
Agreement, (ii) the Purchaser shall not have accepted for payment and paid
for Shares pursuant to the Offer in accordance with the terms thereof on or
before April 30, 1998 or (iii) the Purchaser fails to purchase validly
tendered Shares in violation of the terms of the Offer or the Merger
Agreement; or
(c) by Parent or the Company if the Offer expires or is terminated or
withdrawn pursuant to its terms without any Shares being purchased
thereunder; provided, however, that Parent may terminate the Merger
Agreement pursuant to this clause (c) upon the termination or withdrawal of
the Offer only if Parent's or the Purchaser's termination or withdrawal of
the Offer is not in violation of the terms of the Merger Agreement or the
Offer; or
(d) by Parent or the Company if any court or other governmental entity
shall have issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction, or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
judgment, decree, injunction, ruling or other action shall have become
final and nonappealable; or
(e) by the Company if, prior to the purchase of Shares pursuant to the
Offer in accordance with the terms of the Merger Agreement, (i) there shall
have occurred, on the part of Parent or the Purchaser, a material breach of
any representation or warranty, covenant or agreement contained in the
Merger Agreement which is not curable or, if curable, is not cured within
seven business days after written notice of such breach is given by the
Company to the party committing the breach or (ii) the Company (A) enters
into a definitive agreement with respect to a Superior Proposal after
complying with the terms of the Merger Agreement, and (B) pays any
termination fee and agrees to pay any other amounts required under Section
8.03(b) of the Merger Agreement; or
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(f) by Parent if, prior to the purchase of Shares pursuant to the
Offer in accordance with the terms of the Merger Agreement, (i) there shall
have occurred, on the part of the Company, a breach of any representation,
warranty, covenant or agreement contained in the Merger Agreement which
individually, or in the aggregate, if not cured would be reasonably likely
to have a material adverse effect on the Company and which is not curable
or, if curable, is not cured within the later of (x) seven business days
after written notice of such breach is given by Parent to the Company and
(y) the satisfaction of all conditions to the Offer not related to such
breach or (ii) the Board or committee thereof shall have withdrawn or
modified (or shall have resolved to withdraw or modify), in a manner
adverse to Parent, its approval or recommendation of the Merger Agreement
or any of the transactions contemplated thereby and the Board and such
committee shall not have fully reinstated such approval or recommendations
within two business days or shall have recommended (or shall have resolved
to recommend) an Acquisition Transaction (other than the Offer and Merger)
to the Shareholders and at least ten business days shall have passed since
such recommendation (or resolution); or
(g) by Parent if it is not in material breach of its obligations
hereunder or under the Offer and no Shares shall have been purchased
pursuant to the Offer on or before April 30, 1998.
Fees and Expenses. The Merger Agreement provides that whether or not the
Merger is consummated, all costs and expenses incurred in connection with the
Offer, the Merger Agreement, the Stock Option Agreement and the transactions
contemplated thereby shall be paid by the party incurring such expenses.
In the event the Merger Agreement is terminated pursuant to Section
8.01(e)(ii), 8.01(f)(i) (other than for a termination due to an unintentional
breach of a representation or warranty by the Company) or 8.01(f)(ii) of the
Merger Agreement, then the Company shall promptly reimburse Parent for the
documented out-of-pocket fees and expenses (but in no event greater than
$500,000) of Parent and the Purchaser related to the Merger Agreement, the Stock
Option Agreement, the transactions contemplated thereby and any related
financing and in the event the Merger Agreement is terminated pursuant to
Section 8.01(e)(ii) of the Merger Agreement, then the Company shall promptly pay
Parent a termination fee of $1,200,000 by wire transfer of same day funds to an
account designated by Parent as a condition of such termination.
The Merger Agreement provides that in the event that (i) any person shall
have publicly disclosed a proposal regarding an Acquisition Transaction and (ii)
following such disclosure, either (x) April 30, 1998 occurs without the Revised
Minimum Number being satisfied or the requisite Shareholder approval of the
Merger being obtained (other than as a result of a material breach thereof by
Parent or the Purchaser that has not been cured within the time period set forth
in Article VIII of the Merger Agreement) or (y) the Company breaches (prior to
the time that the designees of the Purchaser constitute a majority of the Board)
any of its material obligations thereunder and does not cure such breach within
the time period set forth in Article VIII of the Merger Agreement or (z) if the
Merger Agreement is terminated pursuant to Section 8.01(f)(ii), and (iii) not
later than twelve months after any such termination the Company shall have
entered into an agreement for an Acquisition Transaction, or an Acquisition
Transaction shall have been consummated, then the Company shall promptly, but in
no event later than immediately prior to, and as a condition of, entering into
such definitive agreement, or, if there is no such definitive agreement then
immediately upon consummation of the Acquisition Transaction, pay Parent a
termination fee of $1,200,000 which amount shall be payable by wire transfer of
same day funds to an account designated by Parent. Notwithstanding anything to
the contrary contained in the Merger Agreement, in no event shall the Company be
obligated to pay more than one termination fee in accordance with the Merger
Agreement.
THE STOCKHOLDER AGREEMENTS
Concurrently with the execution of the Merger Agreement, Parent and the
Purchaser entered into Stockholder Agreements with each of the Selling
Shareholders with respect to, in the aggregate, 3,047,384 Common Shares
(excluding Shares issuable upon the exercise of stock options) owned by such
Selling Shareholders representing approximately 29% of the Common Shares
outstanding on December 11, 1997. The Selling Shareholders are Elsag
International N.V., which is the beneficial of approximately 23% of the Shares,
and Kenneth P. Ostrow, the President and Chief Executive Officer of the Company.
Pursuant to the
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Stockholder Agreements, each of the Selling Shareholders has agreed to validly
tender, in accordance with the terms of the Offer, all Shares subject to the
Stockholder Agreements. Each of the Selling Shareholders has agreed not to
withdraw its or his shares subject to the Stockholder Agreements unless the
Stockholder Agreements are terminated in accordance with the terms of such
Stockholder Agreements. Each of the Selling Shareholders has granted the
Purchaser an irrevocable option to purchase all but not less than all of the
Selling Shareholders' Shares at the Offer Price. The option will become
exercisable following termination of the Merger Agreement pursuant to certain
provisions thereof. In the event the option becomes exercisable and the
Purchaser acquires the Selling Shareholders' Shares thereunder, the Selling
Shareholders will be entitled to receive, upon any subsequent disposition,
transfer or sale of such Shares by the Purchaser during the term of the
Stockholder Agreements, an amount per share in cash equal to 50% of the
difference between the net proceeds received per share in such sale and the
Offer Price.
Pursuant to the Stockholder Agreements, each of the Selling Shareholders
has agreed, at any meeting of the Shareholders, to vote (or cause to be voted)
all shares subject to the foregoing options in furtherance of the consummation
of all actions contemplated by the Merger Agreement and against any proposal
relating to an Acquisition Transaction and against any action or agreement that
would, among other things, impede, frustrate, prevent or nullify the Merger
Agreement. The Selling Shareholders have granted Parent an irrevocable proxy to
vote the Shares subject to the foregoing options in favor of the Merger
Agreement and the transactions contemplated thereby and against any proposed
Acquisition Transaction. Pursuant to the Stockholder Agreements, each of the
Selling Shareholders has agreed, solely in its capacity as a stockholder of the
Company, that neither it nor any controlled affiliates, representatives or
agents of it would encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, the Purchaser or any of
their respective affiliates or representatives) concerning any proposal relating
to an Acquisition Transaction. Each such Selling Shareholder has also agreed to
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Transaction.
Each of the Selling Shareholders has agreed that, except as contemplated by
the Stockholder Agreements, it or he shall not (i) transfer, or consent to the
transfer of, any or all of the Shares or any interest therein, (ii) enter into
any contract, option, or other agreement or understanding with respect to any
transfer of any or all of the Shares or any interest therein, (iii) grant any
proxy, power-of-attorney or other authorization in or with respect to the
Shares, (iv) deposit the Shares into a voting trust or enter into a voting
agreement or arrangement with respect to the Shares or (v) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations under the Stockholder Agreements or the Merger Agreement.
The covenants, agreements and proxy contained in the Stockholder Agreements
will terminate upon the earlier of (i) the Effective Time, (ii) one year
following the execution of the Stockholder Agreements or (iii) the termination
of the Merger Agreement in certain circumstances.
THE STOCK OPTION AGREEMENT
Grant of Stock Option. Pursuant to the Stock Option Agreement, the Company
granted to the Purchaser the Stock Option to purchase the Option Shares at the
Option Price, subject to the terms and conditions set forth in the Stock Option
Agreement; provided, however, that the Stock Option will not be exercisable if
the number of shares subject thereto exceeds the number of authorized Shares
available for issuance.
Exercise of Stock Option. The Stock Option Agreement provides that,
subject to the conditions set forth in the Stock Option Agreement and any
additional requirements of law, the Stock Option may be exercised by the
Purchaser, in whole but not in part, at any one time after the occurrence of an
Exercise Event (as defined below) and prior to the Termination Date (as defined
below). For the purpose of the Stock Option Agreement, an "Exercise Event" would
occur upon the Purchaser's acceptance for payment pursuant to the Offer of
Shares constituting more than 50% but less than 90% of the Shares then
outstanding on a fully diluted basis, and the "Termination Date" would occur
upon the first to occur of any of the following: (i) the
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Effective Time; (ii) the date which is ten business days after the occurrence of
an Exercise Event; and (iii) the termination of the Merger Agreement.
Conditions to Closing. The Stock Option Agreement provides that the
obligation of the Company to deliver Option Shares upon the exercise of the
Stock Option is subject to the following conditions: (i) all waiting periods, if
any, under the HSR Act applicable to the issuance of the Option Shares shall
have expired or have been terminated and the conditions under any other
applicable Antitrust Laws shall have been satisfied and (ii) there shall be no
preliminary or permanent injunction or other final, non-appealable judgement by
a court of competent jurisdiction preventing or prohibiting the exercise of the
Stock Option or the delivery of the Option Shares in respect of such exercise.
Representations and Warranties. The Stock Option Agreement contains
various representations and warranties of the parties thereto, including
representations by the Company as to the Company's corporate organization and
authority relative to the Stock Option Agreement, the Company's authority to
issue the Option Shares and the absence of any conflicts and the making or
obtaining of all applicable filings and consents.
THE NONCOMPETITION AGREEMENT
Simultaneously with the execution of the Merger Agreement, and in order to
preserve and protect the assets of the Company, including the Company's
goodwill, customers and trade secrets, and to preserve and protect Parent's
goodwill and business interests going forward, Parent entered into a
Noncompetition Agreement (the "Noncompetition Agreement") with Kenneth P.
Ostrow, the President and Chief Executive Officer of the Company.
In consideration for Mr. Ostrow's performance pursuant to the terms and
conditions of the Noncompetition Agreement, Parent will pay Mr. Ostrow $700,000
at the Effective Time, $432,000 on the first anniversary of the Effective Time
and $467,000 on the second anniversary of the Effective Time. The Noncompetition
Agreement further provides that during the period beginning at the Effective
Time and continuing for five years thereafter, Mr. Ostrow will not enter into
the employ of, or render services to, any firm, corporation or organization in a
capacity that gives him responsibility for that segment of such entity's
business which derives more than 10% of its annual revenues from sales of
products which directly compete with products which were offered by the Company
at the Effective Time. The geographical scope of the foregoing restriction
includes all cities, counties and states of the United States of America and all
foreign nations in which Parent, the Company or any of their subsidiaries has
engaged in sales, or otherwise conducted business or selling efforts, at any
time during the two years prior to the Effective Time.
SECTION 11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER AND THE
MERGER
Purpose of the Offer. The purpose of the Offer and the Merger is to enable
Parent 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. Parent will consummate, as soon as
practicable following the consummation of the Offer, the Merger. The purpose of
the Merger is to acquire all Shares not purchased pursuant to the Offer or
otherwise. Pursuant to the Merger, each then outstanding Share (other than
Shares held by Parent or the Purchaser, any wholly owned subsidiary of Parent or
the Purchaser, in the treasury of the Company or by any wholly owned subsidiary
of the Company or held by Shareholders who perfect any applicable dissenters'
rights under the GCL) will be converted into the right to receive the amount in
cash equal to the Offer Price paid by the Purchaser pursuant to the Offer. Upon
consummation of the Merger, the Company will become a wholly owned subsidiary of
Parent.
Plans for Merger Consummation. Under the GCL, the approval of the Board
and the affirmative vote of the holders of a majority of the outstanding Shares
is required to approve the Merger and the Merger Agreement. The Board has
approved the Merger Agreement, and, unless the Merger is consummated pursuant to
the short-form merger provisions under the GCL described below, the only
remaining required corporate action of the Company is the approval of the Merger
and the adoption of the Merger Agreement by
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the affirmative vote of the holders of a majority of the Shares. Accordingly, if
the Minimum Condition is satisfied, the Purchaser will have sufficient voting
power to cause the approval of the Merger Agreement and the transactions
contemplated thereby without the affirmative vote of any other Shareholder.
In the Merger Agreement, the Company has agreed to take all action
necessary to convene the Shareholders' Meeting as soon as practicable after the
consummation of the Offer for the purpose of considering and taking action on
the Merger Agreement and the transactions contemplated thereby, if such action
is required by the GCL. Parent and the Purchaser have agreed that all Shares
owned by them and their subsidiaries will be voted in favor of the Merger
Agreement and the transactions contemplated thereby.
If the Purchaser purchases Shares pursuant to the Offer, the Merger
Agreement provides that the Purchaser will be entitled to designate
representatives to serve on the Board in proportion to the Purchaser's ownership
of Shares following such purchase; provided, however, that the Purchaser will be
entitled to designate a number of directors equal to or greater than 50% of the
total number of directors only if Purchaser purchases 90% or more of the
outstanding Shares. See Section 10. The Purchaser expects that such
representation would permit the Purchaser to exert substantial influence over
the Company's conduct of its business and operations.
Under the GCL, if the Purchaser acquires, pursuant to the Offer, the Stock
Option or otherwise, at least 90% of the outstanding Shares, the Purchaser will
be able to effect the Merger without a vote of the Shareholders. In such event,
Parent, the Purchaser and the Company have agreed in the Merger Agreement to
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
the Shareholders.
In the event that more than 50% of the Shares then outstanding are tendered
pursuant to the Offer and not withdrawn, but less than 90% of the Shares then
outstanding on a fully diluted basis are subject to acquisition by the Purchaser
pursuant to the Offer and the Stock Option, the Purchaser will waive the Minimum
Condition and amend the Offer to reduce the number of Shares subject to the
Offer to the Revised Minimum Number of Shares and, if a greater number of Shares
are tendered into the Offer and not withdrawn, purchase, on a pro rata basis,
the Revised Minimum Number of Shares (it being understood that the Purchaser
may, but shall not in any event be required to accept for payment, or pay for,
any Shares if less than the Revised Minimum Number of Shares are tendered
pursuant to the Offer and not withdrawn at the applicable expiration date of the
Offer).
The Company's Amended and Restated Articles of Incorporation provide that
the affirmative vote of the holders of not less than 66 2/3% of the total
voting power of the Company's outstanding voting securities is required to
approve, among other things, any merger or consolidation of the Company or any
of its subsidiaries with any Interested Stockholder (defined to mean, among
other things, the beneficial owner of more than 10% of the voting power of the
then outstanding voting stock) or with any other corporation which is, or after
such merger or consolidation would be, an affiliate or associate of an
Interested Stockholder; provided, however, that this supermajority voting
requirement shall not be applicable to any such merger which is approved by the
Board (so long as not all of the members of the Board are Interested Directors),
in which event such merger shall then require only the affirmative vote as is
required by law. For purposes of the Company's Amended and Restated Articles of
Incorporation, the term "Interested Director" means any member of the Board who
is an affiliate or nominee of an Interested Stockholder or who is nominated to
the Board by directors a majority of whom are Interested Directors; provided,
however, that a director who would be an Interested Director shall not be deemed
to be an Interested Director with respect to a proposed business combination
with a person other than the Interested Stockholder (or any affiliate of such
Interested Stockholder) with whom he or she is affiliated, by whom he or she was
nominated, or who is an affiliate of or has nominated the Interested Directors
nominating him or her. Parent believes that the described supermajority voting
requirement is not applicable to the Offer or the Merger and the Company has
made a representation and warranty in the Merger Agreement to that effect.
Dissenters' Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, in connection with the Merger, holders of Shares,
by complying with the provisions of Chapter 13 of the GCL, may have certain
rights to dissent and to require the Company to purchase their Shares for cash
at "fair
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market value." In general, holders of Shares will be entitled to exercise
dissenters' rights under the GCL only if the holders of five percent or more of
the outstanding Shares properly file demands for payment or if the Shares held
by such holders are subject to any restriction on transfer imposed by the
Company or any law or regulation ("Restricted Shares"). Accordingly, any holder
of Restricted Shares and, if the holders of five percent or more of the Shares
properly file demands for payment, all other such holders who fully comply with
all other applicable provisions of Chapter 13 of the GCL will be entitled to
require the Company to purchase their Shares for cash at their fair market value
if the Merger is consummated. In addition, if immediately prior to the Effective
Time, the Shares are not listed on a national securities exchange such as the
NNM or on the list of OTC margin stocks issued by the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"), holders of Shares may
likewise exercise their dissenters' rights as to any or all of their Shares
entitled to such rights. If the statutory procedures under the GCL relating to
dissenters' rights were complied with, such rights could lead to a judicial
determination of the fair market value of the Shares. The "fair market value"
would be determined as of the day before the first announcement of the terms of
the Merger, excluding any appreciation or depreciation in consequence of the
Merger. The value so determined could be more or less than the Merger Price.
Plans for the Company. It is expected that, initially following the
Merger, the business and operations of the Company will, except as set forth in
this Offer to Purchase, be continued by the Company substantially as they are
currently being conducted. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will take such actions as it deems
appropriate under the circumstances then existing. Parent intends to seek
additional information about the Company during this period. Thereafter, Parent
intends to review such information as part of a comprehensive review of the
Company's business, operations, capitalization and management with a view to
optimizing exploitation of the Company's potential in conjunction with Parent's
businesses.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries or any
material change in the Company's capitalization or dividend policy or any other
material changes in the Company's corporate structure or business, or the
composition of the Board or the Company's management.
SECTION 12. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all of the
Shares pursuant to the Offer and to pay fees and expenses related to the Offer
and the Merger is estimated to be approximately $33.0 million. The Purchaser
will obtain all funds needed for the Offer and the Merger through a capital
contribution from Parent. Parent will obtain all such funds through a capital
contribution from Voith. Voith will supply such funds from working capital and
other cash on hand.
The Offer is not conditioned on obtaining financing.
SECTION 13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS
The Purchaser intends to seek to cause the Company to terminate the
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met. If registration
of the Shares is not terminated prior to the Merger, the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
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Depending upon the aggregate market value and per share price of any Shares
not purchased pursuant to the Offer, the Shares may no longer meet the standards
of the National Association of Securities Dealers, Inc. (the "NASD") for
continued inclusion in the NNM, which require that an issuer have either (i) at
least 750,000 publicly held shares with a market value of $5 million and a
minimum bid price of $1.00 per share held by at least 400 stockholders holding
round lots and have net tangible assets of at least $4 million or (ii) at least
1.1 million publicly held shares with a market value of $15 million and a
minimum bid price of $5.00 per share held by at least 400 stockholders holding
round lots and have either a market capitalization of at least $50 million or
both total assets and total revenue of at least $50 million. If these standards
are not met, the Shares might nevertheless continue to be included in The Nasdaq
Stock Market with quotations published in the Nasdaq "additional list," or in
one of the "local lists." However, if the number of holders of Common Stock
falls below 300, or if the number of publicly held Shares falls below 100,000,
or if there are not at least two market makers for such Shares, NASD rules
provide that the Shares would no longer be "qualified" for The Nasdaq Stock
Market reporting, and The Nasdaq Stock Market would cease to provide any
quotations. Shares held directly or indirectly by an officer or director of the
Company, or by any beneficial owner of more than 10% of the Shares, ordinarily
will not be considered as being publicly held for this purpose. If, as a result
of the purchase of Shares pursuant to the Offer or otherwise, the Shares no
longer meet the NASD requirements for continued inclusion in the NNM or in any
other tier of The Nasdaq Stock Market, and the Shares are no longer included in
any tier of The Nasdaq Stock Market, the market for such Shares could be
adversely affected.
In the event the Shares no longer meet the requirements of the NASD for
inclusion in any tier of The Nasdaq Stock Market, quotations might still be
available from other sources. The extent of the public market for Shares and
availability of such quotations would, however, depend upon the number of
holders of Shares remaining at such time, the interest in maintaining a market
in the Shares on the part of securities firms, the possible termination of
registration under the Exchange Act, as described below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its Shareholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with Shareholders' meetings and the related
requirement of furnishing an annual report to Shareholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions. Furthermore, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. The Purchaser intends to seek
to cause the Company to apply for termination of registration of the Shares
under the Exchange Act as soon after the completion of the Merger as possible.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Federal Reserve Board which has the effect, among other
things, of allowing brokers to extend credit on the collateral of the Shares.
Depending upon factors similar to those described above regarding listing and
market quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin regulations
of the Federal Reserve Board and therefore could no longer be used as collateral
for loans made by brokers.
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SECTION 14. DIVIDENDS AND DISTRIBUTIONS
The Merger Agreement provides that, prior to the Effective Time, without
the prior written consent of Parent, the Company will not, and will not permit
any of its subsidiaries to, (i) declare, set aside or pay any dividend or other
distribution on its capital stock, (ii) except as explicitly permitted by the
Merger Agreement, issue, sell or authorize the issuance or sale of any
additional shares of its capital stock or securities convertible into shares of
its capital stock or (iii) split, combine, redeem, purchase or otherwise
acquire, or propose to redeem or purchase or otherwise acquire, any shares of
its capital stock.
SECTION 15. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, the Purchaser shall not
be required to accept for payment or pay for any tendered Shares, unless the
Minimum Condition has been satisfied; provided, however, that the Minimum
Condition may be waived by the Purchaser and the Revised Minimum Number may be
substituted therefor in certain circumstances. Furthermore, notwithstanding any
other provisions of the Offer, the Purchaser shall not be required to accept for
payment or pay for any tendered Shares until expiration of all applicable
waiting periods under the HSR Act and the satisfaction of conditions under any
other applicable Antitrust Laws, and may, subject to the terms of the Merger
Agreement, amend the Offer or postpone the acceptance for payment of tendered
Shares if at any time on or after December 11, 1997, and before the Expiration
Date, any of the following occur:
(a) any order, preliminary or permanent injunction, decree, judgment
or ruling in any suit, action or proceeding is entered that (i) makes
illegal or otherwise directly or indirectly restrains or prohibits the
acquisition by Parent or the Purchaser of any Shares under the Offer or the
making or consummation of the Offer or the Merger, the performance by the
Company of any of its material obligations under the Merger Agreement or
the Stock Option Agreement or the consummation of any purchase of Shares
contemplated by the Merger Agreement, the Stock Option Agreement or related
agreements, (ii) prohibits or limits the ownership or operation by the
Company, Parent or any of their respective subsidiaries of a material
portion of the business or assets of the Company and its subsidiaries,
taken as a whole, or Parent and its subsidiaries, taken as a whole, or
compels the Company or Parent to dispose of or hold separate any material
portion of the business or assets of the Company and its subsidiaries,
taken as a whole, or Parent and its subsidiaries, taken as a whole, as a
result of the Offer or the Merger, (iii) imposes material limitations on
the ability of Parent or the Purchaser to acquire or hold, or exercise full
rights of ownership of, any Shares accepted for payment pursuant to the
Offer or acquired pursuant to the Stock Option Agreement, including,
without limitation, the right to vote such Shares on all matters properly
presented to the Shareholders or (iv) prohibits Parent or any of its
subsidiaries from effectively controlling in any material respect the
business or operation of the Company and its subsidiaries, taken as a
whole; or
(b) any law is enacted, entered, enforced, promulgated or deemed
applicable to the Offer, the Merger or the transactions contemplated by the
Stock Option Agreement, or any other action is taken by any governmental
entity, other than the application to the Offer, the Merger or the
transactions contemplated by the Stock Option Agreement of all applicable
waiting periods under the HSR Act or other applicable conditions under any
other foreign or domestic antitrust laws, that results, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(iv) of paragraph (a) above; or
(c) (i) the Board or any committee thereof withdraws or modifies in a
manner adverse to Parent or the Purchaser its approval or recommendation of
the Offer, the Merger, the Merger Agreement or the Stock Option Agreement
or approves or recommends any Acquisition Transaction or (ii) the Company
enters into any agreement to consummate any Acquisition Transaction; or
(d) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality are not true
and correct, or any such representations and warranties that are not so
qualified are not true and correct in any respect (when taken together with
all other failures of such representations and warranties to be true and
correct) that would have a Material Adverse Effect (as defined in the
Merger Agreement) on the Company, in each case at the date of the
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Merger Agreement or at the scheduled expiration of the Offer (as though
made as of such date, except that those representations and warranties that
address matters only as of a particular date shall remain true and correct
as of such date); or
(e) the Merger Agreement shall have been terminated in accordance with
its terms; or
(f) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements under the
Merger Agreement or the Stock Option Agreement and such breach or failure
to perform is not curable or, if curable, is not cured within seven
business days after written notice of such breach or failure is given by
Parent to the Company; or
(g) there shall have occurred, and continued to exist, (i) any general
suspension of, or limitation on prices for, trading in securities on the
NYSE or the NNM, (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or Germany,
(iii) a commencement of a war, armed hostilities or other national or
international crisis directly involving the United States or Germany (other
than an action involving solely United Nations' personnel), or (iv) in the
case of any of the events described in the foregoing clauses (i) through
(iii) existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof.
The foregoing conditions are for the benefit of Parent and the Purchaser
and may be asserted by Parent or the Purchaser regardless of the circumstances
giving rise to any such conditions and may be waived by Parent or the Purchaser
in whole or in part at any time and from time to time in their sole discretion.
The failure by Parent or the Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
SECTION 16. CERTAIN LEGAL MATTERS
General. Except as otherwise disclosed herein, based on a review of
publicly available information filed by the Company with the Commission, neither
the Purchaser nor Parent is aware of (i) any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the acquisition of Shares
by the Purchaser pursuant to the Offer or the Merger or (ii) any approval or
other action, by any governmental, administrative or regulatory agency or
authority, domestic, foreign or supranational, that would be required for the
acquisition or ownership of Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required, the Purchaser currently
contemplates that such approval or action would be sought. While the Purchaser
does not currently intend to delay the acceptance for payment of Shares tendered
pursuant to the Offer pending the outcome of any such matter, there can be no
assurance that any such approval or action, if needed, would be obtained or
would be obtained without substantial conditions or that adverse consequences
might not result to the business of the Company, the Purchaser or Parent or that
certain parts of the businesses of the Company, the Purchaser or Parent might
not have to be disposed of in the event that such approvals were not obtained or
any other actions were not taken. The Purchaser's obligation under the Offer to
accept for payment and pay for Shares is subject to certain conditions. See
Sections 10 and 15.
State Takeover Laws. The Company's principal executive offices are located
in, and the Company is incorporated under the laws of, the State of California,
which currently has no takeover statute that would apply to the Offer or to the
Merger. However, there can be no assurances that California will not, prior to
the completion of the Offer, adopt such a statute. Under the GCL, the Merger may
not be accomplished for cash paid to the Shareholders if the Purchaser or Parent
owns directly or indirectly more than 50% but less than 90% of the then
outstanding Shares unless either all the Shareholders consent or the
Commissioner of Corporations of the State of California approves, after a
hearing, the terms and conditions of the Merger and the fairness thereof. The
purpose of the Offer is to obtain 90% or more of the Shares (on a fully diluted
basis) and to enable Parent and the Purchaser to acquire control of the Company.
In the event that more than 50% of the Shares then outstanding are tendered
pursuant to the Offer and not withdrawn, but less than 90% of the Shares then
outstanding on a fully diluted basis are subject to
30
<PAGE> 34
acquisition by the Purchaser pursuant to the Offer and the Stock Option, the
Purchaser will waive the Minimum Condition and amend the Offer to reduce the
number of Shares subject to the Offer to the Revised Minimum Number of Shares
and, if a greater number of Shares are tendered into the Offer and not
withdrawn, purchase, on a pro rata basis, the Revised Minimum Number of Shares
(it being understood that the Purchaser may, but shall not in any event be
required to accept for payment, or pay for, any Shares if less than the Revised
Minimum Number of Shares are tendered pursuant to the Offer and not withdrawn at
the applicable expiration date of the Offer). In the event that the Purchaser
acquires the Revised Minimum Number of Shares, it may have, as a practical
matter the ability to ensure approval of the Merger by the Shareholders.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, shareholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987, in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining shareholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of shareholders in the state and were incorporated
there.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. The Purchaser does not know whether any of these laws will, by
their terms, apply to the Offer or the Merger and has not complied with any such
laws. Should any person seek to apply any state takeover law, the Purchaser will
take such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws are applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer and the Merger. In such case,
the Purchaser may not be obligated to accept for payment any Shares tendered.
See Section 15.
United States Antitrust Approvals. Under the HSR Act, and the rules and
regulations that have been promulgated thereunder by the Federal Trade
Commission (the "FTC"), certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the FTC and certain waiting
period requirements have been satisfied. The acquisition of Shares by the
Purchaser pursuant to the Offer and the Stock Option Agreement are subject to
such requirements. A Premerger Notification and Report Form with respect to the
Offer, Merger Agreement and the Stock Option Agreement promptly.
Under the provisions of the HSR Act applicable to the Offer, the purchase
of Shares under the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing. Such filing is expected to
be made on or about December 18, 1997. Assuming such filing is made on December
18, 1997, the waiting period with respect to the Offer would expire at 11:59
p.m., New York City time, on January 2, 1998 unless a request for additional
information or documentary material is received or the Antitrust Division and
the FTC terminates the waiting period prior thereto. If, within such 15-day
period, either the Antitrust Division or the FTC requests additional information
or material concerning the Offer, the waiting period will be extended and would
expire at 11:59 p.m., New York City time, on the tenth calendar day after the
date of substantial compliance with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized by
the HSR Act. Thereafter, such waiting period may be extended only by court order
or with consent. The Purchaser will not accept for payment Shares tendered
pursuant to the Offer unless and until the waiting period requirements imposed
by the HSR Act with respect to the Offer have been satisfied. See Sections 10
and 15.
31
<PAGE> 35
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer and the Merger. At any time before or after the
Purchaser's acquisition of Shares, either the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition of
Shares pursuant to the Offer or otherwise or seeking divestiture of Shares
acquired by the Purchaser or divestiture of substantial assets of Voith, Parent
or its affiliates. Private parties and state attorneys general may also bring
action under the antitrust laws under certain circumstances. Based upon an
examination of publicly available information relating to the businesses in
which Voith, Parent and the Company are engaged, Voith, Parent and the Purchaser
believe that the acquisition of Shares by the Purchaser will not violate the
antitrust laws. Nevertheless, there can be no assurance that a challenge to the
Offer or other acquisition of Shares by the Purchaser on antitrust grounds will
not be made or, if such a challenge is made, of the result.
Foreign Laws. According to publicly available information, the Company
also conducts business in a number of other countries and jurisdictions
including the United Kingdom and Sweden. In connection with the acquisition of
the Shares pursuant to the Offer, the laws of certain foreign countries and
jurisdictions may require the filing of information with, or the obtaining of
the approval of, governmental authorities in such countries and jurisdictions.
In addition, the waiting period prior to consummation of the Offer associated
with such filings or approvals may extend beyond the scheduled Expiration Date.
The governments in such countries and jurisdictions might attempt to impose
additional conditions on the Company's operations conducted in such countries
and jurisdictions as a result of the acquisition of the Shares pursuant to the
Offer or the Merger. There can be no assurance that the Purchaser will be able
to cause the Company or its subsidiaries to satisfy or comply with such laws or
that compliance or noncompliance will not have adverse consequences for the
Company or any subsidiary after purchase of the Shares pursuant to the Offer or
the Merger.
SECTION 17. FEES AND EXPENSES
D.F. King & Co., Inc. has been retained by the Purchaser as Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee Shareholders to forward material
relating to the Offer to beneficial owners of Shares. The Purchaser will pay the
Information Agent reasonable and customary compensation for all such services in
addition to reimbursing the Information Agent for reasonable out-of pocket
expenses in connection therewith. The Purchaser has agreed to indemnify the
Information Agent against certain liabilities and expenses in connection with
the Offer, including, without limitation, certain liabilities under the federal
securities laws.
ChaseMellon Shareholder Services, L.L.C. has been retained as the
Depositary. The Purchaser will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, will reimburse the
Depositary for its reasonable out-of-pocket expenses in connection therewith and
will indemnify the Depositary against certain liabilities and expenses in
connection therewith, including, without limitation, certain liabilities under
the federal securities laws.
Except as set forth above, neither Parent nor the Purchaser will pay any
fees or commissions to any broker, dealer or other person for soliciting tenders
of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies and other nominees will, upon request, be reimbursed by the Purchaser
for customary clerical and mailing expenses incurred by them in forwarding
offering materials to their customers.
SECTION 18. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities,
blue sky or other laws of such jurisdiction. Neither the Purchaser nor Parent is
aware of any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the
32
<PAGE> 36
laws of such jurisdiction. To the extent the Purchaser or Parent becomes aware
of any state law that would limit the class of offerees in the Offer, the
Purchaser will amend the Offer and, depending on the timing of such amendment,
if any, will extend the Offer to provide adequate dissemination of such
information to such holders of Shares prior to the expiration of the Offer. In
any jurisdiction the securities, blue sky or other laws of which require the
Offer to be made by a licensed broker or dealer, the Offer is being made on
behalf of the Purchaser by one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser, Parent and Voith have filed with the Commission a Tender
Offer Statement on Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act,
together with exhibits, furnishing certain additional information with respect
to the Offer, and may file amendments thereto. Such Schedule 14D-1 and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained in the manner set forth in Section 7 with respect to the Company
(except that such material will not be available at the regional offices of the
Commission).
VOITH SULZER ACQUISITION CORP.
Dated: December 18, 1997.
33
<PAGE> 37
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF FAMILIENGESELLSCHAFT, VOITH AND THE
PURCHASER
FAMILIENGESELLSCHAFT. Set forth below are the name, business address and
present principal occupation or employment and material occupations, positions,
offices or employment for the past five years of each of the four Managing
Directors of Familiengesellschaft as of December 10, 1997. Unless otherwise
indicated, each such person is a citizen of the Federal Republic of Germany.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME, BUSINESS ADDRESS AND EMPLOYMENT AND FIVE-YEAR
CITIZENSHIP EMPLOYMENT HISTORY
<S> <C>
Angela Schily........................ Self-employed medical doctor, Herdecke, Germany (since
Auf dem Schnee 36A 1992)
58313 Herdecke-Schnee
Klemens Schweppenhauser.............. Farmer, Herdwangen, Germany (since 1987)
88634 Herdwangen-Schonach
Birkenhof, Germany
Dr. Hans Wolfram Schweppenhauser..... Member of Supervisory Board of Voith (since April
88634 Herdwangen-Schonach 1997); Retired (since 1987)
Birkenhof, Germany
Johannes Christoph Hammacher......... Consultant, Ernst and Young
Am Bismarckturm 58 Stuttgart, Germany (since August 1997); Student (prior
70192 Stuttgart thereto)
Citizenship: Switzerland
</TABLE>
VOITH. Set forth below are the name, business address and present principal
occupation or employment, and material occupations, positions, offices or
employment for the past five years of each director and executive officer of
Voith as of December 10, 1997. Except as otherwise noted, the business address
of each such person is J.M. Voith AG, Sankt Poltener, StraSSe 43 D-89522,
Heidenheim, Germany. Unless otherwise indicated, each such person is a citizen
of the Federal Republic of Germany and has held his or her present position as
set forth below for the past five years. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to employment with
Voith.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME, BUSINESS ADDRESS AND EMPLOYMENT AND FIVE-YEAR
CITIZENSHIP EMPLOYMENT HISTORY
<S> <C>
Dr. Michael Rogowski................. President and CEO of the Corporate Management Board
(since 1992)
Dr. Hermut Kormann................... Chief Financial Officer and Member of the Corporate
Management Board (since 1991)
Dr. Gunter Armbruster................ Member of the Corporate Management Board (since 1982);
President of Voith Turbo GmbH & Co. KG, Heidenheim,
Germany (since 1993)
Dr. Hans Peter Schiffer.............. Member of the Corporate Management Board (since 1986);
Chairman of the Board of Directors and President of
various other Voith related organizations (since 1990)
Hans Muller.......................... Member of the Corporate Management Board (since 1995);
P.O. Box 1940 President of Voith Sulzer Papiertechnik GmbH & Co. KG,
D-89509 Heidenheim, Germany Heidenheim, Germany (since 1994); President Sulzer
Citizenship: United States Escher Wyss GmbH, Ravensburg, Germany (since 1971)
</TABLE>
THE PURCHASER. Set forth below are the name, business address and present
principal occupation or employment, and material occupations, positions, offices
or employment for the past five years of each director and executive officer of
the Purchaser as of December 10, 1997.
I-1
<PAGE> 38
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME, BUSINESS ADDRESS AND EMPLOYMENT AND FIVE-YEAR
CITIZENSHIP EMPLOYMENT HISTORY
<S> <C>
R. Raymond Hall, Jr.................. Executive Vice President-Service Division of Parent,
990 N. Main St. Appleton, Wisconsin (since 1994); Member of the Board
Monroe, Ohio 45050 of Management and the Board of Directors of various
Citizenship: United States other Voith related organizations (since 1994);
President of Voith Holdings Ltd. and TriStar
Industries Ltd., Vancouver, British Columbia (through
October 1997)
Paul Bouthilet....................... Chief Financial Officer of Parent, Appleton, Wisconsin
2200 Roemer Rd. (since October 1997); Vice President Finance of
Appleton, Wisconsin 54913 Parent, Appleton, Wisconsin (through October 1997)
Citizenship: United States
Mark Zimmermann...................... Head of Planning and Organization of Voith Sulzer
Sankt Poltner StraSSe 43 Papiertechnik GmbH & Co. KG, Heidenheim, Germany
D-89522 Heidenheim, Germany (since April 1996); Strategic Development Manager of
Citizenship: Switzerland Sulzer AG, Winterthur, Switzerland (through March
1996)
</TABLE>
I-2
<PAGE> 39
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each Shareholder of the
Company or such Shareholder's broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
<TABLE>
<CAPTION>
<S> <C> <C>
BY MAIL: BY BY OVERNIGHT COURIER:
ChaseMellon Shareholder HAND: ChaseMellon Shareholder
Services, L.L.C. ChaseMellon Services, L.L.C.
Post Office Box 3301 Shareholder 85 Challenger Road
South Hackensack, NJ 07606 Services, Mail Drop Reorg. Dept.
Attn: Reorganization L.L.C. Ridgefield Park, NJ 07660
Department 120
Broadway
-13th
Floor
New
York,
NY
10271
Attn:
Reorganization
Department
</TABLE>
Facsimile Transmission: (201) 329-8936
Confirmation of Fax: (201) 296-4860
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number set forth below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and all other tender offer
materials may be obtained from the Information Agent, and will be furnished
promptly at the Purchaser's expense. You may also contact your broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll-Free: (800) 714-3310
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
IMPACT SYSTEMS, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED DECEMBER 18, 1997
BY
VOITH SULZER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
VOITH SULZER PAPER TECHNOLOGY NORTH AMERICA INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JANUARY 20, 1998, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3301 120 Broadway - 13th Floor 85 Challenger Road
South Hackensack, NJ 07606 New York, NY 10271 Mail Drop Reorg. Dept.
Attn: Reorganization Attn: Reorganization Ridgefield Park, NJ 07660
Department Department
</TABLE>
FACSIMILE TRANSMISSION: (201) 329-8936
CONFIRMATION OF FAX: (201) 296-4860
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) SHARE CERTIFICATE(S) AND SHARES TENDERED
ON SHARE CERTIFICATE(S) TENDERED.) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE REPRESENTED BY NUMBER OF
CERTIFICATE SHARE SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
----------------
----------------
----------------
================
TOTAL SHARES:
- ----------------------------------------------------------------------------
* Need not be completed by shareholders delivering Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate delivered to the
Depositary
are being tendered hereby. See Instruction 4.
- ----------------------------------------------------------------------------
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE> 2
This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or if delivery of Shares is to be made by book-entry transfer to the
Depositary's account at the Depository Trust Company ("DTC") or the Philadelphia
Depository Trust Company (each a "Book-Entry Transfer Facility" and
collectively, the "Book-Entry Transfer Facilities") pursuant to the book-entry
transfer procedure described in Section 2 of the Offer to Purchase (as defined
below). Holders who are participants ("Participants") in the book-entry facility
system of DTC may execute their tender through DTC's Automated Tender Offer
Program ("ATOP") as set forth in Section 2 of the Offer to Purchase.
Shareholders whose certificates evidencing Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other documents required hereby to the Depositary prior to
the Expiration Date (as defined in Section 1 of the Offer to Purchase) or who
cannot complete the procedure for delivery by book-entry transfer on a timely
basis and who wish to tender their Shares must do so pursuant to the guaranteed
delivery procedure described in Section 2 of the Offer to Purchase. See
Instruction 2.
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Check Box of Applicable Book-Entry Transfer Facility:
(CHECK ONE)
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number: Transaction Code Number:
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Voith Sulzer Acquisition Corp., a
California corporation (the "Purchaser") and a wholly owned subsidiary of Voith
Sulzer Paper Technology North America Inc., a Delaware corporation (the
"Parent"), the above-described shares of common stock, without par value (the
"Shares"), of Impact Systems, Inc., a California corporation (the "Company"),
pursuant to the Purchaser's offer to purchase all outstanding Shares, at $2.75
per Share (the "Offer Price"), net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated December 18, 1997 (the "Offer to Purchase"), receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which, as amended from
time to time, together constitute the "Offer").
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Purchaser all right, title and interest in and to all the Shares
that are being tendered hereby and all dividends, distributions (including,
without limitation, distributions of additional Shares) and rights declared,
paid or distributed in respect of such Shares on or after December 11, 1997
(collectively, "Distributions"), and irrevocably appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver Share Certificates evidencing such Shares and all Distributions,
or transfer ownership of such Shares and all Distributions on the account books
maintained by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned irrevocably
appoints Paul M. Bouthilet and R. Ray Hall, and each of them, as the attorneys
and proxies of the undersigned, each with full power of substitution, to the
full extent of the undersigned's rights with respect to the Shares tendered by
the undersigned and accepted for payment by the Purchaser (and any and all
Distributions). All such proxies shall be considered coupled with an interest in
the tendered Shares. This appointment will be effective if, when, and only to
the extent that, the Purchaser accepts such Shares for payment pursuant to the
Offer. Upon such acceptance for payment, all prior proxies given by the
undersigned with respect to such Shares (and such other Shares and securities)
will, without further action, be revoked, and no subsequent proxies may be given
nor any subsequent written consent executed by the undersigned (and, if given or
executed, will not be deemed to be effective) with respect thereto. The
designees of the Purchaser named above will, with respect to the Shares and
other securities for which the appointment is effective, be empowered to
exercise all voting and other rights of the undersigned as they in their sole
discretion may deem proper at any annual or special meeting of the shareholders
of the Company or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise, and the Purchaser reserves the right to
require that, in order for Shares or other securities to be deemed validly
tendered, immediately upon the Purchaser's acceptance for payment of such
Shares, the Purchaser must be able to exercise full voting rights with respect
to such Shares.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, and that when such Shares are accepted
for payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto and to all Distributions, free and clear of all
liens, restrictions, charges and encumbrances, and that none of such Shares and
Distributions will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver all additional documents deemed by the
Depositary or the Purchaser to be
<PAGE> 4
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of the Purchaser
all Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, the Purchaser shall be entitled to all rights
and privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby or deduct from such purchase price,
the amount or value of such Distribution as determined by the Purchaser in its
sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as otherwise stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. The Purchaser's acceptance of such Shares for
payment will constitute a binding agreement between the undersigned and the
Purchaser upon the terms and subject to the conditions of the Offer, including,
without limitation, the undersigned's representation and warranty that the
undersigned owns the Shares being tendered.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered, in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. The undersigned recognizes that the Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any Shares
from the name of the registered holder(s) thereof if the Purchaser does not
purchase any of the Shares tendered hereby.
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not purchased
are to be issued in the name of someone other than the undersigned.
Issue: [ ] Check [ ] Share Certificate(s) to:
Name
(Print)
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(ZIP Code)
- --------------------------------------------------------------------------------
(Taxpayer Identification or Social Security Number)
(See Substitute Form W-9 on reverse side)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not purchased
are to be mailed to someone other than the undersigned, or to the undersigned at
an address other than that shown under "Description of Shares Tendered."
Mail: [ ] Check [ ] Share Certificate(s) to:
Name
(Print)
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(ZIP Code)
<PAGE> 6
IMPORTANT
SHAREHOLDERS: SIGN HERE
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
X
Signature(s) of Shareholder(s)
Dated: ____________________________ , 199 ____
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share Certificates or on a security position listing or by person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information. See
Instruction 5 hereof.)
Name(s):
(Please Print)
Capacity (full title):
Address:
(Zip Code)
Area Code and Telephone No.:
Tax Identification or Social Security No.:
(See substitute Form W-9 included herein)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5 HEREOF)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
PLACE MEDALLION GUARANTEE IN THE SPACE BELOW.
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or by a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"), unless (i) this Letter of Transmittal is signed by the
registered holder(s) of the Shares (which term, for purposes of this document,
includes any participant in a Book-Entry Transfer Facility system whose name
appears on a security position listing as the owner of the Shares) tendered
hereby and such registered holder(s) has (have) completed neither the box
entitled "Special Payment Instructions" nor the box entitled "Special Delivery
Instructions" on the reverse hereof or (ii) such Shares are tendered for the
account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter
of Transmittal is to be used if Share Certificates are to be forwarded herewith,
if Shares are to be delivered by book-entry transfers pursuant to the procedure
set forth in Section 2 of the Offer to Purchase, or if Shares are to be
delivered pursuant to ATOP procedures. Share Certificates evidencing all
physically tendered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer, together in each case with a properly completed and duly
executed Letter of Transmittal (or a manually signed facsimile thereof), or an
Agent's Message in connection with a book-entry transfer or tender pursuant to
ATOP procedures, and any other documents required by this Letter of Transmittal,
must be received by the Depositary at one of its addresses set forth herein
prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase).
If Share Certificates are forwarded to the Depositary in multiple deliveries, a
properly completed and duly executed Letter of Transmittal must accompany each
such delivery. Shareholders whose Share Certificates are not immediately
available, who cannot deliver their Share Certificates and all other required
documents to the Depositary prior to the Expiration Date or who cannot complete
the procedure for delivery by book-entry transfer on a timely basis may tender
their Shares pursuant to the guaranteed delivery procedure described in Section
2 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be
made by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made available
by the Purchaser, must be received by the Depositary prior to the Expiration
Date; and (iii) the Share Certificates, representing all tendered Shares, in
proper form for transfer (or a Book-Entry Confirmation with respect to all such
Shares), together with a properly completed and duly executed Letter of
Transmittal for (or a manually signed facsimile thereof), with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Manager, and any other required documents must be received by the Depositary
within three New York Stock Exchange, Inc. ("NYSE") trading days after the date
of execution of such Notice of Guaranteed Delivery, all as described in Section
2 of the Offer to Purchase.
Participants in DTC may tender their Shares pursuant to ATOP procedures, to
the extent available to such participants for the Shares they wish to tender. A
shareholder tendering through the ATOP must expressly acknowledge that the
shareholder has received and agreed to be bound by the Letter of Transmittal and
that the Letter of Transmittal may be enforced against such shareholder.
If the tender is not made through ATOP, Share Certificates, as well as this
Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, with any required signature guarantees, and any
other documents required by this Letter of Transmittal, must be received by the
Depositary at its address set forth herein on or prior to the Expiration Date to
be effective.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER.
SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS
WILL BE DEEMED DELIVERED ONLY WHEN
<PAGE> 8
ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY
TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL
WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a manually signed facsimile hereof), all tendering shareholders waive any
right to receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Share Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Share Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing the Shares not tendered or not purchased are to be issued in the name
of, a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity for the registered holder, such person should so indicate when signing,
and proper evidence satisfactory to the Purchaser of such person's authority so
to act must be submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, the Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s),
<PAGE> 9
such other person or otherwise) payable on account of the transfer to such other
person will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to the Purchaser of the payment of such taxes, or
exemption therefrom, is submitted. Except as provided in this Instruction 6, it
will not be necessary for transfer tax stamps to be affixed to the Share
Certificates evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" set forth herein, the appropriate
boxes set forth on this Letter of Transmittal must be completed.
8. WAIVER OF CONDITIONS. The conditions to the Offer may be waived by the
Purchaser in whole or in part at any time and from time to time in its sole
discretion.
9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent at the
address or telephone numbers set forth herein. Additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
10. SUBSTITUTE FORM W-9. Each tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such shareholder is not subject to backup withholding of federal income tax. If
a tendering shareholder has been notified by the Internal Revenue Service that
such shareholder is subject to back-up withholding, such shareholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
shareholder has since been notified by the Internal Revenue Service that such
shareholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering shareholder to
31% federal income tax withholding on the payment of the purchase price of all
Shares purchased from such shareholder. If the tendering shareholder has not
been issued a TIN and has applied for one or intends to apply for one in the
near future, such shareholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31% on all
payments of the purchase price to such shareholder until a TIN is provided to
the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
HEREOF), PROPERLY COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED
SIGNATURE GUARANTEES AND SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND DULY
EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY ON OR
PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payor)
with such shareholder's correct TIN on Substitute Form W-9 below. If such
shareholder is an individual, the TIN is such shareholder's social security
number. If the Depositary is not provided with the correct TIN, the shareholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such shareholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding of 31%.
Certain shareholders (including, among others, corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as
<PAGE> 10
an exempt recipient, such individual must submit a statement, signed under
penalties of perjury, attesting to such individual's exempt status. Forms of
such statements can be obtained from the Depositary. See the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions. A shareholder should consult his or her tax advisor as
to such shareholder's qualification for exemption from backup withholding and
the procedure for obtaining such exemption.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying (i) that the TIN provided on Substitute
Form W-9 is correct (or that such shareholder is awaiting a TIN), and (ii) that
(y) such shareholder has not been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (z) the Internal Revenue Service has
notified such shareholder that such shareholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering shareholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the shareholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
shareholder until a TIN is provided to the Depositary.
<PAGE> 11
ALL TENDERING SHAREHOLDERS MUST COMPLETE THE FOLLOWING:
PAYOR'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
SUBSTITUTE FORM W-9
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
PAYOR'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER ("TIN")
PART I -- Taxpayer Identification Number -- For all accounts, enter your
taxpayer identification number in Part III below. (For most individuals, this is
your social security number. If you do not have a number, see Obtaining a Number
in the enclosed Guidelines and complete as instructed.) Certify by signing and
dating below. Note: If the account is in more than one name, see the chart in
the enclosed Guidelines to determine which number to give the payor.
PART II -- For Payees exempt from backup withholding, see the enclosed
Guidelines and complete as instructed therein.
PART III -- Social Security Number or Employee ID Number:
(If awaiting TIN write "Applied
For")
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me); and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all interest or dividends, or the
IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of under reporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out such item (2). (Also see instructions in
the enclosed Guidelines.)
Signature Date ___________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
THE INFORMATION AGENT FOR THE OFFER IS:
D. F. KING & CO., INC.
77 Water Street
New York, NY 10005-4495
or
BANKS AND BROKERS CALL COLLECT: (212)269-5550
ALL OTHERS CALL TOLL-FREE: (800)714-3310
December 18, 1997
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
IMPACT SYSTEMS, INC.
TO
VOITH SULZER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
VOITH SULZER PAPER TECHNOLOGY NORTH AMERICA INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) if (i) certificates
(the "Share Certificates") evidencing shares of common stock, without par value
(the "Shares"), of Impact Systems, Inc., a California corporation, are not
immediately available, (ii) time will not permit all required documents to reach
ChaseMellon Shareholder Services, L.L.C., as Depositary (the "Depositary"),
prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase
(as defined below)) or (iii) the procedure for book-entry transfer cannot be
completed on a timely basis. This Notice of Guaranteed Delivery may be delivered
by hand or transmitted by telegram, facsimile transmission or mail to the
Depositary. See Section 2 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Post Office Box 3301 120 Broadway - 13th Floor Mail Drop Reorg. Dept.
South Hackensack, NJ 07606 New York, NY 10271 Ridgefield Park, NJ 07660
Attn: Reorganization Attn: Reorganization
Department Department
</TABLE>
FACSIMILE TRANSMISSION: (201) 329-8936
CONFIRMATION OF FAX:(201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Voith Sulzer Acquisition Corp., a
California corporation, and a wholly owned subsidiary of Voith Sulzer Paper
Technology North America Inc., a Delaware corporation, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated December 18,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal, receipt
of each of which is hereby acknowledged, the number of Shares specified below
pursuant to the guaranteed delivery procedures described in Section 2 of the
Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: Name(s) of Record Holder(s):
- ------------------------------------------- -------------------------------------------
-------------------------------------------
Certificate Nos. (if available): Please Print
- ------------------------------------------- Addresses:
Check ONE box if Shares will be tendered by -------------------------------------------
book-entry transfer (including through -------------------------------------------
DTC's ATOP): Zip Code
[ ] The Depository Trust Company Area Code and
[ ] Philadelphia Depository Trust Company Tel. No.:
Account Number: Signature(s):
-------------------------------------------
Dated:, 199 ___
</TABLE>
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a firm that is a member firm of a national securities
exchange registered with the Securities and Exchange Commission or the National
Association of Securities Dealers, Inc., or a commercial bank or trust company
having an office or correspondent in the United States hereby guarantees
delivery to the Depositary, at one of its addresses set forth above, of Share
Certificates evidencing the Shares tendered hereby in proper form for transfer,
or confirmation of book-entry transfer of such Shares into the Depositary's
accounts at the Depository Trust Company or the Philadelphia Depository Trust
Company (pursuant to the procedures for book-entry transfer, set forth in
Section 2 of the Offer to Purchase), in each case with delivery of a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) properly completed and duly executed with any required
signature guarantees, or an Agent's Message (as defined in Section 2 of the
Offer to Purchase), and any other documents required by the Letter of
Transmittal, within three New York Stock Exchange, Inc. trading days after the
date of execution of this Notice of Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and Share
Certificates to the Depositary within the time period shown herein. Failure to
do so could result in financial loss to such Eligible Institution.
<TABLE>
<S> <C>
- ------------------------------------------- -------------------------------------------
Name of Firm Authorized Signature
- ------------------------------------------- -------------------------------------------
Address Title
- ------------------------------------------- Name:
Zip Code Please Type or Print
Area Code and Tel. No.: Date:, 199 __
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED
DELIVERY. SHARE CERTIFICATES SHOULD BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
IMPACT SYSTEMS, INC.
AT
$2.75 NET PER SHARE OF COMMON STOCK
BY
VOITH SULZER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
VOITH SULZER PAPER TECHNOLOGY NORTH
AMERICA INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JANUARY 20, 1998,
UNLESS THE OFFER IS EXTENDED.
December 18, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Voith Sulzer Acquisition Corp., a California
corporation (the "Purchaser") and a wholly owned subsidiary of Voith Sulzer
Paper Technology North America Inc., a Delaware corporation ("Parent"), to act
as Information Agent in connection with the Purchaser's offer to purchase all
outstanding shares of common stock, without par value (the "Shares") of Impact
Systems, Inc., a California corporation (the "Company"), at a price of $2.75 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated December 18,
1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which,
as amended from time to time, together with the Offer to Purchase, constitute
the "Offer") enclosed herewith. Parent is an indirect subsidiary of J.M. Voith
AG, a corporation organized under the laws of the Federal Republic of Germany.
THE OFFER IS BEING MADE PURSUANT TO THE AGREEMENT AND PLAN OF MERGER, DATED
AS OF DECEMBER 11, 1997 (THE "MERGER AGREEMENT"), BY AND AMONG PARENT, THE
PURCHASER AND THE COMPANY. THE BOARD OF DIRECTORS OF THE COMPANY HAS (A)
APPROVED THE MERGER AGREEMENT, THE STOCK OPTION AGREEMENT DESCRIBED IN THE OFFER
TO PURCHASE, THE OFFER AND THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED
THEREBY, (B) DETERMINED THAT THE OFFER PRICE TO BE RECEIVED BY THE SHAREHOLDERS
OF THE COMPANY PURSUANT TO THE OFFER AND THE MERGER IS FAIR TO THE SHAREHOLDERS
AND (C) RECOMMENDS THAT SHAREHOLDERS TENDER THEIR SHARES PURSUANT TO THE OFFER.
Also enclosed is the letter to shareholders of the Company from the
President and Chief Executive Officer of the Company accompanied by the
Company's Solicitation/Recommendation Statement on Schedule 14D-9.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER THAT NUMBER
OF SHARES WHICH WILL REPRESENT AT LEAST 90% OF THE OUTSTANDING SHARES ON A FULLY
DILUTED BASIS (AFTER GIVING PRO FORMA
<PAGE> 2
EFFECT TO THE POTENTIAL ISSUANCE OF ANY SHARES ISSUABLE UNDER THE STOCK OPTION
AGREEMENT) ON THE DATE OF PURCHASE. THE PURCHASER WILL NOT BE REQUIRED TO ACCEPT
FOR PAYMENT OR PAY FOR TENDERED SHARES UNTIL THE EXPIRATION OF ALL APPLICABLE
WAITING PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976,
AS AMENDED (THE "HSR ACT"), AND THE SATISFACTION OF CONDITIONS UNDER ANY OTHER
APPLICABLE ANTITRUST, COMPETITION OR TRADE REGULATORY LAWS, RULES OR REGULATIONS
OF ANY DOMESTIC OR FOREIGN GOVERNMENT OR GOVERNMENTAL AUTHORITY OR ANY
MULTINATIONAL AUTHORITY ("ANTITRUST LAWS"). THE OFFER IS ALSO SUBJECT TO OTHER
TERMS AND CONDITIONS DESCRIBED IN SECTION 15 OF THE OFFER TO PURCHASE. THE OFFER
IS NOT CONDITIONED ON THE RECEIPT OF FINANCING.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, or who hold
Shares registered in their own names, we are enclosing the following documents:
1. The Offer to Purchase dated December 18, 1997;
2. The Company's Solicitation/Recommendation Statement on Schedule
14D-9;
3. The Letter of Transmittal to be used by holders of Shares in
accepting the Offer and tendering Shares;
4. The Notice of Guaranteed Delivery to be used to accept the Offer if
the certificates evidencing such Shares (the "Share Certificates") are not
immediately available or time will not permit all required documents to
reach the Depositary (as defined in the Offer to Purchase) prior to the
Expiration Date (as defined in the Offer to Purchase) or the procedure for
book-entry transfer cannot be completed by the Expiration Date;
5. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominees, with
space provided for obtaining such clients' instructions with regard to the
Offer;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withheld; and
7. A return envelope addressed to the Depositary (as defined in the
Offer to Purchase).
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn
promptly after the latest to occur of (i) the Expiration Date, (ii) the
expiration of all applicable waiting periods under the HSR Act and the
satisfaction of conditions under any other applicable Antitrust Laws and (iii)
the satisfaction or waiver of the conditions to the Offer set forth in Section
15 of the Offer to Purchase. For purposes of the Offer, the Purchaser will be
deemed to have accepted for payment, and thereby purchased, validly tendered
Shares as, if and when the Purchaser gives oral or written notice to the
Depositary of its acceptance of such Shares for payment pursuant to the Offer.
In all cases, payment for Shares purchased pursuant to the Offer will be made
only after timely receipt by the Depositary of (i) Share Certificates or a
timely confirmation of a book-entry transfer of Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities (as defined in Section 2 of
the Offer to Purchase) pursuant to the procedures set forth in Section 2 of the
Offer to Purchase, (ii) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message (as defined in Section 2 of the Offer to Purchase), and (iii) all other
documents required by the Letter of Transmittal. Under no circumstances will
interest on the purchase price for Shares be paid by the Purchaser, regardless
of any delay in making such payment.
- 2 -
<PAGE> 3
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other person (other than the Information Agent and the Depositary as
described in Section 17 of the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. Purchaser will,
however, upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding the enclosed materials to your clients.
The Purchaser will pay any stock transfer taxes with respect to the
transfer and sale to it or its order pursuant to the Offer, except as otherwise
provided in Instruction 6 of the Letter of Transmittal, as well as any charges
and expenses of the Depositary and the Information Agent.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JANUARY 20, 1998 UNLESS THE OFFER IS
EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof), with
any required signature guarantees and any other required documents, should be
sent to the Depositary, and Share Certificates should be delivered or such
Shares should be tendered by book-entry transfer or in accordance with DTC's
Automated Tender Offer Program ("ATOP") procedures, all in accordance with the
Instructions set forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender Shares, but it is impracticable for
them to forward their Share Certificates or other required documents to the
Depositary prior to the Expiration Date or to comply with the procedures for
book-entry transfer or ATOP on a timely basis, a tender may be effected by
following the guaranteed delivery procedures specified under Section 2 of the
Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
undersigned at the address and telephone number set forth on the back cover of
the Offer to Purchase.
Very truly yours,
D.F. KING & CO., INC.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
OTHER PERSON AS AN AGENT OF PARENT, THE PURCHASER, THE COMPANY, THE DEPOSITARY
OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF
ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED AND
THE STATEMENTS CONTAINED THEREIN.
- 3 -
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
IMPACT SYSTEMS, INC.
AT
$2.75 NET PER SHARE
BY
VOITH SULZER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
VOITH SULZER PAPER TECHNOLOGY NORTH AMERICA INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME ON TUESDAY, JANUARY 20, 1998,
UNLESS THE OFFER IS EXTENDED.
December 18, 1997
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated December
18, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal
(which, as amended from time to time, together with the Offer to Purchase,
constitute the "Offer") in connection with the Offer by Voith Sulzer Acquisition
Corp., a California corporation (the "Purchaser") and a wholly owned subsidiary
of Voith Sulzer Paper Technology North America Inc., a Delaware corporation
("Parent"), to purchase all outstanding shares of common stock, without par
value (the "Shares"), of Impact Systems, Inc., a California corporation (the
"Company"), at a price of $2.75 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase. Unless the context indicates otherwise, "Shareholders" shall
mean holders of Shares. Parent is an indirect subsidiary of J.M. Voith AG, a
corporation organized under the laws of the Federal Republic of Germany.
Also enclosed is the letter to shareholders of the Company from the
President and Chief Executive Officer of the Company accompanied by the
Company's Solicitation/Recommendation Statement on Schedule 14D-9.
Shareholders whose certificates evidencing Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other documents required by the Letter of Transmittal to
the Depositary prior to the Expiration Date (as such terms are defined in the
Offer to Purchase) or who cannot complete the procedure for delivery by
book-entry transfer to the Depositary's account at a Book-Entry Transfer
Facility (as defined in Section 2 of the Offer to Purchase) on a timely basis
and who wish to tender their Shares must do so pursuant to the guaranteed
delivery procedure described in Section 2 of the Offer to Purchase. See
Instruction 2 of the Letter of Transmittal. Delivery of documents to a
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures does not constitute delivery to the Depositary.
THIS MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF SHARES HELD
BY US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE THE HOLDER OF
RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE
MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE
LETTER OF TRANSMITTAL IS BEING FURNISHED TO YOU
<PAGE> 2
FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US
FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account upon the terms and
subject to the conditions set forth in the Offer to Purchase and the related
Letter of Transmittal.
Your attention is invited to the following:
1. The tender price is $2.75 per Share (the "Offer Price"), net to you
in cash, without interest thereon.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Tuesday, January 20, 1998, unless the Offer is extended.
3. The Offer is being made pursuant to the Agreement and Plan of
Merger, dated as of December 11, 1997 (the "Merger Agreement"), by and
among Parent, the Purchaser and the Company, which provides, among other
things, for the commencement of the Offer by the Purchaser and further
provides that after the purchase of the Shares pursuant to the Offer,
subject to the satisfaction or waiver of certain conditions, the Purchaser
will be merged with and into the Company (the "Merger"). Following
consummation of the Merger, the separate corporate existence of the
Purchaser will cease and the Company will continue as the surviving
corporation and will become a wholly owned subsidiary of Parent. At the
effective time of the Merger (the "Effective Time"), each Share issued and
outstanding immediately prior to the Effective Time (other than Shares held
by Parent, the Purchaser, any wholly owned subsidiary of Parent or the
Purchaser, in the treasury of the Company or by any wholly owned subsidiary
of the Company and other than Shares held by Shareholders who shall have
properly exercised their dissenters' rights, if any, under California law),
will be converted into the right to receive $2.75 in cash or any greater
amount paid pursuant to the Offer without interest.
4. The Board of Directors of the Company (the "Board") has (a)
approved the Merger Agreement, the Stock Option Agreement (as defined in
the Offer to Purchase), the Offer and the Merger and the other transactions
contemplated thereby, (b) determined that the Offer Price to be received by
the shareholders of the Company pursuant to the Offer and the Merger is
fair to the shareholders and (c) recommends that shareholders tender their
Shares pursuant to the Offer.
5. The Offer is being made for all outstanding Shares.
6. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration date of the
Offer that number of Shares which will represent at least 90% of the
outstanding Shares on a fully diluted basis after giving pro forma effect
to the potential issuance of any Shares issuable under the Stock Option
Agreement on the date of purchase (the "Minimum Condition"). The Purchaser
will not be required to accept for payment or pay for tendered Shares until
the expiration of all applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
satisfaction of conditions under any other applicable antitrust,
competition or trade regulatory laws, rules or regulations of any domestic
or foreign government or governmental authority or any multinational
authority. The Offer is also subject to other terms and conditions
described in Section 15 of the Offer to Purchase. The Offer is not
conditioned on the Receipt of Financing.
7. In the event that more than 50% of the Shares then outstanding are
tendered pursuant to the Offer and not withdrawn, but less than 90% of the
Shares then outstanding on a fully diluted basis are subject to acquisition
by the Purchaser pursuant to the Offer and the Stock Option (as defined in
the Offer to Purchase), the Purchaser will waive the Minimum Condition and
amend the Offer to reduce the number of Shares subject to the Offer to such
number of Shares as equals 49.9999% of the Shares then outstanding (the
"Revised Minimum Number") and, if a greater number of Shares are tendered
into the Offer and not withdrawn, purchase, on a pro rata basis, the
Revised Minimum Number of Shares (it being understood that the Purchaser
may, but shall not in any event be required to accept for payment, or
2
<PAGE> 3
pay for, any Shares if less than the Revised Minimum Number of Shares are
tendered pursuant to the Offer and not withdrawn at the applicable
expiration date of the Offer).
Tendering Shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any amendments or supplements thereto, and is being made to all
holders of all Shares. The Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares in any jurisdiction in which
the making of the Offer or the acceptance thereof would not be in compliance
with the laws of such jurisdiction. Neither the Purchaser nor Parent is aware of
any jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerees in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to such holders of Shares prior to the
expiration of the Offer. In any jurisdiction where securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of the Purchaser by one or more registered
brokers or dealers that are licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified on the instruction form contained in this
letter. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf prior to the expiration of the Offer. If
holders of Shares wish to tender Shares, but it is impracticable for them to
forward their Share Certificates or other required documents to the Depositary
prior to the Expiration Date or to comply with the procedures for book-entry
transfer on a timely basis, a tender may be effected by following the guaranteed
delivery procedures specified under Section 2 of the Offer to Purchase.
3
<PAGE> 4
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
IMPACT SYSTEMS, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated December 18, 1997, and the related Letter of
Transmittal (which, as amended from time to time, together with the Offer to
Purchase, constitute the "Offer"), in connection with the Offer by Voith Sulzer
Acquisition Corp., a California corporation (the "Purchaser") and a wholly owned
subsidiary of Voith Sulzer Paper Technology North America Inc., a Delaware
corporation, to purchase all outstanding shares of common stock, without par
value (the "Shares"), of Impact Systems, Inc., a California corporation, at a
price equal to $2.75 per Share, net to the seller in cash, without interest
thereon.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or, if no number is indicated below, all Shares) held by you
for the account of the undersigned, upon the terms and subject to the conditions
set forth in the Offer.
NUMBER OF SHARES TO BE TENDERED:
________________________ Shares*
SIGN HERE
Account Number: Signature(s):
Dated:________________________, 199__
- --------------------------------------------------------------------------------
Please type or print name(s)
- --------------------------------------------------------------------------------
Please type or print address(es) here
- --------------------------------------------------------------------------------
Area Code and Telephone Number
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number(s)
- ---------------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
4
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER --
Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000 Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000 The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -------------------------------------------------------
GIVE THE
TAXPAYER IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -------------------------------------------------------
<S> <C>
1. An individual's The individual
account
2. Two or more The actual owner of the
individuals (joint account or, if combined
account) funds, the first
individual on the account
(1)
3. Husband and wife The actual owner of the
(joint account) account or, if joint
funds, either person (1)
4. Custodian account of a The minor (2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the minor
account) is the only contributor,
the minor (1)
6. Account in the name of The ward, minor, or
guardian or committee incompetent person (3)
for a designated ward,
minor, or incompetent
person
7. a. The usual revocable The grantor-trustee (1)
savings trust
account (grantor is
also trustee)
b. So-called trust The actual owner (1)
account that is not
a legal or valid
trust under State
law
8. Sole proprietorship The owner (4)
account
- -------------------------------------------------------
<CAPTION>
- -------------------------------------------------------
GIVE THE
TAXPAYER IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -------------------------------------------------------
<S> <C>
9. A valid trust, estate, The legal entity (Do not
or pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated
in the account title.) (5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
- -------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You may
use either your social security number or your employer identification
number.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in
items (1) through (13) and a person registered under the Investment Advisers Act
of 1940 who regularly acts as a broker are exempt. Payments subject to reporting
under sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends, and payments
by certain fishing boat operators.
- - A corporation
- - An organization exempt from tax under section 501(a), or an IRA, or a
custodial account under section 403(b)(7)
- - The United States or any of its agencies or instrumentalities
- - A state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - A foreign government or any of its political subdivisions, agencies or
instrumentalities
- - An international organization or any of its agencies or instrumentalities
- - A foreign central bank of issue
- - A dealer in securities or commodities required to register in the United
States or a possession of the United States
- - A futures commission merchant registered with the Commodity Futures Trading
Commission
- - A real estate investment trust
- - An entity registered at all times during the tax year under the Investment
Company Act of 1940
- - A common trust fund operated by a bank under section 584(a)
- - A financial institution
- - A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries, Inc,
Nominee List
- - A trust exempt from tax under section 664 or described in section 4947
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under Section 1441 of
the Code
- - Payments to partnerships not engaged in a trade or business in the US and
which have at least one nonresident partner
- - Payments of patronage dividends where the amount received is not paid in money
- - Payments made by certain foreign organizations
- - Payments made to a nominee
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer
- - Payments of tax-exempt interest (including exempt-interest dividends under
Section 852 of the Code)
- - Payments described in Section 6049(b)(5) of the Code to non-resident aliens
- - Payments on tax-free covenant bonds under Section 1451 of the Code
- - Payments made by certain foreign organizations
- - Payments of mortgage interest to you
- - Payments made to an appropriate nominee
Exempt payees described above should file substitute Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND
DATE THE FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NON-RESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A(a), 6045, and 6050A and 6050N
of the Code and the regulations promulgated thereunder.
PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS.
The IRS uses the numbers for identification purposes. Payers must be given the
numbers whether or not recipients are required to file tax returns. Payers must
generally withhold 31% of taxable interest, dividend, and certain other payments
to a payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you fail
to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS -- If you fail to
include any portion of an includible payment for interest, dividends or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of any underpayment attributable to the
failure.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
- 2 -
<PAGE> 1
Exhibit (a)(7)
FOR IMMEDIATE RELEASE
From: Paul M. Bouthilet Robert M. Gorski
Voith Sulzer Paper Technology Impact Systems, Inc.
North America Inc. Vice President and Chief
Chief Financial Officer Financial Officer
2200 N. Roemer Road 14600 Winchester Boulevard
Appleton, Wisconsin 54913 Los Gatos, CA 95030
(920) 731-7724 (408) 379-0910
-JOINT PRESS RELEASE-
VOITH SULZER PAPER TECHNOLOGY NORTH AMERICA INC. SIGNS
DEFINITIVE AGREEMENT TO ACQUIRE IMPACT SYSTEMS, INC.
VOITH SULZER PAPER TECHNOLOGY NORTH AMERICA INC.
TO COMMENCE TENDER OFFER AT $2.75 PER SHARE IN CASH
APPLETON, WISCONSIN AND LOS GATOS, CALIFORNIA, DECEMBER 12, 1997
Voith Sulzer Paper Technology North America Inc. (a paper technology
company specializing in stock preparation, paper machinery and finishing) and
Impact Systems, Inc. (OTC:MPAC) (a paper technology company specializing in
computer based actuator, measurement and control systems) today announced a
definitive merger agreement for Voith Sulzer to acquire all of the outstanding
common stock of Impact at $2.75 per share or approximately $30 million. The
purchase price represents a premium of approximately 57% over the closing price
of Impact's shares at the close of business on December 11, 1997.
The combination of Impact's computer based actuator, measurement and
control systems with the Voith Group's range of paper production and technology
activities will create an integrated global business combined with associated
services.
Mr. Hans Muller, CEO of Voith Sulzer stated:
"We are very pleased about the prospect of Impact joining the Voith
Sulzer family. The newly acquired technology will significantly enhance Voith
Sulzer's capability to offer superior and integrated technology solutions to our
customers in the paper industry worldwide."
Mr. Kenneth P. Ostrow, President and CEO of Impact added:
<PAGE> 2
"We believe combining the capability and technology of Impact with the
strength and size of the Voith Sulzer organization will allow both companies the
ability to provide superior solutions to the paper making industry on a global
basis that Impact could not have done alone."
Under the terms of the merger agreement, Voith Sulzer will promptly
commence a cash tender offer, scheduled to begin on December 18, 1997, for all
outstanding Impact shares at a price of $2.75 per share, net in cash. Shares not
purchased in the tender offer will be acquired in a subsequent merger at the
same price as soon as practicable after completion of the tender offer. The
tender offer is subject to a number of conditions including customary regulatory
approvals. The transaction has been approved by the Boards of Directors of both
companies and is not subject to financing.
Voith Sulzer also entered into agreements with the holders of
approximately 29% of Impact's stock, who agreed to tender their shares to Voith
Sulzer. To the extent not acquired in the tender offer, under certain
circumstances such shareholders have granted Voith Sulzer the option to acquire
such shares.
# # #
Impact Systems, Inc. is headquartered in Los Gatos, California and
develops, manufactures, sells and services computer based actuator, measurement
and control systems to reduce variations which occur in the production of all
major types of paper. Impact's products enable paper manufacturers to improve
paper quality, increase production and reduce waste, energy consumption and raw
material costs.
Voith Sulzer Papiertechnik Gmbh & Co KG, a majority owned subsidiary of
J.M. Voith AG, is a leading worldwide supplier of technology and equipment to
the paper industry, headquartered in Heidenheim, Germany.
J.M. Voith AG is a privately held international technology corporation
active in the fields of paper technology, power generation equipment and power
transmission with headquarters in Heidenheim, Germany.
# # #
-2-
<PAGE> 1
Exhibit (a)(8)
This announcement is neither an offer to purchase nor a solicitation of
an offer to sell Shares. The Offer is made solely by the Offer to Purchase,
dated December 18, 1997, and the related Letter of Transmittal and any
amendments or supplements thereto, and is being made to holders of all Shares.
The Offer is not being made to (nor will tenders be accepted from or on behalf
of) holders of Shares in any jurisdiction in which the making of the Offer or
the acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of Voith Sulzer Acquisition Corp. by one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
IMPACT SYSTEMS, INC.
AT
$2.75 NET PER SHARE
BY
VOITH SULZER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
VOITH SULZER PAPER TECHNOLOGY
NORTH AMERICA INC.
<PAGE> 2
Voith Sulzer Acquisition Corp., a California corporation (the
"Purchaser") and a wholly owned subsidiary of Voith Sulzer Paper Technology
North America Inc., a Delaware corporation ("Parent"), is offering to purchase
all outstanding shares of common stock, without par value (the "Shares"), of
Impact Systems, Inc., a California corporation (the "Company"), at a price of
$2.75 per Share (the "Offer Price"), net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated December 18, 1997 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, as amended from time to time, together constitute
the "Offer"). Tendering shareholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
purpose of the Offer is to acquire for cash as many outstanding Shares as
possible as a first step in acquiring the entire equity interest in the
Company. Following the consummation of the Offer, the Purchaser intends to
effect the Merger as described below. Parent is a subsidiary of J.M. Voith AG, a
corporation organized under the laws of the Federal Republic of Germany.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, JANUARY 20, 1998, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration date of the Offer that number
of Shares which will represent at least 90% of the outstanding Shares on a fully
diluted basis (after giving pro forma effect to the potential issuance of any
Shares issuable under the Stock Option described below) on the date of purchase
(the "Minimum Condition"). The Purchaser will not be required to accept for
payment or pay for tendered Shares until the expiration of all applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the satisfaction of conditions under any other applicable
antitrust, competition or trade regulatory laws, rules or regulations of any
domestic or foreign government or governmental authority or any multinational
authority. The Offer is also subject to other terms and conditions described in
Section 15 of the Offer to Purchase. The Offer is not conditioned on the receipt
of financing.
In the event that more than 50% of the Shares then outstanding are
tendered pursuant to the Offer and not withdrawn, but less than 90% of the
Shares then outstanding on a fully diluted basis are subject to acquisition by
the Purchaser pursuant to the Offer and the Stock Option, the Purchaser will
waive the Minimum Condition and amend the Offer to reduce the number of Shares
subject to the Offer to such number of Shares as equals 49.9999% of the Shares
then outstanding (the "Revised Minimum Number") and, if a greater number of
Shares are tendered into the Offer and not withdrawn, purchase, on a pro rata
basis, the Revised Minimum Number of Shares (it being understood that the
Purchaser may, but shall not in any event be required to accept for payment, or
pay for, any Shares if less than the Revised Minimum Number of Shares are
tendered pursuant to the Offer and not withdrawn at the applicable expiration
date of the Offer).
The Offer is being made pursuant to the Agreement and Plan of Merger,
dated December 11, 1997 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company, which provides, among other things, for the
commencement of the Offer by the Purchaser and further provides that after the
purchase of the Shares pursuant to the Offer, subject to the satisfaction or
waiver of certain conditions, the Purchaser will be merged with and into the
Company (the "Merger"). Following consummation of the Merger, the separate
corporate existence of the Purchaser will cease and the Company will continue as
the surviving corporation and will become a wholly owned subsidiary of Parent.
At the effective time of the Merger, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares held by Parent, the
Purchaser, any wholly owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly owned subsidiary of the Company and
other than Shares held by shareholders who shall have properly exercised their
dissenters' rights, if any, under California law) will be converted into the
right to receive $2.75 in cash or any greater amount paid pursuant to the Offer
without interest.
Concurrently with the execution and delivery of the Merger Agreement and
as an inducement to Parent and the Purchaser to enter into the Merger Agreement,
Parent and the Purchaser executed the Stockholder Agreements, dated December 11,
1997 (the "Stockholder Agreements"), with certain shareholders of the Company
(the "Selling Shareholders"), pursuant to which such Selling Shareholders have
agreed to validly tender (and not to withdraw) approximately 29% of the Shares
in the Offer. In addition, the Selling Shareholders have granted the Purchaser
an option to purchase all but not less than all of such Shares and Parent has an
irrevocable proxy to vote the Shares in favor of the Merger and related
transactions and against certain other transactions.
In addition, concurrently with the execution and delivery of the Merger
Agreement, the Purchaser, Parent and the Company entered into a Stock Option
Agreement (the "Stock Option Agreement") pursuant to which, upon the terms set
forth therein, the Company granted to the Purchaser an irrevocable option (the
"Stock Option") to purchase up to the number of Shares (the "Option Shares")
that, when added to the number of Shares owned by the Purchaser and its
affiliates immediately following consummation of the Offer, would constitute 90%
of the Shares then outstanding on a fully diluted basis (assuming the issuance
<PAGE> 1
EXHIBIT (C)(1)
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated December 11, 1997 (this "Agreement"),
by and among Voith Sulzer Paper Technology North America Inc., a Delaware
company ("Parent"), Voith Sulzer Acquisition Corp., a California corporation and
a wholly-owned subsidiary of Parent (the "Purchaser"), and Impact Systems, Inc.,
a California corporation (the "Company").
WHEREAS, as a condition and inducement to Parent's willingness to enter
into this Agreement, Parent has entered into Stockholder Agreements, dated the
date hereof, with certain holders of capital stock of the Company (the
"Stockholder Agreements"); and
WHEREAS, the respective Boards of Directors of Parent, the Purchaser and
the Company have approved the acquisition of the Company by the Purchaser on the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, in furtherance of such acquisition, Parent proposes to cause the
Purchaser to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase all of the issued and
outstanding shares of common stock, no par value per share, of the Company (the
"Common Shares" or "Shares") at a price per Common Share of $2.75 net to the
seller in cash (such price, as it may hereafter be increased, the "Offer
Price"); and
WHEREAS, the Board of Directors of the Company has approved this Agreement,
the Offer and the Merger (as hereinafter defined), has determined that the Offer
and the Merger are fair and in the best interests of the Company's shareholders
(the "Shareholders"), and is recommending that the Shareholders accept the Offer
and tender all their Shares; and
WHEREAS, the respective Boards of Directors of Parent, the Purchaser and
the Company have approved the merger of the Purchaser with and into the Company,
as set forth below (the "Merger"), in accordance with the General Corporation
Law of the State of California (the "GCL") and upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
Share not owned directly or indirectly by Parent, the Purchaser or the Company
will be converted into the right to receive the Offer Price in cash; and
WHEREAS, as a further inducement to Parent to enter into this Agreement,
Parent, the Purchaser and the Company have entered into a Stock Option
Agreement, dated the date hereof (the "Stock Option Agreement"), pursuant to
which the Company has granted to the Purchaser an option to purchase newly
issued Common Shares under certain circumstances; and
WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
the Purchaser and the Company agree as follows.
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
(a) So long as none of the events set forth in clauses (a) through (g) of
Annex I hereto shall have occurred or exist, the Purchaser shall, and Parent
shall cause the Purchaser to, commence (within the meaning of Rule 14d-2(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as
<PAGE> 2
promptly as practicable after the date hereof, but in any event not later than
December 18, 1997, the Offer for any and all outstanding Shares not owned by the
Purchaser at the Offer Price applicable to such Shares, net to the seller in
cash. The initial expiration date for the Offer shall be the twentieth business
day from and after the date the Offer is commenced, including the date of
commencement as the first business day in accordance with Rule 14d-2 under the
Exchange Act (the "Initial Expiration Date"). As promptly as practicable, the
Purchaser shall file with the Securities and Exchange Commission (the "SEC") the
Purchaser's Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1" and
together with the documents therein pursuant to which the Offer will be made,
and with any supplements or amendments thereto, the "Offer Documents"), which
shall contain (as an exhibit thereto) the Purchaser's Offer to Purchase (the
"Offer to Purchase") which shall be mailed to the holders of Shares with respect
to the Offer. The obligation of Parent and the Purchaser to accept for payment
or pay for any Shares tendered pursuant to the Offer will be subject only to the
satisfaction or waiver of the conditions set forth in Annex I hereto. Without
the prior written consent of the Company, the Purchaser shall not (i) decrease
the Offer Price or change the form of consideration payable in the Offer, (ii)
decrease the number of Shares sought to be purchased in the Offer (except as
otherwise set forth in Section 1.01(b) hereof), (iii) change the conditions set
forth in Annex I, (iv) extend the expiration date of the Offer (except as
required by applicable rules and regulations of the SEC and except that
Purchaser may in its discretion extend the expiration date of the Offer for up
to 10 business days after the Initial Expiration Date, and may extend the Offer
thereafter for longer periods (not to exceed 90 calendar days from the date of
commencement (unless, in the Company's sole discretion, the Company requests
that the expiration date of the Offer be further extended, up to a maximum of
120 calendar days) from the date of commencement in the event that any condition
to the Offer is not satisfied or waived) (v) impose additional conditions to the
Offer, or (vi) amend any other term of the Offer in any manner adverse to the
holders of any Shares.
(b) Subject to the limitations set forth in clause (iv) of Section 1.01(a),
in the event the Minimum Condition (as defined in Annex I) is not satisfied on
any scheduled expiration date of the Offer, the Purchaser may either (i) extend
the Offer pursuant to clause (iv) of the last sentence of Section 1.01(a) or
(ii) amend the Offer to provide that, in the event (x) the Minimum Condition is
not satisfied at the next scheduled expiration date of the Offer (after giving
pro forma effect to the potential issuance of any Common Shares issuable upon
exercise of the Stock Option Agreement) and (y) the number of Common Shares
tendered pursuant to the Offer and not withdrawn as of such next scheduled
expiration date is more than 50% of the then outstanding Common Shares, the
Purchaser must waive the Minimum Condition and amend the Offer to reduce the
number of Common Shares subject to the Offer to a number of Shares that when
added to the Shares then owned by the Purchaser will equal 49.9999% of the
Common Shares then outstanding (the "Revised Minimum Number") and, if a greater
number of shares is tendered into the Offer and not withdrawn, purchase, on a
pro rata basis, the Revised Minimum Number of Common Shares (it being understood
that the Purchaser may, but shall not in any event be required to, accept for
payment, or pay for, any Common Shares if less than the Revised Minimum Number
of Shares are tendered pursuant to the Offer and not withdrawn at the applicable
expiration date).
(c) Subject to the terms of the Offer and this Agreement and the
satisfaction or waiver of all the conditions of the Offer set forth in Annex I
hereto as of any expiration date, the Purchaser will accept for payment and pay
for all Shares validly tendered and not withdrawn pursuant to the Offer as soon
as practicable after such expiration date of the Offer.
(d) The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Shareholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by Parent or the
Purchaser with respect to information supplied by the Company in writing for
inclusion in the Offer Documents. No representation, warranty or covenant is
made or shall be made herein by the Company with respect to information
contained in the Offer Documents other than information supplied by the Company
in writing expressly for inclusion in the Offer Documents. Each of Parent and
the Purchaser, on the one hand,
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<PAGE> 3
and the Company, on the other hand, agrees promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that it shall
have become false or misleading in any material respect and the Purchaser
further agrees to take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to the Shareholders,
in each case as and to the extent required by applicable federal securities
laws. Each of Parent and the Purchaser, on the one hand, and the Company, on the
other hand, agrees to give a reasonable opportunity to review and comment upon
any Offer Document to be filed with the SEC prior to any such filing and to
provide in writing any comments each may receive from the SEC or its staff with
respect to the Offer Documents promptly after the receipt of such comments.
SECTION 1.02 Company Actions.
(a) The Company shall file with the SEC, simultaneously with the filing by
Parent and Purchaser of the Schedule 14D-1, and mail to the holders of Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (together with any amendments or supplements thereto, the "Schedule
14D-9"). The Schedule 14D-9 will set forth, and the Company hereby represents,
that the Board of Directors of the Company, at a meeting duly called and held,
has (i) determined that the Offer and the Merger are fair to and in the best
interests of the Company and the Shareholders, (ii) approved the Offer and the
Merger in accordance with Section 1101 of the GCL and approved this Agreement
and the Stock Option Agreement, and (iii) resolved to recommend acceptance of
the Offer by the Shareholders; provided, however, that such recommendation may
be withdrawn, modified or amended to the extent that the Board of Directors of
the Company determines in good faith by a majority vote that it is necessary
under applicable Law (as hereinafter defined) to do so in the exercise of its
fiduciary duties to the Shareholders but only after receipt of written advice of
the Company's outside legal counsel with respect to the fiduciary obligations of
the Board of Directors.
(b) The Schedule 14D-9 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Shareholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company with
respect to information supplied by Parent or the Purchaser in writing for
inclusion in the Schedule 14D-9. Each of the Company, on the one hand, and
Parent and the Purchaser, on the other hand, agree promptly to correct any
information provided by either of them for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and to be disseminated to the Shareholders,
in each case as and to the extent required by applicable federal securities law.
(c) In connection with the Offer, the Company will furnish the Purchaser
with such information and assistance as the Purchaser or its agents or
representatives may reasonably request in connection with communicating the
Offer to the record and beneficial holders of the Shares, including, without
limitation, its stockholders list, security position listings and non-objecting
beneficial owners list, if any. Subject to the requirements of applicable Law,
and except for such actions as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Offer and the Merger, Parent
and the Purchaser and each of their affiliates, associates, partners, employees,
agents and advisors shall hold in confidence the information contained in such
stockholders list, security position listings and non-objecting beneficial
owners list, shall use such information only in connection with the Offer and
the Merger, and, if this Agreement is terminated in accordance with its terms,
shall deliver promptly to the Company all copies of such information (and any
copies, compilations or extracts thereof or based thereon) then in their
possession or under their control.
SECTION 1.03 Directors.
(a) Subject to compliance with applicable Law, promptly upon the payment by
the Purchaser for Shares pursuant to the Offer, and from time to time
thereafter, the Purchaser shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as is equal to the product of the total number of directors on the Board
of Directors of the Company (determined
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<PAGE> 4
after giving effect to the directors elected pursuant to this sentence)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by the Purchaser or its affiliates bears to the total number of Shares
then outstanding, and the Company shall, subject to compliance with Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, upon request of
the Purchaser, promptly take all actions necessary to cause the Purchaser's
designees to be so elected, including, if necessary, seeking the resignations of
one or more existing directors; provided, however, that prior to the Effective
Time (as defined in Section 2.02) the Board of Directors of the Company shall
always have at least two members who are neither officers, directors,
stockholders or designees of the Purchaser or any of its affiliates ("Purchaser
Insiders"); and provided further, however, that the Purchaser shall be entitled
to designate a number of directors equal to or greater than 50% of the total
number of directors only if the Purchaser acquires 90% or more of the
outstanding Shares pursuant to the Offer. If the number of directors who are not
Purchaser Insiders is reduced below two for any reason prior to the Effective
Time, then the remaining directors who are not Purchaser Insiders (or if there
is only one director who is not a Purchaser Insider, the remaining director who
is not a Purchaser Insider) shall be entitled to designate a person (or persons)
to fill such vacancy (or vacancies) who is not an officer, director, stockholder
or designee of the Purchaser or any of its affiliates and who shall be a
director not deemed to be a Purchaser Insider for all purposes of this
Agreement.
(b) The Company's obligation to appoint the Purchaser's designees to the
Board of Directors of the Company shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder. The Company shall promptly take all
actions required pursuant to such Section and Rule in order to fulfill its
obligations under this Section 1.03 and shall include in the Schedule 14D-9 such
information with respect to the Company and its officers and directors as is
required under such Section and Rule in order to fulfill its obligations under
this Section 1.03. Parent will supply in writing any information with respect to
itself and its officers, directors and affiliates required by such Section and
Rule to the Company.
(c) From and after the election or appointment of the Purchaser's designees
pursuant to this Section 1.03 and prior to the Effective Time, any amendment or
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or the Purchaser or waiver of any of the Company's rights hereunder, or any
other action taken by the Board in connection with this Agreement, will require
the concurrence of a majority of the directors of the Company then in office who
are not Purchaser Insiders.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the satisfaction or
waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the GCL, at the Effective Time (as defined in
Section 2.02) the Purchaser shall be merged with and into the Company. Following
the Merger, the separate corporate existence of the Purchaser shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation").
SECTION 2.02 Effective Time; Closing. As soon as practicable after the
satisfaction or waiver of the Second-Step Conditions set forth in Article VII
hereof, the Company shall execute in the manner required by the GCL and file in
the office of the Secretary of State of the State of California an agreement of
merger together with an officer's certificate of the Company and the Purchaser,
and the parties shall take such other and further actions as may be required by
Law to make the Merger effective. The time the Merger becomes effective in
accordance with applicable Law is referred to as the Effective Time. On the
business day immediately preceding such filing, a closing shall be held at the
offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto,
California 94304, unless another date or place is agreed to in writing by the
parties hereto, for the purpose of confirming the satisfaction or waiver, as the
case may be, of the conditions set forth in Article VII.
SECTION 2.03 Effects of the Merger. The Merger shall have the effects set
forth in Section 1107 of the GCL.
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<PAGE> 5
SECTION 2.04 Articles of Incorporation and By-Laws of the Surviving
Corporation.
(a) The articles of incorporation of the Company, as in effect immediately
prior to the Effective Time, shall be the articles of incorporation of the
Surviving Corporation until thereafter amended in accordance with the provisions
thereof and hereof and applicable Law.
(b) The by-laws of the Company in effect at the Effective Time shall be the
by-laws of the Surviving Corporation until thereafter amended in accordance with
the provisions thereof and hereof and applicable Law.
SECTION 2.05 Directors. Subject to applicable Law, the directors of the
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
SECTION 2.06 Officers. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
SECTION 2.07 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of the holders thereof, each Share
issued and outstanding immediately prior to the Effective Time (other than any
Shares held by Parent, the Purchaser, any wholly-owned subsidiary of Parent or
the Purchaser, in the treasury of the Company or by any wholly-owned subsidiary
of the Company, which Shares, by virtue of the Merger and without any action on
the part of the holder thereof, shall be canceled and retired and shall cease to
exist with no payment being made with respect thereto, and other than Dissenting
Shares (as defined in Section 3.01)) shall be converted into the right to
receive in cash the Offer Price (the "Merger Price").
SECTION 2.08 Conversion of Purchaser Common Stock. At the Effective Time,
the shares of common stock, no par value, of the Purchaser 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 and become the number of validly issued, fully paid and nonassessable
shares of common stock, no par value, of the Surviving Corporation equal to the
number of Common Shares outstanding on a fully diluted basis immediately prior
to the Effective Time.
SECTION 2.09 Company Option Plans. The Company shall take all actions
necessary so that, immediately prior to the Effective Time, (A) each outstanding
option to purchase Common Shares (an "Option") granted under the Company's
Discount Stock Option Plan, 1995 Incentive Stock Option Plan, 1985 Incentive
Stock Option Plan and 1982 Incentive Stock Option Plan (collectively, the
"Option Plans"), whether or not then exercisable or vested, shall become fully
exercisable and vested, (B) each Option which is then outstanding shall be
cancelled and (C) in consideration of such cancellation, and except to the
extent that Parent or the Purchaser and the holder of any such Option otherwise
agree, immediately following consummation of the Merger, the Company shall
promptly pay to such holders of Options an amount in respect thereof equal to
the product of (1) the excess of the Merger Price over the exercise price
thereof and (2) the number of Common Shares subject thereto (such payment to be
net of taxes required by law to be withheld with respect thereto); provided that
the foregoing shall be subject to the obtaining of any necessary consents of
holders of Options, it being agreed that the Company and Parent will use their
commercially reasonable best efforts to obtain any such consents.
SECTION 2.10 Shareholders' Meeting.
(a) If required by the Company's articles of incorporation and/or
applicable Law in order to consummate the Merger, the Company, acting through
its Board of Directors, shall, in accordance with applicable Law:
(i) duly call, give notice of, convene and hold a special meeting of
the Shareholders (the "Shareholders' Meeting") as soon as practicable
following the acceptance for payment of and payment for Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon this Agreement;
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<PAGE> 6
(ii) prepare and file with the SEC a preliminary proxy statement
relating to the Merger and this Agreement and use its commercially
reasonable best efforts (x) to obtain and furnish the information required
to be included by the SEC in the Proxy Statement (as hereinafter defined)
and, after the consultation with Parent, to respond promptly to any
comments made by the SEC with respect to the preliminary proxy statement
and, subject to compliance with SEC rules and regulations, to cause a
definitive proxy statement (the "Proxy Statement") to be mailed to the
Shareholders and (y) to obtain the necessary approvals of the Merger and
this Agreement by the Shareholders; and
(iii) subject to the fiduciary obligations of the Board of Directors
of the Company under applicable Law, include in the Proxy Statement the
recommendation of the Board of Directors of the Company that the
Shareholders vote in favor of the approval of the Merger and the adoption
of this Agreement.
(b) Parent and the Purchaser will furnish to the Company the information
relating to Parent and the Purchaser required under the Exchange Act and the
rules and regulations thereunder to be set forth in the Proxy Statement.
(c) Parent agrees that it will (i) vote, or cause to be voted, all of the
Shares then owned by it, the Purchaser or any of its other subsidiaries in favor
of the approval of the Merger and the adoption of this Agreement and (ii) take
or cause to be taken all additional corporate actions necessary for the
Purchaser to adopt and approve this Agreement and the transactions contemplated
hereby.
SECTION 2.11 Merger Without Meeting of Shareholders. Notwithstanding
Section 2.10, in the event that Parent, the Purchaser or any other subsidiary of
Parent shall have acquired at least 90% of the outstanding Shares pursuant to
the Offer (including as a result of the exercise of the Stock Option Agreement)
and prior transactions, the parties hereto agree to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the acceptance for payment of and payment for Shares by the
Purchaser pursuant to the Offer without a meeting of Shareholders, in accordance
with Section 1110 of the GCL.
SECTION 2.12 Earliest Consummation. Each party hereto shall use its
commercially reasonable best efforts to consummate the Merger as soon as
practicable. If the conditions set forth in Annex I hereto are satisfied, or
waived, the Purchaser shall consummate the Offer and accept for payment Shares
tendered therein and thereafter effectuate the Merger.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.01 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Shares outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger or consented thereto
in writing and who has demanded appraisal for such shares in accordance with
Section 1300 of the GCL, if such Section 1300 provides for appraisal rights for
such Shares in the Merger ("Dissenting Shares"), shall not be converted into the
right to receive the Merger Price as provided in Section 2.07, unless and until
such holder fails to perfect or withdraws or otherwise loses his right to
appraisal and payment under the GCL. If, after the Effective Time, any such
holder fails to perfect or withdraws or loses his right to appraisal, then such
Dissenting Shares shall thereupon be treated as if they had been converted as of
the Effective Time into the right to receive the Merger Price, if any, to which
such holder is entitled, without interest or dividends thereon. The Company
shall give Parent prompt notice of any demands received by the Company for
appraisal of Shares and, prior to the Effective Time, Parent shall have the
right to participate in all negotiations and proceedings with respect to such
demands. Prior to the Effective Time, the Company shall not, except with the
prior written consent of Parent, make any payment with respect to or settle or
offer to settle, any such demands.
SECTION 3.02 Payment for Shares.
(a) Prior to the commencement of the Offer, Purchaser shall appoint a
United States bank or trust company mutually acceptable to the Company and
Parent to act as paying agent (the "Paying Agent") for the
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<PAGE> 7
payment of the Offer Price and the Merger Price. Prior to the payment time
thereof, Parent shall deposit or shall cause to be deposited with the Paying
Agent in a separate fund established for the benefit of the holders of Shares,
for payment in accordance with this Article III, through the Paying Agent (the
"Payment Fund"), immediately available funds in amounts necessary to make the
payments pursuant to the Offer, Section 2.07 and this Section 3.02 to holders
(other than the Company or any subsidiary of the Company or Parent, Purchaser or
any other subsidiary of Parent, or holders of Dissenting Shares). The Paying
Agent shall pay the Offer Price and the Merger Price out of the Payment Fund.
From time to time at or after the Effective Time, Parent shall take all
lawful action necessary to make the appropriate cash payments, if any, to
holders of Dissenting Shares. Prior to the Effective Time, Parent shall enter
into appropriate commercial arrangements to ensure effectuation of the
immediately preceding sentence. The Paying Agent shall invest the Payment Fund
as directed by Parent or the Purchaser in obligations of, or guaranteed by, the
United States of America, in commercial paper obligations rated A-1 or P-1 or
better by Moody's Investor Services or Standard & Poor's Corporation,
respectively, or in certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $1 billion, in
each case with maturities not exceeding seven days. Parent shall cause the
Payment Fund to be promptly replenished to the extent of any losses incurred as
a result of the aforementioned investments. All earnings thereon shall inure to
the benefit of the Surviving Corporation. If for any reason (including losses)
the Payment Fund is inadequate to pay the amounts to which holders of Shares
shall be entitled under Section 2.07 and this Section 3.02, Parent shall in any
event be liable for payment thereof. The Payment Fund shall not be used for any
purpose except as expressly provided in this Agreement.
(b) Promptly after the Effective Time, the Paying Agent shall mail to each
record holder of certificates (the "Certificates") that immediately prior to the
Effective Time represented Shares entitled to payment of the Merger Price
pursuant to Section 2.07 (other than Certificates representing Dissenting Shares
and Certificates representing Shares held by Parent or the Purchaser, any
wholly-owned subsidiary of Parent or the Purchaser, in the treasury of the
Company or by any wholly-owned subsidiary of the Company) a form of letter of
transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent and instructions for use in surrendering such
Certificates and receiving the aggregate Merger Price, in respect thereof. Upon
the surrender of each such certificate and subject to applicable withholding,
the Paying Agent shall pay the holder of such Certificate in respect of Shares,
the Merger Price multiplied by the number of Shares formerly represented by such
Certificate, and such Certificate shall forthwith be cancelled. Until so
surrendered, each such Certificate (other than Certificates representing
Dissenting Shares and Certificates representing Shares held by Parent or the
Purchaser, any wholly-owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly-owned subsidiary of the Company) shall
represent solely the right to receive the aggregate Merger Price relating
thereto. No interest or dividends shall be paid or accrued on the Merger Price.
If the Merger Price (or any portion thereof) is to be delivered to any person
other than the person in whose name the Certificate formerly representing Shares
is registered, it shall be a condition to such right to receive such Merger
Price, as applicable, that the Certificate so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the person
surrendering such Certificates shall pay to the Paying Agent any transfer or
other taxes required by reason of the payment of the Merger Price to a person
other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not applicable.
(c) Promptly following the date which is 270 days after the Effective Time,
the Paying Agent shall deliver to the Surviving Corporation all cash,
Certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing a Share may
surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in
consideration therefor the aggregate Merger Price, without any interest or
dividends thereon.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any Shares, which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates formerly representing Shares are presented to the Surviving
Corporation or the
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Paying Agent, they shall be surrendered and cancelled in return for the payment
of the aggregate Merger Price relating thereto, as provided in this Article III,
subject to applicable law in the case of Dissenting Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and the Purchaser as
follows (with such exceptions thereto as are set forth in the disclosure
schedule delivered by the Company to Parent on the date hereof (the "Company
Disclosure Statement")):
SECTION 4.01 Organization and Qualification; Subsidiaries. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California. Each of the Company's subsidiaries (the
"Subsidiaries") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The Company
and each of the Subsidiaries has the requisite corporate 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 or licensed to do business, and is in
good standing, in each jurisdiction in which the nature of its business or the
properties owned, operated or leased by it makes such qualification, licensing
or good standing necessary, except where the failures to have such power or
authority, or the failures to be so qualified, licensed or in good standing,
individually, and in the aggregate, would not have a Material Adverse Effect on
the Company. The term "Material Adverse Effect on the Company", as used in this
Agreement, means any change in or effect on the business, results of operations,
assets or condition (financial or otherwise) of the Company or any of the
Subsidiaries that is materially adverse to the Company and the Subsidiaries
taken as a whole.
SECTION 4.02 Articles of Incorporation and By-Laws. The Company has
heretofore made available to Parent and the Purchaser a complete and correct
copy of the articles of incorporation and the by-laws, each as amended to the
date hereof and a copy of which is set forth in Section 4.02 of the Company
Disclosure Statement, of each of the Company and the Subsidiaries.
SECTION 4.03 Capitalization. The authorized capital stock of the Company
consists of 20,000,000 Common Shares and 2,000,000 shares of preferred stock, no
par value (the "Preferred Stock"). As of the close of business on December 10,
1997, there were 10,511,576 Common Shares issued and no shares of Preferred
Stock issued. The Company has no shares of capital stock reserved for issuance,
except that, as of December 10, 1997, there were 1,201,102 Common Shares
reserved for issuance pursuant to Options granted pursuant to the Option Plans.
Since March 31, 1997, the Company has not issued any shares of capital stock
except pursuant to the exercise of Options outstanding as of such date and in
accordance with their terms. All the outstanding Common Shares are, and all
Common Shares which may be issued pursuant to the exercise of outstanding
Options and pursuant to the Stock Option Agreement will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and nonassessable. There are no bonds, debentures, notes or other
indebtedness having general voting rights (or convertible into Shares having
such rights) ("Voting Debt") of the Company or any of the Subsidiaries issued
and outstanding. Except as set forth in this Section 4.03 and except for the
Merger and the Stock Option Agreement, there are no existing options, warrants,
calls, subscriptions or other rights, agreements, arrangements or commitments of
any character, relating to the issued or unissued capital stock of the Company
or any of the Subsidiaries, obligating the Company or any of the Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or any
of the Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests or obligations of the Company or any of the
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment. Except (i) as
contemplated by the Merger contemplated by this Agreement, (ii) for the
Company's obligations under the Option Plans and (iii) for the Company's
obligations under the Stock Option Agreement, there are no outstanding
contractual obligations of the Company or any of the Subsidiaries to repurchase,
redeem or otherwise acquire any Common Shares or the capital stock of the
Company or any of the Subsidiaries. Each of the outstanding shares of capital
stock of each of the Subsidiaries is duly authorized, validly issued, fully paid
and nonassessable, and such shares of the Subsidiaries as are
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<PAGE> 9
owned by the Company or by another Subsidiary are owned in each case free and
clear of any lien, claim, option, charge, security interest, limitation,
encumbrance and restriction of any kind (any of the foregoing being a "Lien").
Section 4.03 of the Company Disclosure Statement contains a complete list as of
the date hereof of each Subsidiary and sets forth with respect to each of the
Subsidiaries its name and jurisdiction of organization and, with respect to each
Subsidiary that is not wholly-owned by the Company or another Subsidiary, the
percentage of shares of capital stock or share capital owned by the Company or a
Subsidiary. Except for the capital stock of the Subsidiaries or as set forth in
Section 4.03 of the Company Disclosure Statement, the Company does not own,
directly or indirectly, any capital stock or other ownership interest in any
corporation, partnership, limited liability company, joint venture or other
entity.
SECTION 4.04 Authority. The Company has all necessary corporate power and
authority to execute and deliver this Agreement and the Stock Option Agreement
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Stock Option Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly and validly authorized and approved by the
Board of Directors of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize or approve this Agreement or the Stock
Option Agreement or to consummate the transactions contemplated hereby or
thereby (other than, with respect to the Merger, the approval and adoption of
the Merger and this Agreement by holders of the Shares to the extent required by
the Company's articles of incorporation and by applicable Law). This Agreement
and the Stock Option Agreement have been duly and validly executed and delivered
by the Company and, assuming the due and valid authorization, execution and
delivery of this Agreement and the Stock Option Agreement by Parent and the
Purchaser, constitute valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity. The Board of
Directors of the Company has, at a meeting of such Board duly held on December
11, 1997, approved and adopted this Agreement, the Stock Option Agreement, the
Offer and the Merger and the other transactions contemplated hereby and thereby,
determined that the Offer Price to be received by the holders of Shares pursuant
to the Offer and the Merger is fair to the holders of the Shares and recommends
that the holders of Shares tender their Shares pursuant to the Offer.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement or the Stock
Option Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby or thereby or the compliance by the Company
with any of the provisions hereof or thereof will (i) conflict with or violate
the articles of incorporation or by-laws of the Company or the comparable
organizational documents of any of the Subsidiaries, (ii) conflict with or
violate any statute, ordinance, rule, regulation, order, judgment or decree
applicable to the Company or the Subsidiaries, or by which any of them or any of
their respective properties or assets may be bound or affected, or (iii) result
in a violation or 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, amendment, acceleration or cancellation of, or result
in any loss of any material benefit, or the creation of any Lien on any of the
property or assets of the Company or any of the Subsidiaries (any of the
foregoing referred to in clause (ii) or this clause (iii) being a "Violation")
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries or any of their respective properties may be bound or affected,
except in the case of the foregoing clauses (ii) or (iii) for any Violation
which, individually and in the aggregate, would not have a Material Adverse
Effect on the Company.
(b) None of the execution and delivery of this Agreement or the Stock
Option Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby or thereby or the compliance by the Company
with any of the provisions hereof or thereof will require any consent, waiver,
approval, authorization or permit of, or registration or filing with or
notification to (any of the foregoing being a "Consent"), any government or
subdivision thereof, or any administrative, governmental or regulatory
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<PAGE> 10
authority, agency, commission, tribunal or body, domestic, foreign or
supranational (a "Governmental Entity"), except for (i) compliance with any
applicable requirements of the Exchange Act, (ii) the filing of an agreement of
merger together with an officer's certificate of the Company and the Purchaser
pursuant to the GCL, (iii) compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and any requirements of any
foreign or supranational Antitrust Laws (as hereinafter defined), (iv) such
filings and approvals as may be required by any applicable state securities,
"blue sky" or takeover Laws, and (v) Consents or filings the failure of which to
obtain or make, individually and in the aggregate, would not have a Material
Adverse Effect on the Company or materially adversely affect the ability of the
Company to consummate the transactions contemplated by this Agreement and the
Stock Option Agreement.
SECTION 4.06 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements required to be filed by
the Company with the SEC from March 31, 1997 until the date hereof (the "SEC
Reports"). As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Exchange Act or the Securities
Act of 1933, as amended, and the rules and regulations of the SEC promulgated
thereunder applicable, as the case may be, to such SEC Reports, and none of the
SEC Reports contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
(b) The consolidated balance sheets as of March 31, 1997 and 1996 and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended March 31, 1997 (including the
related notes and schedules thereto) of the Company contained in the Company's
Form 10-K for the year ended March 31, 1997 included in the SEC Reports present
fairly, in all material respects, the consolidated financial position and the
consolidated results of operations and cash flows of the Company and its
consolidated subsidiaries as of the dates or for the periods presented therein
in conformity with United States generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto).
(c) The consolidated balance sheets and the related statements of income
and cash flows (including in each case the related notes thereto) of the Company
contained in the Forms 10-Q for the periods ended June 30, 1997 and September
30, 1997 and included in the SEC Reports (collectively, the "Quarterly Financial
Statements") have been prepared in accordance with the requirements for interim
financial statements contained in Regulation S-X. The Quarterly Financial
Statements reflect all adjustments, which include only normal recurring
adjustments, necessary to present fairly and do present fairly, in all material
respects, the consolidated financial position, results of operations and cash
flows of the Company for all periods presented therein in conformity with GAAP
applied on a consistent basis during the periods involved.
(d) The Company and the Subsidiaries have no liabilities or obligations of
any nature (whether absolute, accrued, contingent, unmatured, unaccrued,
unliquidated, unasserted, conditional or otherwise) except for liabilities or
obligations (i) reflected or reserved against on the balance sheet as of
September 30, 1997 (including the notes thereto) included in the Quarterly
Financial Statements, (ii) incurred in the ordinary course of business
consistent with past practice since such date, or (iii) as set forth in Schedule
4.06 to the Company Disclosure Statement.
SECTION 4.07 Information. None of the information supplied by the Company
in writing specifically for inclusion or incorporation by reference in (i) the
Offer Documents, (ii) the Schedule 14D-9, (iii) the Proxy Statement or (iv) any
other document to be filed with the SEC or any other Governmental Entity in
connection with the transactions contemplated by this Agreement (the "Other
Filings") will, at the respective times filed with the SEC or other Governmental
Entity and, in addition, in the case of the Proxy Statement, at the date it or
any amendment or supplement is mailed to the Shareholders, at the time of the
Shareholders' Meeting and at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder,
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<PAGE> 11
except that no representation is made by the Company with respect to statements
made therein based on information supplied by Parent or the Purchaser in writing
specifically for inclusion in the Proxy Statement.
SECTION 4.08 Tax Matters.
(a) Provision For Taxes. The provision made for taxes on the balance sheet
as of September 30, 1997, which balance sheet is included in the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 (the
"Recent Balance Sheet"), is sufficient for the payment of all federal, state,
foreign, county, local and other income, ad valorem, excise, profits, franchise,
occupation, property, payroll, sales, use, gross receipts and other taxes (and
any interest and penalties) and assessments of the Company and the Subsidiaries,
whether or not disputed, at the date of the Recent Balance Sheet and for all
years and periods prior thereto. Since the date of the Recent Balance Sheet,
neither the Company nor any Subsidiary has incurred any taxes other than taxes
incurred in the ordinary course of business consistent in type and amount with
past practices of the Company and the Subsidiaries.
(b) Tax Returns Filed. Except as set forth on Schedule 4.08(a) of the
Company Disclosure Statement, all federal, state, foreign, county, local and
other tax returns required to be filed by or on behalf of the Company and the
Subsidiaries have been timely filed and when filed were true and correct in all
material respects, and the taxes shown as due thereon were paid or adequately
accrued. Except as set forth on Schedule 4.08(b) of the Company Disclosure
Statement, neither the Company nor any of the Subsidiaries is the beneficiary of
any extension of time within which to file tax returns. The Company has
delivered to Parent and the Purchaser true and complete copies of all tax
returns or reports filed by the Company and the Subsidiaries for taxable periods
ending on or after December 31, 1991. The Company and each Subsidiary have
withheld and paid all taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, creditor, shareholder,
independent contractor or third party, and have filed all required information
returns.
(c) Tax Audits. The federal and state income tax returns of the Company and
the Subsidiaries have been audited by the Internal Revenue Service and
appropriate state taxing authorities for the periods and to the extent set forth
in Schedule 4.08(c) of the Company Disclosure Statement, and neither the Company
nor any Subsidiary has received from the Internal Revenue Service or from the
tax authorities of any state, county, local or other jurisdiction any (i) notice
of underpayment of taxes or other deficiency which has not been paid or (ii) any
objection to any return or report filed by the Company or the Subsidiaries. No
claim has been made by a tax authority in a jurisdiction where any of the
Company and the Subsidiaries does not file tax returns that the Company or any
Subsidiary is or may be subject to taxation by that jurisdiction. Except as set
forth in Schedule 4.08(c) of the Company Disclosure Statement, neither the
Company nor any of the Subsidiaries has waived any statute of limitations with
respect to taxes, or has agreed to an extension of time with respect to a tax
assessment or deficiency. There are outstanding no agreements or waivers
extending the statutory period of limitations applicable to any taxes.
(d) Consolidated Group. Schedule 4.08(d) of the Company Disclosure
Statement lists every year that the Company or any Subsidiaries were a member of
an affiliated group of corporations that filed a consolidated tax return on
which the statute of limitations does not bar a federal tax assessment, and
lists each corporation that has been part of such group. No affiliated group of
corporations of which the Company or any of the Subsidiaries has been a member
has discontinued filing consolidated returns during the past five years. A copy
of any tax sharing agreement to which the Company or any of the Subsidiaries is
a party has been delivered by the Company to Parent and the Purchaser.
(e) Other. Except as set forth in Schedule 4.08(e) of the Company
Disclosure Statement, neither the Company nor any Subsidiary has (i) filed any
consent or agreement under Section 341(f) of the Internal Revenue Code of 1986,
as amended (the "Code"), (ii) applied for any tax ruling, (iii) entered into a
closing agreement with any taxing authority, (iv) filed an election under
Section 338(g) or Section 338(h)(10) of the Code (nor has a deemed election
under Section 338(e) of the Code occurred), (v) made any payments that will not
be deductible because of Section 280G of the Code, or (vi) been a party to any
tax allocation or tax sharing agreement. The Company is not a "United States
real property holding corporation" within the meaning of Section 897 of the
Code.
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SECTION 4.09 No Litigation. There is no action, suit, arbitration,
proceeding, investigation or inquiry, whether civil, criminal or administrative
("Litigation"), pending or, to the knowledge of the Company or the Subsidiaries,
threatened against the Company or the Subsidiaries, their respective businesses
or any of their assets, nor does the Company or the Subsidiaries know, or have
grounds to know, of any basis for any Litigation that would have, individually
or in the aggregate, a Material Adverse Effect on the Company. Except as set
forth in Schedule 4.09 of the Company Disclosure Statement, neither the Company
nor the Subsidiaries or any of their respective assets which are material to the
conduct of the business of the Company and the Subsidiaries, taken as a whole,
as heretofore conducted are subject to any Order (as hereinafter defined) of any
Governmental Entity.
SECTION 4.10 Compliance With Laws and Orders.
(a) Compliance. The Company and the Subsidiaries are in compliance with all
applicable laws, ordinances, rules or regulations (collectively, "Laws") and
orders, writs, injunctions, judgments, plans or decrees (collectively, "Orders")
of any Governmental Entity, except for such failures to so comply which,
individually and in the aggregate, would not have a Material Adverse Effect on
the Company. The business operations of the Company and the Subsidiaries are not
being conducted in violation of any Law or Order of any Governmental Entity,
except for possible violations which, individually or in the aggregate, would
not have a Material Adverse Effect on the Company.
(b) Licenses and Permits. The Company and the Subsidiaries have all
material licenses, permits, approvals, authorizations and consents of all
Governmental Entities and all certification organizations required for the
conduct of the business of the Company and the Subsidiaries (as presently
conducted and as proposed to be conducted under any existing business plan of
the Company or any Subsidiary) and operation of the facilities of the Company
and the Subsidiaries.
(c) Environmental Matters. The applicable Laws relating to pollution or
protection of the environment or health, including Laws relating to emissions,
discharges, generation, storage, labeling, releases or threatened releases of
pollutants, contaminants, radioactive material, chemicals or industrial, toxic,
hazardous or petroleum or petroleum-based substances, hazardous substances or
wastes ("Waste") into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Waste including, without limitation,
the Clean Water Act, the Clean Air Act, the Resource Conservation and Recovery
Act, the Toxic Substances Control Act and the Comprehensive Environmental
Response Compensation Liability Act, as amended, and their state, local and
foreign counterparts are herein collectively referred to as the "Environmental
Laws".
The operations of Company and the Subsidiaries have at all times been
(within the period of any applicable statute of limitations) and are currently
in compliance with all Environmental Laws and there are no conditions and have
been no acts or omissions in connection with the operations of the Company or
the Subsidiaries or with any real property now or ever owned or leased by the
Company or any Subsidiary which would impose liability under any Environmental
Law, including but not limited to liability for Waste disposed on or off-site
prior to the Effective Time.
Except as set forth in Schedule 4.10(c) of the Company Disclosure
Statement, the Company has not received any written notice nor, to the knowledge
of the Company or the Subsidiaries, is there any matter threatened against the
Company or any Subsidiary, with respect to any of their respective facilities of
any material violation of or liability under any Environmental Laws which would
have a Material Adverse Effect on the Company.
SECTION 4.11 Title to Properties. The Company and the Subsidiaries have
good and marketable title to all of their respective assets, business and
properties, including, without limitation, all such properties (tangible and
intangible) reflected in the Recent Balance Sheet, except for inventory disposed
of in the ordinary course of business since the date of such Recent Balance
Sheet, free and clear of all mortgages, Liens, claims, licenses, equities,
options, conditional sales contracts, assessments, levies, easements, covenants,
reservations, restrictions, rights-of-way, exceptions, limitations, charges or
encumbrances of any nature
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whatsoever except those described in Schedule 4.11 of the Company Disclosure
Statement, and, in the case of real property, Liens for taxes not yet due or
which are being contested in good faith by appropriate proceedings (and which
have been sufficiently accrued or reserved against in the Recent Balance Sheet),
municipal and zoning ordinances and easements for public utilities, none of
which interfere with the use of the property as currently utilized. None of the
Company's or any Subsidiary's assets, business or properties are subject to any
restrictions with respect to the transferability thereof.
SECTION 4.12 Labor Matters. Except as set forth in Schedule 4.12 of the
Company Disclosure Statement, neither the Company nor any Subsidiary is a party
to any collective bargaining agreement. The employment agreements that have been
entered into by either the Company or any Subsidiary are set forth in Schedule
4.12 of the Company Disclosure Statement. Except to the extent set forth in
Schedule 4.12 of the Company Disclosure Statement, (a) there is no unfair labor
practice charge or complaint against the Company or the Subsidiaries pending or,
to the knowledge of the Company or the Subsidiaries, threatened; (b) there is no
labor strike, dispute, request for representation, slowdown or stoppage actually
pending or, to the knowledge of Company or the Subsidiaries, threatened against
or affecting the Company or the Subsidiaries nor any secondary boycott with
respect to products of the Company or the Subsidiaries; (c) no question
concerning representation has been raised or, to the knowledge of the Company or
the Subsidiaries, is threatened respecting the employees of the Company or the
Subsidiaries; and (d) there are no administrative charges or court complaints
against the Company or the Subsidiaries concerning alleged employment
discrimination or other employment related matters pending or, to the knowledge
of the Company or the Subsidiaries, threatened before the U.S. Equal Employment
Opportunity Commission or any Governmental Entity.
SECTION 4.13 Employee Benefit Plans.
(a) Disclosure. Schedule 4.13(a) of the Company Disclosure Statement sets
forth all pension, thrift, savings, profit sharing, retirement, incentive bonus
or other bonus, medical, dental, life, accident insurance, benefit, employee
welfare, disability, group insurance, stock purchase, stock option, stock
appreciation, stock bonus, executive or deferred compensation, hospitalization
and other similar fringe or employee benefit plans, programs and arrangements,
and any employment or consulting contracts, "golden parachutes," collective
bargaining agreements, severance agreements or plans, vacation and sick leave
plans, programs, arrangements and policies, including, without limitation, all
"employee benefit plans" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")). The items described in the
foregoing sentence and all employee manuals, and all written or binding oral
statements of policies, practices or understandings relating to employment,
which are provided to, for the benefit of, or relate to, any persons employed by
the Company or any Subsidiary are hereinafter sometimes referred to collectively
as "Employee Plans/Agreements," and each individually as an "Employee
Plan/Agreement." True and correct copies of all the Employee Plans/Agreements,
including all amendments thereto, have heretofore been made available to the
Purchaser. No Employee Plan/Agreement is a "multiemployer plan" (as defined in
Section 4001 of ERISA), and neither the Company nor any Subsidiary has ever
contributed nor been obligated to contribute to any such multiemployer plan.
(b) Terminations, Proceedings, Penalties, etc. With respect to each
employee benefit plan (including, without limitation, the Employee
Plans/Agreements) that is subject to the provisions of Title IV of ERISA and
with respect to which the Company or any Subsidiary or any of their assets may,
directly or indirectly, be subject to any material liability, contingent or
otherwise, or the imposition of any Lien (whether by reason of the complete or
partial termination of any such plan, the funded status of any such plan, any
"complete withdrawal" (as defined in Section 4203 of ERISA) or "partial
withdrawal" (as defined in Section 4205 of ERISA) by any person from any such
plan, or otherwise):
(i) no such plan has been terminated so as to subject, directly or
indirectly, any assets of the Company or any Subsidiary to any liability,
contingent or otherwise, or the imposition of any lien under Title IV of
ERISA;
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(ii) no proceeding has been initiated or, to the knowledge of the
Company or any Subsidiary, threatened by any person (including the Pension
Benefit Guaranty Corporation ("PBGC")) to terminate any such plan;
(iii) no condition or event currently exists or currently is expected
to occur that could subject, directly or indirectly, any assets of the
Company or any Subsidiary to any liability, contingent or otherwise, or the
imposition of any lien under Title IV of ERISA, whether to the PBGC or to
any other person or otherwise on account of the termination of any such
plan;
(iv) if any such plan were to be terminated, or if the Company or any
Subsidiary caused a partial or total withdrawal from any such plan, as of
the Effective Time, no assets of the Company or any Subsidiary would be
subject, directly or indirectly, to any liability, contingent or otherwise,
or the imposition of any Lien under Title IV of ERISA;
(v) no "reportable event" (as defined in Section 4043 of ERISA) has
occurred with respect to any such plan;
(vi) no such plan which is subject to Section 302 of ERISA or Section
412 of the Code has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code, respectively),
whether or not waived; and
(vii) no such plan is a plan described in Section 413(c) of the Code.
(c) Prohibited Transactions, etc. There have been no "prohibited
transactions" within the meaning of Section 406 or 407 of ERISA or Section 4975
of the Code for which a statutory or administrative exemption does not exist
with respect to any Employee Plan/Agreement. To the knowledge of the Company and
the Subsidiaries, no event or omission has occurred in connection with which the
Company or any Subsidiary or any Employee Plan/Agreement, directly or
indirectly, could be subject to any material liability under ERISA, the Code or
any other Law or Order applicable to any Employee Plan/Agreement.
(d) Full Funding. The funds available under each Employee Plan/Agreement
that is subject to Title IV of ERISA or Section 412 of the Code which is
intended to be a funded plan equal or exceed the amounts required to be paid, or
which would be required to be paid if such Employee Plan/Agreement were
terminated, on account of rights vested or accrued as of the Effective Time
(using the actuarial methods and assumptions then used by the Company's
actuaries in connection with the funding of such Employee Plan/ Agreement).
(e) Controlled Group; Affiliated Service Group; Leased Employees. Other
than the current relationship between the Company and the Subsidiaries, neither
the Company nor any Subsidiary has ever been a member of a controlled group of
corporations as defined in Section 414(b) of the Code or in common control with
any unincorporated trade or business as determined under Section 414(c) of the
Code. Neither the Company nor any Subsidiary is or ever has been a member of an
"affiliated service group" within the meaning of Section 414(m) of the Code.
There are not any leased employees within the meaning of Section 414(n) of the
Code who perform services for the Company or any Subsidiary for which the
Company or any Subsidiary has not materially complied with the terms of the
applicable Employee Plans/Agreements.
(f) Payments and Compliance. With respect to each Employee Plan/Agreement,
(i) all payments currently due and owing from the Company and any Subsidiary to
date have been made and all amounts accrued to date as liabilities of the
Company or any Subsidiary which have not been paid have been recorded on the
books of the Company and the Subsidiaries and are reflected in the Recent
Balance Sheet in accordance with GAAP; (ii) the Company and the Subsidiaries
have materially complied with, and each such Employee Plan/Agreement conforms in
form and operation to, all applicable laws and regulations, including but not
limited to ERISA and the Code, in all material respects and all reports and
information relating to such Employee Plan/Agreement required to be filed with
any Governmental Entity have been timely filed; (iii) all reports and
information relating to each such Employee Plan/Agreement required to be
disclosed or provided to participants or their beneficiaries have been timely
disclosed or provided; (iv) each such Employee Plan/Agreement which is intended
to qualify under Section 401 of the Code has received a favorable
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determination (or, in the case of a standardized plan, the opinion) letter from
the Internal Revenue Service with respect to such qualification, its related
trust has been determined to be exempt from taxation under Section 501(a) of the
Code, and nothing has occurred since the date of such letter that has or is
likely to have a material adverse effect on such qualification or exemption;
(iv) there are no actions, suits or claims pending (other than routine claims
for benefits) or, to the knowledge of the Company or the Subsidiaries,
threatened with respect to such Employee Plan/Agreement; and (v) no Employee
Plan/Agreement is a plan which is established and maintained outside the United
States primarily for the benefit of individuals substantially all of whom are
nonresident aliens.
(g) Post-Retirement Benefits. No Employee Plan/Agreement provides benefits,
including, without limitation, death or medical benefits (whether or not
insured) with respect to current or former employees of the Company or any
Subsidiary beyond their retirement or other termination of service other than
(i) coverage mandated by applicable law, (ii) death or retirement benefits under
any Employee Plan/Agreement that is an employee pension benefit plan, (iii)
deferred compensation benefits accrued as liabilities on the books of the
Company (including the Recent Balance Sheet), (iv) disability benefits under any
Employee Plan/Agreement, (v) benefits arising in connection with a severance or
separation plan, program or arrangement or (vi) conversion rights under ordinary
life insurance policies.
(h) No Triggering of Obligations. Except as set forth on Schedule 4.13(h)
to the Company Disclosure Statement, the consummation of the transactions
contemplated by this Agreement and the Stock Option Agreement will not (i)
entitle any current or former employee of the Company or any Subsidiary to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due to any such employee or
former employee.
(i) Future Commitments. Neither the Company nor any Subsidiary has
announced any plan or legally binding commitment to create any additional
Employee Plans/Agreements or to amend or modify any existing Employee
Plan/Agreement, except to the extent necessary or appropriate to comply with
applicable Law.
SECTION 4.14 Trade Rights. Schedule 4.14 of the Company Disclosure
Statement lists all Trade Rights (as defined below) in which the Company or any
Subsidiary has any interest, specifying whether such Trade Rights are owned,
controlled, used or held (under license or otherwise) by the Company or any
Subsidiary, and also indicating which of such Trade Rights are registered. All
Trade Rights shown as registered in Schedule 4.14 of the Company Disclosure
Statement have been properly registered, all pending registrations and
applications have been properly made and filed and all annuity, maintenance,
renewal and other fees relating to registrations or applications are current. In
order to conduct the business of the Company and the Subsidiaries, as such is
currently being conducted or proposed to be conducted under currently existing
business plans, neither the Company nor any Subsidiary requires any Trade Rights
that it does not already have. Neither the Company nor any Subsidiary is
infringing and/or has infringed any Trade Rights of another in the operation of
the business of the Company and the Subsidiaries, nor, to the knowledge of the
Company and the Subsidiaries, is any other person infringing the Trade Rights of
the Company or the Subsidiaries. Neither the Company nor any Subsidiary has
granted any license or made any assignment of any Trade Right listed on Schedule
4.14 of the Company Disclosure Statement, nor does the Company or any Subsidiary
pay any royalties or other consideration for the right to use any Trade Rights
of others. There is no Litigation pending or, to the knowledge of the Company
and the Subsidiaries, threatened to challenge the Company's or any Subsidiary's
right, title and interest with respect to its continued use and right to
preclude others from using any Trade Rights of the Company or any Subsidiary.
All Trade Rights of the Company and the Subsidiaries are valid, enforceable and
in good standing, and, to the knowledge of the Company and the Subsidiaries,
there are no equitable defenses to enforcement based on any act or omission of
the Company or the Subsidiaries. The consummation of the transactions
contemplated hereby or by the Stock Option Agreement will not alter or impair
any Trade Rights owned or used by Company or the Subsidiaries. As used herein,
the term "Trade Rights" shall mean and include: (i) all trademark rights,
business identifiers, trade dress, service marks, trade names and brand names,
all registrations thereof and applications therefor and all goodwill associated
with the foregoing; (ii) all copyrights, copyright registrations and copyright
applications,
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and all other rights associated with the foregoing and the underlying works of
authorship; (iii) all patents and patent applications, and all international
proprietary rights associated therewith; (iv) all contracts or agreements
granting any right, title, license or privilege under the intellectual property
rights of any third party; (v) all inventions, mask works and mask work
registrations, know-how, discoveries, improvements, designs, trade secrets, shop
and royalty rights, employee covenants and agreements respecting intellectual
property and non-competition and all other types of intellectual property; and
(vi) all claims for infringement or breach of any of the foregoing.
SECTION 4.15 Material Adverse Change. Since March 31, 1997, except as
otherwise set forth in the Company's Quarterly Reports on Form 10-Q for the
quarters ended June 30 and September 30, 1997 and except as set forth in
Schedule 4.15 to the Company Disclosure Statement, there has not been any change
in the business of the Company and the Subsidiaries, results of operations,
assets or condition (financial or otherwise) of the Company and the Subsidiaries
that is materially adverse to the Company and the Subsidiaries taken as a whole.
Since March 31, 1997, except as otherwise set forth in the Company's Quarterly
Reports on Form 10-Q for the quarters ended June 30 and September 30, 1997 and
except as set forth in Schedule 4.15 to the Company Disclosure Statement, the
Company and the Subsidiaries have conducted their businesses only in the
ordinary course of business consistent with past practices and there has not
been, directly or indirectly:
(a) any payment or granting by the Company or any of the Subsidiaries of
any increase in compensation to any director or executive officer of the Company
or, except in the ordinary course of business and consistent with past practice,
any employee of the Company or the Subsidiaries;
(b) any granting by the Company or any of the Subsidiaries to any such
director, executive officer or employee of any increase in severance or
termination pay, except as required under employment, severance or termination
agreements or plans in effect prior to the date of this Agreement;
(c) any entry by the Company or any of the Subsidiaries into any
employment, severance or termination agreement with any such director or
executive officer;
(d) any adoption or increase in payments to or benefits under any Employee
Plans/Agreements;
(e) any change in accounting methods, principles or practices by the
Company and the Subsidiaries, except insofar as may have been required by a
change in GAAP;
(f) any declaration, setting aside, or payment of any dividend or any other
distribution in respect of the Company's capital stock; any redemption, purchase
or other acquisition by the Company of any capital stock of the Company, or any
security relating thereto; or any other payment to any shareholder of the
Company as such a shareholder;
(g) any sale, lease or other transfer or disposition of any properties or
assets of the Company or any Subsidiary, except for the sale of inventory items
in the ordinary course of business;
(h) any discharge of any obligation or liability (whether accrued,
absolute, contingent or otherwise), other than in the ordinary course of
business consistent with past practices;
(i) any indebtedness for borrowed money incurred, assumed or guaranteed by
the Company or any Subsidiary, which will not be repaid prior to the Effective
Time; or
(j) any agreement or commitment to do any of the things described in the
preceding clauses (a) through (i).
SECTION 4.16 Certain Approvals. The Board of Directors of the Company has
taken appropriate action such that the provisions of Section 1203 of the GCL
will not apply to any of the transactions contemplated by this Agreement, the
Stock Option Agreement and the Stockholder Agreements.
SECTION 4.17 Brokers. None of the Company, the Subsidiaries, or any of
their respective officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees,
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commission or finder's fees in connection with the transactions contemplated by
this Agreement or the Stock Option Agreement.
SECTION 4.18 State Takeover Statutes; Applicability of Articles of
Incorporation; Required Vote. Except for Section 1101 of the GCL, no California
takeover statute or similar statute applies or purports to apply to the Offer or
the Merger, or to this Agreement, the Stock Option Agreement or the Stockholder
Agreements or the transactions contemplated hereby or thereby. The Board of
Directors of the Company has taken such action as may be necessary to ensure
that the supermajority vote provision of ARTICLE FOUR of the Company's articles
of incorporation is inapplicable to the Offer or the Merger, or to this
Agreement, the Stock Option Agreement or the Stockholders Agreements or the
transactions contemplated hereby or thereby. In the event the Shareholders'
Meeting is required to approve the Merger and the adoption of this Agreement,
the approval by the holders of a majority of the votes entitled to be cast by
all holders of Common Stock is the only vote required to approve the Merger and
the adoption of this Agreement.
SECTION 4.19 Year 2000 Compliance. Except as identified on Schedule 4.19 of
the Company Disclosure Statement, none of the personal property, equipment or
assets owned or utilized by the Company and the Subsidiaries, including but not
limited to computer software, databases, hardware, controls and peripherals,
contains any defect related to the occurrence of the year 2000 or the use of any
date after December 31, 1999 in connection with such property or asset (a "Year
2000 Defect"). Except as identified on Schedule 4.19 of the Company Disclosure
Statement, none of the property or assets owned or utilized by the Company and
the Subsidiaries will fail to perform in any material respect or require any
repair, rewrite, conversion or other adaption because of, or due in any way to,
a Year 2000 Defect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser jointly and severally represent and warrant to the
Company as follows:
SECTION 5.01 Organization and Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the laws of Delaware. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of California. Each of Parent and the Purchaser has
the requisite corporate 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 or licensed to do business, and is in good standing, in each
jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not have a
Material Adverse Effect on Parent. The term "Material Adverse Effect on Parent",
as used in this Agreement, means any change in or effect on the business,
operations, financial condition or prospects of Parent or any of its
subsidiaries that would be materially adverse to Parent and its subsidiaries
taken as a whole.
SECTION 5.02 Authority. Each of Parent and the Purchaser has all necessary
corporate power and authority to execute and deliver this Agreement and the
Stock Option Agreement and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Stock Option
Agreement by Parent and the Purchaser and the consummation by Parent and the
Purchaser of the transactions contemplated hereby and thereby have been duly and
validly authorized and approved by the Boards of Directors of Parent and the
Purchaser and by the sole stockholder of the Purchaser and no other corporate
proceedings on the part of Parent or the Purchaser are necessary to authorize or
approve this Agreement or the Stock Option Agreement or to consummate the
transactions contemplated hereby or thereby. Each of this Agreement and the
Stock Option Agreement has been duly executed and delivered by each of Parent
and the Purchaser and, assuming the due and valid authorization, execution and
delivery by the Company, constitutes a valid and binding obligation of each of
Parent and the Purchaser enforceable against each of them in accordance with its
respective terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
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<PAGE> 18
SECTION 5.03 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement or the Stock
Option Agreement by Parent or the Purchaser, the consummation by Parent or the
Purchaser of the transactions contemplated hereby or thereby or the compliance
by Parent or the Purchaser with any of the provisions hereof or thereof will (i)
conflict with or violate the organizational documents of Parent or the
Purchaser, (ii) conflict with or violate any statute, ordinance, rule,
regulation, order, judgment or decree applicable to Parent or the Purchaser, or
any of their subsidiaries, or by which any of them or any of their respective
properties or assets may be bound or affected, or (iii) result in a Violation
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
the Purchaser, or any of their respective subsidiaries, is a party or by which
any of their respective properties or assets may be bound or affected, except in
the case of the foregoing clauses (ii) and (iii) for any such Violations which
would not have a Material Adverse Effect on Parent or materially adversely
affect the ability of Parent or the Purchaser to consummate the transactions
contemplated by this Agreement and the Stock Option Agreement.
(b) None of the execution and delivery of this Agreement or the Stock
Option Agreement by Parent and the Purchaser, the consummation by Parent and the
Purchaser of the transactions contemplated hereby or thereby or the compliance
by Parent and the Purchaser with any of the provisions hereof or thereof will
require any Consent of any Governmental Entity, except for (i) compliance with
any applicable requirements of the Exchange Act, (ii) the filing of an agreement
of merger together with an officer's certificate of the Company and the
Purchaser pursuant to the GCL, (iii) compliance with the HSR Act and any
requirements of any foreign or supranational Antitrust Laws, and (iv) Consents
or filings the failure of which to obtain or make would not have a Material
Adverse Effect on Parent or materially adversely affect the ability of Parent or
the Purchaser to consummate the transactions contemplated by this Agreement and
the Stock Option Agreement.
SECTION 5.04 Information. None of the information supplied or to be
supplied by Parent and the Purchaser in writing specifically for inclusion in
(i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the Proxy Statement or
(iv) the other filings will, at the respective times filed with the SEC or such
other Governmental Entity and, in addition, in the case of the Proxy Statement
at the date it or any amendment or supplement is mailed to Shareholders, at the
time of the Shareholders' Meeting and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
SECTION 5.05 Financing. Parent or the Purchaser has available the funds
necessary to consummate the Offer and the Merger and the transactions
contemplated hereby on a timely basis.
SECTION 5.06 Brokers. None of Parent, the Purchaser, or any of their
respective subsidiaries, officers, directors or employees, has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the transactions contemplated by this
Agreement or the Stock Option Agreement for or with respect to which the Company
is or might be liable.
SECTION 5.07 Purchaser.
(a) Parent owns all of the outstanding stock of Purchaser; at all times
prior to the Merger, no person other than Parent has owned, or will own, any of
the outstanding stock of Purchaser. Purchaser was formed by Parent solely for
the purpose of engaging in the transactions contemplated by this Agreement.
(b) There are not as of the date of this Agreement, and there will not be
at the Effective Time, any outstanding or authorized options, warrants, calls,
rights, commitments or any other agreements of any character which Purchaser is
a party to, or may be bound by, requiring it to issue, transfer, sell, purchase,
redeem or acquire any shares of its capital stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for or
acquire, any shares of its capital stock.
(c) As of the date of this Agreement and the Effective Time, except for
obligations incurred in connection with this Agreement or the transactions
contemplated hereby, Purchaser has not and will not have
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<PAGE> 19
incurred, directly or indirectly through any other corporation, any obligations
or liabilities of any kind or engaged in any activities of any type or kind
whatsoever or entered into any arrangement or arrangements with any person or
entity.
(d) Parent will make available, and Purchaser will have, at or before the
date on which Parent or the Purchaser acquires Shares pursuant to the Offer,
adequate funds to accept for payment, purchase and pay for all of the Shares
tendered and not withdrawn pursuant to the Offer.
SECTION 5.08 No Share Acquisition. Neither Parent nor the Purchaser has
acquired any of the Shares during the two year period prior to the date hereof.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as required by this
Agreement or with the prior written consent of Parent, during the period from
the date of this Agreement to the Effective Time, the Company will and will
cause each of the Subsidiaries to conduct its operations only in the ordinary
course of business consistent with past practice and will use its best efforts
and will cause each of the Subsidiaries to use its best efforts, to preserve
intact the business organization of the Company and each of the Subsidiaries, to
keep available the services of its and their present officers and key employees
and to preserve the goodwill of those having business relationships with it.
Without limiting the generality to the foregoing, and except as otherwise
required by this Agreement or as set forth in Section 6.01 of the Company
Disclosure Statement, the Company will not, and will not permit any of the
Subsidiaries to, prior to the Effective Time, without the prior written consent
of Parent:
(a) adopt any amendment to its charter or by-laws or comparable
organizational documents;
(b) except for issuances of capital stock of the Subsidiaries to the
Company, or to a wholly-owned Subsidiary of the Company, issue, reissue or sell
or authorize the issuance, reissuance or sale of additional shares of capital
stock of any class, or shares convertible into capital stock of any class, or
any rights, warrants or options to acquire any convertible shares or capital
stock, other than the issuance of Shares, pursuant to Options outstanding on the
date of this Agreement or pursuant to the Stock Option Agreement;
(c) declare, set aside or pay any dividend or other distribution (whether
in cash, shares or property or any combination thereof) in respect of any class
or series of its capital stock other than between any of the Company and any
Subsidiary which is wholly-owned by the Company;
(d) split, combine, subdivide, reclassify or redeem, purchase or otherwise
acquire, or propose to redeem or purchase or otherwise acquire, any shares of
its capital stock, or any of its other shares;
(e) except for (A) increases in salary, wages and benefits of non-executive
officers or employees of the Company or the Subsidiaries in the ordinary course
of business consistent with past practice, (B) increases in salary, wages and
benefits granted to officers and employees of the Company or the Subsidiaries in
conjunction with new hires, promotions or other changes in job status in the
ordinary course of business consistent with past practice, or (C) increases in
salary, wages and benefits to employees of the Company or the Subsidiaries
pursuant to collective bargaining agreements entered into in the ordinary course
of business consistent with past practice, (i) increase the compensation or
fringe benefits payable or to become payable to its directors, officers or key
employees (whether from the Company or any of the Subsidiaries), or (ii) pay any
benefit not required by any existing plan or arrangement (including, without
limitation, the granting of stock options, stock appreciation rights, shares of
restricted stock or performance units), or (iii) grant any severance or
termination pay to (except pursuant to existing agreements, plans or policies
and as required by such agreements, plans or polices), or (iv) enter into any
employment or severance agreement with, any director, officer or other key
employee of the Company or any of the Subsidiaries or (iv) establish, adopt,
enter into, or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock or Employee Plans/Agreements for
the benefit or welfare of any directors, officers or current or former
employees, except in each case to the extent required by applicable Law or
regulation;
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<PAGE> 20
(f) acquire, sell, lease or dispose of any assets (other than inventory)
which are material to the Company and the Subsidiaries, taken as a whole, or
enter into any commitment to do any of the foregoing or enter into any material
commitment or transaction outside the ordinary course of business consistent
with past practice;
(g) (i) incur, assume or pre-pay any long-term debt or incur or assume any
short-term debt, except that the Company and the Subsidiaries may incur, assume
or pre-pay debt in the ordinary course of business consistent with past practice
under existing lines of credit, (ii) pay, discharge, settle or satisfy as other
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise, other than in the ordinary course of business
consistent with past practice, (iii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person, or (iv) make any loans, advances or capital
contributions to, or investments in, any other person except in the ordinary
course of business consistent with past practice and except for loans, advances,
capital contributions or investments between any Subsidiary wholly-owned by the
Company and the Company or another Subsidiary wholly-owned by the Company;
(h) make any tax election that would have a material effect on the tax
liability of the Company or the Subsidiaries or settle or compromise any tax
liability of the Company or the Subsidiaries that would materially affect the
aggregate tax liability of the Company or the Subsidiaries;
(i) except in the ordinary course of business consistent with past
practice, enter into, modify, amend or terminate any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license which is material to the Company and the
Subsidiaries or waive, release or assign any material rights or claims; or
(j) agree in writing or otherwise to take any of the foregoing actions.
SECTION 6.02 Information. From the date hereof until the Effective Time,
the Company will, and will cause the Subsidiaries, and each of its and their
respective officers, directors, employees, counsel, advisors and representatives
(collectively, the "Company Representatives") to, provide Parent and the
Purchaser and their respective officers, employees, counsel, advisors and
representatives (collectively, the "Parent Representatives") access, during
normal business hours and upon reasonable notice, to the offices and other
facilities and to the books and records of the Company and the Subsidiaries, and
will permit Parent and the Purchaser to make inspections of such as either of
them may reasonably require (including environmental testing) and will cause the
Company Representatives and the Subsidiaries to furnish Parent, the Purchaser
and the Parent Representatives to the extent available with such other
information with respect to the business of the Company and the Subsidiaries as
Parent and the Purchaser may from time to time reasonably request; provided,
however, that all requests for such access, inspection or information pursuant
to this Section 6.02 shall be made through the President and Chief Executive
Officer of the Company or such other person as he shall designate in writing to
Parent. Unless otherwise required by Law, Parent and the Purchaser will, and
will cause the Parent Representatives to hold any such information in confidence
until such time as such information otherwise becomes publicly available through
no wrongful act of Parent, the Purchaser or the Parent Representative, all as
specifically provided in the confidentiality agreement, dated August 1, 1997,
between Voith Sulzer Papiertechnik GmbH & Co KG and the Company (the
"Confidentiality Agreement").
SECTION 6.03 Commercially Reasonable Best Efforts. Subject to the terms and
conditions herein provided and to applicable legal requirements, each of the
parties hereto agrees to use its commercially reasonable best efforts to take,
or cause to be taken, all action, and to do, or cause to be done, in the case of
the Company, consistent with the fiduciary duties of the Company's Board of
Directors, and to assist and cooperate with the other parties hereto in doing,
as promptly as practicable, all things necessary, proper or advisable under
applicable Laws and regulations to ensure that the conditions set forth in Annex
I and Article VII are satisfied and to consummate and make effective the
transactions contemplated by the Offer, this Agreement and the Stock Option
Agreement.
In addition, if at any time prior to the Effective Time any event or
circumstance relating to either the Company or Parent or the Purchaser or any of
their respective subsidiaries should be discovered by the Company or Parent, as
the case may be, and which should be set forth in an amendment to the Offer
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<PAGE> 21
Documents or Schedule 14D-9, the discovering party will promptly inform the
other party of such event or circumstance. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement or the Stock Option Agreement, including the execution of
additional instruments, the proper officers and directors of each party to this
Agreement or the Stock Agreement, as the case may be, shall take all such
necessary action.
SECTION 6.04 Consents.
(a) Each of the parties will use its commercially reasonable best efforts
to obtain as promptly as practicable all Consents of any Governmental Entity or
any other person required in connection with, and waivers of any Violations that
may be caused by, the consummation of the transactions contemplated by the
Offer, the Merger, this Agreement and the Stock Option Agreement.
(b) In furtherance and not in limitation of the foregoing, Parent shall use
its commercially reasonable best efforts to resolve such objections, if any, as
may be asserted with respect to the transactions contemplated by this Agreement
or the Stock Agreement under any antitrust, competition or trade regulatory
laws, rules or regulations of any domestic or foreign government or governmental
authority or any multinational authority ("Antitrust Laws").
(c) Any party hereto shall promptly inform the others of any material
communication from the United States Federal Trade Commission, the Department of
Justice or any other domestic or foreign government or governmental or
multinational authority regarding any of the transactions contemplated by this
Agreement or the Stock Option Agreement. If any party or any affiliate thereof
receives a request for additional information or documentary material from any
such government or authority with respect to the transactions contemplated by
this Agreement or the Stock Option Agreement, then such party will endeavor in
good faith to make, or cause to be made, as soon as reasonably practicable and
after consultation with the other party, an appropriate response in compliance
with such request. Parent will advise the Company promptly in respect of any
understandings, undertakings or agreements (oral or written) which Parent
proposes to make or enter into with the Federal Trade Commission, the Department
of Justice or any other domestic or foreign government or governmental or
multinational authority in connection with the transactions contemplated by this
Agreement or the Stock Option Agreement.
SECTION 6.05 Public Announcements. So long as this Agreement is in effect,
Parent, the Purchaser and the Company agree to use reasonable efforts to consult
with each other before issuing any press release or otherwise making any public
statement with respect to the transactions contemplated by this Agreement or the
Stock Option Agreement.
SECTION 6.06 Employee Benefit Arrangements. Parent agrees that the Company
will honor and, from and after the Effective Time, Parent will cause the
Surviving Corporation to honor, all Employee Plans/Agreements to which the
Company or any of its Subsidiaries is presently a party which have been
disclosed hereunder; provided , however, that nothing contained in this Section
6.06 shall limit or restrict the Surviving Corporation's right on or after the
Effective Time to amend, modify or terminate any Employee Plans/Agreements in
accordance with the terms thereof and applicable Law.
SECTION 6.07 No Solicitation.
(a) The Company represents and warrants to, and covenants and agrees with,
Parent and the Purchaser that neither the Company nor any of the Subsidiaries
has any agreement, arrangement or understanding with any potential acquirer that
directly or indirectly, would be violated, or require any payments, by reason of
the execution, delivery and/or consummation of this Agreement and the Stock
Option Agreement. The Company shall, and shall use its commercially reasonable
best efforts to cause the Subsidiaries and the officers, directors, employees,
investment bankers, attorneys and other agents and representatives of the
Company and the Subsidiaries to, immediately cease any existing discussions or
negotiations with any person (including a "person" as defined in Section
13(d)(3) of the Exchange Act) other than Parent or the Purchaser (a "Third
Party") heretofore conducted with respect to any Acquisition Transaction (as
hereinafter defined). The Company shall not, and shall use its commercially
reasonable best efforts to cause the Subsidiaries and the officers, directors,
employees, investment bankers, attorneys and other agents and representatives of
the
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<PAGE> 22
Company and the Subsidiaries not to, directly or indirectly, (x) solicit,
initiate, continue, facilitate or encourage (including by way of furnishing or
disclosing non-public information) any inquiries, proposals or offers from any
Third Party with respect to, or that could reasonably be expected to lead to,
any acquisition or purchase of a material portion of the assets or business of,
or any significant equity interest in (including by way of a tender offer), or
any amalgamation, merger, consolidation or business combination with, or any
recapitalization or restructuring, or any similar transaction involving, the
Company or any of the Subsidiaries (the foregoing being referred to collectively
as an "Acquisition Transaction"), or (y) negotiate, explore or otherwise
communicate in any way with any Third Party with respect to any Acquisition
Transaction or enter into, approve or recommend any agreement, arrangement or
understanding requiring the Company to abandon, terminate or fail to consummate
the Offer and/or the Merger or any other transaction contemplated hereby or by
the Stock Option Agreement. Notwithstanding anything to the contrary in the
foregoing, the Company may in response to an unsolicited written proposal with
respect to an Acquisition Transaction involving the acquisition of all of the
Shares (or all or substantially all of the assets of the Company and the
Subsidiaries) from a Third Party (which proposal (1) is not subject to a
financing condition and is from a person that a nationally recognized investment
bank advises in writing is financially capable of consummating such proposal or
(2) is subject to financing, but is from a person that a nationally recognized
investment bank advises in writing is financially capable of achieving such
financing to consummate such proposal), (i) furnish or disclose non-public
information to such Third Party and (ii) negotiate, explore or otherwise
communicate with such Third Party, in each case only if (A) after being advised
in writing by its outside counsel with respect to its fiduciary obligations to
the Shareholders under applicable Law, the Board of Directors of the Company
determines in good faith that taking such action is necessary in the exercise of
its fiduciary obligations under applicable Law (the proposal with respect to an
Acquisition Transaction meeting such requirements being a "Superior Proposal"),
(B) prior to furnishing or disclosing any non-public information to, or entering
into discussions or negotiations with, such Third Party, the Company receives
from such Third Party an executed confidentiality agreement with terms no less
favorable in the aggregate to the Company than those contained in the
Confidentiality Agreement, but which confidentiality agreement shall not provide
for any exclusive right to negotiate with the Company or any payments by the
Company and (C) the Company advises Parent of all such non-public information
delivered to such Third Party concurrently with such delivery; provided,
however, that the Company shall not, and shall cause its affiliates not to,
enter into a definitive agreement with respect to a Superior Proposal unless the
Company first complies with Section 6.07(b) hereof, including the last sentence
thereof, and then unless (I) the Company concurrently terminates this Agreement
in accordance with the terms hereof, pays any Termination Fee required under
Section 8.03(b) and agrees to pay any other amounts required under such Section
8.03(b) and (II) such agreement permits the Company, subject to the fiduciary
duties of the Board of Directors, to terminate it if it receives a Superior
Proposal, such termination and related provisions to be on terms no less
favorable to the Company, including as to fees and reimbursement of expenses, as
those contained herein.
(b) The Company shall promptly (but in any event within one business day of
the Company becoming aware of same) advise Parent of the receipt by the Company,
any of the Subsidiaries or any of the Company's bankers, attorneys or other
agents or representatives of any inquiries or proposals relating to an
Acquisition Transaction and any actions taken pursuant to Section 6.07(a). The
Company shall promptly (but in any event within three business days of the
Company becoming aware of same) provide Parent with a copy of any such inquiry
or proposal in writing and a written statement with respect to any such
inquiries or proposals not in writing, which statement shall include the
identity of the parties making such inquiries or proposal and the material terms
thereof; provided, however, that the Company shall not be obligated to provide a
copy of, or a written statement with respect to, any such inquiry if, after
being advised in writing by its outside legal counsel with respect to its
fiduciary obligations, the Board of Directors of the Company determines that not
providing such copy or written statement is necessary to allow the Board of
Directors of the Company to fulfill its fiduciary duties to the Shareholders
under applicable Law. The Company shall, from time to time, promptly (but in any
event within one business day of the Company becoming aware of same) inform
Parent of the status and content of and material developments (including the
calling of meetings of the Board of Directors of the Company to take action with
respect to such Acquisition Transaction) with respect to any discussions
regarding any Acquisition Transaction with a Third Party; provided, however,
that the Company shall not be
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<PAGE> 23
obligated to make such disclosure if, after being advised in writing by its
outside legal counsel with respect to its fiduciary obligations, the Board of
Directors of the Company determines that not providing such disclosure is
necessary to allow the Board of Directors of the Company to fulfill its
fiduciary duties to the Shareholders under applicable Law. For the avoidance of
doubt, the Company agrees that it will not enter into any agreement with respect
to a Superior Proposal unless and until Parent has been given the opportunity at
least six business days prior to the entering into such agreement to match the
terms of such agreement.
(c) The Company has obtained the oral agreement of each member of the Board
of Directors of the Company and of its executive officers that each such person
will comply with the provisions of this Section 6.07.
SECTION 6.08 Notification of Certain Matters. Parent and the Company shall
promptly notify each other of (a) the occurrence or non-occurrence of any fact
or event which would be reasonably likely (i) to cause any representation or
warranty contained in this Agreement or the Stock Option Agreement to be untrue
or inaccurate in any material respect at any time from the date hereof to the
Effective Time or (ii) to cause any material covenant, condition or agreement
hereunder or under the Stock Option Agreement not to be complied with or
satisfied in all material respects and (b) any failure of the Company, Parent or
the Purchaser, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder or under
the Stock Option Agreement in any material respect; provided, however, that no
such notification shall affect the representations or warranties of any party or
the conditions to the obligations of any party hereunder or under the Stock
Option Agreement.
SECTION 6.09 State Takeover Laws. The Company shall, upon the request of
the Purchaser, take all reasonable steps to assist in any challenge by the
Purchaser to the validity or applicability to the transactions contemplated by
this Agreement and the Stock Option Agreement, including the Offer and the
Merger and by the Stockholder Agreements, of any state takeover law.
SECTION 6.10 Indemnification and Insurance.
(a) The Purchaser and Parent agree that until six years from the date the
Shares are purchased by Parent or the Purchaser in the Offer (the "Acceptance
Date"), the Purchaser will maintain all rights to indemnification now existing
in favor of the directors, officers, employees, fiduciaries and agents of the
Company as provided in the Company's Articles of Incorporation and Bylaws or
otherwise in effect under any agreement on the date of this Agreement and that
the Articles of Incorporation and Bylaws of the Purchaser shall not be amended
to reduce or limit the rights of indemnity afforded to the present and former
directors and officers of the Company, or the ability of the Purchaser to
indemnify them, nor to hinder, delay or make more difficult the exercise of such
rights of indemnity or the ability to indemnify.
(b) The Purchaser will at all times exercise the powers granted to it by
its Articles of Incorporation, its Bylaws, and by applicable law to indemnify
and hold harmless to the fullest extent possible present or former directors,
officers, employees, fiduciaries and agents of the Company against any
threatened or actual claim, action, suit, proceeding or investigation made
against them arising from their service in such capacities (or service in such
capacities for another enterprise at the request of the Company) prior to, and
including the Acceptance Date for at least six years from the Acceptance Date.
Parent shall assume and perform the obligations of the Purchaser under this
Section 6.10; provided, that, any indemnified party shall make a good faith
effort (which shall not include any requirement to bring any suit, claim,
action, or other proceeding) to cause the Purchaser to perform its obligations
under this Section 6.10 before requesting Parent to assume and perform such
obligations.
(c) Should any threatened or actual claim action, suit, proceeding or
investigation be made against any present or former director, officer, employee,
fiduciary or agent of the Company, arising from his services as such, within six
years from the Effective Time, the provisions of this Section 6.10 shall
continue in effect until the final disposition of all such claims.
(d) Any indemnified party wishing to claim indemnification under this
Section, upon learning of any such action, suit, claim, proceeding or
investigation, shall notify Parent and the Purchaser within 15 days thereof;
provided, however, that any failure so to notify Parent and the Purchaser of any
obligation to
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<PAGE> 24
indemnify such indemnified party or of any other obligation imposed by this
Section shall not affect such obligations except to the extent Parent and/or the
Purchaser is actually prejudiced thereby. Parent and the Purchaser shall be
entitled to assume the defense of any such action, suit, claim, proceeding or
investigation with counsel of its choice, unless there is, under applicable
standards of professional conduct, a conflict of any significant issue between
the positions of Parent and the Purchaser, on the one hand, and the indemnified
parties, on the other, in which event the indemnified parties as a group may
retain one law firm to represent them with respect to such matter. Neither
Parent or the Purchaser, on the one hand, nor the indemnified parties, on the
other hand, may settle any such action, suit, claim, proceeding or investigation
without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed.
(e) In addition to the foregoing, Parent shall cause the Purchaser to honor
in accordance with their terms any indemnification agreements in existence on
the date hereof between the Company and any present or former director, officer,
employee, fiduciary or agent of the Company.
(f) The parties agree that the provisions of this Section 6.10 will not
require Parent or the Purchaser to maintain directors' and officers' insurance
coverage in favor of the Company's present and former directors and officers.
(g) Notwithstanding anything in this Agreement to the contrary, in the
event this Agreement is terminated in accordance with its terms before the
consummation of the Merger, the Purchaser's and Parent's obligations under this
Section 6.10 shall cease upon such termination.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger If
the Offer Shall Have Been Consummated. The respective obligations of Parent, the
Purchaser and the Company to consummate the Merger if the Offer shall have been
consummated are subject to the satisfaction or waiver in writing by each party
hereto at or before the Effective Time, of each of the following conditions (the
"Second-Step Conditions"):
(a) Shareholder Approval. The Shareholders shall have duly approved the
transactions contemplated by this Agreement, to the extent required pursuant to
the requirements of the Company's articles of incorporation and applicable Law.
(b) Purchase of Shares. The Purchaser shall have accepted for payment and
paid for Shares pursuant to the Offer in accordance with the terms hereof;
provided, that this condition shall be deemed to have been satisfied with
respect to Parent and the Purchaser if the Purchaser fails to accept for payment
or pay for Shares pursuant to the Offer in violation of the terms of the Offer.
(c) Injunctions; Illegality. The consummation of the Merger shall not be
restrained, enjoined or prohibited by any order, judgment, decree, injunction or
ruling of a court of competent jurisdiction or any Governmental Entity, and
there shall not have been any statute, rule or regulation enacted, promulgated
or deemed applicable to the Merger by any Governmental Entity that prevents the
consummation of the Merger.
(d) No Material Adverse Change. No Material Adverse Change in the Company
(as defined below) shall have occurred and be in effect at the Effective Time;
provided, that this condition shall be deemed to have been satisfied with
respect to the Company if Parent agrees to waive satisfaction thereof. The term
"Material Adverse Change in the Company," as used in this Section 7.01(d) means
a change in the business of the Company as a result of an extraordinary event
outside of the ordinary course of business which would be materially adverse to
the Company's sales or profits. Notwithstanding the foregoing, a Material
Adverse Change in the Company shall not include (i) any change in the Company's
business because of any defect or deficiency in the Company's existing product
line occurring in the ordinary course of business and that can be remedied in
the ordinary course of business, (ii) any loss by the Company of orders from, or
sales to, direct competitors of Parent or (iii) the loss of orders or sales due
to general market conditions in the paper industry.
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<PAGE> 25
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
whether or not approval thereof by the Shareholders has been obtained:
(a) by the mutual written consent of Parent, the Purchaser and the Company
prior to the date on which Parent's designees constitute a majority of the Board
of Directors of the Company; or
(b) by the Company if the Company is not in material breach of any of its
representations, warranties, covenants or arrangements contained in this
Agreement and the Stock Option Agreement and if (i) the Purchaser fails to
commence the Offer as provided in Section 1.01 hereof, (ii) the Purchaser shall
not have accepted for payment and paid for Shares pursuant to the Offer in
accordance with the terms thereof on or before April 30, 1998 or (iii) the
Purchaser fails to purchase validly tendered Shares in violation of the terms of
the Offer or this Agreement; or
(c) by Parent or the Company if the Offer expires or is terminated or
withdrawn pursuant to its terms without any Shares being purchased thereunder;
provided, however, that Parent may terminate this Agreement pursuant to this
Section 8.01(c) upon the termination or withdrawal of the Offer only if Parent's
or the Purchaser's termination or withdrawal of the Offer is not in violation of
the terms of this Agreement or the Offer; or
(d) by Parent or the Company if any court or other Governmental Entity
shall have issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction, or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, judgment, decree
injunction, ruling or other action shall have become final and nonappealable; or
(e) by the Company if, prior to the purchase of Shares pursuant to the
Offer in accordance with the terms of this Agreement, (i) there shall have
occurred, on the part of Parent or the Purchaser, a material breach of any
representation, warranty, covenant or agreement contained in this Agreement
which is not curable or, if curable, is not cured within seven business days
after written notice of such breach is given by the Company to the party
committing the breach or (ii) the Company (A) enters into a definitive agreement
with respect to a Superior Proposal as permitted under Section 6.07(a) hereof
and after complying with the provisions of Section 6.07(b) hereof, and (B) pays
any Termination Fee and agrees to pay any other amounts required under Section
8.03(b); or
(f) by Parent if, prior to the purchase of Shares pursuant to the Offer in
accordance with the terms of this Agreement, (i) there shall have occurred, on
the part of the Company, a breach of any representation, warranty, covenant or
agreement contained in this Agreement which individually, or in the aggregate,
if not cured would be reasonably likely to have a Material Adverse Effect on the
Company and which is not curable or, if curable, is not cured within the later
of (x) 7 business days after written notice of such breach is given by Parent to
the Company and (y) the satisfaction of all conditions to the Offer not related
to such breach or (ii) the Board of Directors of the Company or committee
thereof shall have withdrawn or modified (or shall have resolved to withdraw or
modify), in a manner adverse to Parent, its approval or recommendation of this
Agreement or any of the transactions contemplated hereby and the Board of
Directors of the Company and such committee shall not have fully reinstated such
approval or recommendations within two business days or shall have recommended
(or resolved to recommend) an Acquisition Transaction (other than the Offer and
Merger) to the Shareholders and at least ten business days shall have passed
since such recommendation (or resolution); or
(g) by Parent if it is not in material breach of its obligation hereunder
or under the Offer and no Shares shall have been purchased pursuant to the Offer
on or before April 30, 1998.
SECTION 8.02 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.01, this Agreement shall forthwith become void
and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, other than the provisions of this Section
8.02, Section 8.03
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<PAGE> 26
and the last sentence of Section 6.02, which shall survive any such termination.
The Stock Option Agreement shall also survive any such termination. Nothing
obtained in this Section 8.02 shall relieve any party from liability for any
breach of this Agreement or the Confidentiality Agreement.
SECTION 8.03 Fees and Expenses.
(a) Except as otherwise provided herein, whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Offer, this
Agreement, the Stock Option Agreement and the transactions contemplated by this
Agreement and the Stock Option Agreement shall be paid by the party incurring
such expenses.
(b) In the event this Agreement is terminated pursuant to
Section 8.01(e)(ii), 8.01(f)(i) (other than for a termination due to an
unintentional breach of a representation or warranty by the Company) or
8.01(f)(ii), then the Company shall promptly reimburse Parent for the documented
out-of-pocket fees and expenses (but in no event greater than $500,000) of
Parent and the Purchaser related to this Agreement, the Stock Option Agreement,
the transactions contemplated hereby and thereby and any related financing and
in the event this Agreement is terminated pursuant to 8.01(e)(ii), then the
Company shall promptly pay Parent a Termination Fee of $1,200,000 by wire
transfer of same day funds to an account designated by the Parent as a condition
precedent to such termination.
(c) In the event that (i) any person shall have publicly disclosed a
proposal regarding an Acquisition Transaction and (ii) following such
disclosure, either (x) April 30, 1998 occurs without the Revised Minimum Number
being satisfied or the requisite stockholder approval of the Merger being
obtained (other than as a result of a material breach hereof by Parent or the
Purchaser that has not been cured within the time period set forth in Article
VIII of this Agreement) or (y) the Company breaches (prior to the time that the
designees of the Purchaser constitute a majority of the Board of Directors of
the Company) any of its material obligations hereunder and does not cure such
breach within the time period set forth in Article VIII of this Agreement or (z)
the Agreement is terminated pursuant to Section 8.01(f)(ii), and (iii) not later
than twelve months after any such termination the Company shall have entered
into an agreement for an Acquisition Transaction, or an Acquisition Transaction
shall have been consummated, then the Company shall promptly, but in no event
later than immediately prior to, and as a condition of, entering into such
definitive agreement, or, if there is no such definitive agreement then
immediately upon consummation of the Acquisition Transaction, pay Parent a
Termination Fee of $1,200,000 which amount shall be payable by wire transfer of
same day funds to an account designated by the Parent. Notwithstanding anything
to the contrary contained herein, in no event shall the Company be obligated to
pay more than one Termination Fee in accordance with this Agreement.
(d) The Company acknowledges that the agreements contained in Section
8.03(b) and (c) are an integral part of the transactions contemplated in this
Agreement and constitute liquidated damages and not a penalty, and that, without
these agreements, Parent and the Purchaser would not enter into this Agreement;
accordingly, if the Company fails to promptly pay the amount due pursuant to
Section 8.03(b) and (c), and, in order to obtain such payment, Parent or the
Purchaser commences a suit that results in a judgment against the Company for
the fee and expenses set forth in Section 8.03(b) and (c), the Company shall pay
to Parent its documented out-of-pocket costs and expenses (including attorneys'
fees) in connection with such suit. No termination of this Agreement pursuant to
Article VIII or otherwise shall prejudice the ability of a non-breaching party
from seeking damages from any other party for any breach of this Agreement,
including, without limitation, attorneys' fees and the right to pursue any
remedy at law or in equity.
SECTION 8.04 Amendment. Subject to Section 1.03(c), this Agreement may be
amended by the Company, Parent and the Purchaser at any time before or after any
approval of this Agreement by the Shareholders but, after any such approval, no
amendment shall be made which decreases the Merger Price or which adversely
affects the rights of the Shareholders hereunder without the requisite
affirmative vote of such Shareholders; provided, however, that this Agreement
shall not be amended after the time, if ever, that the Purchaser's designees
constitute a majority of the Board of Directors of the Company. This Agreement
may not be amended except by an instrument in writing signed on behalf of all
the parties.
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<PAGE> 27
SECTION 8.05 Extension; Waiver. Subject to Section 1.03(c), at any time
prior to the Effective Time, the parties hereto may (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other party or in any document, certificate or writing delivered
pursuant hereto by any other party or (iii) waive compliance with any of the
agreements of any other party or with any conditions to its own obligations, it
being understood that the other conditions set forth in Annex I may be waived by
Parent and the Purchaser without the consent of the Company. Any agreement on
the part of any party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time.
SECTION 9.02 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the instruments referred to
herein) and the Confidentiality Agreement constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or obligations
hereunder may 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 will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns. This Agreement is not intended to confer upon any person other than
Parent, the Purchaser and the Company any rights or remedies hereunder.
SECTION 9.03 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
SECTION 9.04 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Parent or the Purchaser:
Voith Sulzer Paper Technology North America Inc.
2200 N. Roemer Road
Appleton, Wisconsin 54913
Attention: Paul Bouthilet
Fax: (920) 731-7409
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Ralf R. Boer, Esq.
Fax: (414) 297-4900
If to the Company:
Impact Systems, Inc.
14600 Winchester Boulevard
Los Gatos, California 95030
Attention: Kenneth P. Ostrow
Fax: (408) 379-0910
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with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94306
Attention: Arthur F. Schneiderman, Esq.
Fax: (650) 493-6811
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.06 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY OR DISPUTE THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE STOCK OPTION AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I)
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.06.
SECTION 9.07 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.08 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 9.09 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and, except with respect to
Sections 1.03(c), 2.09, 6.07 and 6.10, nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
SECTION 9.10 Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any person shall mean any other
person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting shares, by contract or otherwise;
(b) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act); and
(c) the term "subsidiary" or "subsidiaries" means, with respect to Parent,
the Company or any other person, any corporation, partnership, joint venture or
other legal entity of which Parent, the Company or such
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<PAGE> 29
other person, as the case may be (either alone or through or together with any
other subsidiary), owns, directly or indirectly, stock or other equity interests
the holders of which are generally entitled to more than 50% of the vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
SECTION 9.11 SPECIFIC PERFORMANCE. 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 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.
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<PAGE> 30
ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provisions of the Offer,
the Purchaser shall not be required to accept for payment or pay for any
tendered Shares, unless there are validly tendered and not withdrawn prior to
the expiration date for the Offer that number of Common Shares which, when added
to the Shares owned by the Purchaser, will represent at least 90% of the
outstanding Common Shares on a fully diluted basis (after giving pro forma
effect to the potential issuance of any Shares issuable under the Stock Option
Agreement) on the date of purchase (the "Minimum Condition"); provided, however,
that the Minimum Condition must be waived by the Purchaser and the Revised
Minimum Number may be substituted therefor as contemplated by Section 1.01(b) of
the Merger Agreement. Furthermore, notwithstanding any other provisions of the
Offer, the Purchaser shall not be required to accept for payment or pay for any
tendered Shares until expiration of all applicable waiting periods under the HSR
Act and the satisfaction of conditions under any other applicable Antitrust Laws
and the Purchaser may, subject to the terms of the Merger Agreement, amend the
Offer or postpone the acceptance for payment of tendered Shares if at any time
on or after the date of the Merger Agreement and before the expiration of the
Offer, any of the following events (each, an "Event") shall occur:
(a) any order, preliminary or permanent injunction, decree, judgment or
ruling in any suit, action or proceeding is entered that (i) makes illegal or
otherwise directly or indirectly restrains or prohibits the acquisition by
Parent or the Purchaser of any Shares under the Offer or the making or
consummation of the Offer or the Merger, the performance by the Company of any
of its material obligations under the Merger Agreement or the Stock Option
Agreement or the consummation of any purchase of Shares contemplated by the
Merger Agreement, the Stock Option Agreement or related agreements, (ii)
prohibits or limits the ownership or operation by the Company, Parent or any of
their respective subsidiaries of a material portion of the Business or assets of
the Company and the Subsidiaries, taken as a whole, or Parent and the
Subsidiaries, taken as a whole, or compels the Company or Parent to dispose of
or hold separate any material portion of the Business or assets of the Company
and the Subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as
a whole, as a result of the Offer or the Merger, (iii) imposes material
limitations on the ability of Parent or the Purchaser to acquire or hold, or
exercise full rights of ownership of, any Shares accepted for payment pursuant
to the Offer or acquired pursuant to the Stock Option Agreement, including,
without limitation, the right to vote such Shares on all matters properly
presented to the Shareholders or (iv) prohibits Parent or any of its
subsidiaries from effectively controlling in any material respect the Business
or operation of the Company and the Subsidiaries; or
(b) any Law is enacted, entered, enforced, promulgated or deemed applicable
to the Offer, the Merger or the transactions contemplated by the Stock Option
Agreement, or any other action is taken by any Governmental Entity, other than
the application to the Offer, the Merger or the transactions contemplated by the
Stock Option Agreement of applicable waiting periods under the HSR Act or
applicable conditions under other Antitrust Laws that results, directly or
indirectly, in any of the consequences referred to in clauses (i) through (iv)
of paragraph (a) above; or
(c) (i) the Board of Directors of the Company or any committee thereof
withdraws or modifies in a manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, the Merger, the Merger Agreement or the
Stock Option Agreement or approves or recommends any Acquisition Transaction, or
(ii) the Company enters into any agreement to consummate any Acquisition
Transaction; or
(d) any of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified as to Material Adverse Effect are not
true and correct, or any such representations and warranties that are not so
qualified are not true and correct in any respect (when taken together with all
other failures of such representations and warranties to be true and correct)
that would have a Material Adverse Effect on the Company, in each case at the
date of the Merger Agreement or at the scheduled expiration of the Offer (as
though made as of such date, except that those representations and warranties
that address matters only as of a particular date shall remain true and correct
as of such date); or
(e) the Merger Agreement shall have been terminated in accordance with its
terms; or
I-1
<PAGE> 31
(f) the Company shall have breached or failed to perform in any material
respect any of its obligations, covenants or agreements under the Merger
Agreement or the Stock Option Agreement and such breach or failure to perform is
not curable or, if curable, is not cured within seven (7) business days after
written notice of such breach or failure is given by Parent to the Company; or
(g) there shall have occurred, and continued to exist, (i) any general
suspension of, or limitation on prices for, trading in securities on the New
York Stock Exchange or the Nasdaq National Market, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or Germany, (iii) a commencement of a war, armed hostilities or
other national or international crisis directly involving the United States or
Germany (other than an action involving solely United Nations' personnel or
support of United Nations' personnel), or (iv) in the case of any of the events
described in the foregoing clauses (i) through (iii) existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof.
The foregoing conditions are for the benefit of Parent and the Purchaser and may
be asserted by Parent or the Purchaser regardless of the circumstances giving
rise to any such conditions and may be waived by Parent or the Purchaser in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
The capitalized terms used in this Annex I shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex I is
appended.
I-2
<PAGE> 32
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
VOITH SULZER PAPER TECHNOLOGY
NORTH AMERICA INC.
By: /s/ R. RAY HALL
------------------------------------
Name: R. Ray Hall
Title: Executive Vice President
By: /s/ PAUL BOUTHILET
------------------------------------
Name: Paul Bouthilet
Title: Secretary
VOITH SULZER ACQUISITION CORP.
By: /s/ R. RAY HALL
------------------------------------
Name: R. Ray Hall
Title: President
By: /s/ PAUL BOUTHILET
------------------------------------
Name: Paul Bouthilet
Title: Secretary
IMPACT SYSTEMS, INC.
By: /s/ KENNETH P. OSTROW
------------------------------------
Name: Kenneth P. Ostrow
Title: President
By: /s/ ROBERT M. GORSKI
------------------------------------
Name: Robert M. Gorski
Title: V.P. Finance and Secretary
I-3
<PAGE> 1
EXHIBIT (C)(2)
STOCKHOLDER AGREEMENT
AGREEMENT, dated December 11, 1997, among Voith Sulzer Paper Technology
North America Inc., a Delaware corporation ("Parent"), Voith Sulzer Acquisition
Corp., a California corporation and a wholly-owned subsidiary of Parent (the
"Purchaser"), and Elsag International N.V. (the "Stockholder").
W I T N E S S E T H :
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Purchaser and Impact Systems, Inc., a California corporation (the
"Company"), have entered into an Agreement and Plan of Merger (as such agreement
may hereafter be amended from time to time, the "Merger Agreement"), pursuant to
which the Purchaser will be merged with and into the Company (the "Merger"); and
WHEREAS, in furtherance of the Merger, Parent and the Company desire that
as soon as practicable (and not later than five business days) after the
announcement of the execution of the Merger Agreement, the Purchaser shall
commence a cash tender offer (the "Offer") to purchase at the Offer Price all
outstanding shares of Common Stock (each as defined in Section 1 hereof),
including all of the Securities (as defined in Section 2 hereof) beneficially
owned by the Stockholder; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholder agree, and the Stockholder
has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Owned" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
(as hereinafter defined) shall include securities Beneficially Owned by all
other Persons with whom such Person would constitute a "group" within the
meaning of Section 13(d)(3) of the Exchange Act.
(b) "Common Stock" shall mean the Common Stock, no par value, of the
Company.
(c) "Offer Price" shall mean cash in the amount of $2.75 per share of
Common Stock or, if greater, the price per share paid by the Purchaser in the
Offer.
(d) "Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
(e) Capitalized terms used and not defined herein shall have the respective
meanings ascribed to them in the Merger Agreement.
2. Tender of Shares.
(a) In order to induce Parent and the Purchaser to enter into the Merger
Agreement, the Stockholder hereby agrees to validly tender (or cause the record
owner of such shares to validly tender), and not to withdraw, pursuant to and in
accordance with the terms of the Offer, not later than the fifth business day
after commencement of the Offer pursuant to Section 1.01 of the Merger Agreement
and Rule 14d-2 under the Exchange Act, the number of shares of Common Stock set
forth opposite the Stockholder's name on Schedule I hereto (the "Existing
Securities", and together with any shares of Common Stock acquired by the
Stockholder in any capacity after the date hereof and prior to the termination
of this Agreement by means of purchase, dividend, distribution, exercise of
options or other rights to acquire Common Stock or in any other way, the
"Securities"), all of which are Beneficially Owned by the Stockholder. The
Stockholder hereby
<PAGE> 2
acknowledges and agrees that Parent's and the Purchaser's obligation to accept
for payment and pay for the Securities in the Offer, including the Securities
Beneficially Owned by the Stockholder, is subject to the terms and conditions of
the Offer.
(b) The Stockholder hereby permits Parent and the Purchaser to publish and
disclose in the Offer Documents and, if approval of the Company's stockholders
is required under applicable law, the Proxy Statement (including all documents
and schedules filed with the SEC) its identity and ownership of the Securities
and the nature of its commitments, arrangements and understandings under this
Agreement; provided that the Stockholder shall have a right to review and
comment on such disclosure a reasonable time before it is publicly disclosed.
3. Option.
(a) In order to induce Parent and the Purchaser to enter into the Merger
Agreement, the Stockholder hereby grants to Purchaser an irrevocable option (a
"Securities Option") to purchase the Securities (the "Option Securities") at the
Offer Price (the "Purchase Price"). If (i) the Merger Agreement is terminated in
accordance with Section 8.01(c), 8.01(e)(ii), 8.01(f) or 8.01(g) thereof, or
(ii) the Merger Agreement is terminated in accordance with Section 8.01(b)(ii)
thereof and (x) the Stockholder shall have breached the agreements set forth in
Section 2(a) hereof or (y) at the time of such termination the Minimum Condition
shall not have been satisfied, the Securities Option shall, in any such case,
become exercisable, in whole but not in part, upon the first to occur of any
such event and remain exercisable in whole but not in part until the date which
is 90 days after the date of the occurrence of such event (the "90 Day Period"),
so long as: (i) all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), required for the purchase
of the Securities upon such exercise shall have expired or been waived and any
other conditions under the other Antitrust Laws shall have been satisfied and
(ii) there shall not be in effect any preliminary injunction or other order
issued by any Governmental Entity prohibiting the exercise of the Securities
Option pursuant to this Agreement; provided that if (i) all HSR Act waiting
periods shall not have expired or been waived or the conditions under the other
Antitrust Laws shall not have been satisfied or (ii) there shall be in effect
any such injunction or order, in each case on the expiration of the 90 Day
Period, the 90 Day Period shall be extended until five (5) business days after
the later of (A) the later of the date of expiration or waiver of all HSR Act
waiting periods or the date on which the applicable conditions under the other
Antitrust Laws have been satisfied, and (B) the date of removal or lifting of
such injunction or order. In the event that the Purchaser wishes to exercise the
Securities Option, the Purchaser shall send a written notice (the "Notice") to
the Stockholder identifying the place and date (not less than two (2) nor more
than ten (10) business days from the date of the Notice) for the closing of such
purchase.
(b) In the event the Option Securities are acquired by the Purchaser
pursuant to the exercise of the Securities Option (the "Acquired Securities"),
the Stockholder shall be entitled to receive, and the Purchaser shall promptly
pay to the Stockholder, upon any subsequent disposition, transfer or sale
("Sale") of the Acquired Securities during the term of this Agreement an amount
per share in cash equal to 50% of the difference between the net proceeds
received per share in the Sale and the Purchase Price. The Purchaser shall only
effect any Sale in an arms' length bona fide transaction to an unaffiliated
third party.
4. Additional Agreements.
(a) Voting Agreement. The Stockholder shall, at any meeting of the
stockholders of the Company, however called, or in connection with any written
consent of the stockholders of the Company, vote (or cause to be voted) all
Securities then held of record or Beneficially Owned by the Stockholder, (i) in
favor of the Merger, the execution and delivery by the Company of the Merger
Agreement and the Stock Option Agreement and the approval of the terms thereof
and each of the other actions contemplated by the Merger Agreement, the Stock
Option Agreement and this Agreement and any actions required in furtherance
thereof and hereof; and (ii) against any proposal relating to an Acquisition
Transaction and against any action or agreement that would impede, frustrate,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement or the Stock Option Agreement or which would
result in any of the conditions set forth in Annex I to the Merger Agreement or
set forth in Article VII of the Merger Agreement not being fulfilled.
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<PAGE> 3
(b) No Inconsistent Arrangements. The Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
it shall not (i) transfer (which term shall include, without limitation, any
sale, gift, pledge (other than a pledge which does not impair the Stockholder's
ability to perform under this Agreement) or other disposition), or consent to
any transfer of, any or all of the Securities or any interest therein, (ii)
enter into any contract, option or other agreement or understanding with respect
to any transfer of any or all of the Securities or any interest therein, (iii)
grant any proxy, power-of-attorney or other authorization in or with respect to
the Securities, (iv) deposit the Securities into a voting trust or enter into a
voting agreement or arrangement with respect to the Securities or (v) take any
other action that would in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions contemplated hereby
or by the Merger Agreement or the Stock Option Agreement (including, without
limitation, any action that would cause the Merger to be subject to Section 1101
of the GCL).
(c) Grant of Irrevocable Proxy; Appointment or Proxy.
(i) The Stockholder hereby irrevocably grants to, and appoints, Parent
and Ray Hall and Paul Bouthilet, or either of them, in their respective
capacities as officers or directors of Parent, and any individual who shall
hereafter succeed to any such office or directorship of Parent, and each of
them individually, the Stockholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of the
Stockholder, to vote the Securities, or grant a consent or approval in
respect of the Securities, in favor of the various transactions
contemplated by the Merger Agreement and the Stock Option Agreement (the
"Transactions") and against any proposal relating to an Acquisition
Transaction.
(ii) The Stockholder represents that any proxies heretofore given in
respect of the Stockholder's Securities are not irrevocable, and that any
such proxies are hereby revoked.
(iii) The Stockholder understands and acknowledges that Parent is
entering into the Merger Agreement in reliance upon the Stockholder's
execution and delivery of this Agreement. The Stockholder hereby affirms
that the irrevocable proxy set forth in this Section 4(c) is given in
connection with the execution of the Merger Agreement, and that such
irrevocable proxy is given to secure the performance of the duties of the
Stockholder under this Agreement. The Stockholder hereby further affirms
that the irrevocable proxy is coupled with an interest and may under no
circumstances be revoked. The Stockholder hereby ratifies and confirms all
that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable
in accordance with the provisions of Section 705 of the GCL. A legend
reflecting the foregoing irrevocable proxy shall be placed on the
certificate or certificate representing the Securities.
(d) No Solicitation. The Stockholder hereby agrees, in the capacity as a
stockholder of the Company, that neither the Stockholder nor any affiliates,
representatives or agents shall (and, if the Stockholder is a corporation,
partnership, trust or other entity, the Stockholder shall cause its officers,
directors, partners, and employees, representatives and agents, including, but
not limited to, investment bankers, attorneys and accountants, not to), directly
or indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, the Purchaser or any of
their respective affiliates or representatives) concerning any proposal relating
to an Acquisition Transaction. The Stockholder will immediately cease any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any proposal relating to an Acquisition Transaction.
The Stockholder will immediately communicate to Parent the terms of any
proposal, discussion, negotiation or inquiry (and will disclose any written
materials received by the Stockholder in connection with such proposal,
discussion, negotiation or inquiry) and the identity of the party making such
proposal or inquiry which it may receive in respect of any such Acquisition
Transaction. Any action taken by the Company or any member of the Board of
Directors of the Company in accordance with Section 6.07 of the Merger Agreement
shall be deemed not to violate this Section 4(d).
(e) Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate and
make effective the
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<PAGE> 4
transactions contemplated by this Agreement. Each party shall promptly consult
with the other and provide any necessary information and material with respect
to all filings made by such party with any Governmental Entity in connection
with this Agreement and the transactions contemplated hereby.
(f) Waiver of Appraisal Rights. The Stockholder hereby waives any rights of
appraisal or rights to dissent from the Merger that it may have.
5. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Parent and the Purchaser as follows:
(a) Ownership of Securities. The Stockholder is the record and Beneficial
Owner of the Existing Securities, as set forth on Schedule I. On the date
hereof, the Existing Securities constitute all of the Securities owned of record
or Beneficially Owned by the Stockholder. The Stockholder has sole voting power
and sole power to issue instructions with respect to the matters set forth in
Sections 2, 3 and 4 hereof, sole power of disposition, sole power to demand
appraisal rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Existing Securities with no
limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the power and authority
to enter into and perform all of the Stockholder's obligations under this
Agreement. The execution, delivery and performance of this Agreement by the
Stockholder will not violate any other agreement to which the Stockholder is a
party including, without limitation, any voting agreement, proxy arrangement,
pledge agreement, shareholders agreement or voting trust. 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 the
Stockholder in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (ii)
is subject to general principles of equity. There is no beneficiary or holder of
a voting trust certificate or other interest of any trust of which the
Stockholder is a trustee, or any party to any other agreement or arrangement,
whose consent is required for the execution and delivery of this Agreement or
the consummation by the Stockholder of the transactions contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act, other applicable
Antitrust Laws and the Exchange Act (i) no filing with, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary for
the execution and delivery of this Agreement by the Stockholder, the
consummation by the Stockholder of the transactions contemplated hereby and the
compliance by the Stockholder with the provisions hereof and (ii) none of the
execution and delivery of this Agreement by the Stockholder, the consummation by
the Stockholder of the transactions contemplated hereby or compliance by the
Stockholder with any of the provisions hereof, except in cases in which any
conflict, breach, default or violation described below would not interfere with
the ability of such Stockholder to perform such Stockholder's obligations
hereunder, shall (A) conflict with or result in any breach of any organizational
documents applicable to the Stockholder, (B) result in a violation or breach of,
or constitute (with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation, modification or
acceleration) under, any of the terms, conditions or provisions of any note,
loan agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of any
kind to which the Stockholder is a party or by which the Stockholder or any of
its properties or assets may be bound, or (C) violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
the Stockholder or any of such Stockholder's properties or assets.
(d) No Liens. Except as permitted by this Agreement, the Existing
Securities and the certificates representing such securities are now, and at all
times during the term hereof will be, held by the Stockholder, or by a nominee
or custodian for the benefit of the Stockholder, free and clear of all Liens,
proxies, voting trusts or agreements, understandings or arrangements or any
other rights whatsoever, except for any such Liens or proxies arising hereunder.
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<PAGE> 5
(e) No Finder's Fees. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of the Stockholder.
(f) Reliance by Parent. The Stockholder understands and acknowledges that
Parent is entering into, and causing the Purchaser to enter into, the Merger
Agreement in reliance upon the Stockholder's execution and delivery of this
Agreement.
6. Representations and Warranties of Parent and the Purchaser. Each of
Parent and the Purchaser hereby represents and warrants to the Stockholder as
follows:
(a) Power; Binding Agreement. Parent and the Purchaser each has the
corporate power and authority to enter into and perform all of its obligations
under this Agreement. The execution, delivery and performance of this Agreement
by each of Parent and the Purchaser will not violate any other agreement to
which either of them is a party. This Agreement has been duly and validly
executed and delivered by each of Parent and the Purchaser and constitutes a
valid and binding agreement of each of Parent and the Purchaser, enforceable
against each of Parent and the Purchaser in accordance with its terms, except
that such enforceability (i) may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to the enforcement of
creditors' rights generally and (ii) is subject to general principles of equity.
(b) No Conflicts. Except for filings under the HSR Act, other applicable
Antitrust Laws and the Exchange Act, (i) no filing with, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary for
the execution of this Agreement by each of Parent and the Purchaser, the
consummation by each of Parent and the Purchaser of the transactions
contemplated hereby and the compliance by Parent and the Purchaser with the
provisions hereof and (ii) none of the execution and delivery of this Agreement
by each of Parent and the Purchaser, the consummation by each of Parent and the
Purchaser of the transactions contemplated hereby or compliance by each of
Parent and the Purchaser with any of the provisions hereof, except in cases in
which any conflict, breach, default or violation described below would not
interfere with the ability of Parent or the Purchaser to perform their
respective obligations hereunder, shall (A) conflict with or result in any
breach of any organizational documents applicable to either of Parent or the
Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, modification or acceleration) under,
any of the terms, conditions or provisions of any note, loan agreement, bond,
mortgage, indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which either of
Parent or the Purchaser is a party or by which either of Parent or the Purchaser
or any of their properties or assets may be bound, or (C) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to either of Parent or the Purchaser or any of their properties or
assets.
7. Further Assurances. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further lawful action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
8. Stop Transfer. The Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Securities, unless such transfer
is made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Common Stock by reason of any stock dividend,
split-up, recapitalization, combination, exchange of shares or the like, the
term "Securities" shall refer to and include the Securities as well as all such
stock dividends and distributions and any shares into which or for which any and
all of the Securities may be changed or exchanged.
9. Termination. The covenants, agreements and proxy contained herein with
respect to the Securities shall terminate upon the earlier of (a) the Effective
Time, (b) the first anniversary of the date hereof, or (c) the termination of
the Merger Agreement pursuant to Section 8.01(a), 8.01(b)(i), 8.01(b)(iii),
8.01(d) or 8.01(e)(i) thereof.
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<PAGE> 6
10. No Limitation. Nothing in this Agreement shall be construed to prohibit
any officer or affiliate of the Stockholder who is or has designated a member of
the Board of Directors of the Company from taking any action solely in his
capacity as a member of the Board of Directors of the Company or from exercising
his fiduciary duties as a member of such Board of Directors.
11. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement constitute
the entire agreement between the parties with respect to the subject matter
hereof and supersede all other prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations hereunder shall
attach to the Securities and shall be binding upon any person or entity to which
legal or beneficial ownership of the Securities shall pass, whether by operation
of law or otherwise, including, without limitation, the Stockholder's
administrators or successors. Notwithstanding any transfer of Securities, the
transferor shall remain liable for the performance of all obligations of the
transferor under this Agreement.
(c) Assignment. This Agreement shall not be assigned by operation of law or
otherwise without the prior written consent of the Stockholder or Parent and the
Purchaser, as the case may be, provided that Parent or the Purchaser may assign,
in its respective sole discretion, its rights and obligations hereunder to any
direct or indirect subsidiary of Parent, but no such assignment shall relieve
Parent or the Purchaser of its obligations hereunder if such assignee does not
perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by the parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with a
confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the Stockholder:
c/o Elsag Bailey International N.V.
29801 Euclid Avenue
Wyckliffe, Ohio 44092
Attention: Mark Santo
Telephone No.: (216) 585-8651
Telecopy No.: (216) 585-8821
Copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94304
Attention: David K. Michaels
Telephone No.: (415) 494-0600
Telecopy No.: (415) 494-1417
If to Parent
or the Purchaser:
Voith Sulzer Paper Technology North America Inc.
2200 N. Roemer Road
Appleton, Wisconsin 54913
Attention: Paul Bouthilet
Telephone No.: (920) 731-0769
Telecopy No.: (920) 731-7409
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<PAGE> 7
Copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Ralf R. Boer
Telephone No.: (414) 271-2400
Telecopy No.: (414) 297-4900
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein. Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor the Purchaser shall be deemed to be the owner, nor
shall Parent or the Purchaser have the power to vote for the election of
directors, with respect to some or all of the Securities for purposes of the
California General Corporation Law until the purchase of, and payment for, such
Securities is actually consummated. The rights of Parent and the Purchaser
hereunder shall be limited as provided in the preceding sentence.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore in the event
of any such breach the aggrieved party shall be entitled to the remedy of
specific performance of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which it may be entitled, at
law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any rights,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of California, without giving effect to
the principles of conflicts of law thereof.
(l) Waiver of Jury Trial. Each party hereto hereby waives any right to a
trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.
(m) Descriptive Headings. The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same agreement.
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<PAGE> 8
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholder have caused
this Agreement to be duly executed as of the day and year first above written.
VOITH SULZER PAPER TECHNOLOGY
NORTH AMERICA INC.
By: /s/ R. RAY HALL
------------------------------------
Name: R. Ray Hall
Title: Executive Vice President
By: /s/ PAUL BOUTHILET
------------------------------------
Name: Paul Bouthilet
Title: Secretary
VOITH SULZER ACQUISITION CORP.
By: /s/ R. RAY HALL
------------------------------------
Name: R. Ray Hall
Title: President
By: /s/ PAUL BOUTHILET
------------------------------------
Name: Paul Bouthilet
Title: Secretary
ELSAG INTERNATIONAL N.V.
By: /s/ MARK V. SANTO
------------------------------------
Name: Mark V. Santo
Title: Group VP
- 8 -
<PAGE> 9
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
NAME OF STOCKHOLDER BENEFICIALLY OWNED
- ---------------------------------------------------------------------------- ------------------
<S> <C>
Elsag International N.V. ................................................... 2,378,900
</TABLE>
<PAGE> 1
EXHIBIT (C)(3)
STOCKHOLDER AGREEMENT
AGREEMENT, dated December 11, 1997, among Voith Sulzer Paper Technology
North America Inc., a Delaware corporation ("Parent"), Voith Sulzer Acquisition
Corp., a California corporation and a wholly-owned subsidiary of Parent (the
"Purchaser"), and Kenneth P. Ostrow (the "Stockholder").
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Purchaser and Impact Systems, Inc., a California corporation (the
"Company"), have entered into an Agreement and Plan of Merger (as such agreement
may hereafter be amended from time to time, the "Merger Agreement"), pursuant to
which the Purchaser will be merged with and into the Company (the "Merger"); and
WHEREAS, in furtherance of the Merger, Parent and the Company desire that
as soon as practicable (and not later than five business days) after the
announcement of the execution of the Merger Agreement, the Purchaser shall
commence a cash tender offer (the "Offer") to purchase at the Offer Price all
outstanding shares of Common Stock (each as defined in Section 1 hereof),
including all of the Securities (as defined in Section 2 hereof) beneficially
owned by the Stockholder; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholder agree, and the Stockholder
has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Owned" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
(as hereinafter defined) shall include securities Beneficially Owned by all
other Persons with whom such Person would constitute a "group" within the
meaning of Section 13(d)(3) of the Exchange Act.
(b) "Common Stock" shall mean the Common Stock, no par value, of the
Company.
(c) "Offer Price" shall mean cash in the amount of $2.75 per share of
Common Stock or, if greater, the price per share paid by the Purchaser in the
Offer.
(d) "Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
(e) Capitalized terms used and not defined herein shall have the respective
meanings ascribed to them in the Merger Agreement.
2. Tender of Shares.
(a) In order to induce Parent and the Purchaser to enter into the Merger
Agreement, the Stockholder hereby agrees to validly tender (or cause the record
owner of such shares to validly tender), and not to withdraw, pursuant to and in
accordance with the terms of the Offer, not later than the fifth business day
after commencement of the Offer pursuant to Section 1.01 of the Merger Agreement
and Rule 14d-2 under the Exchange Act, the number of shares of Common Stock set
forth opposite the Stockholder's name on Schedule I hereto (the "Existing
Securities", and together with any shares of Common Stock acquired by the
Stockholder in any capacity after the date hereof and prior to the termination
of this Agreement by means of purchase, dividend, distribution, exercise of
options or other rights to acquire Common Stock or in any other
<PAGE> 2
way, the "Securities"), all of which are Beneficially Owned by the Stockholder.
The Stockholder hereby acknowledges and agrees that Parent's and the Purchaser's
obligation to accept for payment and pay for the Securities in the Offer,
including the Securities Beneficially Owned by the Stockholder, is subject to
the terms and conditions of the Offer.
(b) The Stockholder hereby permits Parent and the Purchaser to publish and
disclose in the Offer Documents and, if approval of the Company's stockholders
is required under applicable law, the Proxy Statement (including all documents
and schedules filed with the SEC) its identity and ownership of the Securities
and the nature of its commitments, arrangements and understandings under this
Agreement; provided that the Stockholder shall have a right to review and
comment on such disclosure a reasonable time before it is publicly disclosed.
3. Option.
(a) In order to induce Parent and the Purchaser to enter into the Merger
Agreement, the Stockholder hereby grants to Purchaser an irrevocable option (a
"Securities Option") to purchase the Securities (the "Option Securities") at the
Offer Price (the "Purchase Price"). If (i) the Merger Agreement is terminated in
accordance with Section 8.01(c), 8.01(e)(ii), 8.01(f) or 8.01(g) thereof, or
(ii) the Merger Agreement is terminated in accordance with Section 8.01(b)(ii)
thereof and (x) the Stockholder shall have breached the agreements set forth in
Section 2(a) hereof or (y) at the time of such termination the Minimum Condition
shall not have been satisfied, the Securities Option shall, in any such case,
become exercisable, in whole but not in part, upon the first to occur of any
such event and remain exercisable in whole but not in part until the date which
is 90 days after the date of the occurrence of such event (the "90 Day Period"),
so long as: (i) all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), required for the purchase
of the Securities upon such exercise shall have expired or been waived and any
other conditions under the other Antitrust Laws shall have been satisfied and
(ii) there shall not be in effect any preliminary injunction or other order
issued by any Governmental Entity prohibiting the exercise of the Securities
Option pursuant to this Agreement; provided that if (i) all HSR Act waiting
periods shall not have expired or been waived or the conditions under the other
Antitrust Laws shall not have been satisfied or (ii) there shall be in effect
any such injunction or order, in each case on the expiration of the 90 Day
Period, the 90 Day Period shall be extended until five (5) business days after
the later of (A) the later of the date of expiration or waiver of all HSR Act
waiting periods or the date on which the applicable conditions under the other
Antitrust Laws have been satisfied, and (B) the date of removal or lifting of
such injunction or order. In the event that the Purchaser wishes to exercise the
Securities Option, the Purchaser shall send a written notice (the "Notice") to
the Stockholder identifying the place and date (not less than two (2) nor more
than ten (10) business days from the date of the Notice) for the closing of such
purchase.
(b) In the event the Option Securities are acquired by the Purchaser
pursuant to the exercise of the Securities Option (the "Acquired Securities"),
the Stockholder shall be entitled to receive, and the Purchaser shall promptly
pay to the Stockholder, upon any subsequent disposition, transfer or sale
("Sale") of the Acquired Securities during the term of this Agreement an amount
per share in cash equal to 50% of the difference between the net proceeds
received per share in the Sale and the Purchase Price. The Purchaser shall only
effect any Sale in an arms' length bona fide transaction to an unaffiliated
third party.
4. Additional Agreements.
(a) Voting Agreement. The Stockholder shall, at any meeting of the
stockholders of the Company, however called, or in connection with any written
consent of the stockholders of the Company, vote (or cause to be voted) all
Securities then held of record or Beneficially Owned by the Stockholder, (i) in
favor of the Merger, the execution and delivery by the Company of the Merger
Agreement and the Stock Option Agreement and the approval of the terms thereof
and each of the other actions contemplated by the Merger Agreement, the Stock
Option Agreement and this Agreement and any actions required in furtherance
thereof and hereof; and (ii) against any proposal relating to an Acquisition
Transaction and against any action or agreement that would impede, frustrate,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the
- 2 -
<PAGE> 3
Merger Agreement or the Stock Option Agreement or which would result in any of
the conditions set forth in Annex I to the Merger Agreement or set forth in
Article VII of the Merger Agreement not being fulfilled.
(b) No Inconsistent Arrangements. The Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
it shall not(i) transfer (which term shall include, without limitation, any
sale, gift, pledge (other than a pledge which does not impair the Stockholder's
ability to perform under this Agreement) or other disposition), or consent to
any transfer of, any or all of the Securities or any interest therein, (ii)
enter into any contract, option or other agreement or understanding with respect
to any transfer of any or all of the Securities or any interest therein, (iii)
grant any proxy, power-of-attorney or other authorization in or with respect to
the Securities, (iv) deposit the Securities into a voting trust or enter into a
voting agreement or arrangement with respect to the Securities or (v) take any
other action that would in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions contemplated hereby
or by the Merger Agreement or the Stock Option Agreement (including, without
limitation, any action that would cause the Merger to be subject to Section 1101
of the GCL).
(c) Grant of Irrevocable Proxy; Appointment or Proxy.
(i) The Stockholder hereby irrevocably grants to, and appoints, Parent
and Ray Hall and Paul Bouthilet, or either of them, in their respective
capacities as officers or directors of Parent, and any individual who shall
hereafter succeed to any such office or directorship of Parent, and each of
them individually, the Stockholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of the
Stockholder, to vote the Securities, or grant a consent or approval in
respect of the Securities, in favor of the various transactions
contemplated by the Merger Agreement and the Stock Option Agreement (the
"Transactions") and against any proposal relating to an Acquisition
Transaction.
(ii) The Stockholder represents that any proxies heretofore given in
respect of the Stockholder's Securities are not irrevocable, and that any
such proxies are hereby revoked.
(iii) The Stockholder understands and acknowledges that Parent is
entering into the Merger Agreement in reliance upon the Stockholder's
execution and delivery of this Agreement. The Stockholder hereby affirms
that the irrevocable proxy set forth in this Section 4(c) is given in
connection with the execution of the Merger Agreement, and that such
irrevocable proxy is given to secure the performance of the duties of the
Stockholder under this Agreement. The Stockholder hereby further affirms
that the irrevocable proxy is coupled with an interest and may under no
circumstances be revoked. The Stockholder hereby ratifies and confirms all
that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable
in accordance with the provisions of Section 705 of the GCL. A legend
reflecting the foregoing irrevocable proxy shall be placed on the
certificate or certificate representing the Securities.
(d) No Solicitation. The Stockholder hereby agrees, in the capacity as a
stockholder of the Company, that neither the Stockholder nor any affiliates,
representatives or agents shall (and, if the Stockholder is a corporation,
partnership, trust or other entity, the Stockholder shall cause its officers,
directors, partners, and employees, representatives and agents, including, but
not limited to, investment bankers, attorneys and accountants, not to), directly
or indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, the Purchaser or any of
their respective affiliates or representatives) concerning any proposal relating
to an Acquisition Transaction. The Stockholder will immediately cease any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any proposal relating to an Acquisition Transaction.
The Stockholder will immediately communicate to Parent the terms of any
proposal, discussion, negotiation or inquiry (and will disclose any written
materials received by the Stockholder in connection with such proposal,
discussion, negotiation or inquiry) and the identity of the party making such
proposal or inquiry which it may receive in respect of any such Acquisition
Transaction. Any action taken by the Company or any member of the Board of
Directors of the Company in accordance with Section 6.07 of the Merger Agreement
shall be deemed not to violate this Section 4(d).
- 3 -
<PAGE> 4
(e) Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate and
make effective the transactions contemplated by this Agreement. Each party shall
promptly consult with the other and provide any necessary information and
material with respect to all filings made by such party with any Governmental
Entity in connection with this Agreement and the transactions contemplated
hereby.
(f) Waiver of Appraisal Rights. The Stockholder hereby waives any rights of
appraisal or rights to dissent from the Merger that it may have.
5. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Parent and the Purchaser as follows:
(a) Ownership of Securities. The Stockholder is the record and Beneficial
Owner of the Existing Securities, as set forth on Schedule I. On the date
hereof, the Existing Securities constitute all of the Securities owned of record
or Beneficially Owned by the Stockholder. The Stockholder has sole voting power
and sole power to issue instructions with respect to the matters set forth in
Sections 2, 3 and 4 hereof, sole power of disposition, sole power to demand
appraisal rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Existing Securities with no
limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the power and authority
to enter into and perform all of the Stockholder's obligations under this
Agreement. The execution, delivery and performance of this Agreement by the
Stockholder will not violate any other agreement to which the Stockholder is a
party including, without limitation, any voting agreement, proxy arrangement,
pledge agreement, shareholders agreement or voting trust. 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 the
Stockholder in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (ii)
is subject to general principles of equity. There is no beneficiary or holder of
a voting trust certificate or other interest of any trust of which the
Stockholder is a trustee, or any party to any other agreement or arrangement,
whose consent is required for the execution and delivery of this Agreement or
the consummation by the Stockholder of the transactions contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act, other applicable
Antitrust Laws and the Exchange Act (i) no filing with, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary for
the execution and delivery of this Agreement by the Stockholder, the
consummation by the Stockholder of the transactions contemplated hereby and the
compliance by the Stockholder with the provisions hereof and (ii) none of the
execution and delivery of this Agreement by the Stockholder, the consummation by
the Stockholder of the transactions contemplated hereby or compliance by the
Stockholder with any of the provisions hereof, except in cases in which any
conflict, breach, default or violation described below would not interfere with
the ability of such Stockholder to perform such Stockholder's obligations
hereunder, shall (A) conflict with or result in any breach of any organizational
documents applicable to the Stockholder, (B) result in a violation or breach of,
or constitute (with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation, modification or
acceleration) under, any of the terms, conditions or provisions of any note,
loan agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of any
kind to which the Stockholder is a party or by which the Stockholder or any of
its properties or assets may be bound, or (C) violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
the Stockholder or any of such Stockholder's properties or assets.
(d) No Liens. Except as permitted by this Agreement, the Existing
Securities and the certificates representing such securities are now, and at all
times during the term hereof will be, held by the Stockholder, or by a nominee
or custodian for the benefit of the Stockholder, free and clear of all Liens,
proxies, voting
- 4 -
<PAGE> 5
trusts or agreements, understandings or arrangements or any other rights
whatsoever, except for any such Liens or proxies arising hereunder.
(e) No Finder's Fees. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of the Stockholder.
(f) Reliance by Parent. The Stockholder understands and acknowledges that
Parent is entering into, and causing the Purchaser to enter into, the Merger
Agreement in reliance upon the Stockholder's execution and delivery of this
Agreement.
6. Representations and Warranties of Parent and the Purchaser. Each of
Parent and the Purchaser hereby represents and warrants to the Stockholder as
follows:
(a) Power; Binding Agreement. Parent and the Purchaser each has the
corporate power and authority to enter into and perform all of its obligations
under this Agreement. The execution, delivery and performance of this Agreement
by each of Parent and the Purchaser will not violate any other agreement to
which either of them is a party. This Agreement has been duly and validly
executed and delivered by each of Parent and the Purchaser and constitutes a
valid and binding agreement of each of Parent and the Purchaser, enforceable
against each of Parent and the Purchaser in accordance with its terms, except
that such enforceability (i) may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to the enforcement of
creditors' rights generally and (ii) is subject to general principles of equity.
(b) No Conflicts. Except for filings under the HSR Act, other applicable
Antitrust Laws and the Exchange Act, (i) no filing with, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary for
the execution of this Agreement by each of Parent and the Purchaser, the
consummation by each of Parent and the Purchaser of the transactions
contemplated hereby and the compliance by Parent and the Purchaser with the
provisions hereof and (ii) none of the execution and delivery of this Agreement
by each of Parent and the Purchaser, the consummation by each of Parent and the
Purchaser of the transactions contemplated hereby or compliance by each of
Parent and the Purchaser with any of the provisions hereof, except in cases in
which any conflict, breach, default or violation described below would not
interfere with the ability of Parent or the Purchaser to perform their
respective obligations hereunder, shall (A) conflict with or result in any
breach of any organizational documents applicable to either of Parent or the
Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, modification or acceleration) under,
any of the terms, conditions or provisions of any note, loan agreement, bond,
mortgage, indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which either of
Parent or the Purchaser is a party or by which either of Parent or the Purchaser
or any of their properties or assets may be bound, or (C) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to either of Parent or the Purchaser or any of their properties or
assets.
7. Further Assurances. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further lawful action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
8. Stop Transfer. The Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Securities, unless such transfer
is made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Common Stock by reason of any stock dividend,
split-up, recapitalization, combination, exchange of shares or the like, the
term "Securities" shall refer to and include the Securities as well as all such
stock dividends and distributions and any shares into which or for which any and
all of the Securities may be changed or exchanged.
9. Termination. The covenants, agreements and proxy contained herein with
respect to the Securities shall terminate upon the earlier of (a) the Effective
Time, (b) the first anniversary of the date hereof, or
- 5 -
<PAGE> 6
(c) the termination of the Merger Agreement pursuant to Section 8.01(a),
8.01(b)(i), 8.01(b)(iii), 8.01(d) or 8.01(e)(i) thereof.
10. No Limitation. Nothing in this Agreement shall be construed to prohibit
any officer or affiliate of the Stockholder who is or has designated a member of
the Board of Directors of the Company from taking any action solely in his
capacity as a member of the Board of Directors of the Company or from exercising
his fiduciary duties as a member of such Board of Directors.
11. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement constitute
the entire agreement between the parties with respect to the subject matter
hereof and supersede all other prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations hereunder shall
attach to the Securities and shall be binding upon any person or entity to which
legal or beneficial ownership of the Securities shall pass, whether by operation
of law or otherwise, including, without limitation, the Stockholder's
administrators or successors. Notwithstanding any transfer of Securities, the
transferor shall remain liable for the performance of all obligations of the
transferor under this Agreement.
(c) Assignment. This Agreement shall not be assigned by operation of law or
otherwise without the prior written consent of the Stockholder or Parent and the
Purchaser, as the case may be, provided that Parent or the Purchaser may assign,
in its respective sole discretion, its rights and obligations hereunder to any
direct or indirect subsidiary of Parent, but no such assignment shall relieve
Parent or the Purchaser of its obligations hereunder if such assignee does not
perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by the parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with a
confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the Stockholder:
Kenneth P. Ostrow
14600 Winchester Boulevard
Los Gatos, California 95030
Telephone No.: (408) 379-0910
Telecopy No.: (408) 379-7275
If to Parent
or the Purchaser:
Voith Sulzer Paper Technology North America Inc.
2200 N. Roemer Road
Appleton, Wisconsin 54913
Attention: Paul Bouthilet
Telephone No.: (920) 731-0769
Telecopy No.: (920) 731-7409
- 6 -
<PAGE> 7
Copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Ralf R. Boer
Telephone No.: (414) 271-2400
Telecopy No.: (414) 297-4900
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein. Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor the Purchaser shall be deemed to be the owner, nor
shall Parent or the Purchaser have the power to vote for the election of
directors, with respect to some or all of the Securities for purposes of the
California General Corporation Law until the purchase of, and payment for, such
Securities is actually consummated. The rights of Parent and the Purchaser
hereunder shall be limited as provided in the preceding sentence.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore in the event
of any such breach the aggrieved party shall be entitled to the remedy of
specific performance of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which it may be entitled, at
law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any rights,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of California, without giving effect to
the principles of conflicts of law thereof.
(l) Waiver of Jury Trial. Each party hereto hereby waives any right to a
trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.
(m) Descriptive Headings. The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same agreement.
- 7 -
<PAGE> 8
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholder have caused
this Agreement to be duly executed as of the day and year first above written.
VOITH SULZER PAPER TECHNOLOGY
NORTH AMERICA INC.
By: /s/ R. RAY HALL
------------------------------------
Name: R. Ray Hall
Title: Executive Vice President
By: /s/ PAUL BOUTHILET
------------------------------------
Name: Paul Bouthilet
Title: Secretary
VOITH SULZER ACQUISITION CORP.
By: /s/ R. RAY HALL
------------------------------------
Name: R. Ray Hall
Title: President
By: /s/ PAUL BOUTHILET
------------------------------------
Name: Paul Bouthilet
Title: Secretary
KENNETH P. OSTROW
By: /s/ KENNETH P. OSTROW
------------------------------------
(signature)
ELSAG INTERNATIONAL. M.V.
By: /s/ MARK V. SANTO
------------------------------------
Name: Mark V. Santo
Title: Group VP
- 8 -
<PAGE> 9
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
NAME OF STOCKHOLDER BENEFICIALLY OWNED
--------------------------------- ---------------------------------
<S> <C>
Kenneth P. Ostrow 668,484
</TABLE>
<PAGE> 1
EXHIBIT (C)(4)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated December 11, 1997 (this "Agreement"), by and
among Voith Sulzer Paper Technology North America Inc., a Delaware corporation
("Parent"), Voith Sulzer Acquisition Corp., a California corporation and a
wholly-owned subsidiary of Parent (the "Purchaser"), and Impact Systems, Inc., a
California corporation (the "Company").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Purchaser and the Company are entering into an Agreement and Plan of
Merger (as such agreement may hereafter be amended from time to time, the
"Merger Agreement"; capitalized terms used but not defined in this Agreement
shall have the meanings ascribed to them in the Merger Agreement), which
provides, upon the terms and subject to the conditions thereof, for (i) the
commencement by the Purchaser of a tender offer (the "Offer") to purchase all of
the issued and outstanding shares of the common stock, no par value, of the
Company ("Common Stock") at the applicable Offer Price and (ii) the subsequent
merger of the Purchaser with and into the Company (the "Merger"), whereby each
share of Common Stock, other than shares owned directly or indirectly by Parent,
the Purchaser or the Company and other than Dissenting Shares, will be converted
into the right to receive in cash the Offer Price applicable thereto; and
WHEREAS, as a condition to the willingness of Parent and the Purchaser to
enter into the Merger Agreement, Parent and the Purchaser have required that the
Company agree, and in order to induce Parent and the Purchaser to enter into the
Merger Agreement, the Company has agreed, to grant the Purchaser an option to
purchase shares of Common Stock, upon the terms and subject to the conditions of
this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
THE TOP-UP STOCK OPTION
SECTION 1.1. Grant of Top-Up Stock Option. Subject to the terms and
conditions set forth herein, the Company hereby grants to the Purchaser an
irrevocable option (the "Top-Up Stock Option") to purchase that number of shares
of Common Stock (the "Top-Up Option Shares") equal to the number of shares of
Common Stock that, when added to the number of shares of Common Stock owned by
the Purchaser and its affiliates immediately following consummation of the
Offer, shall constitute 90% of the shares of Common Stock then outstanding on a
fully diluted basis (assuming the issuance of the Top-Up Option Shares) at a
purchase price per Top-Up Option Share equal to the Offer Price; provided,
however, that the Top-Up Stock Option shall not be exercisable if the number of
shares of Common Stock subject thereto exceeds the number of authorized shares
of Common Stock available for issuance. The Company agrees to provide Parent and
the Purchaser with information regarding the number of shares of Common Stock
available for issuance on an ongoing basis.
SECTION 1.2. Exercise of Top-Up Stock Option. (a) Subject to the conditions
set forth in Section 2.1 and any additional requirements of Law, the Top-Up
Stock Option may be exercised by the Purchaser, in whole but not in part, at any
one time after the occurrence of a Top-Up Exercise Event (as defined below) and
prior to the Top-Up Termination Date (as defined below).
(b) A "Top-Up Exercise Event" shall occur for purposes of this Agreement
upon the Purchaser's acceptance for payment pursuant to the Offer of shares of
Common Stock constituting more than 50% but less than 90% of the shares of
Common Stock then outstanding on a fully diluted basis.
<PAGE> 2
(c) Except as provided in the last sentence of this Section 1.2.(c), the
"Top-Up Termination Date" shall occur for purposes of this Agreement upon the
earliest to occur of:
(i) the Effective Time;
(ii) the date which is ten (10) business days after the occurrence of
Top-Up Exercise Event; and
(iii) the termination of the Merger Agreement.
Notwithstanding the occurrence of the Top-Up Termination Date, the Purchaser
shall be entitled to purchase the Top-Up Option Shares if it has exercised the
Top-Up Stock Option in accordance with the terms hereof prior to such
occurrence, and the occurrence of the Top-Up Termination Date shall not affect
any rights hereunder which by their terms do not terminate or expire prior to or
as of such date.
(d) In the event the Purchaser wishes to exercise the Top-Up Stock Option,
the Purchaser shall send to the Company a written notice (a "Top-Up Exercise
Notice", the date of which notice is referred to herein as the "Top-Up Notice
Date") specifying the denominations of the certificate or certificates
evidencing the Top-Up Option Shares which the Purchaser wishes to receive, the
place for the closing of the purchase and sale pursuant to the Top-Up Stock
Option (the "Top-Up Closing") and a date not earlier then three (3) business
days nor later then ten (10) business days from the Top-Up Notice Date for the
Top-Up Closing (the "Top-Up Closing Date"); provided, however, that (i) if the
Top-Up Closing cannot be consummated by reason of any applicable Laws or Orders,
the period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which such restriction on consummation has expired or
been terminated and (ii) without limiting the foregoing, if prior notification
to or approval of any Governmental Entity is required in connection with such
purchase, the Purchaser and the Company 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. The Company shall, within two (2)
business days after receipt of the Top-Up Exercise Notice, deliver written
notice to the Purchaser specifying the number of Top-Up Option Shares and the
aggregate purchase price therefor.
ARTICLE II
CLOSING
SECTION 2.1. Conditions to Closing. The obligation of the Company to
deliver Top-Up Option Shares upon the exercise of the Top-Up Stock Option is
subject to the following conditions:
(a) All waiting periods, if any, under the HSR Act applicable to the
issuance of the Top-Up Option Shares hereunder shall have expired or have been
terminated and the conditions under any other applicable Antitrust Laws shall
have been satisfied; and
(b) There shall be no preliminary or permanent injunction or other final,
non-appealable judgment by a court of competent jurisdiction preventing or
prohibiting the exercise of the Top-Up Stock Option or the delivery of the
Top-Up Option Shares in respect of such exercise.
SECTION 2.2. Closing. (a) At the Top-Up Closing, (i) the Company shall
deliver to the Purchaser a certificate or certificates evidencing the applicable
number of Top-Up Option Shares (in the denominations specified in the Top-Up
Exercise Notice), and (ii) the Purchaser shall purchase each Top-Up Option Share
from the Company at the Top-Up Price. Payment by the Purchaser of the Top-Up
Price for the Top-Up Option Shares shall be made by wire transfer of immediately
available funds to an account designated by the Company.
(b) The Company shall pay all expenses, and any and all Federal, state and
local taxes and other charges, that may be payable in connection with the
preparation, issuance and delivery of stock certificates under this Section 2.2.
- 2 -
<PAGE> 3
(c) Certificates evidencing Top-Up Option Shares delivered hereunder may
include legends legally required including the legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
It is understood and agreed that the foregoing legend shall be removed by
delivery of substitute certificate(s) without such legend upon the sale of the
Top-Up Option Shares pursuant to a registered public offering or Rule 144 under
the Securities Act of 1933, as amended (the "Securities Act"), or any other sale
as a result of which such legend is no longer required.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and the Purchaser
(except as otherwise disclosed in writing on the date hereof) as follows:
SECTION 3.1. Organization; Authority Relative to this Agreement. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of California. The Company has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due and valid authorization, execution and delivery by
Parent and the Purchaser, constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, and by general equitable principles.
SECTION 3.2. Authority to Issue Shares. The Company has taken all necessary
corporate action to authorize and reserve and permit it to issue, and at all
times from the date hereof through the Top-Up Termination Date shall have
reserved, all the Top-Up Option Shares issuable pursuant to this Agreement. All
of the shares of Common Stock issuable under the Top-Up Stock Option, upon their
issuance and delivery in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable, will be delivered
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on the Purchaser's voting
rights, charges, adverse rights and other encumbrances of any nature whatsoever
(other than this Agreement) and will not be subject to any preemptive rights.
SECTION 3.3. 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 of the
transactions contemplated hereby will not, (i) conflict with or violate the
articles of incorporation or bylaws or equivalent organizational documents of
the Company or any of the Subsidiaries, (ii) assuming that all Consents and
filings described in Section 3.3(b) have been obtained or made, conflict with or
violate any Law applicable to the Company or the Subsidiaries or by which any
property or asset of the Company or the Subsidiaries is bound or affected or
(iii) result in any Violation pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries or any of their respective
properties may be bound or affected.
(b) No Consent of, or filing with, any Governmental Entity is required by
the Company in connection with the execution and delivery of this Agreement, the
performance by the Company of its obligations hereunder or the consummation by
the Company of the transactions contemplated hereby, except for
- 3 -
<PAGE> 4
(i) compliance with the HSR Act and any requirements of any other Antitrust Laws
and (ii) Consents or filings the failure of which to be obtained or made would
not, individually or in the aggregate, prevent or materially delay the
consummation of the transactions contemplated hereby or the performance by the
Company of any of its obligations hereunder.
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.1. Further Action. The Company shall use its best efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable Laws to
consummate and make effective the transactions contemplated hereunder,
including, without limitation, using all reasonable efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser hereby represent and warrant to the Company as
follows:
SECTION 5.1. Organization; Authority Relative to this Agreement. Each of
Parent and the Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation. Each
of Parent and the Purchaser has all requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and the Purchaser and the consummation by Parent and
the Purchaser of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and the
Purchaser. This Agreement has been duly and validly executed and delivered by
Parent and the Purchaser and, assuming the due and valid authorization,
execution and delivery by the Company, constitutes a valid and binding
obligation of Parent and the Purchaser, enforceable against each of Parent and
the Purchaser in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally, and by general
equitable principles.
SECTION 5.2. No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement by Parent and the Purchaser do not, and the
performance by Parent and the Purchaser of their obligations hereunder and the
consummation of the transactions contemplated hereby will not, (i) conflict with
or violate the articles of incorporation or bylaws or equivalent organizational
documents of Parent or the Purchaser, (ii) assuming that all Consents and
filings described in Section 5.2(b) have been obtained or made, conflict with or
violate any Law applicable to Parent or the Purchaser or by which any property
or asset of Parent or the Purchaser is bound or affected or (iii) result in any
Violation pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or the Purchaser is a party or by which Parent or the Purchaser or any of
their respective properties may be bound or affected.
(b) No Consent of, or filing with, any Governmental Entity is required by
Parent or the Purchaser in connection with the execution and delivery of this
Agreement, the performance by Parent or the Purchaser of any of its obligations
hereunder or the consummation by Parent or the Purchaser of the transactions
contemplated hereby, except for (i) compliance with the HSR Act and any
requirements of any other Antitrust Laws and (ii) Consents or filings the
failure of which to be obtained or made would not, individually or in the
aggregate, prevent or materially delay the consummation of the transactions
contemplated hereby or the performance by Parent or the Purchaser of any of
their respective obligations hereunder.
- 4 -
<PAGE> 5
ARTICLE VI
COVENANTS OF THE PURCHASER
SECTION 6.1. Distribution. The Purchaser shall acquire the Top-Up Option
Shares for investment purposes only (and, only for the purpose of effecting a
short-form merger with the Company) and not with a view to any distribution
thereof in violation of the Securities Act.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 7.2. Waiver. Any party hereto may (a) extend the time for or waive
compliance with the performance of any obligation or other act of any other
party hereto or (b) waive any inaccuracy in the representations and warranties
contained herein or in any document delivered pursuant hereto. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby. The failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
SECTION 7.3. Fees and Expenses. Except as otherwise provided herein or in
Section 8.03 of the Merger Agreement, all costs, fees and expenses incurred in
connection with this Agreement shall be paid by the party incurring such
expenses.
SECTION 7.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by telecopy or by overnight courier (providing
proof of delivery) to the respective parties at their addresses as specified in
Section 9.04 of the Merger Agreement.
SECTION 7.5. 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 such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner to
the fullest extent permitted by applicable Law in order that the transactions
contemplated hereby may be consummated as originally contemplated to the fullest
extent possible.
SECTION 7.6. Assignment; Binding Effect; Benefit. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned, in
whole or in part, by operation of law or otherwise, by any of the parties hereto
without the prior written consent of the other parties, except that the
Purchaser may assign, in its discretion, any or all of its rights, interests and
obligations hereunder to Parent or any direct or indirect subsidiary of Parent,
but no such assignment shall relieve the Purchaser of any of its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by, the parties hereto and
their respective successors and permitted assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement, express
or implied, is intended to confer on any person other than the parties hereto or
their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION 7.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to the principles of conflicts of laws thereof.
SECTION 7.8. ENFORCEMENT. THE PARTIES 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
- 5 -
<PAGE> 6
OTHERWISE BREACHED. IT IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED
TO AN INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO
ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS OF THIS AGREEMENT 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.
SECTION 7.9. Headings. The descriptive headings contained in this Agreement
are included for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 7.10. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
SECTION 7.11. Entire Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement.
- 6 -
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, all as of the
date first written above.
VOITH SULZER PAPER TECHNOLOGY
NORTH AMERICA INC.
By: /s/ R. RAY HALL
------------------------------------
Name: R. Ray Hall
Title: Executive Vice President
By: /s/ PAUL BOUTHILET
------------------------------------
Name: Paul Bouthilet
Title: Secretary
VOITH SULZER ACQUISITION CORP.
By: /s/ R. RAY HALL
------------------------------------
Name: R. Ray Hall
Title: President
By: /s/ PAUL BOUTHILET
------------------------------------
Name: Paul Bouthilet
Title: Secretary
IMPACT SYSTEMS, INC.
By: /s/ KENNETH P. OSTROW
------------------------------------
Name: Kenneth P. Ostrow
Title: President
- 7 -
<PAGE> 1
EXHIBIT (C)(5)
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT (the "Agreement"), dated the 11th day of
December, 1997 by and between Voith Sulzer Paper Technology North America Inc.,
a Delaware corporation ("Voith") and Kenneth P. Ostrow (the "Executive").
BACKGROUND
Simultaneously with the execution hereof, Voith and Impact Systems, Inc.
("Impact") are entering into an Agreement and Plan of Merger of even date
herewith (the "Merger Agreement") which provides in part, that Voith and Voith
Sulzer Acquisition Corp. will offer to purchase any and all of the shares of
Common Stock of the Company pursuant to a cash tender offer (the "Tender
Offer").
Executive is an executive of Impact and has been actively involved in the
development and marketing of Impact's products together with its present or
future subsidiaries (collectively, "Impact"). Voith intends to continue the
business of Impact after the Acceptance Date (as defined below), and integrate
such business into Voith's ongoing business. To preserve and protect the assets
of Impact, including Impact's goodwill, customers and trade secrets of which
Executive has, and will, in his role as an employee of Voith, have knowledge,
and to preserve and protect Voith's goodwill and business interests going
forward, and in consideration for Voith's entering into and performing under the
Merger Agreement, Executive has agreed to enter into this Agreement.
Executive and Voith believe the limitations as to time, geographical area
and scope of activity contained in this Agreement hereof are reasonably
necessary to, and no greater than that required to, protect the goodwill and
business interests purchased by Voith.
1. Consideration. In consideration for Executive's performance pursuant to
the terms and conditions of this Agreement, Voith shall (i) purchase any of the
shares of Impact owned by Executive pursuant to the Merger Agreement and (ii)
pay Executive $700,000 on the date the Merger contemplated by the Merger
Agreement is consummated (the "Acceptance Date"); $432,000 on the first
anniversary of the Acceptance Date and $467,000 on the second anniversary of the
Acceptance Date.
2. Noncompete. Executive agrees that during the period beginning on the
Acceptance Date and continuing for five (5) years thereafter, he shall not enter
into the employ of, or render services to, any firm, corporation, or
organization in a capacity that gives him responsibility for that segment of
such entity's business which derives more than ten percent (10%) of its annual
revenues from sales of products which directly compete with products which were
offered by Impact at the Acceptance Date.
3. Geographic Area. The parties acknowledge that the business of Voith,
Impact and their subsidiaries is international in scope. Accordingly, in order
to secure Voith the benefits of the Merger, the parties agree that the
geographical areas in which the restrictions provided for in this Agreement
apply include all cities, counties and states of the United States of America.
In addition, the parties agree that the geographical areas in which the
restrictions provided for in this Agreement apply include all foreign nations
outside the United States of America in which Voith, Impact or any of their
subsidiaries has engaged in sales, or otherwise conducted business or selling
efforts, at any time during the two (2) years prior to the Acceptance Date.
4. Severability. The parties intend that the covenants contained in this
Agreement be construed as a series of separate covenants, one for each county of
each state of the United States and each nation. Except for geographic coverage,
each such separate covenant shall be deemed identical in terms of the covenants
contained in this Agreement. If, in any judicial proceeding, a court shall
refuse to enforce any of the separate covenants (or any part thereof) deemed
included in this Agreement, then such unenforceable covenant (or such part)
shall be deemed eliminated from this Agreement for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
(or portions thereof) to be enforced. In the event that the provisions of this
Agreement should ever be deemed to exceed the time or geographic limitations, or
the
<PAGE> 2
scope of these covenants, as permitted by applicable law, then such provisions
shall be reformed to the maximum time or geographic limitations, as the case may
be, permitted by applicable laws.
5. Injunctions. Executive acknowledges that any breach of the covenants of
this Agreement will result in immediate and irreparable injury to Voith and,
accordingly, consents to the application of injunctive relief and such other
equitable remedies for the benefit of Voith as may be appropriate in the event
such a breach occurs or is threatened. The foregoing remedies will be in
addition to all other legal remedies to which Voith may be entitled hereunder,
including, without limitation, monetary damages. Voith shall notify Executive of
any purported breach of the Agreement and Executive shall have a reasonable
period to cure such purported breach.
6. Miscellaneous.
(a) Notices. Any and all notices permitted or required to be given under
this Agreement must be in writing. Notices will be deemed given (i) when
personally received or when sent by facsimile transmission (to the receiving
party's facsimile number), (ii) on the first business day after having been sent
by commercial overnight courier with written verification of receipt, or (iii)
on the third business day after having been sent by registered or certified mail
from a location on the United States mainland, return receipt requested, postage
prepaid, whichever occurs first, at the address set forth below or at any new
address, notice of which will have been given in accordance with this Section
6(a):
If to Voith: Voith Sulzer Paper Technology North America, Inc.
200 N. Roemer Road
Appleton, WI 54913
Attn: Paul Bouthilet
If to Executive, at Executive's address in the personnel records of Voith.
(b) Amendments. This Agreement contains the entire agreement and supersedes
and replaces all prior agreements between Voith and Executive or Impact and
Executive concerning the subject matter hereof. This Agreement may not be
changed or modified in whole or in part except by a writing signed by the party
against whom enforcement of the change or modification is sought.
(c) Successors and Assigns. This Agreement will not be assignable by either
Executive or Voith except that the rights and obligations of Voith under this
Agreement may be assigned to a corporation which becomes the successor to Voith
as the result of a merger or other corporate reorganization and which continues
the business of Voith or any other subsidiary of Voith, provided that, in the
case of a subsidiary, Voith guarantees the performance by such assignee of
Voith's obligations hereunder.
(d) Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the law of California, as applied to agreements
entered into, and to be performed entirely in such state, by residents of such
state.
(e) No Waiver. The failure of either party to insist on strict compliance
with any of the terms of this Agreement in any instance or instances will not be
deemed to be a waiver of any term of this Agreement or of that party's right to
require strict compliance with the terms of this Agreement in any other
instance.
(f) Counterparts. This Agreement may be executed in counterparts which when
taken together will constitute one instrument. Any copy of this Agreement with
the original signatures of all parties appended will constitute an original.
(g) Legal Costs. In the event that Executive sues to enforce his rights
under this Agreement, Voith shall pay Executive all costs to Executive of such
litigation.
(h) Termination. In the event the merger contemplated by the Merger
Agreement is not consummated prior to the termination of the Merger Agreement,
this Agreement shall terminate and no payments shall be due Executive hereunder.
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<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
VOITH SULZER PAPER TECHNOLOGY
NORTH AMERICA INC.
By: /s/ R. RAY HALL
------------------------------------
Title: Executive Vice President
KENNETH P. OSTROW
/s/ KENNETH P. OSTROW
--------------------------------------
(Signature)
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