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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
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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
SAGE LABORATORIES, INC.
(Name of Subject Company)
FIL ACQUISITION CORP.
FILTRONIC PLC
(Bidders)
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COMMON STOCK, $.10 PAR VALUE PER SHARE
(Title of Class of Securities)
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786 650 101
(CUSIP Number of Class of Securities)
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PROFESSOR DAVID RHODES
EXECUTIVE CHAIRMAN
FILTRONIC PLC
THE WATERFRONT
SALTS MILL ROAD, SALTAIRE
SHIPLEY, WEST YORKSHIRE
ENGLAND, BD18 3TT
011-44-1274-530-622
(Name, Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent For Service)
Copy to:
NANCY E. FUCHS, ESQ.
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP
425 PARK AVENUE
NEW YORK, NEW YORK 10022
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CALCULATION OF REGISTRATION FEE
Transaction Value Amount of Registration Fee
$19,482,137.50 $3,896.43
(1)
* For purposes of calculating fee only. This amount assumes (i) the purchase of
1,085,265 outstanding shares of common stock of Sage Laboratories, Inc. and (ii)
28,000 shares of common stock of Sage Laboratories, Inc. which may be issued
upon exercise of outstanding options, in each case, at $17.50 in cash per share.
The amount of the filing fee calculated in accordance with Regulation 240.0-11
of the Securities Exchange Act of 1934, as amended, equals 1/50 of one percentum
of the value of shares to be 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 the date of its filing.
Amount Previously Paid: Not applicable.
Form or Registration No.: Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
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SCHEDULE 14D-1
CUSIP NO. 786 650 101
- --------------------------------------------------------------------------------
1. Names of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Persons
FIL Acquisition Corp.
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
AF
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5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(e) or 2(f) [ ]
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6. Citizenship or Place of Organization
Massachusetts
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7. Aggregate Amount Beneficially Owned By Each Reporting
Person
267,180
(see the Offer to Purchase)
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8. Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares [ ]
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9. Percent of Class Represented by Amount in Row (7)
24.6%
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10. Type of Reporting Person
CO
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SCHEDULE 14D-1
CUSIP NO. 786 650 101
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1. Names of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Persons
Filtronic plc
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
WC
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5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(e) or 2(f) [ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
England and Wales
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned By Each Reporting
Person
267,180
(see the Offer to Purchase)
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8. Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares [ ]
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
24.6%
- --------------------------------------------------------------------------------
10. Type of Reporting Person
CO
- --------------------------------------------------------------------------------
4
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TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement")
relates to the offer by FIL Acquisition Corp., a Massachusetts corporation (the
"Purchaser"), and a direct wholly owned subsidiary of Filtronic plc, a company
organized under the laws of England and Wales ("Parent"), to purchase all of the
outstanding shares (the "Shares") of common stock, par value $.10 per share (the
"Common Stock") of Sage Laboratories, Inc., a Massachusetts corporation (the
"Company"), at $17.50 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated May 19, 1998
(the "Offer to Purchase"), a copy of which is attached hereto as Exhibit (a)(1),
and in the related Letter of Transmittal, a copy of which is attached hereto as
Exhibit (a)(2) (which together constitute the "Offer"). This Statement also
constitutes a Statement on Schedule 13D of each of Parent and the Purchaser.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Sage Laboratories, Inc., a
Massachusetts corporation, and the address of its principal executive offices is
11 Huron Drive, East Natick Industrial Park, Natick, Massachusetts 01760.
(b) The class of securities to which this Statement relates is the
Common Stock. The Company has represented that as of May 12, 1998 there were
1,085,265 shares of Common Stock, issued and outstanding and (b) outstanding
options to purchase an aggregate of 177,300 shares of Common Stock. Purchaser is
seeking to purchase all of the outstanding Shares at a purchase price of $17.50
per Share, net to the seller in cash.
(c) The information set forth in "Section 6--Price Range of the Shares;
Dividends on the Shares" of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by Parent and the Purchaser.
The information set forth in the "INTRODUCTION" and "Section 9--Certain
Information Concerning Parent and the Purchaser" of the Offer to Purchase is
incorporated herein by reference. The name, business address, present principal
occupation or employment, the material occupations, positions, offices or
employments for the past five years and citizenship of each director and
executive officer of Parent and the Purchaser and the name, principal business
and address of any corporation or other organization in which such occupations,
positions, offices and employments are or were carried on are set forth in Annex
I and II of the Offer to Purchase and incorporated herein by reference.
(e)-(f) During the last five years neither Parent, the Purchaser, nor,
to the best knowledge of Parent and the Purchaser, any of the persons listed in
Annex I and II of the Offer to Purchase have been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which any such person 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.
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ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)(1) Other than the transactions described in Item 3(b) below,
neither Parent, the Purchaser, nor, to the best knowledge of Parent and the
Purchaser, any of the persons listed in Annex I and II of the Offer to Purchase,
has entered into any transaction with the Company, or any of the Company's
affiliates which are corporations, since the commencement of the Company's third
full fiscal year preceding the date of this Statement, the aggregate amount of
which was equal to or greater than one percent of the consolidated revenues of
the Company for (i) the fiscal year in which such transaction occurred or (ii)
the portion of the current fiscal year which has occurred if the transaction
occurred in such year.
(a)(2) Other than the transactions described in Item 3(b) below,
neither Parent, the Purchaser, nor, to the best knowledge of Parent and the
Purchaser, any of the persons listed in Annex I and II of the Offer to Purchase,
has entered into any transaction since the commencement of the Company's third
full fiscal year preceding the date of this Statement, with the executive
officers, directors or affiliates of the Company which are not corporations, in
which the aggregate amount involved in such transaction or in a series of
similar transactions, including all periodic installments in the case of any
lease or other agreement providing for periodic payments or installments,
exceeded $40,000.
(b) The information set forth in the "INTRODUCTION", "Section 9 --
Certain Information Concerning Parent and the Purchaser", "Section 11 --
Contracts with the Company; Background of the Offer and "Section 12 -- Purpose
of the Offer, Short Form Merger; Plans for the Company; Dissenters' Rights;
Going Private Transactions" of the Offer to Purchase is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "Section 10--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)-(e) The information set forth in the "INTRODUCTION", "Section 11 --
Contracts with the Company; Background of the Offer" and "Section 12 -- Purpose
of the Offer; Short Form Merger; Plans for the Company; Dissenters' Rights;
Going Private Transactions" of the Offer to Purchase is incorporated herein by
reference.
(f)-(g) The information set forth in "Section 7 -- Effect of the Offer
on the Market for the Shares; Stock Quotations; Registration under the Exchange
Act" of the Offer to Purchase is incorporated herein by reference.
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ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in "Section 9 -- Certain Information
Concerning Parent and the Purchaser"; "Section 11 -- Contracts with the Company;
Background of the Offer" and "Section 13 -- The Merger Agreement; Stockholder
Agreement" of the Offer to Purchase is 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 10 -- Source
and Amount of Funds"; "Section 11 -- Contracts with the Company; Background of
the Offer"; "Section 12 --Purpose of the Offer; Short Form Merger; Plans for the
Company; Dissenters' Rights; Going Private Transactions" and "Section 16 -- Fees
and Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Section 17 -- Fees and Expenses" of the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between Parent or the Purchaser, or to the best knowledge of Parent and the
Purchaser, any of the persons listed in Annex I and II of the Offer to Purchase,
and the Company, or any of its executive officers, directors, controlling
persons or subsidiaries.
(b)-(c) The information set forth in the "INTRODUCTION", "Section 15 --
Certain Conditions of the Offer" and "Section 16 -- Certain Legal Matters" of
the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in "Section 7 -- Effect of the Offer on
the Market for Shares; Stock Quotation; Registration under the Exchange Act" and
"Section 16 -- Certain Legal Matters" of the Offer to Purchase is incorporated
herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letters
of Transmittal, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
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ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated May 19, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Letter for use by Brokers, Dealers, Banks, Trust Companies and
Nominees to their Clients.
(a)(4) Letter to Clients.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(a)(7) Press Release issued by Parent, dated May 13, 1998.
(a)(8) Press Release issued by the Company, dated May 13, 1998.
(a)(9) Fairness Opinion of KPMG Peat Marwick, dated May 13, 1998.
(b)(1) Agreement and Plan of Merger, dated as of May 13, 1998, by and
among Parent, the Purchaser and the Company.
(b)(2) Shareholder Agreement, dated May 13, 1998, by and among
Parent, the Purchaser and Carl A. Marguerite.
(b)(3) Shareholder Agreement, dated May 13, 1998, by and among
Parent, the Purchaser and John E. Miller.
(b)(4) Shareholder Agreement, dated May 13, 1998, by and among
Parent, the Purchaser and Janusz J. Majewski.
(b)(5) Letter, dated May 1, 1998, from Parent to the Company.
(b)(6) Confidentiality Agreement, dated February 12, 1998, by and
between Parent and the Company.
(c) None.
(d) Not applicable.
(e) None.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: May 19, 1998
FIL ACQUISITION CORP.
By: /s/ Christopher Schofield
Name: Christopher Schofield
Title: Clerk
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: May 19, 1998
FILTRONIC plc
By: /s/ Christopher Schofield
Name: Christopher Schofield
Title: Company Secretary and Solicitor
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INDEX TO EXHIBITS
(a)(1) Offer to Purchase dated May 19, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Letter for use by Brokers, Dealers, Banks, Trust Companies and
Nominees to their Clients.
(a)(4) Letter to Clients.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(a)(7) Press Release issued by Parent, dated May 13, 1998.
(a)(8) Press Release issued by the Company, dated May 13, 1998.
(a)(9) Fairness Opinion of KPMG Peat Marwick, dated May 13, 1998.
(b)(1) Agreement and Plan of Merger, dated as of May 13, 1998, by and
among Parent, the Purchaser and the Company.
(b)(2) Stockholder Agreement, dated as of May 13, 1998 by and among
Parent, the Purchaser and Carl A. Marguerite.
(b)(3) Stockholder Agreement, dated May 13, 1998, by and among
Parent, the Purchaser and John E. Miller.
(b)(4) Stockholder Agreement, dated May 13, 1998, by and among
Parent, the Purchaser and Janusz J. Majewski.
(b)(5) Letter, dated May 1, 1998, from Parent to the Company.
(b)(6) Confidentiality Agreement, dated February 12, 1998, by and
between Parent and the Company.
(c) None.
(d) Not applicable.
(e) None.
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<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SAGE LABORATORIES, INC.
AT
$17.50 NET PER SHARE
BY
FIL ACQUISITION CORP.,
A WHOLLY-OWNED SUBSIDIARY OF
FILTRONIC PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON WEDNESDAY, JUNE 17, 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 OF THE OFFER A NUMBER OF
SHARES (AS DEFINED BELOW) REPRESENTING AT LEAST 66 2/3% OF THE TOTAL NUMBER OF
OUTSTANDING SHARES OF SAGE LABORATORIES, INC. (THE "COMPANY") ON A FULLY DILUTED
BASIS (AS DEFINED BELOW) AS OF THE DATE THE SHARES ARE ACCEPTED FOR PAYMENT
PURSUANT TO THIS OFFER TO PURCHASE. HOLDERS OF 267,180 ISSUED AND OUTSTANDING
SHARES, CONSTITUTING APPROXIMATELY 24.6% OF THE OUTSTANDING SHARES AND 27.4% OF
THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS, HAVE AGREED TO SELL THEIR
SHARES TO THE PURCHASER (AS DEFINED BELOW) AT THE CLOSING OF THE OFFER.
THE BOARD OF DIRECTORS OF THE COMPANY HAVING DETERMINED THAT THE OFFER
AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT (AS DEFINED BELOW), THE OFFER
(AS DEFINED BELOW) AND THE MERGER (AS DEFINED BELOW), AND RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
-------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such
stockholder's shares should either (1) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, mail or deliver it and any other required documents to
the Depositary (as defined below) and either deliver the certificate(s) for such
tendered shares to the Depositary along with the Letter of Transmittal or tender
such shares pursuant to the procedures for book-entry transfer set forth in
section 3 of this Offer to Purchase, or (2) request such stockholder's broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for the stockholder. Stockholders 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
they desire to tender such shares.
A stockholder who desires to tender shares and whose certificate(s) for
shares are not immediately available, or who cannot comply with the procedures
for book-entry transfer on a timely basis, and who cannot deliver all required
documentation, may tender such shares by following the procedures for guaranteed
delivery set forth in section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to the
information agent at its address and telephone number set forth on the back
cover of this Offer to Purchase. Requests for additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be
directed to the information agent or to brokers, dealers, commercial banks or
trust companies.
-------------------------
The Information Agent for the Offer Is:
MORROW & CO., INC.
May 19, 1998
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TO THE HOLDERS OF COMMON STOCK OF
SAGE LABORATORIES, INC.
INTRODUCTION
FIL Acquisition Corp., a Massachusetts corporation (the "Purchaser")
and a wholly-owned subsidiary of Filtronic plc, a public limited company
organized under the laws of England and Wales ("Parent"), hereby offers to
purchase all outstanding shares of common stock, par value $.10 per share (the
"Shares"), of Sage Laboratories, Inc., a Massachusetts corporation (the
"Company"), at $17.50 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the
accompanying Letter of Transmittal (which together constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer.
However, any tendering stockholder 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 stockholder or other payee pursuant to the Offer. See
Section 2. The Purchaser will pay all charges and expenses of Morrow & Co.,
Inc., as Information Agent (the "Information Agent"), and State Street Bank and
Trust Company, as Depositary (the "Depositary"), incurred in connection with the
Offer. See Section 17.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES REPRESENTING AT LEAST 66 2/3% OF THE TOTAL NUMBER OF OUTSTANDING SHARES
OF THE COMPANY ON A FULLY DILUTED BASIS (AS DEFINED BELOW) AS OF THE DATE THE
SHARES ARE ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER. CARL A. MARGUERITE, JOHN
E. MILLER AND JANUSZ J. MAJEWSKI, WHO OWN 254,180, 12,000 AND 1,000 ISSUED AND
OUTSTANDING SHARES, RESPECTIVELY, CONSTITUTING APPROXIMATELY 24.6% OF THE
OUTSTANDING SHARES AND 27.4% OF THE OUTSTANDING SHARES ON A FULLY DILUTED BASIS,
AND ARE OFFICERS OR DIRECTORS OF THE COMPANY, HAVE AGREED TO SELL THEIR SHARES
CONTEMPORANEOUSLY WITH THE CLOSING OF THE OFFER. THE OFFER IS ALSO SUBJECT TO
CERTAIN OTHER TERMS AND CONDITIONS SET FORTH IN SECTION 15. "FULLY DILUTED
BASIS" SHALL INCLUDE FOR PURPOSES OF SUCH CALCULATION ALL SHARES ISSUABLE UPON
EXERCISE OF ALL STOCK OPTIONS THAT ARE OR WILL BE FULLY VESTED, CURRENTLY
EXERCISABLE AND OUTSTANDING IMMEDIATELY PRIOR TO THE EFFECTIVE TIME (AS DEFINED
BELOW) AND CONVERSION OF CONVERTIBLE SECURITIES OR OTHER RIGHTS TO PURCHASE OR
ACQUIRE SHARES THAT CAN BE CONVERTED OR ACQUIRED PRIOR TO THE EFFECTIVE TIME.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of May 13, 1997 (the "Merger Agreement"), among Parent, the Purchaser
and the Company. The Merger Agreement provides, among other things, that upon
the terms and subject to the conditions therein, as soon as practicable after
the consummation of the Offer, the Purchaser and the Company will be merged (the
"Merger"). The entity surviving the Merger is hereinafter referred to as the
"Surviving Corporation." At the effective time of the Merger (the "Effective
Time"), each outstanding Share (other than Shares with respect to which
appraisal rights are properly exercised under the Massachusetts Business
Corporation Law (the "BCL") (the "Dissenting Shares")) not held in the treasury
of the Company or owned by any subsidiary of the Company, Parent, the Purchaser
or any subsidiary of Parent or the Purchaser, will be converted into and
represent the right to receive $17.50 in cash or any higher price that may be
paid per Share in the Offer (the "Per Share Amount"), without interest. See
Section 13.
THE BOARD OF DIRECTORS OF THE COMPANY, HAVING DETERMINED THAT THE OFFER
AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND
RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
KPMG Inc. ("KPMG") has delivered to the Company's Board of Directors
its written opinion that the cash consideration of $17.50 per Share to be
received by the public stockholders of the Company pursuant to the Offer and the
Merger is fair, from a financial point of view, to the public stockholders of
the Company. A copy of such
2
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opinion is contained in the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 which is being distributed to the Company's stockholders.
The Merger Agreement provides that promptly upon the acceptance for
payment of, and payment for, Shares constituting a majority of the then
outstanding Shares by Parent or Purchaser, as applicable, pursuant to the Offer,
Parent from time to time 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 will give Parent or Purchaser, as applicable, subject to compliance with
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), up to that percentage of the total number of directors on the Board of
Directors of the Company (giving effect to the election of any additional
directors described below) equal to the percentage of then outstanding Shares
owned by Parent or Purchaser, and the Company shall, at such time, cause
Parent's or Purchaser's designees, as applicable, to be so elected by its
existing Board of Directors; provided, however, that in the event that such
designees are elected to the Board of Directors of the Company, until the
Effective Time such Board of Directors shall have at least two directors who are
directors on the date of execution of the Merger Agreement and who are neither
officers of the Company nor affiliates of Parent or Purchaser (the "Independent
Directors"); and provided further that if the number of Independent Directors
shall be reduced below two for any reason whatsoever, the remaining Independent
Director shall designate a person to fill such vacancy who shall be deemed to be
an Independent Director for purposes of the Merger Agreement or, if no
Independent Directors then remain, the other directors shall designate two
Persons to fill such vacancies who shall not be officers or affiliates of the
Company or officers or affiliates of Parent or any of its subsidiaries, and such
persons shall be deemed to be Independent Directors for purposes of the Merger
Agreement. Following the election of Parent's or Purchaser's designees, prior to
the Effective Time, any amendment or termination of the Merger Agreement or
waiver of any of the Company's rights thereunder shall require the concurrence
of a majority of the Independent Directors.
The Company has informed the Purchaser that as of May 18, 1998 there
were 1,085,265 Shares outstanding and 177, 300 Shares reserved for issuance
pursuant to outstanding options, warrants and convertible debentures (of which
123,500 Shares are or will be fully vested, presently exercisable and
outstanding immediately prior to the Effective Time). Based on such number of
outstanding Shares, options, warrants and convertible debentures, if the
Purchaser acquires at least 476,944 Shares as a result of the Offer and 328,900
Shares pursuant to the Stockholder Agreements (as defined below) assuming the
issuance of 64,000 Shares upon exercise of options, it will own 66 2/3% of the
outstanding Shares on a Fully Diluted Basis. In such event the Purchaser would
have sufficient voting power to approve the Merger without the affirmative vote
of any other stockholder. Mr. Marguerite, Mr. Miller and Mr. Majewski, who own
267,180 issued and outstanding Shares in the aggregate and 64,000 Shares
presently exercisable pursuant to option plans, constituting approximately 24.6%
of the outstanding Shares and 27.4% of the outstanding Shares on a Fully Diluted
Basis, have agreed to sell their Shares contemporaneously with the consummation
of the Offer. If the Purchaser acquires 90% or more of the outstanding Shares in
the Offer, the Purchaser would be able to effect the Merger pursuant to the
short form merger provisions of the BCL, without the action of any other
stockholder of the Company.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY
DECISION IS MADE WITH RESPECT TO THE OFFER.
3
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THE TENDER OFFER
1. TERMS OF THE OFFER; EXTENSION OF TENDER PERIOD; TERMINATION;
AMENDMENTS. 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 pay for
all Shares which are validly tendered on or prior to the Expiration Date (as
defined below) and not theretofore withdrawn as permitted by Section 4. The term
"Expiration Date" means 5:00 P.M., New York City time, on Wednesday, June 17,
1998, unless and until the Purchaser (subject to the terms and conditions of the
Merger Agreement) shall have extended the period of time for 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 (as defined in Section 15). Subject to the provisions of
the Merger Agreement, the Purchaser reserves the right (but shall not be
obligated) to waive or reduce to a majority of the outstanding shares on a Fully
Diluted Basis the Minimum Condition or to waive any or all of the other
conditions of the Offer. If, by 5:00 P.M., New York City time, on Wednesday,
June 17, 1998, or any subsequent Expiration Date, any or all of such conditions
have not been satisfied or waived, subject to the provisions of the Merger
Agreement, the Purchaser may elect to (i) terminate the Offer and return all
tendered Shares to tendering stockholders, (ii) waive all of the unsatisfied
conditions and, subject to any required extension, purchase all Shares validly
tendered by the Expiration Date and not withdrawn, (iii) extend the Offer and,
subject to the right of stockholders to withdraw Shares until the Expiration
Date, retain the Shares that have been tendered until the expiration of the
Offer as extended or (iv) delay acceptance for payment of, or payment for, the
Shares, subject to complying with applicable law, until the satisfaction or
waiver of the conditions of the Offer. Under the terms of the Merger Agreement,
the Purchaser may not (except as described in the next sentence), without the
prior written consent of the Company, (i) decrease the Per Share Amount or the
form of consideration payable in the Offer, (ii) reduce the maximum number of
Shares to be purchased in the Offer, (iii) waive or reduce below a majority of
the outstanding Shares on a Fully Diluted Basis the Minimum Condition or (iv)
impose additional conditions to the Offer or extend the Offer. See Section 13.
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, extend the Offer at any time, and from time to time, (i) if at the then
scheduled Expiration Date of the Offer any of the conditions to the Purchaser's
obligation to accept for payment and pay for Shares shall not have been
satisfied or waived, until such time as such conditions are satisfied or waived,
(ii) for any period required by any rule, regulation, interpretation or position
of the Securities and Exchange Commission (the "Commission") or its staff
applicable to the Offer or (iii) if all conditions to the Purchaser's obligation
to accept for payment and pay for Shares are satisfied or waived but the number
of Shares tendered is less than 90% of the then outstanding number of Shares on
a Fully Diluted Basis, for an aggregate period of not more than ten (10)
business days (for all such extensions) beyond the latest Expiration Date that
would be permitted under clause (i) or (ii) of this sentence.
Subject to the applicable regulations of the Commission and the
provisions of the Merger Agreement, the Purchaser also expressly reserves the
right, in its sole discretion, at any time or from time to time, to (i) delay
acceptance for payment of or, regardless of whether such Shares were theretofore
accepted for payment, payment for any Shares, (ii) terminate the Offer (whether
or not any Shares have theretofore been accepted for payment) if any of the
conditions referred to in Section 15 have not been satisfied or upon the
occurrence of any of the events specified in Section 15 and (iii) waive any
condition or otherwise amend the Offer in any respect, in each case by giving
oral or written notice of such delay, termination, waiver or amendment to the
Depositary and by making a public announcement thereof. If the Purchaser accepts
for payment any Shares pursuant to the terms of the Offer, it will accept for
payment all Shares validly tendered prior to the Expiration Date and not
withdrawn and, subject to clause (i) above, will promptly pay for all Shares so
accepted for payment. The Purchaser acknowledges that its reservation of the
right to delay payment for Shares that it has accepted for payment is limited by
Rule 14e-l(c) under the Exchange Act, which requires the Purchaser to pay the
consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer.
The rights reserved by the Purchaser in the preceding paragraph are in
addition to the Purchaser's rights pursuant to Section 15. Any extension, delay,
termination or amendment of the Offer will be followed as promptly as
practicable by public announcement thereof, such announcement in the case of an
extension to be issued no later
4
<PAGE> 5
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date, in accordance with the public announcement
requirements of Rule 14e-1(d) 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
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
making a release to the Dow Jones News Service or other financial news service.
If the Purchaser makes a material change in the terms of the Offer or
the information concerning the Offer, or if it waives a material condition of
the Offer (including the Minimum Condition), the Purchaser will disseminate
additional tender offer materials (including by public announcement as set forth
above) and extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d)
and 14e-1 under the Exchange Act. The minimum period during which an offer must
remain open following material changes in the terms of the Offer, other than a
change in price, percentage of securities sought or inclusion of or change to a
dealer's soliciting fee, will depend upon the facts and circumstances, including
the materiality, of the changes. In the Commission's view, an offer should
remain open for a minimum of five business days from the date the material
change is first published, sent or given to stockholders, and, if material
changes are made with respect to information that approaches the significance of
price and share levels, a minimum of ten business days may be required to allow
for adequate dissemination and investor response. With respect to a change in
price or, subject to certain limitations, a change in the percentage of
securities sought or inclusion of or change to a dealer's soliciting fee, a
minimum ten business day period from the date of such change is generally
required to allow for adequate dissemination to stockholders. Accordingly, if,
prior to the Expiration Date, the Purchaser decreases the number of Shares being
sought or increases or decreases the consideration offered pursuant to the
Offer, and if the Offer is scheduled to expire at any time earlier than the
period ending on the tenth business day from the date that notice of such
increase or decrease is first published, sent or given to holders of Shares, the
Offer will be extended at least until the expiration of such ten business day
period. For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or a federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, New York City time.
In connection with the Offer, the Company has provided or will provide
the Purchaser with the names and addresses of all record holders of Shares and
security position listings of Shares held in stock depositories. This Offer to
Purchase, the related Letter of Transmittal and other relevant materials will be
mailed to registered holders of Shares 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 stockholder list or, if applicable,
who are listed as participants in a clearing agency's security position listing,
for subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT OF OFFER PRICE. 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 extension or amendment), the
Purchaser will accept for payment and will pay for all Shares validly tendered
prior to the Expiration Date (and not properly withdrawn in accordance with
Section 4 below) as soon as practicable after the latest to occur of (a) the
Expiration Date, and (b) subject to compliance with Rule 14e-1(c) under the
Exchange Act, the satisfaction or waiver of the conditions of the Offer set
forth in Section 15. Any determination concerning the satisfaction of such terms
and conditions shall be within the sole discretion of the Purchaser, and such
determination shall be final and binding on all tendering stockholders. See
Section 15.
The Purchaser expressly reserves the right to delay acceptance for
payment of, or payment for, Shares in order to comply in whole or in part with
any applicable law. If the Purchaser desires to delay payment for Shares
accepted for payment pursuant to the Offer, and such delay would otherwise be in
contravention of Rule 14e-1(c) of the Exchange Act, the Purchaser will formally
extend the 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)
certificates representing such Shares (or a timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at the Book-Entry Transfer
Facility, as described in Section 3), (ii) a properly completed and duly
executed
5
<PAGE> 6
Letter of Transmittal (or facsimile thereof) with any required signature
guarantees (or, in connection with a book-entry transfer, an Agent's Message)
and (iii) any other documents required by the Letter of Transmittal.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, tendered Shares when, as and if the
Purchaser gives oral or written notice to the Depositary, as agent for the
tendering stockholders, of the Purchaser's acceptance for payment of such
Shares. Payment for Shares so accepted for payment will be made by the deposit
of the purchase price therefor with the Depositary, which will act as agent for
the tendering stockholders for the purpose of receiving such payment from the
Purchaser and transmitting such payment to tendering stockholders. If, for any
reason whatsoever, acceptance for payment of any Shares tendered pursuant to the
Offer is delayed, or the Purchaser is unable to accept for payment Shares
tendered pursuant to the Offer, then, without prejudice to the Purchaser's
rights under Section 1, the Depositary may, nevertheless, on behalf of the
Purchaser, retain tendered Shares, and such Shares may not be withdrawn, except
to the extent that the tendering stockholders are entitled to withdrawal rights
as described in Section 3 and as otherwise required by Rule 14e-1(c) under the
Exchange Act. Under no circumstances will interest be paid on the purchase price
by reason of any delay in making such payments.
If any tendered Shares are not accepted for payment and paid for,
certificates representing such Shares will be returned (or, in the case of
Shares delivered by book-entry transfer with the Book-Entry Transfer Facility as
permitted by Section 3, such Shares will be credited to an account maintained
with the Book-Entry Transfer Facility) without expense to the tendering
stockholder as promptly as practicable following the expiration or termination
of the Offer.
If, prior to the Expiration Date, the Purchaser increases the
consideration to be paid for Shares pursuant to the Offer, the Purchaser will
pay such increased consideration for all Shares accepted for payment pursuant to
the Offer, whether or not such Shares have been tendered or accepted for payment
prior to such increase in the consideration.
The Purchaser reserves the right to transfer or assign in whole or in
part to one or more affiliates of the Purchaser or Parent the right to purchase
all or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve the Purchaser of its obligations under
the Offer and will in no way prejudice the rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
3. PROCEDURE FOR TENDERING SHARES. Except as set forth below, in order
for Shares to be validly tendered pursuant to the Offer, the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
together with any required signature guarantees, or an Agent's Message (as
defined below) in connection with a book-entry transfer of Shares, and any other
documents required by the Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase on or prior to the Expiration Date, and either (i) certificates
representing tendered Shares must be received by the Depositary, or such Shares
must be tendered pursuant to the procedure for book-entry transfer set forth
below (and confirmation of receipt of such delivery must be received by the
Depositary), in each case on or prior to the Expiration Date or (ii) the
guaranteed delivery procedures set forth below must be complied with. No
alternative, conditional or contingent tenders will be accepted.
Signature Guarantees. No signature guarantee is required on the Letter
of Transmittal (i) if such Letter of Transmittal is signed by the registered
holder of the Shares tendered therewith, unless such holder has completed either
the box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" in the Letter of Transmittal, or (ii) if Shares are
tendered for the account of a firm that is a member in good standing of the
Security Transfer Agent's Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program (each being
hereinafter referred to as an "Eligible Institution"). See Instruction 1 of the
Letter of Transmittal.
If a certificate representing Shares is registered in the name of a
person other than the signer of the Letter of Transmittal (or a facsimile
thereof), or if payment is to be made, or Shares not accepted for payment or not
6
<PAGE> 7
tendered are to be returned to a person other than the registered holder, the
certificate must be endorsed or accompanied by an appropriate stock power, in
either case signed exactly as the name(s) of the registered holder(s) appears on
the certificate, with the signature(s) on the certificate or stock power
guaranteed by an Eligible Institution. If the Letter of Transmittal or stock
powers are signed or any certificate is endorsed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing and, unless waived by the Purchaser, proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
See Instruction 5 of the Letter of Transmittal.
Book-entry Transfer. The Depositary will establish accounts with
respect to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase, and any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of the
Shares by causing the Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account in accordance with the Book-Entry Transfer Facility's
procedure for such transfer. However, although delivery of Shares may be
effected through book-entry transfer at the Book-Entry Transfer Facility, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), 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 guaranteed delivery procedures
described below must be complied with. The term "Agent's Message" means a
message transmitted through electronic means by the Book-Entry Transfer Facility
to, and received by, the Depositary and forming a part of a book-entry
confirmation, which states that the Book-Entry Transfer Facility has received an
express acknowledgment from the participant in the Book-Entry Transfer Facility
tendering the Shares that such participant has received, and agrees to be bound
by, the terms of the Letter of Transmittal. Delivery of documents to the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures does not constitute delivery to the Depositary.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant
to the Offer and such stockholder's certificates representing Shares are not
immediately available (or the procedures for book-entry transfer cannot be
completed on a timely basis) or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such Shares may nevertheless
be tendered, provided that all of the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives, prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery (enclosed herewith),
substantially in the form provided by the Purchaser; and
(c) the certificates representing all tendered Shares in proper form
for transfer (or confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility), together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees (or, in connection with a
book-entry transfer, an Agent's Message) and any other documents required by the
Letter of Transmittal are received by the Depositary within three trading days
after the date of such Notice of Guaranteed Delivery. A "trading day" is any day
on which the Nasdaq National Market (as defined below) is open for business.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
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.
In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) certificates representing such Shares (or timely confirmation of a
book-entry transfer of such Shares into the Depositary's account at the
Book-Entry Transfer Facility), (ii) properly completed and duly executed
Letter(s) of Transmittal (or facsimile(s) thereof), together with any required
signature guarantees (or, in connection with a book-entry transfer, an Agent's
Message) and (iii) any other
7
<PAGE> 8
documents required by the Letter of Transmittal. Accordingly, tendering
stockholders may be paid at different times depending upon when certificates
representing Shares or confirmations of book-entry transfers of such Shares are
actually received by the Depositary.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR
SHARES, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY
WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. 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.
Determination of Validity. All questions as to the form of documents
and the validity, eligibility (including time of receipt) and acceptance for
payment of any tendered Shares will be determined by the Purchaser in its sole
discretion, and its determination shall be final and binding on all parties. The
Purchaser reserves the absolute right to reject any or all tenders of any Shares
that it determines are not in appropriate 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 of the
conditions of the Offer or any defect or irregularity in any tender with respect
to any particular Shares or any particular stockholder, and 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. No tender of Shares will be deemed to have been validly made until all
defects or irregularities relating thereto have been expressly waived or cured
to the satisfaction of the Purchaser. None of the Purchaser, Parent, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders, nor shall any of
them incur any liability for failure to give any such notification.
Other Requirements. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of the Purchaser as such
stockholder's proxies, in the manner set forth in the Letter of Transmittal,
each with full power of substitution, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by the Purchaser (and any and all other Shares or other securities or
rights issued or issuable in respect of such Shares on or after May 19, 1998),
effective if, when and 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 such stockholder with respect to such Shares or other
securities accepted for payment will, without further action, be revoked, and no
subsequent proxies may be given by such stockholder nor any subsequent written
consents executed (and, if given or executed, will not be deemed effective).
Such designees of the Purchaser will, with respect to such Shares and other
securities or rights issuable in respect thereof, be empowered to exercise all
voting and other rights of such stockholder as they, in their sole discretion,
may deem proper in respect of any annual, special or adjourned meeting of the
Company's stockholders, action by written consent in lieu of any such meeting or
otherwise. 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 rights
with respect to such Shares.
The Purchaser's acceptance for payment of Shares tendered pursuant to
any of the procedures described above will constitute a binding agreement
between the tendering stockholder and the Purchaser upon the terms and subject
to the conditions of the Offer.
TO PREVENT BACKUP WITHHOLDING OF FEDERAL INCOME TAX ON PAYMENTS MADE TO
STOCKHOLDERS WITH RESPECT TO SHARES PURCHASED PURSUANT TO THE OFFER, EACH
STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH HIS CORRECT TAXPAYER IDENTIFICATION
NUMBER AND CERTIFY THAT HE IS NOT SUBJECT TO BACKUP WITHHOLDING OF FEDERAL
INCOME TAX BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF
TRANSMITTAL. FOREIGN HOLDERS MUST SUBMIT A COMPLETED FORM W-8 TO AVOID BACKUP
WITHHOLDING. THIS FORM MAY BE OBTAINED FROM THE DEPOSITARY. SEE INSTRUCTIONS 10
AND 11 OF THE LETTER OF TRANSMITTAL.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer will
be irrevocable, except that Shares tendered may be withdrawn at any time prior
to the Expiration Date, and, unless theretofore accepted for payment by the
Purchaser as provided herein, may also be withdrawn on or after July 20, 1998.
8
<PAGE> 9
For a withdrawal of Shares tendered to be effective, a written,
telegraphic, telex or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase. Any 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(s) in which the certificate(s) representing such Shares
are registered, if different from that of the person who tendered such Shares.
If certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, the name of the registered holder and the serial
numbers shown on the particular certificates evidencing such Shares to be
withdrawn must also be furnished to the Depositary prior to the physical release
of the Shares to be withdrawn. The signature(s) on the notice of withdrawal must
be guaranteed by an Eligible Institution (except in the case of Shares tendered
by an Eligible Institution). If Shares have been tendered pursuant to the
procedures for book-entry transfer set forth in Section 2, any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with such withdrawn Shares and must otherwise
comply with the Book-Entry Transfer Facility's procedures.
If the Purchaser extends the Offer, is delayed in its acceptance for
payment of any Shares tendered, or is unable to accept for payment or pay for
Shares tendered pursuant to the Offer, for any reason whatsoever, then, without
prejudice to the Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares, and such
Shares may not be withdrawn except to the extent that the tendering stockholder
is entitled to and duly exercises withdrawal rights as described in this Section
and as otherwise required by Rule 14e-1(c) under the Exchange Act. Any such
delay will be accompanied by an extension of the Offer to the extent required by
law.
Withdrawals of tenders of Shares may not be rescinded, and Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may be retendered by again following the
procedures described in Section 3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Purchaser, in its sole
discretion, and its determination will be final and binding on all parties. None
of the Purchaser, Parent, 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, nor shall any of them incur any
liability for failure to give any such notification.
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 (and may also be a taxable transaction under
applicable state, local or other tax laws). In general, a stockholder will
recognize gain or loss for such purposes equal to the difference between such
stockholder's adjusted tax basis for the Shares such stockholder sells in such
transaction and the amount of cash received therefor. Gain or loss must be
determined separately for each block of Shares (i.e., Shares acquired at the
same cost in a single transaction) sold pursuant to the Offer or converted to
cash in the Merger. Such gain or loss will be capital gain or loss if the Shares
are a capital asset in the hands of the stockholder and will be long term
capital gain or loss if the Shares were held for more than 18 months on the date
of sale (in the case of the Offer) or the effective time of the Merger (in the
case of the Merger) (which gain will be entitled to be taxed at a 20% maximum
federal income tax rate in the case of stockholders who are individuals). If
such Shares were held for more than one year but not more than 18 months, any
gain will be mid-term gain (which gain will be entitled to be taxed at a 28%
maximum federal income tax rate in the case of stockholders who are individuals)
and any loss will be available as an offset first against the holder's mid-term
gains; if any, and then against other long-term capital gains. Recently enacted
legislation includes substantial changes to the federal taxation of capital
gains recognized by individuals and special rules (and generally lower maximum
tax rates) apply to individuals in lower tax brackets. The receipt of cash for
Shares pursuant to the exercise of dissenters' rights, if any, will generally be
taxed in the same manner described above.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31%. Backup withholding generally applies if
the stockholder (a) fails to furnish such stockholder's social security number
or TIN, (b) furnishes an incorrect TIN, or (c) under certain circumstances,
fails to provide a certified statement, signed under penalties of perjury, that
the TIN provided is such stockholder's correct number
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<PAGE> 10
and that such stockholder is not subject to backup withholding. Backup
withholding is not an additional tax but merely an advance payment, which may be
refunded to the extent it results in an overpayment of tax. Certain persons
generally are entitled to exemption from backup withholding, including
corporations and financial institutions. Certain penalties apply for failure to
furnish correct information and for failure to include reportable payments in
income. Each stockholder should consult with his own tax advisor as to such
stockholder's qualification for exemption from backup withholding and the
procedure for obtaining such exemption. Tendering stockholders may be able to
prevent backup withholding by completing the Substitute Form W-9 included in the
Letter of Transmittal.
The foregoing discussion may not be applicable to a stockholder who
acquired Shares pursuant to the exercise of employee stock options or otherwise
as compensation, or to a stockholder who is not a citizen or resident of the
United States or who is otherwise subject to special tax treatment under the
Internal Revenue Code. In addition, the foregoing discussion does not address
the tax treatment of holders of options or warrants to acquire Shares or of
debentures convertible into Shares.
The federal income tax discussion set forth above is included for
general information only and is based upon present law. Stockholders are urged
to consult their tax advisors with respect to the specific tax consequences of
the Offer and the Merger to them, including the application and effect of the
alternative minimum tax, and state, local or foreign income and other tax laws.
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed on the
Nasdaq National Market System for trading in the over-the-counter market (the
"Nasdaq National Market") under the symbol "SLAB." The following table sets
forth, for the periods indicated, the high and low per Share sales prices on The
Nasdaq National Market as reported by published financial sources. The Company
paid cash dividends in October of 1995, 1996 and 1997 in the amount of 10 cents
per share.
<TABLE>
<CAPTION>
1997 1996 1995
High Low High Low High Low
<S> <C> <C> <C> <C> <C> <C>
First Quarter 17 14 23 11 4/5 10 3/10 7 4/5
Second Quarter 16 5/8 12 1/4 22 18 1/10 10 1/5 8 4/5
Third Quarter 15 1/4 13 20 1/4 14 3/4 9 3/5 8 9/10
Fourth Quarter 14 3/4 12 3/4 18 3/4 15 1/8 12 9 3/5
</TABLE>
On May 12, 1998, the last trading day prior to the public announcement
of the terms of the Offer and the Merger, the closing per Share sales price on
the Nasdaq National Market was $12.50. On May 15, 1998, the last trading day
prior to commencement of the Offer for which information was available, the
closing per Share sales price on the Nasdaq National Market was $17.19.
Stockholders are urged to obtain a current market quotation for the Shares.
7. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; STOCK QUOTATIONS;
REGISTRATION UNDER THE EXCHANGE ACT. 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. Consequently, depending upon the number of
Shares purchased and the number of remaining holders of Shares, the purchase of
Shares pursuant to the Offer may adversely affect the liquidity and market value
of the remaining Shares held by the public. The Purchaser cannot predict whether
the reduction in the number of Shares that might otherwise trade publicly would
have an adverse or beneficial effect on the market price for, or marketability
of, the Shares or whether it would cause future market prices to be greater or
less than the Offer price.
The Shares are currently listed and traded on the Nasdaq National
Market, which constitutes the principal trading market for the Shares. Depending
upon the aggregate market value and the number of Shares not
10
<PAGE> 11
purchased pursuant to the Offer, the Shares may no longer meet the quantitative
maintenance criteria of the National Association of Securities Dealers, Inc.
(the "NASD") for continued inclusion on the Nasdaq National Market and may cease
to be authorized for quotation on such market. Pursuant to new maintenance
criteria, beginning February 22, 1998 issuers on the Nasdaq National Market are
required to have (i) (A) at least 750,000 publicly held shares, (B) at least 400
holders of round lots, (C) a market value of publicly held shares of at least $5
million, (D) a minimum bid price per share of $1, and (E) net tangible assets of
at least $4 million or (ii) (A) at least 1.1 million publicly held shares, (B)
at least 400 holders of round lots, (C) a market value of publicly held shares
of at least $15 million, (D) a market capitalization of at least $50 million or
total assets and total revenue of at least $50 million (each for the most
recently completed fiscal year or two of the last three most recently completed
fiscal years), (E) a minimum bid price per share of $5, and (F) at least four
registered and active market makers for the Shares. Shares held directly or
indirectly by directors, officers or beneficial owners of more than 10% of the
Shares outstanding are not 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 requirements of the NASD for continued
inclusion in the Nasdaq National Market or in any other tier of the Nasdaq Stock
Market, and the Shares are no longer included in the Nasdaq National Market or
in any other tier of the Nasdaq Stock Market, the market for Shares could be
adversely affected.
In the event that the Shares no longer meet the requirements of the
NASD for continued inclusion in any tier of The Nasdaq Stock Market, it is
possible that Shares would continue to trade in the over-the-counter market and
that price quotations would be reported by other sources. The extent of the
public market for the Shares and the 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 Shares on the part of securities firms, the
possible termination of registration of the Shares under the Exchange Act, as
described below, and other factors.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application of the Company to the Commission
if such Shares are not listed on a national securities exchange and there are
fewer than 300 holders of record of the Shares. The termination of the
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to its stockholders and to
the Commission, and would make certain of the provisions of the Exchange Act,
such as the short-swing profit recovery provisions of Section 16(b) and the
requirement of furnishing a proxy statement in connection with stockholders'
meetings and the related requirement of an annual report to stockholders, and
the requirements of Rule 13e-3 with respect to going private transactions, no
longer applicable with respect to the Shares or to the Company. Furthermore, if
registration of the Shares under the Exchange Act were terminated, the ability
of "affiliates" of the Company and persons holding "restricted securities" of
the Company to dispose of such securities pursuant to Rule 144 promulgated under
the Securities Act of 1933, as amended (the "Securities Act"), may be impaired
or, with respect to certain persons, eliminated. According to the Company, as of
April 30, 1998, there were 222 holders of record of the Shares.
The Shares are currently "margin securities" under the regulations of
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to extend
credit on such Shares as collateral. Depending on factors similar to those
described above regarding listing and market quotations, it is possible the
Shares would no longer constitute "margin securities" for purposes of the
Federal Reserve Board's margin regulations and therefore could no longer be used
as collateral for loans made by brokers. If registration of the Shares under the
Exchange Act were terminated, the Shares would no longer be "margin securities."
8. 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. Although neither the
Purchaser nor Parent has any knowledge that would indicate that the statements
contained herein based on such information are untrue, neither the Purchaser nor
Parent takes 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
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<PAGE> 12
disclose events or information which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to the
Purchaser or Parent.
The Company was incorporated in 1955 under the laws of the Commonwealth
of Massachusetts under the name "Sage Laboratories, Inc." The Company's
principal executive offices are located at 11 Huron Drive, East Natick
Industrial Park, Natick, Massachusetts 01760 and its telephone number is (508)
653-0844. According to the Company's filings with the Commission the Company
develops, manufactures, distributes and markets electronic systems and
sub-systems of specialized microwave components and subsystems used in
applications such as cellular base stations, point-to-point radio links,
satellite communications, aircraft landing and guidance, medical diagnostics and
treatment, radar and weapons guidance.
Set forth below is a summary of certain consolidated financial
information with respect to the Company and its consolidated subsidiaries,
excerpted or derived from the information contained in the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1997 and its Quarterly
Report on Form 10-Q for the quarter ended March 28, 1998. More comprehensive
financial information is included in such reports and other documents filed by
the Company with the Commission. The financial information summary set forth
below is qualified in its entirety by reference to such reports and other
documents filed with the Commission and all of the financial information and
related notes contained therein. Such reports and other documents may be
inspected and copies may be obtained from the offices of the Commission in the
manner set forth below.
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Fiscal Year Ended
Nine Months Ended June 30,
----------------------- ---------------------------------
March 28, March 29,
1998 1997 1997 1996 1995
-------- --------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net Sales............................... $7,339 $6,744 $ 8,934 $ 9,769 $9,154
Operating income (loss)................. 388 775 780 2,341 2,158
Net earnings (loss)..................... 368 615 692 1,609 1,389
Net earnings (loss) per share........... 0.34 0.52 0.59 1.38 1.20
BALANCE SHEET:
Total assets............................ $12,278 $12,937 $12,996 $13,028 $11,611
Total liabilities....................... 2,457 2,313 2,285 2,931 3,122
Shareholders' equity.................... 9,821 10,625 10,711 10,096 8,488
</TABLE>
Other Information. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational filing requirements of
the Exchange Act and, in accordance therewith, is obligated 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 such proxy statements and
distributed to the Company's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities at the Commission's principal
office at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and
at the regional offices of the Commission located at 7 World Trade Center, Suite
1300, New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The Commission maintains a site on the World Wide Web, and the
reports, proxy statements and other information filed by the Company with the
Commission may be accessed electronically on the Web at http://www.sec.gov.
Copies of such material may also be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549.
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<PAGE> 13
9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER. The
Purchaser is a newly formed Massachusetts corporation and a wholly-owned
subsidiary of Parent. To date, the Purchaser has not conducted any business
other than incident to its formation, the execution and delivery of the Merger
Agreement and the commencement of the Offer.
Until immediately prior to the time that the Purchaser purchases Shares
pursuant to the Offer, it is not anticipated that 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. Since the Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information is available. The
address of the principal office of the Purchaser is The Waterfront, Salts Mill
Road, Saltaire, Shipley, West Yorkshire, England BD18 3TT, and its telephone
number is 011-44-1274-530622.
Parent is an established supplier of customized microwave devices to
the rapidly growing cellular radio equipment market. Parent designs,
manufactures and supplies sophisticated technically complex devices for mobile
telecommunications systems. The products comprise an integral part of base
stations and are comparable with all widely-used cellular systems. Customers
include the world's leading manufacturers of cellular radio network
infrastructure. Parent also designs, manufactures and supplies RF and microwave
components and integrated subsystems for airborne and shipborne electronic
warfare and countermeasure systems.
Parent is a public limited company organized under the laws of England
and Wales. Its registered offices are located at The Waterfront, Salts Mill
Road, Saltaire, Shipley, West Yorkshire, England BD18 3TT, and its telephone
number is 011-44-1274-530622. The name, citizenship, business address, present
principal occupation or employment and five year employment history of each of
the directors and executive officers of Parent and the Purchaser are set forth
in Annex I and Annex II hereto, respectively.
None of Parent, the Purchaser or, to the best of their knowledge, any
of the persons listed on Annex I or Annex II hereto, or any associate or
majority-owned subsidiary of Parent, the Purchaser or any of the persons so
listed, owns or has the right to acquire any Shares (except pursuant to the
Stockholder Agreement and Option described in Section 13)or has effected any
transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, none of Parent, the
Purchaser or, to the best of their knowledge, any of the persons listed in Annex
I or Annex II hereto, (a) 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 the voting of any securities of the
Company, joint ventures, loan or option arrangements, puts or calls, guaranties
of loans, guaranties against loss, or the giving or withholding of proxies, (b)
has engaged in contacts, negotiations or transactions with the Company or its
affiliates concerning a merger, consolidation, acquisition, tender offer or
other acquisition of securities, election of directors or a sale or other
transfer of a material amount of assets or (c) has had any other transaction
with the Company or any of its executive officers, directors or affiliates that
would require disclosure under the rules and regulations of the Commission
applicable to the Offer.
10. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by
Parent and the Purchaser to purchase all Shares that may be tendered pursuant to
the Offer and in the Merger, and to pay related fees and expenses, is estimated
to be approximately $20.1 million.
The Purchaser will obtain all such funds from Parent or its affiliates.
Parent has sufficient financial resources to satisfy its and the Purchaser's
obligations under the Offer and the Merger Agreement. This Offer is not
conditioned upon any financing arrangements.
11. CONTRACTS WITH THE COMPANY; BACKGROUND OF THE OFFER. On February 5,
1998, Parent contacted the Company to solicit Company's interest in being
acquired by Parent. On February 12, 1998, Parent and the Company executed a
confidentiality agreement regarding the furnishing of non-public information
concerning the Company to Parent. Parent then commenced its due diligence
review, with meetings with the
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<PAGE> 14
Company on February 12 and 13, 1998. From time to time thereafter, Parent
continued to conduct discussions with the Company's management and
representatives concerning matters related to the acquisition proposal.
At a regular scheduled meeting of the Board of Directors of Parent,
which was held on February 26, 1998, the directors of Parent first formally
considered the proposal to acquire the Company, although no formal action in
this regard was proposed or taken at the meeting. On March 26 and 27, 1998,
members of the Board of Directors of Parent and the Company met in Natick,
Massachusetts to further discuss the proposed acquisition. Parent's Board of
Directors again considered the matter at the regular scheduled meeting of
Parent's Board of Directors held in March and authorized the proper officer of
Parent to present a proposal for the acquisition of the Company. Thereafter, on
April 2, 1998, Parent delivered to the Company a letter containing a non-binding
indication of interest to acquire the Company in an all cash transaction at a
price of $16.00 per Share.
The Company retained a financial advisor, Katahdin Investment
Partnership LLP ("Katahdin"), to assist the Company in evaluating and
negotiating a transaction with Parent. Throughout April and early May, the
Company conferred with Katahdin as to the offer by Parent and continued
negotiations with Parent. On April 22 and 23, 1998, representatives of the
Company met with representatives of Parent at the offices of Parent in Shipley,
West Yorkshire, England to further discuss the terms of the proposed
acquisition.
At a regular scheduled meeting of the Board of Directors of Parent held
on May 1, 1998, the Board of Directors of Parent authorized the proper executive
officers to proceed with such acquisition, at a price of $17.50 per Share to be
further approved by Parent's Board.
On May 1, 1998, Parent submitted its non-binding proposal to acquire
the Company in an all-cash tender offer at a price of $17.50 per Share, subject
to the negotiation of definitive documentation. On May 4, 1998, the Board of
Directors of the Company held a meeting to consider the proposal and authorized
management to proceed subject to the approval of the Company's Board of the
definitive acquisition agreement. The Company's Board of Directors also engaged
KPMG to render a fairness opinion. On May 5, 1998, counsel for Parent and the
Company commenced negotiations on the form of a draft merger agreement.
Representatives of Parent conducted an on-site due diligence review on May 7 and
8, 1998. Counsel for Parent and the Company continued their negotiations
concerning the Merger Agreement and completed final negotiations on such
document on May 13, 1998.
On May 13, 1998, the Board of Directors of the Company held a meeting
of its Board of Directors to consider the Offer, the Merger and the Merger
Agreement. KPMG delivered its oral opinion to the Company's Board (subsequently
confirmed in writing) that, as of such date, the cash consideration of $17.50
per Share proposed to be paid to the public stockholders of the Company in the
Offer and the Merger was fair, from a financial point of view, to the public
stockholders of the Company. Thereafter, the Company's Board of Directors, by
unanimous vote of the directors present, approved the Offer, the Merger and the
Merger Agreement and determined to recommend the Offer and the Merger to the
Company's stockholders. A representative of the Company then contacted Parent to
inform it of the Board's determination.
On May 13, 1998, the Board of Directors of Parent also held a
telephonic meeting to consider the Offer, the Merger and the Merger Agreement
and approved the merger and determined to recommend the merger to its
stockholders.
The Merger Agreement and the Stockholder Agreement were executed by
the respective parties on May 13, 1998. A joint press release announcing the
execution of the Merger Agreement was released by the parties on such day.
12. PURPOSE OF THE OFFER; SHORT FORM MERGER; PLANS FOR THE COMPANY;
DISSENTERS' RIGHTS; GOING PRIVATE TRANSACTIONS
Purpose of the Offer. The purpose of the Offer is to acquire control
of, and the entire equity interest in, the Company. The purpose of the Merger is
to acquire all outstanding Shares not tendered and purchased pursuant
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<PAGE> 15
to the Offer. The acquisition of the entire equity interest in the Company has
been structured as a cash tender offer followed by a cash merger in order to
provide a prompt and orderly transfer of ownership of the Company from the
public stockholders to Parent and to provide stockholders with cash for all of
their Shares.
Under the BCL and the Company's Restated Articles of Organization, the
approval of the Board of Directors of the Company and the affirmative vote of a
66 2/3% of the holders of outstanding Shares are required to approve and adopt
the Merger Agreement and the Merger. The Board of Directors of the Company has
approved the Offer, the Merger and the Merger Agreement and the transactions
contemplated thereby, and, unless the Merger is consummated pursuant to the
short-form merger provisions under the BCL described below, the only remaining
required corporate action of the Company is the approval and adoption of the
Merger Agreement and the Merger by the affirmative vote of the holders of a
majority of the outstanding Shares. If the Minimum Condition is satisfied, the
Purchaser will have sufficient voting power to cause the approval and adoption
of the Merger Agreement and the Merger without the affirmative vote of any other
stockholder. Mr. Marguerite, Mr. Miller and Mr. Majewski, who collectively own
267,180 issued and outstanding Shares and 64,000 Shares issuable pursuant to
stock option plans, constituting approximately 24.6% of the currently
outstanding Shares and 27.4% of the Shares on a Fully Diluted Basis, have agreed
to tender their Shares in the Offer.
The Merger Agreement provides that, if approval of the Merger by the
stockholders of the Company is required by law, the Company will, as soon as
possible following payment for Shares in the Offer, duly call and hold a meeting
of stockholders for the purpose of obtaining stockholder approval of the Merger,
and the Company, through its Board of Directors, will recommend to stockholders
that such approval be given.
Short Form Merger. If the Purchaser acquires at least 90% of the
outstanding Shares, Purchaser will be able to approve such merger without a vote
of the stockholders (a "short-form merger"). In the event that all of the
conditions to the Purchaser's obligation to purchase Shares in the Offer are
satisfied or waived and the number of Shares tendered or purchased pursuant to
the Stockholders Agreement is less than 90% of the outstanding Shares on a Fully
Diluted Basis, the Purchaser may, subject to the limitations set forth in the
Merger Agreement, extend the Offer for an aggregate period of not more than 10
business days (for all such extensions) without the consent of the Company.
Additionally, the Purchaser could seek to purchase additional shares in the open
market or otherwise in order to reach the 90% threshold and employ a short-form
merger. See Section 1. Parent is obligated to effect a merger, whether or not it
acquires 90% or more of the Shares. If the Purchaser does not acquire at least
90% of the outstanding Shares, a significantly longer period of time may be
required to effect the Merger, because a vote of the Company's stockholders
would be required under the BCL.
Plans for the Company. Except as otherwise set forth in this Offer to
Purchase, it is expected that, initially following the Merger, the business and
operations of the Company will be continued by the Surviving Corporation
substantially as they are currently being conducted. Carl A. Marguerite,
Chairman and Chief Executive Officer of the Company, David McIntosh (an employee
of Parent who will be appointed Chief Technical Officer of the Company), and two
Independent Directors who will be appointed at the Effective Time, will be the
initial directors of the Surviving Corporation, and the officers of the Company
and such other persons as are designated by Parent will be the initial officers
of the Surviving Corporation. Upon completion of the Offer, Parent intends to
conduct a detailed review of the Company and its assets, corporate structure,
capitalization, operations, policies, management and personnel. After such
review, Parent will determine what actions or changes, if any, would be
desirable in light of the circumstances which then exist, and reserves the right
to effect such actions or changes.
Except as described in this Offer to Purchase, neither Parent nor the
Purchaser has any present plans or proposals that would relate to or result in
(i) any extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries, (ii) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries, (iii) any change in the Company's Board of Directors or
management, (iv) any material change in the Company's capitalization or dividend
policy, (v) any other material change in the Company's corporate structure or
business, (vi) a class of securities of the Company being delisted from a
national securities exchange or ceasing to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association,
or (vii) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g) of the Exchange Act.
15
<PAGE> 16
Massachusetts Business Combination Statute. In general, Chapter 110F
(the "Massachusetts Business Combination Statute") of the Massachusetts General
Laws prohibits any Person who is an "interested shareholder," including an owner
of 5% or more of the outstanding voting stock of a corporation, from engaging in
certain "business combinations" (including the Merger) with certain corporations
for a period of three years following the time at which such person became an
interested stockholder, unless (a) prior to such date the board of directors of
the corporation approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder, (b) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 90% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding, those shares owned by (1) persons who are directors and also
officers and (2) employee stock plan in which employee participants do not have
the right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer, or (c) on or subsequent to such
date the business combination is approved by the board of directors and
authorized at an annual or special meeting of the stockholders, and not by
written consent, by the affirmative vote of at least two-thirds of the
outstanding voting stock which is not owned by the interested stockholder. The
requirements of the Massachusetts Business Combination Statute do not apply
under a number of circumstances including if (i) the corporation fails to
satisfy the "Massachusetts nexus" of having a principal executive office or
substantial assets in Massachusetts and either 10% or more of its shareholders
residing in Massachusetts or 10% or more of its shares owned by Massachusetts
residents, (ii) the corporation's original articles of organization contain a
provision expressly electing not to be governed by this Statute or (iii) if the
Corporation adopts a by-law within 90 days after the effective date of this
statute expressly electing not to be governed thereby. According to publicly
available information, the Company's Restated Articles of Organization and
By-Laws do not contain such provisions.
The Company has represented in the Merger Agreement that its Board of
Directors has unanimously approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, and such approval
constitutes approval of the Offer, the Merger Agreement and the transactions
contemplated thereby, including the Merger, for purposes of Chapter 110F, such
that the provisions of Section 1 of Chapter 110F will not apply to the Offer and
such transactions because of such board approval.
Massachusetts Control Share Acquisition Statute. Massachusetts has also
enacted a control share acquisition statute (Chapter 110D of the Massachusetts
General Laws) that provides, in general, that shares of a widely held
Massachusetts corporation acquired in a control share acquisition (as defined in
the statute) will not have voting rights unless, among other things, voting
rights for such shares are approved by a vote of the shareholders of the
corporation, not including those holding such shares. Excluded from the
definition of "control share" acquisition," is, among other things, an
acquisition by merger or tender offer pursuant to a merger agreement to which
the Massachusetts corporation is a party. Since the Company is a party to the
Merger Agreement the Massachusetts control share acquisition statute is
inapplicable to the acquisition of Shares in the Offer or the Merger.
Dissenters' Rights. No dissenters' rights are available in connection
with the Offer. However, if the Merger is consummated, stockholders of the
Company who do not vote in favor of the merger may have certain rights under the
BCL to dissent, and demand appraisal of, and to obtain payment for the fair
value of their Shares (the "Dissenting Shares"). Such rights, if the statutory
procedures were complied with, could lead to a judicial determination of the
fair value of the Shares (excluding any element of value arising from the
accomplishment or expectation of the Merger) to be required to be paid in cash
to such dissenting holders for their Shares. In addition, such dissenting
stockholders would be entitled to receive payment of a rate of interest
determined by a court from the date of consummation of the Merger on the amount
determined to be the fair value of their Shares. In determining the fair value
and the rate of interest of the Shares, a Massachusetts court would be required
to take into account all relevant factors. Accordingly, such determination could
be based upon considerations other than, or in addition to, the market value of
the Shares, including, among other things, asset value and investment value of
the Shares. The value so determined could be more or less than the purchase
price per Share pursuant to the Offer or the consideration per Share to be paid
in the Merger.
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<PAGE> 17
In addition, the Merger will have to comply with other applicable
procedural and substantive requirements of Massachusetts law, including any
duties to minority stockholders imposed upon a controlling or, if applicable,
majority stockholder. Upon consummation of the Merger more detailed information
regarding the availability of Dissenter's Rights may be provided.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING SHAREHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
SHAREHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE
PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT ADHERENCE TO THE
APPLICABLE PROVISIONS OF THE BCL.
The foregoing description of the BCL, including the descriptions of the
merger provisions, the Massachusetts Business Combination Statute, the control
share acquisition statute and dissenters' rights, is not necessarily complete
and is qualified in its entirety by reference to the applicable statutes.
Going Private Transactions. The Merger would have to comply with any
applicable Federal law operative at the time. The Commission has adopted Rule
13e-3 under the Exchange Act which is applicable to certain "going private"
transactions and which may under certain circumstances be applicable to the
Merger or another business combination following the purchase of Shares pursuant
to the Offer in which the Purchaser or Parent seeks to acquire the remaining
Shares not held by it. The Purchaser believes, however, that Rule 13e-3 will not
be applicable to the Merger. If applicable, Rule 13e-3 requires, among other
things, that certain financial information concerning the Company and certain
information relating to the fairness of such transaction and the consideration
offered to minority stockholders in such transaction be filed with the
Commission and disclosed to stockholders prior to the consummation of such
transaction.
13. THE MERGER AGREEMENT; STOCKHOLDER AGREEMENTS.
THE MERGER AGREEMENT
The following summary of certain provisions of the Merger Agreement, a
copy of which is filed as an exhibit to the Schedule 14D-1 referred to in
Section 18, is qualified in its entirety by reference to the text of the Merger
Agreement. Capitalized terms used in the following summary and not otherwise
defined in this Offer to Purchase shall have the respective meanings set forth
in the Merger Agreement.
The Offer. The Merger Agreement provides that Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, Purchaser will purchase all Shares
validly tendered and not withdrawn pursuant to the Offer. The Merger Agreement
provides that, without the written consent of the Company, the Parent will not
(i) decrease the price per share or form of consideration payable in the Offer,
(ii) reduce the maximum number of Shares to be purchased in the Offer, (iii)
waive or reduce to a majority of the outstanding shares on a Fully Diluted Basis
below a majority of the outstanding Shares the Minimum Condition or (iv) impose
additional conditions to the Offer or extend the Offer. However, if on the
initially scheduled Expiration Date any of the conditions to the Offer shall not
have been satisfied or waived, Parent may, without the consent of the Company,
extend the Expiration Date for any period required by any rule, regulation,
interpretation or position of the Commission or its staff applicable to the
Offer. The Merger Agreement provides that if, immediately prior to the
Expiration Date, as it may be extended, if as of such date all of the conditions
to Parent's obligations to accept for payment, and to pay for, the Shares are
satisfied or waived, but the Shares tendered and not withdrawn pursuant to the
Offer are less than 90% of the outstanding Shares on a Fully Diluted Basis,
Parent or Purchaser may extend the Offer for a period of not more than 10
business days.
The Merger. The Merger Agreement provides that, following the
consummation of the Offer and subject to the terms and conditions set forth
therein, at the Effective Time, Purchaser shall be merged with and into the
Company and, as a result of the Merger, the separate corporate existence of
Purchaser shall cease, and the Company shall continue as the surviving
corporation as a direct subsidiary of Parent. At the election of Parent, the
Company may be merged into Purchaser.
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<PAGE> 18
The respective obligations of Parent and Purchaser, on the one hand,
and the Company, on the other hand, to consummate the Merger are subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions: (i) if required by applicable law, the Merger Agreement shall have
been approved and adopted by the stockholders of the Company within the meaning
of, and in accordance with, applicable law and the Company's Articles of
Organization and by-laws; (ii) no provision of any applicable law or regulation
and no judgment, injunction, order, decree or other legal restraint shall
prohibit the consummation of the Merger and (iii) the Purchaser shall have made
the Offer on the terms and conditions set forth in the Merger Agreement and
shall have purchased, or caused to be purchased, all Shares validly tendered and
not withdrawn pursuant to the Offer; provided, however, this condition shall not
be applicable to the obligations of Parent or Purchaser if, in breach of the
Merger Agreement or the terms of the Offer, Purchaser fails to purchase any
Shares validly tendered and not withdrawn pursuant to the Offer. The obligations
of Parent and Purchaser to consummate the Merger are further subject to the
satisfaction of the condition that the Offer shall not have been terminated in
accordance with its terms prior to the purchase of any Shares.
At the Effective Time of the Merger, (i) each issued and outstanding
Share (other than Shares that are held by stockholders properly exercising
dissenters' rights under the BCL and those referred to in clause (ii) below)
shall be canceled and retired and be converted into the right to receive in cash
the price paid in the Offer (the "Merger Consideration"), (ii) each Share owned
by (A) the Company, (B) Parent or Purchaser, (iii) any Subsidiary of the
Company, Parent or Purchaser immediately prior to the Effective Time shall be
canceled and no payment shall be made with respect thereto and (iv) each share
of common stock of Purchaser outstanding immediately prior to the Effective Time
shall be converted into and become one fully paid and nonassessable share of
common stock, par value $.01 per share, of the Surviving Corporation and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation.
The Company's Board of Directors. The Merger Agreement provides that
promptly upon the acceptance for payment of, and payment for, Shares
constituting a majority of the then outstanding Shares by Purchaser, pursuant to
the Offer, Parent from time to time 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 will give Parent or Purchaser, as applicable, subject to
compliance with Section 14(f) of the Exchange Act, up to that percentage of the
total number of directors on the Board of Directors of the Company (giving
effect to the election of any additional directors described below) equal to the
percentage of then outstanding Shares owned by Parent or Purchaser, and the
Company shall, at such time, cause Parent's or Purchaser's designees, as
applicable, to be so elected by its existing Board of Directors; provided,
however, that in the event that such designees are elected to the Board of
Directors of the Company, until the Effective Time such Board of Directors shall
have at least two Independent Directors; and provided further that if the number
of Independent Directors shall be reduced below two for any reason whatsoever,
the remaining Independent Director shall designate a Person to fill such vacancy
who shall be deemed to be an Independent Director for purposes of the Merger
Agreement or, if no Independent Directors then remain, the other directors shall
designate two Persons to fill such vacancies who shall not be officers or
affiliates of the Company or officers or affiliates of Parent or any of its
Subsidiaries, and such Persons shall be deemed to be Independent Directors for
purposes of the Merger Agreement. Following the election of Parent's or
Purchaser's designees, prior to the Effective Time, any amendment or termination
of the Merger Agreement or waiver of any of the Company's rights thereunder
shall require the concurrence of a majority of the Independent Directors.
Stockholders' Meeting. Pursuant to the Merger Agreement, the Company
will, if required by applicable law in order to consummate the Merger, duly call
and convene a meeting of its stockholders as promptly as practicable after
expiration of the Offer to consider and vote upon the approval of the Merger
Agreement and the Merger and all other necessary matters (the "Company
Proposals"). The Merger Agreement provides that the Company will, if required by
applicable law in order to consummate the Merger, file with the Commission and,
when cleared by the Commission, will mail to stockholders, a proxy statement in
connection with a meeting of the Company's stockholders to vote upon the Company
Proposals, or an information statement, as appropriate, satisfying all
requirements of the Exchange Act. If Parent acquires at least two-thirds of the
Shares, it will have sufficient voting power to approve the Merger, even if no
other stockholder votes in favor of the Merger.
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<PAGE> 19
The Merger Agreement provides that in the event that Parent acquires at
least 90% of the Shares, pursuant to the Offer or otherwise, Parent, Purchaser
and the Company will take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after the Merger, without a
meeting of stockholders of the Company, in accordance with the BCL.
Options. Each option to purchase Shares granted pursuant to the Options
Plans (as defined below) and outstanding immediately prior to the Effective Time
shall in accordance with their terms, at the Effective Time, become the right to
receive, upon the exercise thereof as provided in the option, the Merger
Consideration for each Share subject to such option. Parent and the Company
shall take all actions necessary to provide that at the Effective Time, each
Company Option (as defined below) surrendered for cash by the holder thereof
shall be canceled. In consideration of such cancellation, and, except to the
extent that Parent or Purchaser and the holder of any such Company Option
otherwise agree, Parent shall pay to each such holder of Company Options an
amount in cash in respect thereof equal to the product of (1) the excess, if
any, of the Merger Consideration over the per share exercise price thereof and
(2) the number of Shares subject thereto immediately prior to the Effective
Time, less applicable withholding taxes (the "Option Consideration"). "Company
Option" means any option to purchase Shares granted pursuant to the 1997
Incentive Stock Option Plan and Director Stock Option Plan (collectively, the
"Option Plans") to the extent that it is outstanding and exercisable immediately
prior to the Effective Time. The surrender of a Company Option to the Surviving
Corporation in exchange for the Option Consideration shall be deemed a release
of any and all rights the holder had or may have had in respect of such Company
Option.
Each holder of an exercisable or non-exercisable option that is not
surrendered for cancellation shall, at the Effective Time, be given the
opportunity to convert such options into options to purchase ordinary shares of
Parent, determined by multiplying the number of such options by the Per Share
Amount and dividing the result by the then market value of a share of the
ordinary shares of Parent as of the Effective Time. The exercise price of each
such new option shall be determined by multiplying the exercise price of each
such non-surrendered option at the Effective Time, by a fraction, the numerator
of which is the then fair market value of the ordinary shares of Parent at the
Effective Time and the denominator of which is the Per Share Amount.
Notwithstanding the foregoing, Parent shall not be required to take any action
which would require registration under the Securities Act or cause it to violate
such Securities Act or any applicable state securities law, but Parent shall
take such action as may be reasonable to provide such conversion opportunity on
or following the Effective Time without having to register under or violate the
Securities Act or such other law.
Except as otherwise agreed to by the parties: (i) the Option Plans
shall terminate as of the Effective Time and the provisions in any other plan,
program or arrangement providing for the issuance or grant of any other interest
in respect of the capital stock of the Company shall be canceled as of the
Effective Time and (ii) the Company shall take all commercially reasonable
action in an effort to provide that following the Effective Time no participant
in any stock option plans or other plans, programs or arrangements shall have
any right thereunder to acquire equity securities of the Company or the
Surviving Corporation and to terminate all such plans.
Covenants. Pursuant to the Merger Agreement, the Company has agreed
that, after the date of execution of the Merger Agreement and prior to the
Effective Time, the Company shall, and shall cause its Subsidiaries to, carry on
their business in the ordinary course of business in substantially the same
manner as heretofore conducted and, to the extent consistent therewith, use all
reasonable efforts to preserve intact their current business organizations, keep
available the services of their current officers and employees and preserve
their relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them. Without limiting the
generality of the foregoing, the Company shall not, and shall not permit any of
its Subsidiaries
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<PAGE> 20
to, directly or indirectly, except as expressly permitted by the Merger
Agreement or with the prior written approval of Parent:
(a) (i) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property) in respect of, any
of its capital stock, other than (A) dividends and distributions by any direct
or indirect wholly owned Subsidiary of the Company to its parent or (B) if the
Offer has not been consummated, any annual dividend payable in October of 1998
in an amount consistent with that paid in October 1997, (ii) adjust, split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (iii) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its Subsidiaries or any
other securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(b) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options, including Company Options,
to acquire, any such shares, voting securities or convertible securities (other
than the issuance of Shares upon the exercise of Company Options outstanding as
of the date hereof);
(c) amend its Articles of Organization, by-laws or other
comparable charter or organizational documents;
(d) acquire or agree to acquire, including, without
limitation, by merging or consolidating with, or purchasing a substantial equity
interest in or a substantial portion of the assets of, or by any other manner,
any business or any Person or division thereof;
(e) mortgage or otherwise encumber or subject to any Lien or,
except in the ordinary course of business consistent with past practice and
pursuant to existing contracts or commitments, sell, lease, license, transfer,
grant an option in respect of or otherwise dispose of any material properties or
assets;
(f) amend, modify or waive any material term of any
outstanding security of the Company and its Subsidiaries;
(g) incur, assume, guarantee or become obligated with respect
to any Indebtedness, or incur, assume, guarantee or become obligated with
respect to any other material obligations, other than in the ordinary course of
business and consistent with past practice;
(h) make or agree to make any new capital expenditures or
acquisitions of assets or property or other acquisitions or commitments in
excess of $100,000 in the aggregate or otherwise acquire or agree to acquire any
material assets or property;
(i) make any material tax election or take any material tax
position (unless required by law) or change its fiscal year or accounting
methods, policies or practices (except as required by changes in GAAP) or settle
or compromise any material income tax liability;
(j) make any loan, advance or capital contributions to or
investment in any Person other than in the ordinary course of business
consistent with past practice, but in no event in the amount of more than $7,500
to any one Person or $25,000 in the aggregate, and other than investments in
cash equivalents made in the ordinary course of business consistent with past
practice;
(k) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction thereof, in the
ordinary course of business consistent with past practice and in accordance with
their terms, modify, amend or terminate any material contract or agreement to
which it is a party, or release or waive any material rights or claims, or agree
to modify in any manner, any confidentiality, standstill or similar agreement to
which the Company or any of its Subsidiaries is a party;
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<PAGE> 21
(l) (i) provide to any current or former director, officer or
employee of the Company or any of its Subsidiaries any material increase in
compensation or benefits or any severance payment or other benefit not required
under the terms of an existing Plan, except for employees who are not officers
or directors in the ordinary course of business consistent with past practice,
(ii) grant to any such director, officer, or employee any increase in severance
or termination pay (including the acceleration in the exercisability of Company
Options or in the vesting of Shares (or other property) except for automatic
acceleration in accordance with the terms of the Option Plans or the provision
of any tax gross-up), or (iii) enter into any employment, deferred compensation,
severance or termination agreement or arrangement with or for the benefit of any
such current or former director, officer, or employee;
(m) (i) take or agree or commit to take any action that would
make any representation or warranty of the Company hereunder inaccurate in any
material respect at, or as of any time prior to, the Effective Time, or (ii)
omit or agree or commit to omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any material respect at any
such time; or
(n) authorize any of, or commit or agree to take any of, the
foregoing actions.
No Solicitation. The Merger Agreement provides that (a) the Company
shall not, directly or indirectly, through any officer, director or employee,
representative or agent of the Company or any of its Subsidiaries, (i) solicit,
initiate or encourage or take any other action to facilitate the institution of
any inquiries or proposals regarding any Acquisition Proposal (as defined
below), (ii) engage in negotiations or discussions concerning, or provide any
nonpublic information or assistance to any Person in connection with any
Acquisition Proposal or (iii) agree to, approve or recommend any Acquisition
Proposal. Neither the Company nor the Board of Directors of the Company shall be
prevented, however, from considering, negotiating, discussing, approving
entering into agreements with respect to and recommending to the stockholders of
the Company a bona fide Acquisition Proposal not solicited in violation of the
Merger Agreement that constitutes a Superior Proposal (as defined below),
provided that the Board of Directors of the Company determines in good faith
(after consultation with and based upon the advise of outside counsel) that it
is required to do so in order to discharge properly its fiduciary duties to the
Company's stockholders; and provided, further, that the Company shall keep
Parent informed, on a current basis, as to the status and details of any such
consideration, negotiations or discussions and shall, upon receipt, provide
Parent with copies of all correspondence, offers and written communications
received by it with respect thereto. Nothing contained in the Merger Agreement
shall prohibit the Board of Directors of the Company from complying with Rules
14d-9 and 14e-2 promulgated under the Exchange Act with regard to a tender or
exchange offer. An "Acquisition Proposal" means any of the following involving
the Company or any of its Subsidiaries (other than the entering into or
consummation of the Merger and the other transactions contemplated by the Merger
Agreement): (a) any merger, consolidation, share exchange, business combination
or other similar transaction; (b) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of substantial assets (other than assets held in
inventory for resale in the ordinary course of business) of the Company and its
Subsidiaries, taken as a whole, in a single transaction or series of
transactions; (c) any tender offer or exchange offer that if consummated would
result in any Person beneficially owning 20% or more of the outstanding shares
of capital stock of the Company or the filing of a registration statement under
the Securities Act in connection therewith; (d) any solicitation of proxies in
opposition to approval by the Company's stockholders of the Merger; (e) the
acquisition by any Person, after the date hereof, of beneficial ownership or the
right to acquire beneficial ownership of, or the formation of any "group" (as
such term is defined under Section 13(d) of the Exchange Act), that beneficially
owns or has the right to acquire beneficial ownership of 20% or more of the then
outstanding shares of capital stock of the Company, or the acquisition by any
Person or "group" that, as of the date hereof, beneficially owns 20% or more of
the outstanding shares of capital stock of the Company of beneficial ownership
or the right to acquire beneficial ownership of any additional shares of capital
stock of the Company; (f) the adoption by the Company of a plan of liquidation,
the declaration or payment by the Company of an extraordinary dividend on any of
its shares of capital stock or the effectuation by the Company of stock dividend
or a distribution of assets of any kind to the holders of such capital stock
(except as permitted in the Merger Agreement); (g) the repurchase by the Company
or any of its Subsidiaries of Shares; or (h) any agreement to, or public
announcement by the Company or any other Person, entity or group of a proposal,
plan or intention to, do any of the foregoing.
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<PAGE> 22
A "Superior Proposal" means any bona fide proposal relating to an Acquisition
Proposal made by a third party on terms which the Board of Directors of the
Company determines in its good faith judgment (based upon the advice of a
financial advisor of nationally recognized reputation, including KPMG) to be
more financially favorable to the Company's stockholders than the Offer and the
Merger and for which financing, to the extent required, is then committed or
which, in the good faith judgment (based upon the advice of a financial advisor
of nationally recognized reputation, including KPMG) of the Board of Directors
of the Company, is reasonably capable of being financed by such third party.
The Board of Directors of the Company at any time prior to the
time of acceptance for payment of at least two-thirds of the Shares pursuant to
the Offer may withdraw, modify or change any such recommendations to the extent
that the Board of Directors of the Company (i) determines in good faith after
consultation with and based upon the advice of outside legal counsel that it is
required to so withdraw, modify or change its recommendation in order to
discharge properly its fiduciary duties to the Company's stockholders under
applicable law and (ii) the Company has received in writing a Superior Proposal,
which is then pending, which the Board of Directors of the Company has
determined to recommend to the stockholders of the Company.
Indemnification And Insurance. For six years after the Effective Time,
Parent will cause the Surviving Corporation to indemnify and hold harmless the
present and former officers, directors, employees and agents of the Company (the
"Indemnified Parties") in respect of acts or omissions occurring on or prior to
the Effective Time or arising out of or pertaining to the transactions
contemplated by the Merger Agreement to the extent provided under the Company's
Articles of Organization and by-laws in effect on the date of the Merger
Agreement; provided that such indemnification shall be subject to any limitation
imposed from time to time under applicable law. In addition, for three years
after the Effective Time, Parent will cause the Surviving Corporation to use its
best efforts to provide officers' and directors' liability insurance in respect
of acts or omissions occurring on or prior to the Effective Time covering each
such Person currently covered by the Company's officers' and directors'
liability insurance policy on terms substantially similar to those of such
policy in effect on the date hereof; provided that in satisfying this
obligation, Parent shall not be obligated to cause the Surviving Corporation to
pay premiums in excess of 125% of the amount per annum the Company paid in its
last full fiscal year, and if the Surviving Corporation is unable to obtain such
insurance, it shall obtain as much comparable insurance as possible for an
annual premium equal to such maximum amount.
Representations And Warranties. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Parent and
Purchaser that with respect to, among other things, its organization,
capitalization, authority relative to the Merger, public filings, financial
statements, property, litigation, compliance with laws, employee benefit plans,
tax matters, insurance, labor matters, intellectual property, environmental
matters and brokers' fees.
Termination; Fees. The Merger Agreement provides that it may be
terminated at any time prior to the Effective Time, whether before or after
approval of the stockholders of the Company described therein:
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent,
(i) if the Merger shall not have been consummated by
October 31, 1998; provided, however, that the right
to terminate the Merger Agreement under this clause
(b)(i) shall not be available to any party whose
action or failure to act has been a principal cause
of, or resulted in, the failure of the Merger to
occur on or before such date if such action or
failure to act constitutes a breach of the Merger
Agreement;
(ii) if Parent or Purchaser shall have terminated the
Offer in accordance with its terms and conditions
without purchasing any Shares pursuant thereto;
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<PAGE> 23
(iii) if there shall be any law or regulation that makes
payment of, or payment for Shares pursuant to the
Offer or consummation of the Merger illegal or
otherwise prohibited or any judgment, injunction,
order or decree is entered enjoining Parent, the
Purchaser or the Company from paying for the Shares
pursuant to the Offer or consummating the Merger and,
in the case of any action brought other than by a
Governmental Entity, such judgment, injunction, order
or decree shall become final and non-appealable; or
(iv) if the Company shall have accepted a Superior
Proposal; or
(c) by Parent,
(i) if at the meeting of the stockholders of the Company
or any adjournment at which the approval or the
Merger Agreement and the transactions contemplated
therein is voted upon, the approval of the
stockholders of the Company (the "Company Stockholder
Approval") shall not have been obtained (provided
that the right to terminate under this clause (c)(i)
shall not be available to Parent where the failure to
obtain such Company Stockholder Approval shall have
been caused by (A) the failure of Parent or Purchaser
to vote its Shares in favor of the Merger or (B) if
it is legally able to do so because of its control of
the Company's Board of Directors, failure to call or
convene a meeting of the Stockholders of the Company
to vote on the Merger;
(ii) if the Board of Directors of the Company (i)
withdraws, modifies or changes its recommendation of
the Merger Agreement, the Offer or the Merger in a
manner adverse to Parent or Purchaser, (ii) shall
have initiated, entered into or recommended to the
stockholders of the Company any Acquisition Proposal
(including a Superior Proposal) or (iii) shall have
resolved to do any of the foregoing; or
(iii) prior to the purchase of the Shares pursuant to the
Offer if there has been a breach of any
representation, warranty, covenant or agreement on
the part of the Company set forth in the Merger
Agreement, or if any representation or warranty of
the Company shall have become untrue (except, in all
cases, where the failure to be so true and correct
would not have a Company Material Adverse Effect (as
defined below)) (a "Terminating Company Event");
provided, however, that, if such Terminating Company
Event is curable by the Company through the exercise
of its reasonable best efforts and for so long as the
Company continues to exercise such reasonable best
efforts (but in no event longer than 30 days after
Parent's notification of the Company of the
occurrence of such Terminating Company Event), Parent
may not terminate the Merger Agreement under this
clause (c)(ii); or
(d) by the Company,
(i) if there has been a breach of any representation,
warranty, covenant or agreement on the part of Parent
and Purchaser set forth in the Merger Agreement, or
if any representation or warranty of Parent and
Purchaser shall have become untrue (except, in all
cases, where the failure to be so true and correct
would not have a Parent Material Adverse Effect (as
defined below)) ("Terminating Parent Event");
provided, however, that, if such Terminating Parent
Event is curable by Parent and Purchaser through the
exercise of its reasonable best efforts and for so
long as Parent and Purchaser continue to exercise
such reasonable best efforts (but in no event longer
than 30 days after the Company's notification of
Parent of the occurrence of such Terminating Parent
Event), the Company may not terminate the Merger
Agreement under this clause (d); or
(ii) if the Purchaser has not commenced the Offer within
five business days of the date on which the
Purchaser's intention to honor the Offer is publicly
announced,
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<PAGE> 24
(iii) if at a meeting of the shareholders of the Parent or
any adjournment thereof at which the approval of the
shareholders of the Parent to the acquisition by the
Parent of the Company is voted upon, such approval
shall not have been obtained by the requisite vote
required.
"Company Material Adverse Effect" means an event that could not
reasonably be expected to (i) have a material adverse effect on the condition
(financial or otherwise), business or results of operations of the Company and
its Subsidiaries taken as a whole, (ii) impair the ability of any party hereto
to perform its obligations under the Merger Agreement or (iii) prevent or
materially delay consummation of any of the transactions contemplated by the
Merger Agreement. "Parent Material Adverse Effect" means an event that would
impair the ability of Parent and Purchaser to perform their respective
obligations under the Merger Agreement or prevent or materially delay the
consummation of any of the transactions contemplated by the Merger Agreement.
Except as otherwise set forth in the next sentence, pursuant to the
Merger, all Expenses incurred in connection with the Merger and the transactions
contemplated thereby shall be paid by the party incurring such expenses, whether
or not any transaction contemplated thereby is consummated. The Company also
agreed in the Merger Agreement that, if
(i) Parent shall terminate the Merger Agreement pursuant
to the provisions described in clauses (b)(iv),
(c)(ii) and (c)(iii) above, or the Company shall
terminate the Merger Agreement pursuant to the
provisions described in clause (b)(iv) above; or
(ii) Parent shall terminate the Merger Agreement pursuant
to the provisions described in clause (c)(i) above or
shall terminate the Offer because the Minimum
Condition is not satisfied and at the time the
Company Stockholder Approval in the case of a
termination pursuant to the provisions described in
clause (c)(i) above was voted upon or the Offer was
so terminated, as the case may be (A) there was
announced or commenced an Acquisition Proposal and
the Company shall have either (x) executed an
agreement to engage in the same or (y) the Board of
Directors of the Company shall not have recommended
against such Acquisition Proposal and maintained such
recommendation in effect or (B) there was announced
an Acquisition Proposal with a third party and the
Company shall have initiated, recommended or entered
into an agreement to engage in, an Acquisition
Proposal with such third party or an affiliate
thereof within 12 months after the date of the
Company Stockholder Meeting or the termination of the
Offer, as the case may be; or
(iii) Parent shall terminate the Offer because the
condition to the Offer described in Section 15(iv)(f)
hereof shall exist;
then promptly after such termination (or, with respect to
clause (ii)(B) above, upon engaging in such Acquisition
Proposal or agreement) the Company shall pay to Parent an
amount equal to (i) in the case of a termination by Parent
pursuant to the provisions of clause (c)(ii) above or the
termination event referred to in clause (b)(iii) above, 3% of
the amount of the consideration to be paid to the stockholders
of the Company hereunder and (ii) in the case of a termination
pursuant to the provisions of clauses (c)(i) and (ii) above,
or the termination events referred to in clause (b)(ii) above,
that amount which is equal to the greater of (x) 3% of the
amount of the consideration to be paid to the stockholders of
the Company hereunder and (y) the excess of the amount which
the stockholders of the Company who are parties to a
Stockholder Agreement would receive in any Superior Proposal
over the amount to be paid to such stockholders hereunder, but
in no event shall such amount exceed 5% of such consideration
to be paid to the stockholders of the Company.
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<PAGE> 25
Parent agreed in the Merger Agreement that, if
(i) Company shall terminate the Merger Agreement pursuant
to the provisions of clauses (d)(i), (d)(ii) or
(d)(iii) above; or
(ii) Parent shall terminate the Offer because the
condition described in Section 15 (iii) is not
satisfied;
then promptly after such termination, Parent shall pay to the
Company an amount equal to $250,000.
Stockholder Agreements. Carl A. Marguerite, John E. Miller and Janusz
J. Majewski, who own 254,180, 12,000 and 1,000 issued and outstanding Shares,
respectively, constituting approximately 24.6% of the outstanding Shares and
27.4% of the Shares on a Fully Diluted Basis, have each agreed to sell their
Shares contemporaneously with the closing of the Offer. In the event that the
Company is required to pay to the Purchaser a break-up fee as described in this
Section 13, Messrs. Marguerite, Miller and Majewski have agreed, under certain
circumstances, to pay to the Purchaser a portion of the merger consideration
that such stockholders receive as part of a Superior Proposal.
14. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that
neither the Company nor any of the Company Subsidiaries will (i) split, combine
or reclassify any shares of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (ii) declare, pay or set aside
any dividend or other distribution in respect of its capital stock, other than
dividends or distributions to the Company or a subsidiary of the Company by a
direct or indirect wholly-owned subsidiary of the Company to its parent (other
than if the Offer has not been consummated, any annual dividend payable in
October of 1998 in an amount consistent with that paid in October 1997) or (iii)
purchase, redeem or otherwise acquire any shares of its capital stock or other
securities thereof.
15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other
provision of the Offer or the Merger Agreement, Purchaser, shall not be required
to accept for payment or pay for any Shares tendered pursuant to the Offer, and
may terminate or amend the Offer (subject to the provisions of the Merger
Agreement) and may postpone the acceptance of, and payment for, subject to Rule
14e-1(c) of the Exchange Act, (relating to Purchaser's obligation to pay for or
return tendered Shares promptly after termination or withdrawal of the Offer)
any Shares tendered if:
(i) the Minimum Condition (as defined below) shall not have been
satisfied;
(ii) the period of time for any review process by the Committee on
Foreign Investment in the United States ("CFIUS") pursuant to Section 721 of
Title VII of the Defense Production Act of 1950 as amended by Section 5021 of
the Omnibus Trade and Competitiveness Act of 1988 in relation to the
determination of any threat to national security shall not have expired, and
CFIUS shall have taken any action or made any recommendation to the President of
the United States to block or prevent the consummation of the transactions
contemplated by the Merger Agreement;
(iii) the shareholders of Parent shall not have approved the
acquisition of the Company by Parent;
(iv) at any time on or after the date of the Merger Agreement, and
prior to the acceptance for payment of Shares, any of the following conditions
shall exist:
(a) there shall have been instituted by any government or
Governmental Entity, any action or proceeding before any Governmental Entity
(including such Governmental Entity instituting or initiating such action or
proceeding): (i) challenging or seeking to make illegal, materially delay or
otherwise directly or indirectly restrain or prohibit the making of the Offer,
the acceptance for payment of, or payment for, any Shares by Parent, Purchaser
or any other affiliate of Parent, or the consummation of any other transaction
contemplated by the
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<PAGE> 26
Merger Agreement, or seeking to obtain material damages in connection with any
transaction contemplated by the Merger Agreement; (ii) seeking to prohibit or
limit materially the ownership or operation by the Company, Parent or any of
their respective Subsidiaries of all or any material portion of the business or
assets of the Company, Parent or any of their respective Subsidiaries, or to
compel the Company, Parent or any of their respective Subsidiaries to dispose of
or to hold separate all or any material portion of the business or assets of the
Company, Parent or any of their respective Subsidiaries, as a result of the
transactions contemplated by the Merger Agreement; (iii) seeking to impose or
confirm limitations on the ability of Parent, Purchaser or any other affiliate
of Parent to exercise effectively full rights of ownership of any Shares,
including, without limitation, the right to vote any Shares acquired by
Purchaser or Parent pursuant to the Offer or otherwise on all matters properly
presented to the Company's stockholders, including, without limitation, the
approval and adoption of the Merger Agreement and the transactions contemplated
by the Merger Agreement; (iv) seeking to require divestiture by Parent,
Purchaser or any other affiliate of Parent of any Share; or (v) which otherwise
has a Company Material Adverse Effect or which relates to the transactions
contemplated by the Merger Agreement and has a Parent Material Adverse Effect;
(b) there shall have been any action taken, or any law
enacted, entered, enforced, promulgated, amended, issued or deemed applicable to
(i) Parent, the Company or any Subsidiary or affiliate of Parent or the Company
or (ii) any transaction contemplated by the Merger Agreement, by any government
or Governmental Entity, which is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through (v) of
paragraph (a) above;
(c) there shall have occurred any change, condition, event or
development that has a Company Material Adverse Effect;
(d) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in securities on the New York Stock
Exchange or the Nasdaq National Market (excluding any coordinated trading halt
triggered solely as a result of a specified decrease in a market index), (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States, (iii) any limitation (whether or not mandatory) by
any government or Governmental Entity of the United States on the extension of
credit by banks or other lending institutions or (iv) a commencement of a war or
material armed hostilities or other national or international calamity involving
the United States;
(e) the Company or any of its Subsidiaries shall have
sustained a loss or interference with its business by fire, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or malicious act which
will, in the reasonable opinion of Parent, make it inadvisable or impractical to
proceed with the Offer;
(f) (i) it shall have been publicly disclosed or Parent or
Purchaser shall have otherwise learned that beneficial ownership of 20% of more
of the then outstanding Shares has been acquired by any Person, other than
Parent or any of its affiliates or any other Person not required to file a
Schedule 13D under the rules promulgated under the Exchange Act or (ii) (A) the
Board of Directors of the Company or any committee thereof shall have withdrawn,
modified or changed in a manner adverse to Parent or Purchaser the approval or
recommendation of the Offer, the Merger or the Merger Agreement, or approved or
recommended any Acquisition Proposal or any other acquisition of Shares other
than the Offer or the Merger or (B) the Board of Directors of the Company or any
committee thereof shall have resolved to do any of the foregoing;
(g) the representations and warranties of the Company
contained in the Merger Agreement shall not be true and correct in all respects
(except, in all cases, where the failure to be so true and correct would not
have a Company Material Adverse Effect) as of the expiration of the Offer,
except for (i) changes specifically contemplated by the Merger Agreement and
(ii) those representations and warranties that address matters only as of a
particular date (which shall remain true and correct as of such date);
(h) the Company shall not have performed or complied in all
material respects with all obligations, agreements and covenants of the Company
to be performed or complied with by it under the Merger Agreement;
26
<PAGE> 27
(i) the Merger Agreement shall have been terminated in
accordance with its terms; or
(j) Parent and the Company shall have agreed that Parent or
Purchaser, as applicable, shall terminate the Offer or postpone the acceptance
for payment of or payment for Shares thereunder.
For purposes hereof, the term "Minimum Condition" shall mean at least
two-thirds of the Shares outstanding on a Fully Diluted Basis (including for
purposes of such calculation all Shares issuable upon exercise of all stock
options that are or will be fully vested, currently exercisable or outstanding
immediately prior to the Effective Time, and conversion of convertible
securities or other rights to purchase or acquire Shares that can be
converted or purchased prior to the Effective Time) being validly tendered and
not withdrawn prior to the expiration of the Offer.
The Parent is a public limited company listed on the London Stock
Exchange (the "LSE"). The rules and regulations of the LSE require shareholder
approval of acquisitions by companies listed thereon if the level of net assets
of the listed company and the consideration to be paid in the proposed
acquisition meet specified criteria. The Merger meets such criteria and,
therefore, is subject to approval by a vote of the stockholders of Parent.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be asserted by Parent or Purchaser regardless of the
circumstances giving rise to any such condition or may be waived by Parent or
Purchaser in whole or in part at any time and from time to time in their sole
discretion, subject in each case to the terms of the Merger Agreement. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
16. CERTAIN LEGAL MATTERS.
General. Except as described in this Section 16, based on a review of
publicly available filings by the Company with the Commission and other publicly
available information concerning the Company, neither Parent nor the Purchaser
is aware of any license or regulatory permit that appears to be material to the
business of the Company and that might be adversely affected by the Purchaser's
acquisition of Shares pursuant to the Offer, or of any approval or other action
by any governmental, administrative or regulatory agency or authority, domestic
or foreign, that would be required for the acquisition or ownership of Shares by
the Purchaser pursuant to the Offer. Should any such approval or other action be
required, it is presently contemplated that such approval or action would be
sought, except as described below under "State Takeover Laws." While the
Purchaser does not currently intend to delay 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 other action, if required, would be
obtained without substantial conditions or that adverse consequences would not
result to the Company's business or that certain parts of the Company's business
would not have to be disposed of in the event that such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser may decline to accept for
payment or pay for any Shares tendered. See Section 15.
State Takeover Laws. The Company is incorporated under the laws of the
Commonwealth of Massachusetts. In general, Section 3 of Chapter 110C of the
Massachusetts General Laws prohibits any offeror from making a takeover bid if
he and his associates and affiliates are directly or indirectly the beneficial
owners of 5% or more of the issued and outstanding equity securities of any
class of the target company, any of which, were purchased within one (1) year
before the proposed takeover bid, and the offeror, before making any such
purchase, failed to publicly announce his intention to gain control of the
target company, or otherwise failed to make fair, full, and effective disclosure
of such intention to the persons from whom he acquired such securities. Section
1 of Chapter 110C of the Massachusetts General Laws defines a takeover bid and
indicates it does not include any takeover bid to which the target company
consents, by action of its Board of Directors, if such Board of Directors has
recommended acceptance thereof to shareholders and the terms thereof, including
any inducements to officers or directors which are not made available to all
shareholders have been furnished to the
27
<PAGE> 28
shareholders. The Company has represented that its Board of Directors has
unanimously approved the Merger Agreement and the transactions contemplated
hereby, including the Offer and the Merger, and such approval constitutes
approval of the Offer, the Merger Agreement and the transactions contemplated
thereby, including the Merger, for purposes of Section 1 and Section 3 of
Chapter 110C of the Massachusetts General Laws, such that the provisions of
Section 1 and the restrictions contained in Section 3 of the Massachusetts
General Laws will not apply to the Offer and such transactions. 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 and certain of its subsidiaries conduct business in a
number of other states throughout the United States, some of which have enacted
takeover laws and regulations. Neither Parent nor the Purchaser knows whether
any or all of these other takeover laws and regulations will by their terms
apply to the Offer, and, except as set forth above with respect to Sections 1
and 3 of Chapter 110C of the Massachusetts General Laws, neither Parent nor the
Purchaser has currently complied with any other state takeover statute or
regulation. The Purchaser reserves the right to challenge the applicability or
validity of any state law purportedly applicable to the Offer and nothing in
this Offer to Purchase or any action taken in connection with the Offer is
intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer 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 to receive approvals from, the
relevant state authorities, and the Purchaser might be unable to accept for
payment or pay for Shares tendered pursuant to the Offer, or may be delayed in
consummating the Offer. In such case, the Purchaser may not be obligated to
accept for payment or pay for any Shares tendered pursuant to the Offer.
17. FEES AND EXPENSES. The Purchaser has retained Morrow & Co, Inc. to
act as the Information Agent and State Street Bank and Trust Company to act as
the Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telex, telecopy and personal interview and
may request brokers, dealers and other nominee stockholders to forward the Offer
materials to beneficial owners. The Information Agent and the Depositary will
receive reasonable and customary compensation for services relating to the Offer
and will be reimbursed for certain out-of-pocket expenses. The Purchaser and
Parent have also agreed to indemnify the Information Agent and the Depositary
against certain liabilities and expenses in connection with the Offer, including
certain liabilities under the federal securities laws.
Neither Parent nor the Purchaser will pay any fees or commissions to
any broker or dealer or any other person (other than to the Information Agent)
for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers,
commercial banks and trust companies will, upon request, be reimbursed by the
Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering materials to their customers.
18. MISCELLANEOUS. The Offer is being made to all holders of Shares.
The Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with any such state statute or
seek to have such statute declared inapplicable to the Offer. If, after such
good faith effort, the Purchaser cannot comply with any such state statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Shares in such state. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer will be deemed to be made on behalf of the Purchaser by one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
28
<PAGE> 29
No person has been authorized to give any information or make any
representation on behalf of Parent, the Purchaser or the Company not contained
in this Offer to Purchase or in the related Letter of Transmittal and, if given
or made, such information or representation must not be relied upon as having
been authorized.
Parent and the Purchaser have filed with the Commission a Tender Offer
Statement on Schedule 14D-1, together with all exhibits thereto, pursuant to
Rule 14d-3 of the General Rules and Regulations under the Exchange Act,
furnishing certain additional information with respect to the Offer. Such Tender
Offer Statement and any amendments thereto, including exhibits, may be inspected
and copies may be obtained from the offices of the Commission in the manner set
forth in Section 8 (except that they will not be available at the regional
offices of the Commission).
FIL ACQUISITION CORP.
May 19, 1998
29
<PAGE> 30
ANNEX I
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF FILTRONIC PLC
The following table sets forth the name, current business address,
present principal occupation or employment, and material occupations, positions,
offices or employment for the past five years of each director of Parent, each
executive officer of Parent and the executive officers of certain of Parent's
subsidiaries. Unless otherwise indicated, positions held shown in the following
table are positions with Parent. Except for Professor Stephen Burbank, each such
person is a citizen of the United Kingdom. None of the listed persons, during
the past five years, has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or was a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction as a result of
which such person 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.
<TABLE>
<CAPTION>
Present Principal
Occupation or Employment
Name and Position Held Current Business Address and Five-Year Employment History
- ---------------------- ------------------------ --------------------------------
<S> <C> <C>
Professor John David Rhodes The Waterfront Since prior to 1993, Professor Rhodes
Executive Chairman, Salts Mill Road, Saltaire has been the Executive Chairman of
OBE, FEng, FRS Shipley, West Yorkshire Parent. Professor Rhodes is a non-
England BD18 3TT executive director of Henderson
Technology Trust plc and holds
directorships of Isotek (Holdings)
Limited and Bradford City Holdings
Limited. Professor Rhodes also holds a
special part-time Industrial
Professorship at Leeds University.
John Samuel The Waterfront Since prior to 1993, Mr. Samuel has
Financial Director Salts Mill Road, Saltaire been the Financial Director of Parent.
Shipley, West Yorkshire Mr. Samuel is also a director of Ilkley
England BD18 3TT Toy Museum Limited and Photarc
Surveys Limited.
Rhys Williams The Waterfront Mr. Williams became a Non-Executive
Non-Executive Director Salts Mill Road, Saltaire Director of Parent in 1994. Mr. Williams
Shipley, West Yorkshire is also Chairman of LaserScan Holdings, plc. Electron
England BD18 3TT Technologies Limited, Radstone Technology plc,
ProChancellor and Chairman of Council of Warwick
University and holds directorships of Acal plc, TransTec
plc and The Cable Group Limited. From prior to 1993
through 1997, Mr. Williams was also a director of
Eurotherm plc.
</TABLE>
30
<PAGE> 31
<TABLE>
<CAPTION>
Present Principal
Occupation or Employment
Name and Position Held Current Business Address and Five-Year Employment History
- ---------------------- ------------------------ --------------------------------
<S> <C> <C>
Richard Blake The Waterfront Mr. Blake became a non-executive
Non-Executive Director Salts Mill Road, Saltaire director of Parent in 1994. Since prior
Shipley, West Yorkshire to 1993, Mr. Blake was a Chartered
England BD18 3TT Accountant and partner with Baker Tilly
until he retired in 1993. He remained a
non-executive Chairman of Baker Tilly
through 1995.
Professor Stephen Burbank The University of Pennsylvania Professor Burbank became a non-
Non-Executive Director School of Law executive director with Parent in 1994.
3400 Chestnut Street He is currently the David Berger
Philadelphia, PA 19103 Professor for the Administration of
Justice at the University of
Pennsylvania Law School in
Philadelphia, Pennsylvania.
Christopher Schofield The Waterfront Mr. Schofield joined Parent in 1995 as
Company Secretary and Salts Mill Road, Saltaire the Company Secretary and Solicitor.
Solicitor Shipley, West Yorkshire Prior to that time, Mr. Schofield was a
England BD18 3TT solicitor and partner with Ralph C.
Yablon, Temple-Milnes & Carr. Mr.
Schofield is also a solicitor and partner
with Schofield Sweeney.
</TABLE>
31
<PAGE> 32
ANNEX II
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF THE PURCHASER
The following table sets forth the name, current business address,
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. Each such person is a citizen of the United Kingdom.
The current business address of each of the officers of the Purchaser is The
Waterfront, Salts Mill Road, Saltaire, Shipley, West Yorkshire England BD 18
3TT. None of the listed persons, during the past five years, has been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person 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.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
OCCUPATION OR EMPLOYMENT
NAME AND POSITION HELD AND FIVE-YEAR EMPLOYMENT HISTORY
- ---------------------- --------------------------------
<S> <C>
Professor David Rhodes.................... *
President
John Samuel................................... *
Treasurer
Christopher Schofield......................... *
Clerk and Director
</TABLE>
* Please see the information set forth in Annex I.
32
<PAGE> 33
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal and certificates for Shares should be sent or
delivered by each stockholder of the Company or his broker, dealer, commercial
bank or trust company to the Depositary at one of its addresses set forth below:
The Depositary for the Offer is:
STATE STREET BANK AND TRUST COMPANY
<TABLE>
<CAPTION>
By Express Mail or
By First Class Mail: Overnight Courier: By Hand:
-------------------- ------------------ --------
<S> <C> <C>
State Street Bank and Trust State Street Bank and Trust Securities Transfer and
Company Company Reporting Services, Inc.
Corporate Reorganization Corporate Reorganization c/o Boston EquiServe
P.O. Box 9572 70 Campanelli Drive Corporate Reorganization
Boston, MA 02205-9572 Braintree, MA 02184 55 Broadway, 3rd Floor
New York, NY 10006
</TABLE>
Any questions or requests for assistance may be directed to the
Information Agent at its address and telephone numbers set forth below. Requests
for additional copies of this Offer to Purchase and the Letter of Transmittal
may be directed to the Information Agent or the Depositary. Stockholders may
also contact their brokers, dealers, commercial banks or trust companies for
assistance concerning the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue
New York, New York 10022
(212) 754-8000 (call collect)
or
CALL TOLL-FREE (800) 566-9061
Bank and Brokerage Firms
Call (800) 662-5200
33
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
SAGE LABORATORIES, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED MAY 19, 1998
OF
FIL ACQUISITION CORP.,
A WHOLLY-OWNED SUBSIDIARY OF
FILTRONIC PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
WEDNESDAY, JUNE 17, 1998, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
STATE STREET BANK AND TRUST COMPANY
<TABLE>
<S> <C> <C>
By Express Mail or
By First Class Mail: Overnight Courier: By Hand:
State Street Bank and Trust State Street Bank and Trust Securities Transfer and
Company Company Reporting Services, Inc.
Corporate Reorganization Corporate Reorganization c/o Boston EquiServe
P.O. Box 9572 70 Campanelli Drive Corporate Reorganization
Boston, MA 02205-9572 Braintree, MA 02184 55 Broadway, 3rd Floor
New York, NY 10006
</TABLE>
-----------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL
IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE SUBSTITUTE
FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates representing Shares (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined in Instruction 2) is utilized, if
delivery is to be made by book-entry transfer to the account maintained by the
Depositary at The Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in Section 3 of the Offer to Purchase.
Stockholders whose certificates are not immediately available, or who cannot
deliver their certificates or confirmation of the book-entry transfer of their
Shares into the Depositary's account at the Book-Entry Transfer Facility
("Book-Entry Confirmation") and all other documents required hereby to the
Depositary on or prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase), must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase. See
Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:_________________________________________
Account Number:________________________________________________________
Transaction Code Number:_______________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s):_______________________________________
Date of Execution of Notice of Guaranteed Delivery:____________________
Name of Institution that Guaranteed Delivery:__________________________
If Delivered by Book-Entry Transfer:___________________________________
Name of Tendering Institution:_________________________________________
Account Number:________________________________________________________
Transaction Code Number:_______________________________________________
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
CERTIFICATE(S) TENDERED
(ATTACH ADDITIONAL LISTS IF NECESSARY)
TOTAL NUMBER OF NUMBER OF
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE SHARES REPRESENTED SHARES
(PLEASE FILL IN, IF BLANK) NUMBER(S)* BY CERTIFICATE(S) TENDERED**
<S> <C> <C> <C>
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
TOTAL SHARES
-----------------------------------------------------
</TABLE>
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares
represented by any certificates delivered to the Depositary are being
tendered hereby. See Instruction 4.
The names and addresses of the registered holders should be printed, if
not already printed above, exactly as they appear on the certificates
representing Shares tendered hereby. The certificates and number of Shares that
the undersigned wishes to tender should be indicated in the appropriate boxes.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
2
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to FIL Acquisition Corp., a
Massachusetts corporation (the "Purchaser") and a wholly-owned subsidiary of
Filtronic plc, a public limited company organized under the laws of England and
Wales ("Parent"), the above-described shares of common stock, par value $.10 per
share (the "Shares"), of Sage Laboratories, Inc., a Massachusetts corporation
(the "Company"), pursuant to the Purchaser's offer to purchase all of the
outstanding Shares at a price of $17.50 per Share, net to the tendering
stockholder in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated May 19, 1998 (the "Offer to Purchase"), receipt of
which is hereby acknowledged, and in this Letter of Transmittal (which together
constitute the "Offer"). The Purchaser reserves the right to transfer or assign,
in whole or from time to time in part, to Parent or to one or more affiliates of
Parent, the right to purchase Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of and payment
for the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer, the undersigned hereby sells, assigns, and transfers
to, or upon the order of, the Purchaser all right, title and interest in and to
all of the Shares that are being tendered hereby (and any and all other Shares
or other securities or rights issued or issuable in respect thereof on or after
May 19, 1998) and irrevocably appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares (and any
such other Shares or securities or rights), with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with an
interest), to (a) deliver certificates representing such Shares (and any such
other Shares or securities or rights), or transfer ownership of such Shares (and
any such other Shares or securities or rights) on the account books maintained
by the Book-Entry Transfer Facility, together in either such case with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Purchaser upon receipt by the Depositary, as the undersigned's agent, of the
purchase price (adjusted, if appropriate, as provided in the Offer to Purchase),
(b) present such Shares (and any such other Shares or securities or rights) for
registration and transfer on the books of the Company, and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any such other Shares or securities or rights), all in accordance
with the terms of the Offer.
The undersigned hereby irrevocably appoints Christopher Schofield and
John Samuel and each of them or any other designee of the Purchaser, the
attorneys and proxies of the undersigned, each with full power of substitution,
to vote in such manner as each such attorney and proxy or his substitute shall,
in his sole discretion, deem proper, and otherwise act (including pursuant to
written consent) with respect to all the Shares tendered hereby which have been
accepted for payment by the Purchaser prior to the time of such vote or action
(and any and all other Shares or securities or rights issued or issuable in
respect thereof on or after May 19, 1998), which the undersigned is entitled to
vote at any meeting of stockholders (whether annual or special and whether or
not an adjourned meeting) of the Company, or consent in lieu of any such
meeting, or otherwise. This proxy and power of attorney is coupled with an
interest in the Shares tendered hereby and is irrevocable and is granted in
consideration of, and is effective upon, the acceptance for payment of such
Shares (and any such other Shares or securities or rights) by the Purchaser in
accordance with the terms of the Offer. Such acceptance for payment shall revoke
all prior proxies granted by the undersigned at any time with respect to such
Shares (and any such other Shares or securities or rights) and no subsequent
proxies will be given (and if given will be deemed not to be effective) with
respect thereto by the undersigned. The undersigned acknowledges that in order
for Shares to be deemed validly tendered, immediately upon the acceptance for
payment of such Shares, the Purchaser or the Purchaser's designee must be able
to exercise full voting and other rights of a record and beneficial holder 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 any and all other Shares or securities or rights issued or
issuable in respect thereof on or after May 19, 1998), and that, when the same
are accepted for payment by the Purchaser, the Purchaser will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and the same will not be subject to any adverse claim. The
undersigned, upon request, will execute and deliver any additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Shares tendered hereby (and
any such other Shares or securities or rights).
No authority herein conferred or agreed to be conferred in this Letter
of Transmittal shall be affected by, and all such authority shall survive, the
death or incapacity of the undersigned, and any obligation of the undersigned
3
<PAGE> 4
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as 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 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth
in the Offer to Purchase, the Purchaser may not be required to accept for
payment any of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates
representing Shares not tendered or accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any certificates
representing Shares not tendered or accepted for payment (and accompanying
documents, as appropriate) to the registered holder(s) appearing under
"Description of Shares Tendered" at the address shown below such registered
holder(s) name(s). In the event that either or both the Special Delivery
Instructions and the Special Payment Instructions are completed, please issue
the check for the purchase price and/or return any certificates representing
Shares not tendered or accepted for payment in the name(s) of, and deliver such
check and/or return such certificates to, the person or persons so indicated.
Stockholders tendering Shares by book entry transfer may request that any Shares
not accepted for payment be returned by crediting such account maintained at the
Book-Entry Transfer Facility as such stockholder may designate by making an
appropriate entry under "Special Payment Instructions." 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 accept for payment any of the Shares so
tendered hereby.
<TABLE>
<CAPTION>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
<S> <C>
To be completed ONLY if certificates representing To be completed ONLY if certificates representing
Shares not tendered or not purchased and/or the check Shares not tendered or not purchased and/or the check
for the purchase price of Shares purchased are to be for the purchase price of Shares purchased are to be sent
issued in the name of someone other than the to someone other than the undersigned, or to the
undersigned, or if Shares tendered by book-entry transfer undersigned at an address other than that shown under
which are not purchased are to be returned by credit to "Description of Shares Tendered."
an account maintained at the Book-Entry Transfer
Facility other than that account designated above. Issue check and/or certificate(s) to:
Issue check and/or certificate(s) to: Name:
---------------------------------------------------
(Please Print)
Name: Address:
--------------------------------------------------- ------------------------------------------------
(Please Print)
Address:
------------------------------------------------ --------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------
- --------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------
(Tax Identification or Social Security No.)
Credit unpurchased Shares tendered by book-entry
transfer to the Book-Entry Transfer Facility account set
forth below.
- --------------------------------------------------------
(Account Number)
</TABLE>
4
<PAGE> 5
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
Signature(s) of Holder(s) of Shares
---------------------------------------------
- --------------------------------------------------------------------------------
Dated: , 1998
--------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificate(s) 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 trustees, executors, administrators, guardians,
attorneys-in-fact, agents, officers of corporations or others acting in a
fiduciary or representative capacity, please set forth the full title and see
Instruction 5.)
Name(s)
-------------------------------------------------------------------------
(Please Print)
Capacity (full title)
-----------------------------------------------------------
Address
-------------------------------------------------------------------------
(Including Zip Code)
- ----------------------------- -------------------------------------------
(Area Code and Telephone No.) (Tax Identification or Social Security No.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY
PLACE MEDALLION GUARANTEE IN SPACE BELOW.
Authorized Signature(s)
---------------------------------------------------------
Name
----------------------------------------------------------------------------
(Please Print)
Title
---------------------------------------------------------------------------
Name of Firm
--------------------------------------------------------------------
Address
-------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
Dated: , 1998
--------------
5
<PAGE> 6
INSTRUCTIONS
Forming Part of The Terms And Conditions of The Offer
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder(s) of the Shares (which term, for purposes of this document,
shall include any participant in the Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) tendered
herewith, unless such holder has completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
this Letter of Transmittal, or (ii) if such Shares are tendered for the account
of a firm that is a member in good standing of the Security Transfer Agent's
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchange Medallion Program (each being hereinafter referred to as an
"Eligible Institution"). In all other cases, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by stockholders either if certificates
representing Shares are to be forwarded herewith to the Depositary or, unless an
Agent's Message (as defined below) is utilized, if tenders of Shares are to be
made pursuant to the procedures for delivery by book-entry transfer set forth in
Section 3 of the Offer to Purchase. Certificates representing all physically
tendered Shares, or any book-entry confirmation of Shares, as the case may be,
together with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, or, in connection
with a book-entry transfer, an Agent's Message, and any other documents required
by this Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth herein on or prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase). If a stockholder's certificate(s)
representing Shares are not immediately available (or the procedure for the
book-entry transfer cannot be completed on a timely basis) or time will not
permit all required documents to reach the Depositary on or prior to the
Expiration Date, such stockholder's Shares may nevertheless be tendered if the
procedures for guaranteed delivery set forth in Section 3 of the Offer to
Purchase are followed. 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 provided by
the Purchaser, must be received by the Depositary on or prior to the Expiration
Date, and (iii) the certificates representing all tendered Shares, in proper
form for transfer, or Book-Entry Confirmation of Shares, as the case may be, in
each case together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees (or,
in connection with a book-entry transfer, an Agent's Message) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three Nasdaq National Market trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in Section 3 of
the Offer to Purchase. The term "Agent's Message" means a message transmitted
through electronic means by the Book-Entry Transfer Facility to, and received
by, the Depositary and forming a part of a book-entry confirmation, which states
that the Book-Entry Transfer Facility has received an express acknowledgment
from the participant in the Book-Entry Transfer Facility tendering the Shares
that such participant has received, and agrees to be bound by, this Letter of
Transmittal.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE
CERTIFICATE(S) REPRESENTING SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING
DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND SOLE
RISK OF THE TENDERING STOCKHOLDER. THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE DEPOSITARY. IF SUCH DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and
no fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER SHARES BY
BOOK-ENTRY TRANSFER). If fewer than all the Shares represented by any
certificate submitted are to be tendered, fill in the number of Shares that
6
<PAGE> 7
are to be tendered in the box entitled "Number of Shares Tendered." In such
case, new certificate(s) representing the remainder of the Shares that were
represented by the old certificate(s) will be sent to the registered holder(s),
unless otherwise provided in the appropriate box on this Letter of Transmittal,
as soon as practicable after the Expiration Date. All Shares represented by
certificate(s) 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 exactly with the
name(s) as written on the face(s) of the certificate(s) without alteration,
enlargement or any change whatsoever. If any of the Shares tendered hereby are
owned of record by two or more joint owners, all such owners must sign this
Letter of Transmittal. If any tendered Shares are registered in different names
on several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of
the Shares listed and tendered hereby, no endorsements of certificates or
separate stock powers are required, unless payment or certificates for Shares
not tendered or accepted for payment are to be issued to a person other than the
registered holder(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, 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.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution, unless the signature is that of an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or if
certificates representing Shares not tendered or accepted for payment are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder or such other person) payable on
account of the transfer to such person will be deducted from the purchase price,
unless satisfactory evidence of the payment of such taxes or exemption therefrom
is submitted.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or
certificates representing Shares not tendered or accepted for payment are to be
issued in the name of a person other than the signer of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to someone other than the signer of this Letter of Transmittal or to an
address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Stockholders tendering Shares by book-entry
transfer may request that Shares not accepted for payment be credited to such
account maintained at the Book-Entry Transfer Facility as such stockholder may
designate hereon. If no such instructions are given, such Shares not accepted
for payment will be returned by crediting the account at the Book-Entry Transfer
Facility designated above.
8. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost or destroyed certificates have been followed.
7
<PAGE> 8
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by
the Purchaser, in whole or in part, at any time and from time to time in the
Purchaser's sole discretion, in the case of any Shares tendered hereby.
10. SUBSTITUTE FORM W-9. The tendering stockholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN"),
generally the stockholder's social security or federal employer identification
number, on Substitute Form W-9, which is provided below, and to certify whether
the stockholder is subject to backup withholding of Federal income tax. If a
tendering stockholder is subject to backup withholding, the stockholder must
cross out item (2) of the Certification box of the Substitute Form W-9. Failure
to provide the information on the Substitute Form W-9 may subject the tendering
stockholder to 31% Federal income tax withholding on the payment of the purchase
price. If the tendering stockholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future, the
stockholder 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% on all payments of the purchase price until a TIN
is provided to the Depositary.
11. FOREIGN HOLDERS. Foreign holders must submit a completed IRS Form
W-8 to avoid backup withholding. IRS Form W-8 may be obtained by contacting the
Depositary at one of the addresses on the face of this Letter of Transmittal.
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for
assistance may be directed to the Information Agent at the address set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal,
the Notice of Guaranteed Delivery and the Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 may be obtained from the
Information Agent at the address set forth below or from your broker, dealer,
commercial bank or trust company.
IMPORTANT: This Letter of Transmittal (or a facsimile thereof),
together with certificates representing Shares or confirmation of book-entry
transfer and all other required documents, or the Notice of Guaranteed Delivery,
must be received by the Depositary on or prior to the Expiration Date.
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is such person's social security number. The TIN of a
resident alien who does not have and is not eligible to obtain a social security
number is such person's IRS individual taxpayer identification number. If a
tendering stockholder is subject to backup withholding, the stockholder must
cross out item (2) of the Certification box on the Substitute Form W-9. If the
Depositary is not provided with the correct TIN, the stockholder may be subject
to a $50 penalty imposed by the Internal Revenue Service ("IRS"). In addition,
payments that are made to such stockholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and
certain foreign individuals) are not subject to backup withholding. In order for
a foreign individual to qualify as an exempt recipient, that stockholder must
submit to the Depositary a properly completed IRS Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. Such forms
may be obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold
31% of any payments made to the stockholder. 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 IRS.
8
<PAGE> 9
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a
stockholder with respect to Shares purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of such stockholder's correct
TIN by completing the Substitute Form W-9 below certifying that the TIN provided
on such form is correct (or that such stockholder is awaiting a TIN) and that
(i) such holder is exempt from backup withholding, (ii) such holder has not been
notified by the IRS that such holder is subject to backup withholding as a
result of a failure to report all interest or dividends, or (iii) the IRS has
notified such holder that such holder is no longer subject to backup withholding
(see Part 2 of Substitute Form W-9).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number, individual taxpayer identification number, or employer identification
number of the record owner of the Shares. If the Shares are in more than one
name or are not in the name of the actual owner, consult the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidelines on which number to report. If the tendering stockholder
has not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, such stockholder should write "Applied For" in the
space provided for in the TIN in Part 1, and sign and date the Substitute Form
W-9. If "Applied For" is written in Part 1 and the Depositary is not provided
with a TIN within 60 days, the Depositary will withhold 31% on all payments of
the purchase price until a TIN is provided to the Depositary.
9
<PAGE> 10
PAYER'S NAME: STATE STREET BANK AND TRUST COMPANY
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1-PLEASE PROVIDE YOUR TIN
FORM W-9 IN THE BOX AT RIGHT AND Social security number
CERTIFY BY SIGNING AND OR________________________
DATING BELOW Employer identification number
(If awaiting TIN write "Applied For")
PART 2-For Payees exempt from backup
withholding, see the enclosed Taxpayer
Identification Number (TIN) Guidelines
for Certification of Taxpayer
Identification Number on Substitute Form
W-9 and complete as instructed
therein.
DEPARTMENT OF CERTIFICATION-UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
THE TREASURY (1) The number shown on this form is my correct Taxpayer Identification
INTERNAL REVENUE Number (or a Taxpayer Identification Number has not been issued to
SERVICE me) and either (a) I have mailed or delivered an application to receive a
Taxpayer Identification Number to the appropriate Internal
Revenue Service ("IRS") or Social Security Administration
office or (b) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a
Taxpayer Identification Number within sixty (60) days, 31% of
all reportable payments made to me thereafter will be withheld
until I provide a number; and
(2) I am not subject to backup withholding because (a) I am
exempt from backup withholding, (b) I have not been notified by
the IRS that I am subject to backup withholding as a result
of a failure to report all interest or dividends, or (c)
the IRS has notified me that I am no longer subject to backup
withholding.
PAYER'S REQUEST FOR CERTIFICATION INSTRUCTIONS - You must cross out item (2) above if you
TAXPAYER IDENTIFICATION have been notified by the IRS that you are currently subject to backup withholding
NUMBER (TIN) AND because you have failed to report all interest and dividends on your tax return. If
CERTIFICATION 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, you received another notification from the IRS that you are o
longer subject to backup withholding, do not cross out item (2). (Also see
instructions in the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form
W-9).
NAME:___________________________________________________________
(please print)
ADDRESS:________________________________________________________
(please print)
SIGNATURE_________________________________ DATE___________, 1998
</TABLE>
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
INFORMATION.
The Information Agent for the offer is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free (800) 566-9061 Banks and
Brokerage Firms please call:
(800) 662-5200
10
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SAGE LABORATORIES, INC.
AT
$17.50 NET PER SHARE
BY
FIL ACQUISITION CORP.,
A WHOLLY-OWNED SUBSIDIARY OF
FILTRONIC PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
WEDNESDAY, JUNE 17, 1998, UNLESS THE OFFER IS EXTENDED.
May 19, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
We have been appointed by FIL Acquisition Corp., a Massachusetts
corporation (the "Purchaser") and a wholly-owned subsidiary of Filtronic plc, a
public limited company organized under the laws of England and Wales ("Parent"),
to act as Information Agent in connection with the Purchaser's offer to purchase
all of the outstanding shares of common stock, par value $.10 per share (the
"Shares"), of Sage Laboratories, Inc., a Massachusetts corporation (the
"Company"), at a price of $17.50 per Share (the "Offer Price"), net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated May 19, 1998 (the "Offer to Purchase"), and the related
Letter of Transmittal (which together constitute the "Offer"), copies of which
are enclosed herewith. The Offer is being made in connection with the Agreement
and Plan of Merger, dated as of May 13, 1998, among Parent, Purchaser and the
Company.
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.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES REPRESENTING AT LEAST 66 2/3% OF THE TOTAL NUMBER OF OUTSTANDING SHARES
OF THE COMPANY ON A FULLY DILUTED BASIS (AS DEFINED IN THE OFFER TO PURCHASE) AS
OF THE DATE THE SHARES ARE ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER. HOLDERS
OF 267,180 ISSUED AND OUTSTANDING SHARES, CONSTITUTING APPROXIMATELY 24.6% OF
THE OUTSTANDING SHARES AND 27.4% OF THE SHARES ON A FULLY DILUTED BASIS, HAVE
AGREED TO TENDER THEIR SHARES IN THE OFFER.
For your information and for forwarding to your clients, we are
enclosing the following documents:
1. The Offer to Purchase.
2. The Letter of Transmittal to be used by stockholders of the
Company in accepting the Offer. Facsimile copies of the Letter of
Transmittal (with manual signatures) may be used to tender Shares.
<PAGE> 2
3. A letter to stockholders of the Company from Carl A.
Marguerite, Chairman and Chief Executive Officer of the Company,
together with a Solicitation/Recommendation Statement on Schedule 14D-9
filed by the Company with the Securities and Exchange Commission and
mailed to the stockholders of the Company.
4. A printed form of letter which may be sent to your clients
for whose account you hold Shares in your name or in the name of your
nominee with space provided for obtaining such clients' instructions
with regard to the Offer.
5. The Notice of Guaranteed Delivery to be used to accept the
Offer if certificates representing Shares are not immediately available
or if time will not permit all required documents to reach the
Depositary prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase) or if the procedures for book-entry transfer cannot
be completed on a timely basis.
6. Guidelines of the Internal Revenue Service for
Certification of Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to State Street Bank and Trust
Company, as Depositary.
Your attention is directed to the following:
1. The Offer Price is $17.50 per Share, net to the seller in
cash.
2. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT
THE OFFER AND THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE) ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS
APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND RECOMMENDS
THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
3. The Offer and withdrawal rights will expire at 5:00 P.M.,
New York City time, on Wednesday, June 17, 1998, unless the Offer is
extended.
4. The Offer is being made for all of the outstanding Shares.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a
number of Shares representing at least 66 2/3% of the total number of
outstanding Shares of the Company on a Fully Diluted Basis as of the
date the Shares are accepted for payment pursuant to the Offer. Holders
of 267,180 issued and outstanding Shares, constituting approximately
24.6% of the outstanding Shares and 27.4% of the Shares on a Fully
Diluted Basis, have agreed to tender their Shares in the Offer.
5. Stockholders who tender Shares will not be obligated to pay
brokerage fees, commissions or, except as set forth in Instruction 6 of
the Letter of Transmittal, transfer taxes on the purchase of Shares by
the Purchaser pursuant to the Offer.
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 pay for all
Shares which are validly tendered on or prior to the Expiration Date and not
theretofore withdrawn pursuant to the 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) certificates representing such Shares (or a
timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company, pursuant to the procedures
described in Section 3 of the Offer to Purchase), (ii) a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees (or, in connection with a book-entry transfer, an Agent's
Message (as defined in Section 3 of the Offer to Purchase)), and (iii) all other
documents required by the Letter of Transmittal.
2
<PAGE> 3
If holders of Shares wish to tender, but it is impracticable for them
to forward their certificates or other required documents prior to the
expiration of the Offer, a tender may be effected by following the guaranteed
delivery procedures specified under Section 3, "Procedure for Tendering Shares,"
in the Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker or
dealer or to any other person (other than the Information Agent) in connection
with the solicitation of tenders of Shares pursuant to the Offer. The 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 or cause to be paid any transfer taxes payable on the
transfer of Shares to it, except as otherwise provided in Instruction 6 of the
enclosed Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY, JUNE 17, 1998, UNLESS THE
OFFER IS EXTENDED.
Any inquiries you may have with respect to the Offer should be directed
to, and additional copies of the enclosed materials may be obtained by
contacting, the undersigned at (800) 566-9061 or (212)754-8000 (call collect).
Banks and brokerage firms please call (800)662-5200.
Very truly yours,
MORROW & CO., INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY PERSON AS AN AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY OR THE
INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY
STATEMENTS 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
SAGE LABORATORIES, INC.
AT
$17.50 NET PER SHARE
BY
FIL ACQUISITION CORP.,
A WHOLLY-OWNED SUBSIDIARY OF
FILTRONIC PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
WEDNESDAY, JUNE 17, 1998, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated May 19,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") relating to the offer by FIL Acquisition Corp.,
a Massachusetts corporation (the "Purchaser") and a wholly-owned subsidiary of
Filtronic plc, a public limited company organized under the laws of England and
Wales ("Parent"), to purchase all of the outstanding shares of common stock, par
value $.10 per share (the "Shares"), of Sage Laboratories, Inc., a Massachusetts
corporation (the "Company"), at a price of $17.50 per Share (the "Offer Price"),
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer. The Offer is being made in connection with the Agreement and
Plan of Merger, dated as of May 13, 1998, among Parent, the Purchaser and the
Company.
WE ARE THE HOLDER OF RECORD OF SHARES 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 FURNISHED TO YOU 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, pursuant to
the terms and conditions set forth in the Offer.
Your attention is directed to the following:
1. The Offer Price is $17.50 per Share, net to you in cash.
2. THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER
AND THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE) ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
3. The Offer and withdrawal rights will expire at 5:00 P.M., New York
City time, on Wednesday, June 17, 1998, unless the Offer is extended.
4. The Offer is being made for all of the outstanding Shares. The Offer
is conditioned upon, among other things, there being validly tendered and not
withdrawn prior to the expiration of the Offer a number of Shares representing
at least 66 2/3% of the total number of outstanding Shares of the Company on a
Fully Diluted Basis (as defined in the Offer to Purchase) as of the date the
Shares are accepted for payment pursuant to the Offer. Holders of 267,180 issued
and outstanding Shares, constituting approximately 24.6% of the outstanding
Shares and 27.4% of the Shares on a Fully Diluted Basis, have agreed to tender
their Shares in the Offer.
<PAGE> 2
5. Stockholders who tender Shares will not be obligated to pay
brokerage fees, commissions or, except as set forth in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please
complete, sign and return the instruction form set forth below. An envelope 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 set forth below. PLEASE FORWARD YOUR INSTRUCTIONS TO US AS SOON
AS POSSIBLE TO ALLOW US AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO
THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related
Letter of Transmittal and any supplements and amendments thereto. The Purchaser
is not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If the
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a
good faith effort to comply with any such state statute or seek to have such
statute declared inapplicable to the Offer. If, after such good faith effort,
the Purchaser cannot comply with any such state statute, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer will be deemed to be made on behalf of the Purchaser by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SAGE LABORATORIES, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated May 19, 1998, and the related Letter of Transmittal
(which together constitute the "Offer") relating to the offer by FIL Acquisition
Corp., a Massachusetts corporation (the "Purchaser") and a wholly-owned
subsidiary of Filtronic plc, a public limited company incorporated under the
laws of England and Wales, to purchase all of the outstanding shares of common
stock, par value $.10 per share (the "Shares"), of Sage Laboratories, Inc., a
Massachusetts corporation, at a price of $17.50 per Share, net to the seller in
cash.
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.
SIGN HERE
Number of Shares to be Tendered:*
Shares
------------- --------------------------------------------
--------------------------------------------
Signature(s)
Account Number:
------------- --------------------------------------------
Please print name(s) and address(es) here
Dated: , 1998
------------------- --------------------------------------------
Area Code and Telephone Number(s)
--------------------------------------------
Tax Identification or Social Security Number
- --------
* Unless otherwise indicated, it will be assumed that all of your Shares
held by us for your account are to be tendered in the Offer.
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
SAGE LABORATORIES, INC.
TO
FIL ACQUISITION CORP.,
A WHOLLY-OWNED SUBSIDIARY OF
FILTRONIC PLC
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This form, or one substantially equivalent hereto, must be used to accept
the Offer (as defined below) if certificates representing shares of common
stock, par value $.10 per share (the "Shares"), of Sage Laboratories, Inc., a
Massachusetts corporation, are not immediately available (or if the procedure
for book-entry transfer cannot be completed on a timely basis), or if time will
not permit all required documents to reach the Depositary on or prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase). Such form
may be delivered by hand or transmitted by facsimile transmission or mail to the
Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
STATE STREET BANK AND TRUST COMPANY
By First Class Mail:
State Street Bank and Trust Company
Corporate Reorganization
P.O. Box 9572
Boston, MA 02205-9572
By Express Mail or
Overnight Courier:
State Street Bank and Trust
Company
Corporate Reorganization
70 Campanelli Drive
Braintree, MA 02184
By Hand:
Securities Transfer and
Reporting Services, Inc.
c/o Boston EquiServe
Corporate Reorganization
55 Broadway, 3rd Floor
New York, NY 10006
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 form 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.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message (as defined in Section 3 of the Offer to Purchase) and
certificates representing the Shares to the Depositary within the time period
specified herein. Failure to do so could result in a financial loss to the
Eligible Institution.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to FIL Acquisition Corp., a Massachusetts
corporation and a wholly-owned subsidiary of Filtronic plc, a public limited
company organized under the laws of England and Wales, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated May 19, 1998,
(the "Offer to Purchase") and the related Letter of Transmittal (which together
constitute the "Offer"), receipt of which is hereby acknowledged, the number of
Shares specified below pursuant to the guaranteed delivery procedures set forth
in Section 3 of the Offer to Purchase.
Number of Shares __________________________
Certificate No(s). (if available) _________
___________________________________________
/ / CHECK BOX IF SHARES WILL BE
TENDERED BY BOOK-ENTRY TRANSFER.
Name of Tendering Institution:
___________________________________________
Account Number ____________________________
Dated _______________, 1998
Name(s) of Record Holder(s)
________________________________________________________________________________
(Please Type or Print)
Address(es)
________________________________________________________________________________
________________________________________________________________________________
(Zip Code)
Area Code and Tel. No(s).
________________________________________________________________________________
Signature(s)
________________________________________________________________________________
________________________________________________________________________________
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member in good standing of the Security Transfer
Agent's Medallion Program, the New York Stock Exchange Medallion Signature
Program or the Stock Exchange Medallion Program (each, an "Eligible
Institution"), (a) represents that the above named person(s) own(s) the Shares
tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (b) represents
that such tender of Shares complies with Rule 14e-4 under the Exchange Act, and
(c) guarantees delivery to the Depositary, at one of its addresses set forth
above, of certificates representing 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, in each case with
delivery of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees, or an Agent's Message
in the case of a book-entry transfer, and any other required documents, within
three Nasdaq National Market trading days after the date hereof.
____________________________________ ________________________________________
(Name of Firm) (Authorized Signature)
____________________________________ ________________________________________
(Address) (Title)
____________________________________ Name____________________________________
(Zip Code) (Please Type or Print)
____________________________________ Date______________________________, 1998
(Area Code and Tel. No.)
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES REPRESENTING SHARES SHOULD BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
<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 NAME AND
GIVE THE NAME AND EMPLOYER
SOCIAL SECURITY IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Individual The individual 7. Corporate The corporation
2. Two or more individuals The actual owner of the 8. Association, club, The organization
(joint account) account or, if combined religious, charitable,
funds, the first individual educational or other tax-
on the account(1) exempt organization
3. Custodian account of a The minor (2) 9. Partnership The partnership
minor (Uniform Gift to 10. A broker or registered The broker or nominee
Minors Act) nominee
4. a. The usual revocable The grantor-trustee(1) 11. Account with the The public entity
savings trust (grantor Department of Agriculture
is also trustee) in the name of a public
b. So-called trust account The actual owner(1) entity (such as a state or
that is not a legal or local government, school
valid trust under state district, or prison) that
law receives agricultural
5. Sole proprietorship The owner(3) program payments
6. A valid trust, estate,or The legal entity(4)
pension trust
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your social security
number or employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the identifying number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number, or Form
SS-4, Application for an Employer Identification Number, at the local office of
the Social Security Administration or the Internal Revenue Service and apply for
a number. United States resident aliens who cannot obtain a social security
number must apply for an ITIN (Individual Taxpayer Identification Number) on
Form W-7.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on payments of interest,
dividends and with respect to broker transactions include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an
individual retirement plan.
- The United States or any agency or instrumentality thereof.
- A state, the District of Columbia, a possession of the United
States, or any political subdivision or instrumentality thereof.
- A foreign government, or any a political subdivision, agency or
instrumentality thereof.
- An international organization or any agency or instrumentality
thereof.
- A dealer in securities or commodities required to register in the
United States, the District of Columbia, or a possession of the
United States.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust
described in section 4947.
- An entity registered at all times under the Investment Company Act
of 1940.
- A foreign central bank of issue.
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.
- Payments to partnerships not engaged in a trade or business in the
United States and which have at least one nonresident alien partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Payments made to a middleman known in the investment community as a
nominee or who is listed in the most recent publication of the
American Society of Corporate Secretaries, Inc., Nominee List.
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).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a middleman known in the investment community as a
nominee or who is listed in the most recent publication of the
American Society of Corporate Secretaries, Inc., Nominee List.
Exempt payees described above should file 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, AND RETURN IT TO THE PAYER. IF THE
PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE
FORM.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your 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.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE> 1
Filtronic plc ("Filtronic")
Filtronic, the designer and manufacturer of highly customized RF and microwave
electronic devices, announces that one of its wholly-owned subsidiaries has
signed an agreement dated 13 May 1998 to make an offer (the "Offer") for the
entire issued share capital of Sage Laboratories, Inc. ("Sage"). Sage, whose
shares are traded on NASDAQ, designs, manufactures and sells a broad range of
specialized RF and microwave components for commercial telecommunications,
space/satellite communications and defense electronics industries. Applications
include cellular base stations, point-to-point radio links, satellite
communications, aircraft landing and guidance systems, medical diagnostics and
treatment equipment, and radar and weapons guidance systems.
The Offer, which has been recommended by the board of Sage, will be made at U.S.
$17.50 per share in Sage, valuing the outstanding share capital of Sage at U.S.
$19.0 million. The consideration will be satisfied in cash from new bank
facilities.
In the nine months ended 28 March 1998, Sage reported income before provision
for income taxes of U.S. $574,000 (after a non-recurring cost of U.S. $258,000)
on sales of U.S. $7.3 million. In the year ended 30 June 1997, Sage reported
income before provision for income taxes of U.S. $1.1 million on sales of U.S.
$8.9 million and, as at 28 March 1998, it had net assets of U.S. $9.8 million
including cash of U.S. $4.5 million.
The board believes that the acquisition of Sage will benefit the existing
business of Filtronic, and in particular the recently acquired Filtronic
Components military business.
Sage has made considerable investment in its manufacturing facilities, which are
of a very high standard and include a Class 100 clean room and the board
believes that Sage can improve the utilization of these facilities following the
transfer of Filtronic Components' technology relating to advanced broadband
microwave amplifiers, extended range detector log video amplifiers and digital
frequency measurement systems.
The board believes that, through the transfer of technology from Filtronic
Components into Sage, Safe can use Filtronic Components' products to address
U.S. military business opportunities more successfully. As at 28 March 1998,
Sage had orders of U.S. $7 million and Filtronic Components had U.S.- sourced
orders of U.S. $2.4 million.
Following the acquisition by Filtronic, Sage will continue to be headed by its
current Chief Executive Officer and 23 percent shareholder, Carl Marguerite.
Sage's headquarters are located at Natick, Massachusetts. This facility, which
is large enough to accommodate expansion, comprises 30,000 square feet and is a
modern, freehold, high technology facility with engineering, manufacturing,
quality assurance, and sales and marketing activities. Additionally, Sage owns
an adjacent 25,000 square foot facility which is fully-let. Sage's wholly-owned
subsidiary, Sage Laboratories Active Microwave Inc., is based at Hollis, New
Hampshire, where it leases a 6,000 square foot property.
<PAGE> 2
The acquisition will not complete until after the current financial year end, 31
May 1998. The board expects that the income before taxes of Sage's existing
business will approximately equal the interest payments on the borrowings taken
on by Filtronic to fund the acquisition.
The acquisition is subject, inter alia, to the approval of Filtronic
shareholders in general meeting. A circular containing further details of the
acquisition and notice of an extraordinary general meeting will be posted to
Filtronic shareholders in due course.
13 May 1998
Enquiries
Filtronic plc
Processor David Rhodes
John Samuel
Panmure Gordon & Co. Limited
Tim Linacre
Erik Anderson
Binns & Co. Public Relations Limited
Peter Binns
2
<PAGE> 1
SAGE LABORATORIES, INC. LETTERHEAD
Contact: Carl A. Marguerite
SAGE LABORATORIES, INC.
(508) 653-0844
For Immediate Release
SAGE LABORATORIES ANNOUNCES ACQUISITION BY FILTRONIC plc AND
FISCAL 1998 THIRD QUARTER RESULTS
Natick, Massachusetts - May 13, 1998 - Sage Laboratories, Inc.
(NASDAQ:SLAB) announced that it has entered into a definitive agreement with
Filtronic plc, an English supplier of advanced telecommunications integrated
subsystems, under which Filtronic will acquire all of the outstanding Sage
shares for a cash purchase price of $17.50 per share. The closing market price
for Sage shares on May 12, 1998 was $12.50 per share.
The transaction will be in the form of a cash tender offer for the
outstanding Sage shares, planned to be commenced by Tuesday, May 19, 1998,
followed by a merger of Sage with a Filtronic subsidiary in which holders of any
untendered shares will receive the same cash consideration. The tender offer
will be open for 20 business days, subject to extension as provided in the
agreement. The transaction is subject to certain conditions, including the
tender of at least two-thirds of the outstanding Sage shares, approval by
Filtronic shareholders, obtaining necessary governmental clearances and other
customary closing conditions.
Carl A. Marguerite, Chairman and Chief Executive Officer of Sage, stated:
"This transaction will allow Sage shareholders to realize on the value we have
created over the years, while enhancing Sage's strong position in RF and
microwave components with the greater resources and broad base of technical
expertise of Filtronic".
Sage also announced net income of approximately $68,000, or $.06 per
diluted share, on sales of $2,660,000 for the quarter ended March 28, 1998. This
compares with net income of approximately $88,000, or $.07 per diluted share, on
sales of $2,178,000 for the same period a year ago. Included in the third
quarter of fiscal year 1998 is a one time pre-tax charge of approximately
$258,000 for severance costs associated with the termination of the Company's
former president. Without this charge, the third quarter would have had net
income of $220,000, or $.20 per diluted share.
For the nine months ended March 28, 1998, net income was $368,000, or $.34
per diluted share, on sales of $7,339,000, compared to net income of $615,000,
or $.52 per diluted share, on sales of $6,744,000 for the previous year.
<PAGE> 2
Sage Laboratories Active Microwave, Inc. (SLAM), the Company's
wholly-owned subsidiary, had net income of $18,520, or $.02 per diluted share,
on revenue of $288,000 for the quarter ended March 28, 1998. This compares to a
net loss of $45,000, or a net loss of $.04 per diluted share, on revenue of
$144,000 for the same period a year ago.
For the nine months ended March 28, 1998, SLAM had a net loss of $10,000,
or $.01 per share, on revenue of $605,000, compared to a net loss of $138,000,
or $.12 per share, on revenue of $457,000 for the same period a year ago.
In his message to the stockholders, Carl A. Marguerite also reported that
gross profit as a percentage of sales was approximately 37% for the nine months
ended March 28, 1998, compared to approximately 40% for the same period a year
ago. The 3% decline in gross profit percentage is attributed to reduced margins
on certain engineering programs and increased research and development expense
of $140,000. He further indicated that gross profit for SLAM for the nine months
ended March 28, 1998 was $116,000, compared to a negative gross profit of
$57,000 for the same period a year ago. Mr. Marguerite also pointed out that it
is important to note that this is the second quarter SLAM has shown a positive
net income.
Total orders received for the Company were $7,629,000, including $656,000
from SLAM, for the nine months ended March 28, 1998. This compares to
$7,351,000, including $695,000 from SLAM, for the same period a year ago. The
Company's backlog at the end of the quarter was $5,751,000, including $652,000
for SLAM. Backlog for the previous year was $5,202,000, including $504,000 for
SLAM.
The comments in this press release include forward-looking statements
within the meaning of Section 27a of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934, including comments as to management's
views as to the future of SLAM. The results of these undertakings depend on
numerous factors, including acceptance by third parties and actual results could
differ materially from those projected or implied in the forward looking
statements.
Sage Laboratories, Inc. manufactures an extensive line of active and
passive microwave components and subsystems used in commercial, space and
military applications.
2
<PAGE> 1
[KPMG Logo]
KPMG Inc. Suite 300 Commerce Court West Telephone (416) 777-8500
PO Box 31 Stn Commerce Court Telefax (416) 777-3364
Toronto Ontario M5L 1B2 Telefax (416) 777-8818
http://www.kpmg.ca
May 13, 1998
Board of Directors
Sage Laboratories, Inc.
11 Huron Drive
East Natick Industrial Park
East Natick, Massachusetts 01760
Gentlemen:
We understand that Sage Laboratories, Inc. ("Sage") is considering entering into
an Agreement and Plan of Merger pursuant to which FIL Acquisition Corp. ("FIL"),
a wholly-owned subsidiary of Filtronic plc ("Filtronic"), will commence a tender
offer for all of Sage's outstanding common stock for a cash consideration of
$17.50 per share, net to the seller, to be followed as soon as practicable by a
merger of Sage and FIL whereby each issued and outstanding share of Sage (other
than those shares owned by Sage, Filtronic, FIL or dissenting shareholders) will
be converted into the right to receive the cash consideration per share in the
tender offer (collectively, the "Transaction"). You have supplied us with a
draft of the Agreement and Plan of Merger by and among Filtronic plc, FIL, Inc.
and Sage Laboratories, Inc. dated as of May 13, 1998 in substantially the form
to be executed by the parties (the "Merger Agreement").
You have asked us to render our opinion as to whether the cash consideration to
be received by the public stockholders of Sage in the Transaction is fair, form
a financial point of view to the public stockholders of Sage.
In the course of our analyses for rendering this opinion, we have:
1. reviewed the Merger Agreement;
2. reviewed Sage's Annual Reports on Form 10-K for the fiscal years ended June
30, 1993 through 1997, its Quarterly Reports on Form 10-Q for the periods
ended September 27, 1997, and December 27, 1997 and its unaudited interim
financial statements for the periods ended March 29, 1997 and March 28,
1998;
<PAGE> 2
The Board of Directors of Sage Laboratories, Inc.
Page 2
3. reviewed certain operating and financial information provided to us by
management relating to Sage's business and prospects, including its budget
for the year ending June 30, 1998;
4. met with Sage's senior management to discuss its operations, historical
financial statements and future prospects;
5. visited Sage's facilities in East Natick, Massachusetts;
6. reviewed the historical market price of the common stock of Sage;
7. reviewed publicly available financial data and stock market performance
data of public companies which we deemed appropriate;
8. reviewed the terms of recent acquisition of companies we deemed
appropriate; and
9. conducted such other studies, analyses, inquiries, and investigations as we
deemed appropriate for the purposes of this opinion.
In rendering our opinion, we have relied upon and assumed, without any
obligation of independent verification, the accuracy, completeness and fairness
of all financial and other information that was available to us form public
sources and all the financial and other information provided to us by Sage or
its representatives. We have further relied upon the assurances of the
management of Sage that they are unaware of any facts that would make the
information Sage or its representatives provided to us incomplete or misleading.
With respect to the fiscal year 1998 budget supplied to us, we assumed that, as
of the date supplied to us, it was reasonably prepared on bases reflecting the
best currently available estimates and judgments of the management of Sage. In
arriving at our opinion, we have not performed any independent appraisal of the
assets of Sage. Our use of Sage's fiscal year 1998 budget does not constitute an
examination or compilation of prospective financial statements in accordance
with standards established by the American Institute of Certified Public
Accountants ("AICPA"). We do not express an opinion or any other form of
assurance on the reasonableness of the underlying assumptions or whether any of
the prospective financial statements, if used, are presented in conformity with
AICPA presentation guidelines. Further, there will usually be differences
between prospective and actual results because events and circumstances
frequently do not occur as expected and those differences may be material.
<PAGE> 3
The Board of Directors of Sage Laboratories, Inc.
Page 3
Our opinion is necessarily based on economic, market, financial and other
conditions as the exist on, and on the information made available to us as of,
the date of this letter. We have relied as to all legal matters on the advice of
counsel to Sage.
The opinion expressed herein is provided for the information and assistance of
the Board of Directors of Sage in connection with its consideration of the
Transaction. Our opinion, as expressed below, does not constitute a
recommendation to the stockholders of Sage as to whether or not to tender their
shares in the tender offer or vote in favor of the merger.
Based on the foregoing, it is our opinion that the cash consideration to be
received by the public stockholders of Sage in the Transaction is fair, from a
financial point of view, to the public stockholders of Sage.
Very truly yours,
/s/ KPMG Inc.
KPMG Inc.
<PAGE> 1
================================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FILTRONIC PLC,
FIL ACQUISITION CORP.
AND
SAGE LABORATORIES, INC.
DATED AS OF MAY 13, 1998
================================================================================
<PAGE> 2
Table OF CONTENTS
Page
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ARTICLE I
THE OFFER
SECTION 1.1. Offer.......................................................... 2
SECTION 1.2. Company Actions................................................ 3
ARTICLE II
THE MERGER
SECTION 2.1. The Merger..................................................... 4
SECTION 2.2. Closing........................................................ 5
SECTION 2.3. Effective Time of the Merger................................... 5
SECTION 2.4. Effects of the Merger.......................................... 5
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
SECTION 3.1. Conversion of Shares........................................... 5
SECTION 3.2. Surrender and Payment.......................................... 6
SECTION 3.3. Dissenting Shares.............................................. 7
SECTION 3.4. Stock Options and Stock Plans.................................. 7
SECTION 3.5. No Further Rights in Shares.................................... 9
SECTION 3.6. No Liability................................................... 9
SECTION 3.7. Withholding Rights............................................. 9
SECTION 3.8. Lost Certificates.............................................. 9
ARTICLE IV
THE SURVIVING CORPORATION
SECTION 4.1. Articles of Organization....................................... 9
SECTION 4.2. By-laws........................................................ 9
SECTION 4.3. Directors and Officers......................................... 10
SECTION 4.4. Subsequent Actions............................................. 10
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 5.1. Organization, Standing and Corporate Power..................... 10
SECTION 5.2. Subsidiaries and Minority Affiliates........................... 11
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<PAGE> 3
Page
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SECTION 5.3. Capital Structure.............................................. 11
SECTION 5.4. Authority; Noncontravention.................................... 12
SECTION 5.5. SEC Documents; Financial Statements; No Undisclosed
Liabilities.................................................... 13
SECTION 5.6. Disclosure Documents........................................... 14
SECTION 5.7. Property....................................................... 15
SECTION 5.8. Absence of Certain Changes or Events........................... 15
SECTION 5.9. Litigation..................................................... 17
SECTION 5.10. Compliance with Laws, Etc..................................... 17
SECTION 5.11. Benefit....................................................... 17
SECTION 5.12. Tax Matters................................................... 20
SECTION 5.13. Debt Instruments.............................................. 21
SECTION 5.14. Insurance..................................................... 22
SECTION 5.15. Labor Matters................................................. 22
SECTION 5.16. Business Relationships; No Restrictive Agreements............. 23
SECTION 5.17. Interests of Officers and Directors........................... 23
SECTION 5.18. Intellectual Property......................................... 23
SECTION 5.19. Environmental Matters......................................... 24
SECTION 5.20. Brokers....................................................... 25
SECTION 5.21. Absence of Certain Commercial Practices....................... 25
SECTION 5.22. Warranty Claims............................................... 25
SECTION 5.23. Product Liability............................................. 25
SECTION 5.24. Backlog....................................................... 26
SECTION 5.25. Inventories................................................... 26
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 6.1. Organization, Standing and Corporate Power..................... 26
SECTION 6.2. Authority; Noncontravention.................................... 26
SECTION 6.3. Disclosure Documents........................................... 27
SECTION 6.4. Brokers........................................................ 28
SECTION 6.5. Financial Resources............................................ 28
SECTION 6.6. Merger Sub..................................................... 28
SECTION 6.7. Litigation..................................................... 28
ARTICLE VII
COVENANTS OF THE COMPANY
SECTION 7.1. Conduct of Business............................................ 28
SECTION 7.2. No Solicitation................................................ 30
SECTION 7.3. Access to Information.......................................... 32
SECTION 7.4. Company SEC Documents.......................................... 32
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<PAGE> 4
Page
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SECTION 7.5. Notification of Certain Matters................................ 33
SECTION 7.6. Accountants.................................................... 33
ARTICLE VIII
COVENANTS OF PARENT AND MERGER SUB
SECTION 8.1. Confidentiality................................................ 33
SECTION 8.2. Obligations of Merger Sub...................................... 34
SECTION 8.3. Voting of Shares............................................... 34
SECTION 8.4. Director and Officer Liability................................. 34
SECTION 8.5. Notice to Company of Certain Events............................ 35
ARTICLE IX
COVENANTS AND FURTHER AGREEMENTS OF PARENT AND THE COMPANY
SECTION 9.1. Reasonable Efforts; Notification; Further Actions.............. 35
SECTION 9.2. Public Announcements........................................... 36
SECTION 9.3. Directors...................................................... 37
SECTION 9.4. Employees...................................................... 38
SECTION 9.5. Company Stockholder Meeting.................................... 38
ARTICLE X
CONDITIONS TO THE MERGER
SECTION 10.1. Conditions to the Obligations of Each Party................... 39
SECTION 10.2. Conditions to the Obligations of Parent and Merger Sub........ 40
ARTICLE XI
TERMINATION
SECTION 11.1. Termination................................................... 40
SECTION 11.2. Effect of Termination......................................... 42
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Notices....................................................... 42
SECTION 12.2. Survival of Representations and Warranties.................... 43
SECTION 12.3. Entire Agreement; Amendments; No Waivers...................... 43
SECTION 12.4. Expenses...................................................... 44
SECTION 12.5. Successors and Assigns; Parties in Interest................... 45
SECTION 12.6. Governing Law; Jurisdiction................................... 46
SECTION 12.7. Counterparts; Effectiveness; Interpretation................... 46
-iii-
<PAGE> 5
INDEX OF DEFINED TERMS
POSITION OF
DEFINED TERM DEFINITION
- ------------ ----------
Accountant's Letter............................................. Section 7.6
Acquisition Proposal............................................ Section 7.2(f)
Action.......................................................... Section 5.9
Agreement....................................................... Preamble
Articles of Merger.............................................. Section 2.2
Articles of Organization........................................ Section 5.1
BCL............................................................. Recitals
Benefit Plans................................................... Section 5.8
Certificates.................................................... Section 3.2(b)
Closing......................................................... Section 2.2
Code............................................................ Section 5.11(a)
Company......................................................... Preamble
Company Disclosure Schedule..................................... Article V
Company Intellectual Property Rights............................ Section 5.18(a)
Company Material Adverse Effect................................. Section 5.1
Company Options................................................. Section 3.4
Company Proxy Statement......................................... Section 5.6(a)
Company Stockholder Approval.................................... Section 5.4(a)
Company Stockholder Meeting..................................... Section 5.4(a)
Consents........................................................ Section 5.4(d)
Constituent Corporations........................................ Section 2.1
Controlled Group Liability...................................... Section 5.11(a)
Dissenting Shares............................................... Section 3.3(a)
Effective Time.................................................. Section 2.3
Environmental Laws.............................................. Section 5.19(a)
Environmental Permits........................................... Section 5.19(b)
ERISA........................................................... Section 5.11(a)
ERISA Affiliate................................................. Section 5.11(a)
Exchange Act.................................................... Section 1.1(b)
Exchange Agent.................................................. Section 3.2(a)
Exchange Fund................................................... Section 3.2(a)
Expenses........................................................ Section 12.4(a)
Exon-Florio Provision........................................... Section 5.4(d)
GAAP............................................................ Section 5.5(b)
Governmental Entity............................................. Section 5.4(d)
Hazardous Substances............................................ Section 5.19(a)
HSR Act......................................................... Section 5.4(d)
Indebtedness.................................................... Section 5.13
Indemnified Parties............................................. Section 8.4
Independent Directors........................................... Section 9.3(a)
Inside Stockholders............................................. Recitals
IRS............................................................. Section 5.11(c)
Leases.......................................................... Section 5.7(b)
Liens........................................................... Section 5.2
Merger.......................................................... Recitals
Merger Consideration............................................ Section 3.1(c)
Merger Sub...................................................... Preamble
Minimum Condition............................................... Exhibit 1.1(j)
Multiemployer Plan.............................................. Section 5.11(h)
Multiple Employer Plan.......................................... Section 5.11(h)
Offer........................................................... Recitals
Offer Documents................................................. Section 1.1(b)
Offer Price..................................................... Recitals
Options......................................................... Section 5.3
Option Plans.................................................... Section 3.4(a)
Parent.......................................................... Preamble
Parent Material Adverse Effect.................................. Section 6.2(c)
Person.......................................................... Section 3.2(c)
Plans........................................................... Section 5.11(b)
Qualified Plans................................................. Section 5.11(d)
Schedule 14D-1.................................................. Section 1.1(b)
Schedule 14D-9.................................................. Section 1.2(a)
SEC............................................................. Section 1.1(a)
SEC Documents................................................... Section 5.5(a)
Securities Act.................................................. Section 5.5(a)
Shares.......................................................... Recitals
Stockholder Agreements.......................................... Recitals
Subsidiary...................................................... Section 5.1
Superior Proposal............................................... Section 9.5(b)
Surviving Corporation........................................... Section 2.1
Taxes........................................................... Section 5.12(h)
Terminating Company Event....................................... Section 11.1(g)
Terminating Parent Event........................................ Section 11.1(h)
-iv-
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of May
13, 1998, by and among Sage Laboratories, Inc., a Massachusetts corporation (the
"Company"), Filtronic plc, a public limited company incorporated under the laws
of England and Wales ("Parent"), and FIL Acquisition Corp., a Massachusetts
corporation and a wholly owned subsidiary of Parent ("Merger Sub").
RECITALS
WHEREAS, in furtherance of the acquisition of the Company by
Parent on the terms and subject to the condition set forth in this Agreement,
Parent proposes that Parent or Merger Sub commence a tender offer (as it may be
amended from time to time as permitted under this Agreement, the "Offer") to
purchase all of the outstanding shares of the common stock, par value $.10 per
share, of the Company (the "Shares"), at a purchase price of $17.50 per Share,
net to the seller in cash (the "Offer Price");
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have approved the Offer and the merger of Merger Sub and the
Company (the "Merger"), upon the terms and subject to the conditions set forth
in this Agreement and the Massachusetts Business Corporation Law (the "BCL"),
whereby each issued and outstanding Share, other than Shares owned directly or
indirectly by Parent or the Company and Dissenting Shares (as hereinafter
defined), will be converted into the right to receive the price paid in the
Offer;
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe the various conditions to the
consummation of the Offer and the Merger; and
WHEREAS, as a condition to the willingness of, and inducement to,
Parent and Merger Sub to enter into this Agreement and consummate the
transactions contemplated hereby, Parent has required that Carl A. Margarite and
certain other officers and directors of the Company who own Shares (the "Inside
Stockholders") execute and deliver on the date hereof certain Stockholder
Agreements among each of the Inside Stockholders, Parent and Merger Sub (the
"Stockholder Agreements"), pursuant to which among other things, each of the
Inside Stockholders has agreed to vote the Shares beneficially owned by such
Inside Stockholder in accordance with the Stockholder Agreement, to grant to
Parent an irrevocable proxy to vote the Shares and to sell all Shares then
owned by such Stockholder to Parent or Merger Sub, as applicable, in accordance
with the Offer and to make certain payments to Parent under certain
circumstances;
<PAGE> 7
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements herein
contained, the parties hereto, in tending to be legally bound, hereby agree as
follows:
ARTICLE I
THE OFFER
Section 1.1. Offer.
(a) Subject to the terms and conditions of this Agreement, as
promptly as reasonably practicable after the date hereof, but in no event later
than five business days after the public announcement of the execution of this
Agreement, Parent or Merger Sub will commence the Offer. Parent or Merger Sub
will conduct the Offer in compliance in all material respects with applicable
laws, accept and pay for Shares validly tendered and not withdrawn and
consummate the Offer, all on the terms and subject to the conditions thereof, as
soon as legally permissible. The initial expiration date of the Offer will be
the 20th business day following the Offer. Subject to the conditions set forth
in Exhibit 1.1, Parent or Merger Sub, as the case may be, will pay, as promptly
as reasonably practicable after the expiration of the Offer for all Shares duly
tendered and not withdrawn. Parent expressly reserves the right to waive any
such condition, to increase the price per Share payable in the Offer, and to
make any other changes in the terms and conditions of the Offer; provided,
however, that no change may be made, without the consent of the Company, which
decreases the price per Share or form of consideration payable in the Offer,
reduces the maximum number of Shares to be purchased in the Offer, waives or
reduces below a majority of the outstanding Shares on a fully diluted basis (as
set forth in Exhibit 1.1) the Minimum Condition, imposes conditions to the Offer
other than those set forth in Exhibit 1.1 or extends the Offer. Notwithstanding
the foregoing, Parent may, without the consent of the Company, (i) extend the
Offer beyond the scheduled expiration date if, at the scheduled expiration date
of the Offer, any of the conditions to Parent's obligation to accept for
payment, and to pay for, the Shares, shall not be satisfied or waived, (ii)
extend the Offer for any period required by any rule, regulation, or
interpretation of the Securities and Exchange Commission (the "SEC") or the
staff thereof, applicable to the Offer or (iii) extend the Offer for an
aggregate period of not more than 10 business days beyond the latest applicable
date that would otherwise be permitted under clause (i) or (ii) of this
sentence, if as of such date all of the conditions to Parent's obligations to
accept for payment, and to pay for, the Shares are satisfied or waived, but the
number of Shares validly tendered and not withdrawn, or purchased pursuant to
the Stockholder Agreements, pursuant to the Offer, is less than 90% of the
outstanding Shares on a fully diluted basis (as set forth in Exhibit 1.1).
(b) On the date of commencement of the Offer, Parent and Merger
Sub will file with the SEC, a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer, which shall contain an offer to
purchase, a related letter of transmittal and the other documents used in the
Offer (the "Offer Documents"). Parent and Merger Sub agree that the Schedule
14D-1, including the Offer Documents, shall comply in all material respects with
the requirements of the Securities Exchange Act of 1934, as amended, and the
rules and
2
<PAGE> 8
regulations promulgated thereunder (the "Exchange Act") and 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
therein, in light of the circumstances under which they were made, not
misleading, except that no representation or warranty is made by Parent or
Merger Sub with respect to information supplied by the Company or any of its
stockholders specifically for inclusion or incorporation by reference in the
Offer Documents. Each of Parent, Merger Sub and the Company agree promptly to
correct any information provided by it for use in the Schedule 14D-1 or Offer
Documents, if and to the extent that such information shall have become false or
misleading in any material respect, and Parent and Merger Sub further agree to
take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed
with the SEC and the Offer Documents as so corrected to be disseminated to the
Company's stockholders, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given the
opportunity to review the Schedule 14D-1, including the Offer Documents, prior
to their being filed with the SEC. Neither the Parent nor Merger Sub shall file
any such documents with the SEC without the approval of the Company (which shall
not be unreasonably withheld.) Parent and Merger Sub agree to provide the
Company and its counsel any comments Parent, Merger Sub or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
Section 1.2. Company Actions.
(a) The Company hereby approves of, and consents to, the Offer and
represents that the Board of Directors of the Company, at a meeting duly called
and held, has unanimously (i) determined that the terms of the Offer and the
Merger are fair to the holders of the Shares and the Merger is in the best
interests of the Company and the stockholders of the Company, (ii) approved this
Agreement, the Offer and the Merger, and recommended acceptance of the Offer by
the holders of the Shares and the tender of their Shares pursuant to the Offer
and approval of the Agreement (including the Merger) by the Company's
stockholders, if required, and approving the acquisition of the Shares pursuant
to the Offer and the other transactions contemplated by this Agreement. The
Company has been advised by each of its directors and executive officers that
each such person currently intends to tender all Shares owned by such persons
pursuant to the Offer. On the date the Schedule 14D-1 is filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement with
respect to the Offer (the "Schedule 14D-9") containing, subject to the terms of
this Agreement, the recommendation described in this Section 1.2(a) and shall
mail the Schedule 14D-9 to the stockholders of the Company. The Schedule 14D-9
shall comply, in all material respects, with the requirements of the Exchange
Act and other applicable laws, and on the date filed with the SEC and on the
date first published, sent or given to the Company's stockholders, 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
therein, in light of the circumstances under which they were made, not
misleading, except that no representation or warranty is made by the Company
with respect to information supplied by Parent or Merger Sub specifically for
inclusion in the Schedule 14D-9. Each of the Company, Parent and Merger Sub
agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that
3
<PAGE> 9
such information shall have become false or misleading in any material respect,
and the Company further agrees to take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or
supplemented, to be filed with the SEC and disseminated to the Company's
stockholders, in each case, as and to the extent required by applicable federal
securities laws. Parent and its counsel shall be given an opportunity to review
the Schedule 14D-9 prior to its being filed with the SEC. The Company shall not
file the Schedule 14D-9 with the SEC without the approval of the Parent (which
shall not be unreasonably withheld). The Company agrees to provide Parent and
its counsel any comments the Company or its counsel, may receive from the SEC or
its staff with respect to the Schedule 14D-9, promptly after the receipt of such
comments.
(b) In connection with the Offer and the Merger, the Company will
cause the transfer agent for the Shares to furnish promptly to Parent and Merger
Sub a list, as of a recent date, of the record holders of Shares and their
addresses, as well as mailing labels containing the names and addresses of all
record holders of Shares as of a recent date and of those Persons (as
hereinafter defined) becoming record holders subsequent to such date, together
with copies of all lists of stockholders, security position listings and
computer files, and all other information in the Company's possession or control
regarding the beneficial owners of Shares, and shall furnish to Parent and
Merger Sub such information and assistance (including updated lists of
stockholders, security position listings and computer files) as Parent may
reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable law, and except as such steps are
necessary to disseminate the Offer Documents or (if required) the Proxy
Statement (as hereinafter defined) (i) Parent and Merger Sub will hold in
confidence the information contained in such labels and listings, (ii) use such
information only in connection with the Offer and the Merger and (iii) if this
Agreement shall be terminated in accordance with Article XI, deliver to the
Company all copies of such information in the possession of Parent or Merger Sub
or the possession of their respective agents or representatives.
ARTICLE II
THE MERGER
Section 2.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the BCL, at the
Effective Time (as hereinafter defined), Merger Sub shall be merged with and
into the Company. At the Effective Time, the separate corporate existence of
Merger Sub shall cease, and the Company (i) shall continue as the surviving
corporation as a direct or indirect wholly owned Subsidiary (as hereinafter
defined) of Parent (Merger Sub and the Company are sometimes hereinafter
referred to as "Constituent Corporations" and, the surviving corporation in the
Merger is sometimes hereinafter referred to as the "Surviving Corporation") and
(ii) shall succeed to and assume all the rights and obligations of Merger Sub in
accordance with the BCL. At the election of Parent, the Company may be merged
into Merger Sub, in which event, the reference to "Surviving Corporation"
shall mean Merger Sub.
4
<PAGE> 10
Section 2.2. Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 11.1, and subject to the satisfaction or waiver of the
conditions set forth in Article X, the closing of the Merger (the "Closing")
shall take place at 10:00 a.m. on the second business day after satisfaction or
waiver of the conditions set forth in Article X, at the offices Kaye, Scholer,
Fierman, Hays & Handler, LLP, 425 Park Avenue, New York, New York 10022, unless
another date, time or place is agreed to in writing by the parties hereto. At
the time of the Closing, the Company and Merger Sub will cause the Merger to be
consummated by filing articles of merger (the "Articles of Merger") with the
Secretary of State of the Commonwealth of Massachusetts as soon as practicable
on such date, in such form as required by, and executed in accordance with the
relevant provisions of the BCL and shall make all other filings or recordings
required by the BCL in connection with the Merger.
Section 2.3. Effective Time of the Merger. The Merger shall,
subject to the BCL, become effective as of such date and time as the Articles of
Merger is duly filed with the Secretary of State of the Commonwealth of
Massachusetts or at such later date and time as is specified in the Articles of
Merger (the "Effective Time").
Section 2.4. Effects of the Merger. From and after the Effective
Time, the Surviving Corporation shall possess all the property, rights,
privileges, immunities, powers and franchises and be subject to all of the
debts, restrictions, liabilities and duties of the Company and Merger Sub, all
as provided under the BCL.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
Section 3.1. Conversion of Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holder of any Shares or any shares of capital stock of Merger
Sub:
(a) each Share owned by (i) the Company, (ii) Parent or Merger Sub
or (iii) any Subsidiary of the Company, Parent or Merger Sub
immediately prior to the Effective Time shall be canceled and no
payment shall be made with respect thereto;
(b) each share of common stock of Merger Sub outstanding
immediately prior to the Effective Time shall be converted into and
become one fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation and shall constitute
the only outstanding shares of capital stock of the Surviving
Corporation; and
5
<PAGE> 11
(c) except as otherwise provided in Section 3.1(a) or as provided
in Section 3.3 with respect to Dissenting Shares (as hereinafter
defined), each Share issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive in cash the
price paid in the Offer (the "Merger Consideration").
Section 3.2. Surrender and Payment. (a) Prior to the Effective
Time, Parent shall appoint a bank or trust company reasonably satisfactory to
the Company (the "Exchange Agent") for the purpose of exchanging certificates
representing Shares for the Merger Consideration. Parent will, or will cause
Merger Sub to, make available to the Exchange Agent, as needed, the Merger
Consideration to be paid in respect of the Shares (the "Exchange Fund").
Promptly after the Effective Time, Parent will send, or will cause the Exchange
Agent to send, to each holder of Shares at the Effective Time a letter of
transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the certificates representing Shares to the Exchange Agent). The
Exchange Agent shall, pursuant to irrevocable instructions, make the payments
provided in this Section 3.2. The Exchange Fund shall not be used for any other
purpose, except as provided in this Agreement.
(b) Each holder of the Shares that have been converted into a
right to receive the Merger Consideration, upon surrender to the Exchange Agent
of a certificate or certificates representing such Shares (the "Certificates"),
together with a properly completed letter of transmittal covering such Shares
and other customary documentation, will be entitled to receive the Merger
Consideration, payable in respect of such Shares. As of the Effective Time, all
such Shares shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
previously representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration, without
interest, upon surrender of the certificates representing such Shares, as
contemplated hereby.
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a Person other than the
registered holder of such Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. For purposes of
this Agreement, "Person" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
(d) After the Effective Time, there shall be no further
registration of transfers of Shares. If, after the Effective Time, certificates
representing Shares are presented to the
6
<PAGE> 12
Surviving Corporation, they shall be canceled and exchanged for the
consideration provided for, and in accordance with the procedures set forth in
this Article III.
(e) Any portion of the Exchange Fund made available to the
Exchange Agent pursuant to this Agreement that remains unclaimed by the holders
of Shares six months after the Effective Time shall be returned to Parent, upon
Parent's demand, and any such holder who has not exchanged his Shares for the
Merger Consideration in accordance with this Section 3.2 prior to that time
shall thereafter look only to Parent for payment of the Merger Consideration in
respect of his Shares.
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 3.2(a) to pay for Shares for which the right
to a determination of fair market value, as contemplated by Section 3.3, has
been perfected shall be returned to Parent upon Parent's demand.
Section 3.3. Dissenting Shares. (a) Notwithstanding anything in
this Agreement to the contrary, Shares that are issued and outstanding
immediately prior to the Effective Time and which are held by holders who have
not voted in favor of, or consented to, the Merger and who shall have delivered
a written notice of objection and demand for appraisal of such Shares in the
time and manner provided in Sections 86 to 98, inclusive, of the BCL and shall
not have failed to perfect or shall not have effectively withdrawn or lost their
rights to appraisal and payment under the BCL (the "Dissenting Shares") shall
not be converted into the right to receive the Merger Consideration, but such
holders shall no longer retain any rights of a stockholder of the Company and
the Surviving Corporation, except those provided in the BCL, and such holders
shall be entitled to receive the consideration as shall be determined pursuant
to Section 89 of the BCL: provided, however, that, if any such holder shall have
failed to perfect or shall have effectively withdrawn or lost his, her or its
right to appraisal and payment under the BCL, such holder's Shares shall
thereupon be deemed to have been converted, at the Effective Time, into the
right to receive the Merger Consideration set forth in Section 3.l(c) of this
Agreement, without any interest thereon.
(b) The Company shall give Parent and Merger Sub (i) prompt notice
of any notices of objection and demands for appraisal pursuant to Section 86 of
the BCL received by the Company, withdrawals of such demands and any other
instruments served pursuant to the BCL and received by the Company, and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the BCL. The Company shall not, except with the prior
written consent of Parent, make any payment with respect to any such demands for
appraisal or offer to settle any such demands.
Section 3.4. Stock Options and Stock Plans.
(a) Each option to purchase Shares granted pursuant to the Option
Plans and outstanding immediately prior to the Effective Time shall in
accordance with their terms, at the
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Effective Time, become the right to receive, upon exercise thereof as provided
in the option, the Merger Consideration for each Share subject to such option.
(b) Parent and the Company shall take all actions necessary to
provide that, at the Effective Time, each Company Option (as hereinafter
defined) surrendered for cash by the holder thereof shall be canceled. In
consideration of such cancellation, and except to the extent that Parent or
Merger Sub and the holder of any such Company Option otherwise agree, Parent
shall pay to each such holder of Company Options an amount in cash in respect
thereof equal to the product of (1) the excess, if any, of the Merger
Consideration over the per share exercise price thereof and (2) the number of
Shares subject thereto, immediately prior to the Effective Time, less applicable
withholding taxes (the "Option Consideration"). "Company Option" means any
option to purchase Shares granted pursuant to the 1997 Incentive Stock Option
Plan and Director Stock Option Plan (collectively, the "Option Plans") to the
extent that it is outstanding, fully vested and exercisable immediately prior to
the Effective Time (and has not expired or been previously exercised).
(c) Upon receipt of the Option Consideration, each Company Option
shall be canceled. The surrender of a Company Option to the Surviving
Corporation in exchange for the Option Consideration shall be deemed a release
of any and all rights the holder had or may have had in respect of such Company
Option.
(d) Each exercisable or non-exercisable option with an exercise
price greater than the Merger Consideration that is not surrendered for
cancellation shall, at the Effective Time, be deemed canceled, and in
consideration of the cancellation of such options, holders of such options shall
be granted options to purchase the number of ordinary shares of Parent,
determined by multiplying the number of such canceled options by the exercise
price per Share of each such canceled option and dividing the result by the then
market value of an ordinary share of Parent at the Effective Time. The exercise
price of each such new option shall be the then market value of an ordinary
share of Parent at the Effective Time. Each holder of an exercisable or
non-exercisable option with an exercise price equal to or less than the Merger
Consideration that is not surrendered for cancellation shall, at the Effective
Time, be given the opportunity to convert such options into options to purchase
ordinary shares of Parent, determined by multiplying the number of such options
by the Merger Consideration and dividing the result by the then market value of
an ordinary share of Parent as of the Effective Time. The exercise price of each
such new option shall be determined by multiplying the exercise price of each
such non-surrendered option at the Effective Time, by a fraction, the numerator
of which is the then fair market value of the ordinary shares of Parent at the
Effective Time and the denominator of which is the Merger Consideration.
Notwithstanding the foregoing. Parent shall not be required to take any action
that would require registration under the Securities Act or cause it to violate
such Securities Act or any applicable state securities law, but Parent shall
take such action as may be reasonable to provide such conversion opportunity on
or following the Effective Time without having to register under or violate the
Securities Act or such other law.
(e) Except as otherwise agreed to by the parties: (i) the Option
Plans shall terminate as of the Effective Time and the provisions in any other
plan, program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company shall be canceled as of
the Effective Time and (ii) the Company shall take all commercially reasonable
action in an effort to provide that following the Effective Time no participant
in any stock option plans or other plans, programs or arrangements shall have
any right thereunder to acquire equity securities of the Company or the
Surviving Corporation and to terminate all such plans.
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Section 3.5. No Further Rights in Shares. All Merger Consideration
paid upon the acceptance of tendered and not withdrawn Shares, in accordance
with the terms of the Offer, shall be deemed to have been paid in full
satisfaction of all rights pertaining to such Shares.
Section 3.6. No Liability. Neither Parent nor the Surviving
Corporation shall be liable to any holder of Shares for any cash delivered to a
public official pursuant to any abandoned property, escheat or similar law.
Section 3.7. Withholding Rights. Each of the Surviving Corporation
and Parent shall be entitled to deduct and withhold from the consideration,
otherwise payable pursuant to this Agreement to any Person, such amounts as is
required to deduct and withhold with respect to the making of such payment under
the Code (as hereinafter defined), or any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by the Surviving Corporation
or Parent, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to a Person in respect of which
such deduction and withholding was made by the Surviving Corporation or Parent.
Section 3.8. Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will pay the Merger Consideration to the registered owner of
such Shares.
ARTICLE IV
THE SURVIVING CORPORATION
Section 4.1. Articles of Organization. (a) The articles of
organization of the corporation that will be the Surviving Corporation as in
effect immediately prior to the Effective Time shall be amended as of the
Effective Time in such manner as the Parent shall determine. As so amended, such
Articles of Organization shall be the Articles of Organization of the Surviving
Corporation, until thereafter changed or amended, as provided therein or by
applicable law.
Section 4.2. By-laws. The by-laws of Merger Sub in effect at the
Effective Time shall be the by-laws of the Surviving Corporation until amended
or repealed as provided therein and in accordance with the Surviving
Corporation's articles of organization and applicable law.
Section 4.3. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law or until their earlier death, resignation or removal, the
directors of Merger Sub and the officers of the
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Company at the Effective Time shall be the initial directors and officers,
respectively, of the Surviving Corporation.
Section 4.4. Subsequent Actions. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect, confirm or record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Constituent Corporations acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized to execute and
deliver, in the name and on behalf of each of the Constituent Corporations or
otherwise, all such deeds, bills of sale, assignments and assurances and to take
and do, in the name and on behalf of each of the Constituent Corporations or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub,
subject to the exceptions specifically disclosed in the disclosure schedule
supplied by the Company to Parent (the "Company Disclosure Schedule"), as
follows:
Section 5.1. Organization, Standing and Corporate Power. Each of
the Company and each of its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has the requisite corporate power and
authority to carry on its business as now being conducted. Each of the Company
and each of its Subsidiaries 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
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) could not reasonably be expected
to (i) have a material adverse effect on the condition (financial or otherwise),
business or results of operations of the Company and its Subsidiaries taken as a
whole, (ii) impair the ability of any party hereto to perform its obligations
under this Agreement or (iii) prevent or materially delay consummation of any of
the transactions contemplated by this Agreement (a "Company Material Adverse
Effect") (provided that a Company Material Adverse Effect shall not be deemed to
have occurred as a result of (i) any events or conditions affecting the economy
or the Company's industry in general or (ii) any events or conditions resulting
from the execution and/or announcement of this Agreement). The Company has
delivered to Parent complete and correct copies of its articles of organization
(the "Articles of Organization") and by-laws and equivalent organizational
documents of its Subsidiaries, in each case as amended to the date of this
Agreement. For purposes of this Agreement, a "Subsidiary" of any Person means
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another Person in which such first Person, directly or indirectly, owns 50% or
more of the equity interests, or has the right, through ownership of equity,
contractually or otherwise, to elect at least a majority of its Board of
Directors or any other governing body.
Section 5.2. Subsidiaries and Minority Affiliates. All the
outstanding shares of capital stock or other ownership interests of each
Subsidiary of the Company have been validly issued and are fully paid and
nonassessable and all such shares or ownership interests are owned by the
Company, by another Subsidiary of the Company or by the Company and another such
Subsidiary, free and clear of any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership (collectively, "Liens"). Neither the Company nor any of its
Subsidiaries (i) owns equity securities (as defined in Rule 3a-11 promulgated
under the Exchange Act) or (ii) has entered into any commitment, contract or
agreement to provide equity financing to any other Person or entity.
Section 5.3. Capital Structure. The authorized capital stock of
the Company consists of 10,000,000 shares of common stock, $.10 par value per
share. As of March 28, 1998 (i) 1,085,265 Shares were issued and outstanding,
(ii) 1,600,215 Shares were held by the Company or by any of the Company's
Subsidiaries and (iii) 550,000 Shares were reserved for issuance pursuant to the
Option Plans. Except as set forth above, no shares of capital stock or other
equity or voting securities of the Company are issued, reserved for issuance or
outstanding except for shares reserved for issuance under Option Plans. As of
the date hereof, 177,300 options (the "Options) have been granted and are
outstanding under the Option Plans and no further Options will be granted. All
outstanding shares of capital stock of the Company are, and all Shares which may
be issued pursuant to the Option Plans will, when issued, be duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. There are not any bonds, debentures, notes or other indebtedness or
securities of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote. Other than the Shares and Options under
the Option Plans, there are not any securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which the Company or any of its Subsidiaries is a party or by which any of them
is bound obligating the Company or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity or voting securities of the Company or of any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no outstanding
rights, commitments, agreements, arrangements or undertakings of any kind
obligating the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire or dispose of any shares of capital stock or other equity or
voting securities of the Company or any of its Subsidiaries or any securities of
the type described in the two immediately preceding sentences. No Company
Options will be accelerated or in any way altered or changed, whether in
connection with the acceleration of any vesting period or otherwise, by the
execution, delivery or performance of this Agreement by the Company or the
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consummation of the transactions contemplated by this Agreement, except pursuant
to and in accordance with Section 3.4 hereof. Except as specifically
contemplated by this Agreement, there are no stockholder agreements, voting
trusts or other agreements or understandings to which the Company is a party, or
of which the Company is aware, relating to voting, registration or disposition
of any Shares or granting to any Person or group of Persons the right to elect,
or to designate or nominate for election, a director to the Board of Directors
of the Company.
Section 5.4. Authority; Noncontravention. (a) The Company has the
requisite corporate power and authority to enter into this Agreement (and,
subject to the Company Stockholder Approval (as hereinafter defined) if required
by the BCL in connection with the consummation of the Merger) to consummate the
transactions contemplated by this Agreement. If the BCL requires that the Merger
be approved by the Stockholders of the Company, the approval by the affirmative
vote of the holders of two-thirds of the outstanding Shares (the "Company
Stockholder Approval") will be required and such approval will be the only vote
of the holders of any class or series of the capital stock of the Company
necessary to approve the Merger and this Agreement and the transactions
contemplated hereby.
(b) The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, except for the Company Stockholder Approval in connection
with the consummation of the Merger. This Agreement has been duly executed and
delivered by the Company and, assuming this Agreement constitutes a valid and
binding agreement of Parent and Merger Sub, constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
(c) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice, or lapse of time, or both)
under, or give rise to a right of termination, cancellation, modification or
acceleration of any obligation or to a loss of a benefit under, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its Subsidiaries under, (i) the Articles of Organization or by-laws of the
Company or the comparable charter or organizational documents of any of its
Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lien, lease or any other contract, agreement, instrument, permit,
commitment, concession, franchise or license applicable to the Company or any of
its Subsidiaries or their respective properties or assets, or (iii) subject to
the governmental filings and other matters referred to in the following
subsection 5.4(d), any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any of its Subsidiaries or their
respective properties or assets.
(d) No consent, approval, franchise, order, license, permit,
waiver or authorization of, or registration, declaration or filing with or
exemption, notice, application, or certification by or to (collectively,
"Consents") any federal, state or local government or any
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arbitration panel or any court, tribunal, administrative or regulatory agency or
commission or other governmental authority, department, bureau, commission or
agency, domestic or foreign (a "Governmental Entity"), is required by or with
respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated by this Agreement, except for (i)
the filing of a Schedule 14D-1, Schedule 14D-9 and the information required
under Rule 14f-1 of the Exchange Act with the SEC, (ii) the filing of the
Articles of Merger with the Secretary of State of the Commonwealth of
Massachusetts, (iii) the filing of the Proxy Statement with the SEC (if
necessary), (iv) the filing of a Current Report on Form 8-K with the SEC, (v)
the filing with the United States Department of Justice and the Federal Trade
Commission of such forms as may be required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), (vi) any filing pursuant to the
requirements of Section 721 (the "Exon-Florio Provision") of the Defense
Production Act or U.S. Government approval of necessary securities agreements to
mitigate foreign ownership, control or influence pursuant to the National
Industrial Securities Program Operating Manual, (vii) any requirements imposed
by the United States Department of Defense, (viii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws and the laws of any
foreign country and (ix) such other consents, authorizations, filings, approvals
and registrations which, if not obtained or made, would not have a Company
Material Adverse Effect or a material adverse effect on the ability of the
parties to consummate the Offer, the Merger or the other transactions
contemplated by this Agreement.
(e) The Board of Directors of the Company has, on May 13, 1998,
unanimously (i) approved and adopted this Agreement and transactions
contemplated hereby, (ii) determined that this Agreement and the transactions,
including each of the Offer and the Merger, are in the best interests of the
Company and its stockholders and that the terms of this Agreement are fair to
the Company and its stockholders and (iii) determined to recommend that the
stockholders of the Company approve and adopt this Agreement. The Company has
been advised by each of its directors and officers that they intend to tender
all Shares beneficially owned by them pursuant to the Offer.
(f) The Board of Directors of the Company has approved the
transactions contemplated by this Agreement and the Stockholder Agreements for
purposes of excluding Parent from the restrictions contained in Chapters 110D
and 110F of the BCL. To the Company's knowledge, except for Chapter 110C of the
BCL no other state takeover statute or similar statute or regulation applies to
or purports to apply to the Offer, the Merger, this Agreement, the Stockholder
Agreements or the transactions contemplated by this Agreement or the Stockholder
Agreements.
Section 5.5. SEC Documents; Financial Statements; No Undisclosed
Liabilities. (a) The Company has filed, and delivered to Parent true and
complete copies of, all required reports, schedules, forms, statements, exhibits
and other documents filed with the SEC since January 1, 1996, including the
Company's Form 10-Q filed on or before the date hereof (the "SEC Documents"). As
of their respective dates, the SEC Documents complied in all
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material respects with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act"), or the
Exchange Act, as the case may be, applicable to such SEC Documents and none of
the SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) The financial statements of the Company included in the SEC
Documents comply in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with United States generally accepted
accounting principles (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis throughout the periods
involved ("GAAP") (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(c) Except as set forth in the SEC Documents, neither the Company
nor any of its Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required to be reflected in
the financial statements of the Company in accordance with GAAP, except for
liabilities and obligations incurred in the ordinary course of business which,
individually or in the aggregate, have not had or could not reasonably be
expected to have a Company Material Adverse Effect.
Section 5.6. Disclosure Documents. (a) Any proxy statement or the
information statement of the Company to be filed with the SEC in connection with
the Merger (the "Company Proxy Statement"), and any amendments or supplements
thereto will, when filed, comply in all material respects with the applicable
requirements of the Exchange Act.
(b) At the time of filing a Company Proxy Statement with the SEC,
at the time the Company Proxy Statement or any amendment or supplement thereto
is first mailed to stockholders of the Company, at the time (if any) such
stockholders vote on adoption of this Agreement, and at the Effective Time, the
Company Proxy Statement, as supplemented or amended, if applicable, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties contained in this paragraph (b) will not apply to statements or
omissions included in the Company Proxy Statement based upon information
furnished to the Company in writing by Parent or Merger Sub specifically for use
therein.
Section 5.7. Property. (a) The Company and its Subsidiaries have
good and valid title to all property material to the business of the Company and
reflected in the latest audited financial statements included in the SEC
Documents as being owned by the Company and its Subsidiaries or acquired after
the date thereof (except properties sold or otherwise
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disposed of in the ordinary course of business since the date thereof), free and
clear of all Liens except (i) Liens described in the SEC Documents, (ii)
statutory Liens securing payments not yet due and (iii) such imperfections or
irregularities of title or Liens as do not affect the use of the properties or
assets subject thereto or affected thereby or otherwise materially impair
business operations at such properties.
(b) The Company has delivered and made available to Parent prior
to the date hereof, correct and complete copies of each lease under which the
Company or any of its Subsidiaries is a lessee or lessor which is (i) a lease of
real property, or (ii) a lease of Personal property having a term of more than
one year or calling for annual rental payments in excess of $20,000
(collectively, the "Leases"). Each Lease is in full force and effect and
constitutes a binding obligation of the Company or its Subsidiaries and, to the
best knowledge of the Company, the other party thereto. The Company and its
Subsidiaries enjoy peaceful and undisturbed, exclusive possession under each
Lease to which it is a party, and there is not, with respect to any Lease, any
existing material breach or event of default, or event which with notice or
lapse of time or both would constitute a material breach or event of default, on
the part of the Company or, to the best knowledge of the Company, on the part of
any other party thereto.
(c) To the knowledge of the Company and its Subsidiaries, all
buildings, structures, and equipment owned or leased by the Company and its
Subsidiaries are structurally sound, free from material defects, in reasonable
operating condition and repair, subject to ordinary wear and tear given their
age and use, and are adequate and sufficient in all material respects for the
operation of their businesses as currently operated.
Section 5.8. Absence of Certain Changes or Events. Except as
disclosed in the SEC Documents, since June 30, 1997, the Company and its
Subsidiaries have conducted their business only in the ordinary course
consistent with past practice, and there has not been:
(a) any event, occurrence or development of a state of
circumstances which has had or could reasonably be expected to have a
Company Material Adverse Effect,
(b) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect
to any of the Company's capital stock or any repurchase, redemption or
other acquisition by the Company or any of its Subsidiaries of any
outstanding shares of capital stock or other securities of the Company
or any of its Subsidiaries,
(c) any adjustment split, combination or reclassification of any
of its capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock,
(d) (i) any granting by the Company or any of its Subsidiaries to
any current or former director, officer or employee of the Company or
any of its Subsidiaries of any increase in compensation or benefits,
except for grants to employees who are not officers
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or directors in the ordinary course of business consistent with past
practice, (ii) any granting by the Company or any of its Subsidiaries
to any such director, officer or employee of any increase in severance
or termination pay (including the acceleration in the vesting of Shares
(or other property) or the provision of any tax gross-up), or (iii) any
entry by the Company or any of its Subsidiaries into any employment,
deferred compensation, severance or termination agreement or
arrangement with or for the benefit of any such current or former
director, officer or employee,
(e) (i) any acceleration, amendment or change of the period of
exercisability or vesting of any Company Options under the Option Plans
(including any discretionary acceleration of the exercise periods or
vesting by the Company's Board of Directors or any committee thereof or
any other Persons administering an Option Plan) or authorization of
cash payments in exchange for any Company Options under any of such
Option Plans, (ii) any adoption or material amendment by the Company or
any of its Subsidiaries of any collective bargaining agreement or any
bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom
stock, stock appreciation right, retirement, vacation, severance,
disability, death benefit, hospitalization, medical, worker's
compensation, supplementary unemployment benefits, or other plan,
arrangement or understanding (whether or not legally binding) or any
employment agreement providing compensation or benefits to any current
or former employee, officer, director or independent contractor of the
Company or any of its Subsidiaries or any beneficiary thereof or
entered into, maintained or contributed to, as the case may be, by the
Company or any of its Subsidiaries (collectively, "Benefit Plans"), or
(iii) any adoption of, or amendment to, or change in employee
participation or coverage under, any Benefit Plans which would increase
materially the expense of maintaining such Benefit Plans above the
level of the expense incurred in respect thereof for the fiscal year
ended on June 30, 1997.
(f) any change in accounting methods, principles or practices by
the Company or any of its Subsidiaries (except as required by law),
(g) any amendment, waiver or modification of any material term of
any out standing security of the Company or any of its Subsidiaries,
(h) any incurrence, assumption or guarantee by the Company or any
of its Subsidiaries of any material indebtedness for borrowed money or
other material obligations, or any creation or assumption by the
Company or any of its Subsidiaries of any Lien on any asset other than
in the ordinary course of business consistent with past practice, but
in no event with respect to assets with a value of, or obligations in
an amount of, more than $25,000 in the aggregate,
(i) any making of any loan, advance or capital contributions to or
investment in any Person other than in the ordinary course of business
consistent with past practice, but in no event in the amount of more
than $25,000 in the aggregate, and other than
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investments in cash equivalents made in the ordinary course of business
consistent with past practice,
(j) any transaction or commitment made, or any contract or
agreement entered into, by the Company or any of its Subsidiaries
relating to its assets or business on behalf of the Company or any of
its Subsidiaries, other than the purchase of products and services and
sales of products and services in the ordinary course of business,
(k) any acquisition or disposition of any assets, other than in
the ordinary course of business, or any merger or consolidation with
any Person on behalf of the Company or any of its Subsidiaries,
(l) any entry by the Company or any Subsidiary into any other
commitment or transaction material to the Company and its Subsidiaries
taken as a whole, except in the ordinary course of business and
consistent with past practice,
(m) any relinquishment by the Company or any of its Subsidiaries
of any contract or other right, in either case, material to the
Company and its Subsidiaries taken as a whole, other than transactions
and commitments in the ordinary course of business consistent with
past practice and those contemplated by the Agreement, or
(n) any agreement, commitment, arrangement or undertaking by the
Company or any of its Subsidiaries to perform any action described in
clauses (a) through (m).
Section 5.9. Litigation. There is no action, arbitration, audit,
hearing, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Entity or arbitrator ("Action") or, to the Company's
knowledge, investigation pending against or affecting the Company or any of its
Subsidiaries or any of their respective properties and, to the Company's
knowledge, there is no Action or investigation threatened against or affecting
the Company or any of its Subsidiaries or any of their respective properties
before any Governmental Entity. Neither the Company nor any of its Subsidiaries
is subject to any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator.
Section 5.10. Compliance with Laws, Etc. The conduct by the
Company and its Subsidiaries of their business is and has been in compliance in
all material respects with all statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees, applicable thereto and material to the conduct of
their business.
Section 5.11. Benefit. (a) For purposes of this Agreement, the
following definitions apply: "Code" means the Internal Revenue Code of 1986, as
amended, and the Treasury regulations thereunder; "Controlled Group Liability"
means any and all liabilities under (i) Title IV of ERISA, (ii) Section 302 of
ERISA (as hereinafter defined), (iii) Sections 412 and 4971 of the Code, (iv)
the continuation coverage requirements of Section 601 et seq. of ERISA and
Section 4980B of the
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Code, and (v) corresponding or similar provisions of foreign laws or
regulations, other than such liabilities that arise solely out of, or relate
solely to, the Plans (as hereinafter defined); "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended, and the regulations
thereunder; "ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same "controlled group" as the first entity, trade or business pursuant
to Section 4001(a)(14) of ERISA.
(b) Exhibit 5.11 includes a complete list of all employee benefit
plans, programs, policies, practices, and other arrangements in effect at any
time during the past three years providing benefits to any current or former
employee, officer or director of the Company or any of its Subsidiaries or
beneficiary or dependent thereof, whether or not written, and whether covering
one Person or more than one Person, sponsored or maintained by the Company or to
which the Company contributes or is obligated to contribute ("Plans"). Without
limiting the generality of the foregoing, the term "Plans" includes all employee
welfare benefit plans within the meaning of Section 3(1) of ERISA, all employee
pension benefit plans within the meaning of Section 3(2) of ERISA, and all other
employee benefit, bonus, incentive, deferred compensation, stock purchase, stock
option, severance, change of control and fringe benefit plans, programs or
agreements.
(c) With respect to each Plan, the Company has delivered to Parent
and Merger Sub a true, correct and complete copy of: (i) each writing
constituting a part of such Plan, including without limitation all plan
documents, benefit schedules, trust agreements, and insurance contracts and
other funding vehicles; (ii) the most recent Annual Report (Form 5500 Series)
and accompanying schedules, if any; (iii) the current summary plan description
and any material modifications thereto, if any; (iv) the most recent annual
financial report, if any; (v) the most recent actuarial report, if any; and (vi)
the most recent determination letter from the Internal Revenue Service (the
"IRS"). Except as specifically provided in the foregoing documents delivered to
Parent and Merger Sub or as otherwise required by law, there are no amendments
to any Plan or any new Plan that have been adopted or approved nor has the
Company undertaken to make any such amendments or adopt or approve any new Plan.
(d) Exhibit 5.11 identifies each Plan that is intended to be a
"qualified plan" within the meaning of Section 401(a) of the Code ("Qualified
Plans"). The IRS has issued a favorable determination letter with respect to
each Qualified Plan that has not been revoked, and, to the knowledge of the
Company, there are no existing circumstances nor any events that have occurred
that could reasonably be expected to adversely affect the qualified status of
any Qualified Plan or the related trust. No Plan is intended to meet the
requirements of Code Section 501(c)(9) of the Code.
(e) All contributions required to be made to any Plan by
applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Plan, for any period through the date
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hereof have been timely made or paid in full or, to the extent not required to
be made or paid on or before the date hereof, have been fully reflected in all
material respects on the financial statements contained in the SEC Documents.
(f) The Company has complied, and is now in compliance, in all
material respects with all provisions of ERISA, with the Code and all laws and
regulations applicable to the Plans. There is not now, nor do any circumstances
exist that could give rise to, any requirement for the posting of security with
respect to a Plan or the imposition of any lien on the assets of the Company
under ERISA or the Code. No non-exempt prohibited transaction has occurred with
respect to any Plan that could reasonably be expected to result in a material
liability to the Company or any of its Subsidiaries.
(g) With respect to each Plan that is subject to Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code: (i) there does not
exist any accumulated funding deficiency within the meaning of Section 412 of
the Code or Section 302 of ERISA, whether or not waived; (ii) the fair market
value of the assets of such Plan equals or exceeds the actuarial present value
of all accrued benefits under Plan (whether or not vested) on a termination
basis; (iii) no reportable event within the meaning of Section 4043(c) of ERISA
has occurred, and the consummation of the transactions contemplated by this
Agreement will not result in the occurrence of any such reportable event; and
(iv) all premiums to the Pension Benefit Guaranty Corporation have been timely
paid in full. All liabilities in connection with the termination of any employee
pension benefit plan that was sponsored, maintained or contributed to by the
Company at any time within the past three years have been fully satisfied.
(h) No Plan is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or
more contributing sponsors at least two of whom are not under common control,
within the meaning of Section 4063 of ERISA (a "Multiple Employer Plan").
(i) There does not now exist, nor do any circumstances exist that
could reasonably be expected to result in any Controlled Group Liability that
would be a material liability of the Company following the Closing. Without
limiting the generality of the foregoing, neither the Company nor any ERISA
Affiliate of the Company has engaged in any transaction described in Section
4069 or Section 4204 of ERISA.
(j) The Company has no liability for life, health, medical or
other welfare benefits to former employees or beneficiaries or dependents
thereof, except for health continuation coverage as required by Section 4980B of
the Code or Part 6 of Title I of ERISA and at no expense to the Company.
(k) All Plans covering foreign employees of the Company comply
with applicable local law and are fully funded and/or book reserved to the
extent applicable.
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(l) There are no pending or, to the Company's knowledge,
threatened claims (other than claims for benefits in the ordinary course),
lawsuits or arbitrations which have been asserted or instituted against the
Plans, any fiduciaries thereof with respect to their duties to the Plans or the
assets of any of the trusts under any of the Plans which could reasonably be
expected to result in any material liability of the Company to the Pension
Benefit Guaranty Corporation, the Department of Treasury or the Department of
Labor.
(m) Except as expressly contemplated hereby, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (either alone or in conjunction with any
other event) result in, cause the accelerated vesting or delivery of, or
increase the amount or value of, any payment or benefit to any employee of the
Company.
SECTION 5.12. Tax Matters. Except as set forth in the SEC
Documents:
(a) Each of the Company and each of its Subsidiaries has filed
or caused to be filed on a timely basis since January 1, 1993 all tax
returns and reports required to be filed by them pursuant to applicable
legal requirements. All tax returns filed by the Company and/or any
Subsidiary are true, complete and correct in all material respects.
Each of the Company and each of its Subsidiaries has paid (or the
Company has paid on its Subsidiaries' behalf), or has made provision
for the payment of, all Taxes (as hereinafter defined) that have been
or may become due pursuant to those tax returns or otherwise.
(b) No tax return of the Company or any of its Subsidiaries is
under audit or examination by any taxing authority, and no written or
unwritten notice of such an audit or examination has been received by
the Company or any of its Subsidiaries. Each deficiency resulting from
any audit or examination relating to Taxes by any taxing authority has
been paid, except for deficiencies being contested in good faith by
appropriate proceedings and which have been reserved against in
accordance with GAAP. No issues relating to taxes were raised in
writing by the relevant taxing authority during any presently pending
audit or examination, and no material issues relating to Taxes were
raised in writing by the relevant taxing authority in any completed
audit or examination that can reasonably be expected to recur in a
later taxable period. Neither the Company nor any of its Subsidiaries
has given or is there a pending request to give waivers or extensions
(or is or would be subject to a waiver or extension given by any other
Person) of any statute of limitations relating to Taxes for which the
Company or any of its Subsidiaries would be liable. The federal income
tax returns of the Company and each of its Subsidiaries consolidated in
such returns have been examined by and settled with the IRS for all
years, or all years are otherwise closed, through the taxable year
ended June 30, 1995.
(c) The charges, accruals and reserves with respect to Taxes on
the respective books of each of the Company or any Subsidiary are
adequate (determined in accordance
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with GAAP). There exists no proposed Tax assessment against the Company
or any Subsidiary. No consent for the application of Section 341(f)(2)
of the Code has been filed with respect to any property or assets held,
acquired or to be acquired by the Company or any Subsidiary thereof.
All Taxes required by legal requirements to be withheld or collected
have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Entity or Person.
(d) No Liens for Taxes exist with respect to any assets or
properties of the Company or any of its Subsidiaries, except for
statutory Liens for Taxes not yet due.
(e) None of the Company or any of its Subsidiaries is a party
to, is bound by or required to make any payment under any tax sharing
agreement, tax allocation agreement, tax indemnity obligation or
similar written or unwritten agreement, arrangement, understanding or
practice with respect to Taxes (including any advance pricing
agreement, closing agreement or other agreement relating to Taxes with
any taxing authority).
(f) The disallowance of a deduction under Section 162(m) of
the Code for employee remuneration will not apply to any material
amount paid or payable by the Company or any of its Subsidiaries under
any contract, Option Plan, Benefit Plan, program, arrangement or
understanding currently in effect.
(g) No material amount or other entitlement that could be
received (whether in cash or property or the vesting of property) in
connection with the transactions contemplated hereby (either alone or
in conjunction with any other event) will be an "excess parachute
payment" (as such term is defined in Section 280G(b)(1) of the Code).
(h) As used in this Agreement, "Taxes" shall include all
federal, state, local and foreign income, property, sales, excise,
withholding and other taxes, tariffs or governmental charges of any
nature whatsoever, and all interest, penalties and additions to tax
with respect to any of the foregoing.
SECTION 5.13. Debt Instruments. Exhibit 5.13 hereto is a list
of (i) all loan or credit agreements, notes, bonds, mortgages, indentures and
other agreements and instruments pursuant to which any Indebtedness (as
hereinafter defined) of the Company or any of its Subsidiaries is outstanding or
may be incurred and (ii) the respective principal amounts currently outstanding
thereunder. All such Indebtedness is prepayable at any time without penalty,
subject to the notice provisions of the agreements governing such Indebtedness
(which shall not require a notice period of more than 30 days). For purposes of
this Section 5.13, "Indebtedness" shall mean, with respect to any Person,
without duplication, (i) all obligations of such Person for borrowed money, or
with respect to deposits or advances of any kind to such Person, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (iii) all obligations of such Person upon which interest charges
are customarily paid, (iv) all obligations of such Person under conditional sale
or other title retention agreements relating to property
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purchased by such Person, (v) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (excluding obligations of
such Person to creditors for raw materials, inventory, services and supplies
incurred in the ordinary course of such Person's business), (vi) all capitalized
lease obligations of such Person, (vii) all obligations of others secured by any
Lien on property or assets owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (viii) all obligations of such
Person under interest rate or currency swap transactions (valued at the
termination value thereof), (ix) all letters of credit issued for the account of
such Person (excluding letters of credit issued for the benefit of suppliers to
support accounts payable to suppliers incurred in the ordinary course of
business), (x) all obligations of such Person to purchase securities (or other
property) which arises out of or in connection with the sale of the same or
substantially similar securities or property, and (xi) all guarantees and
arrangements having the economic effect of a guarantee of such Person of any
indebtedness of any other Person.
SECTION 5.14. Insurance. The Company and its Subsidiaries are
covered by valid and currently effective insurance policies issued in favor of
the Company that are customary for companies of similar size and financial
condition. All such policies are in full force and effect, all premiums due
thereon have been paid and the Company has complied with the provisions of such
policies. The Company has not been advised of any defense to coverage in
connection with any claim to coverage asserted or noticed by the Company under
or in connection with any of its extant insurance policies. The Company has not
received any written notice from or on behalf of any insurance carrier issuing
policies or binders relating to or covering the Company and its Subsidiaries
that there will be a cancellation or non-renewal of existing policies or
binders, or that alteration of any equipment or any improvements to real estate
occupied by or leased to or by the Company or its Subsidiaries, purchase of
additional equipment, or material modification of any of the methods of doing
business, will be required.
SECTION 5.15. Labor Matters. The Company and its Subsidiaries
are in material compliance with all federal, state and local laws, rules,
regulations and orders respecting employment and employment practices,
including, without limitation, immigration and terms and conditions of
employment, wages and hours. To the Company's knowledge, there are no pending
investigations involving the Company or any of its Subsidiaries by any
Governmental Entity for the enforcement of such federal, state or local laws,
rules, regulations and orders. There is no unfair labor practice charge or
complaint pending, or, to the Company's knowledge, threatened or contemplated,
against the Company or any of its Subsidiaries before any Governmental Entity or
any strike, picketing, boycott, dispute, slowdown or stoppage pending, or, to
the Company's knowledge, threatened or contemplated, against or involving the
Company or any of its Subsidiaries. There are no existing collective bargaining
agreements with the Company or any of its Subsidiaries. No representation
question exists respecting the employees of the Company or any of its
Subsidiaries and no collective bargaining agreement or modification thereof is
currently being negotiated by or on behalf of the Company or any of its
Subsidiaries. No grievance or arbitration proceeding is pending, or, to the
Company's knowledge, threatened or contemplated, under any expired collective
bargaining agreements of the Company or its Subsidiaries. No labor dispute with
the employees of the Company or any of
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its Subsidiaries which could reasonably be expected to have a Company Material
Adverse Effect. is pending or, to the Company's knowledge, threatened or
contemplated.
SECTION 5.16. Business Relationships; No Restrictive
Agreements. (a) The relationships of the Company and its Subsidiaries with its
customers, distributors, licensors, designers and suppliers are satisfactory in
all material respects.
(b) The Company and its Subsidiaries are not parties to or
bound by any agreement, contract, policy, license, document, instrument,
arrangement or commitment that limits the freedom of the Company or any of its
Subsidiaries to compete in any line of business or with any Person or in any
geographic area or which would so limit the freedom of the Company or any of its
Subsidiaries or affiliates after the Effective Time.
(c) To the Company's knowledge, based on most recent costs
estimates to complete, there are no sales agreements or commitments involving
the Company or any of its Subsidiaries, the fulfillment of which will likely
result in a loss to the Company or its Subsidiaries in excess of $100,000.
SECTION 5.17. Interests of Officers and Directors. None of the
Company's or any of its Subsidiaries' officers or directors or any of their
respective affiliates (other than the Company or any of its Subsidiaries) has
any interest in any property, real or personal, tangible or intangible, used in
or pertaining to the business of the Company or its Subsidiaries, or any
supplier, distributor or customer of the Company or its Subsidiaries, or any
other relationship, contract, agreement, arrangement or understanding with the
Company or any of its Subsidiaries, except as disclosed in the SEC Documents and
except for the normal rights of a stockholder and rights under the Benefit Plans
and the Option Plans. Except as disclosed in the SEC Documents, neither the
Company nor any of its Subsidiaries is indebted to any director, officer,
employee or agent of the Company or any of its Subsidiaries (except for amounts
due as normal salaries and bonuses and in reimbursement of ordinary expenses)
and no such Person is indebted to the Company or any of its Subsidiaries, and
there have been no transactions of the type required to be disclosed pursuant to
Items 402 and 404 of Regulation S-K under the Exchange Act.
SECTION 5.18. Intellectual Property.
(a) "Company Intellectual Property Rights" means all
trademarks, trademark rights, trade names, trade name rights, patents, patent
rights, industrial models, copyrights, servicemarks, trade secrets, computer
software programs or applications (in both source code and object code form),
maskworks, net lists, schematics, technology, ideas, algorithms, processes,
know-how, inventions and applications for patents, trademarks, copyrights and
servicemarks and all other tangible and intangible proprietary rights and
information owned by or licensed to the Company or any Subsidiary or which the
Company or any Subsidiary otherwise possesses legally enforceable rights to use.
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(b) The Company Intellectual Property Rights are all those
used or proposed to be used by the Company for the operation of the businesses
of the Company and its Subsidiaries as they are currently conducted or currently
proposed to be conducted, respectively. Either the Company or one of its
Subsidiaries is the owner of all right, title and interest in and to each of the
Company Intellectual Property Rights, free and clear of all Liens and has the
right to use without payment to a third party such Company Intellectual Property
Rights and the Company or one of its Subsidiaries will continue to own or
license such Company Intellectual Property Rights immediately after the
Effective Time. No claim of infringement of any intellectual property rights of
any third party has been brought or, to the Company's knowledge, asserted
against the Company or any of its Subsidiaries in respect of the operation of
the Company or any of its Subsidiaries. To the Company's knowledge, no Person is
infringing in any material respect the rights of the Company or any of its
Subsidiaries with respect to any Company Intellectual Property Rights. Neither
the Company nor any of its Subsidiaries has licensed, or otherwise granted, to
any third party, any material rights in or to any Company Intellectual Property
Rights.
(c) All former and current employees of each of the Company
and each of its Subsidiaries who are or were employees at any time during the
past three years have executed written agreements with one or more of the
Company and its Subsidiaries that assign to one or more of such entities all
rights to any inventions, improvements, discoveries or information relating to
and material to the business of the Company or one of its Subsidiaries. To the
Company's knowledge, no employee of the Company or one of its Subsidiaries has
entered into any contract, agreement, understanding or arrangement that restrict
or limits in any way the scope or type of work in which the employee may be
engaged or requires the employees to transfer, assign, or disclose information
concerning his work to anyone other than one or more of the Company and its
Subsidiaries.
SECTION 5.19. Environmental Matters.
(a) For purposes of this Agreement, the following terms shall
have the following meanings: (i) "Hazardous Substances" means (A) those
substances defined in or regulated under the following federal statutes and
their state counterparts and all regulations thereunder: the Hazardous Materials
Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (B) petroleum
and petroleum products including crude oil and any fractions thereof; (C)
natural gas, synthetic gas, and mixtures thereof; (D) radon; (E) asbestos; (F)
any other contaminant; and (G) any substance with respect to which a federal,
state or local agency requires environmental investigation, monitoring,
reporting or remediation; and (ii) "Environmental Laws" means any federal, state
or local law relating to (A) releases or threatened releases of Hazardous
Substances or materials containing Hazardous Substances; (B) the manufacture,
handling, transport, use, treatment, storage or disposal of Hazardous Substances
or material containing Hazardous Substances; or (C) otherwise relating to
pollution of the environment.
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(b) Except as could not reasonably be expected to have a
Company Material Adverse Effect, (i) the Company is not in violation of any
Environmental Law; (ii) to the Company's knowledge, none of the properties owned
or leased by the Company are contaminated with any Hazardous Substances; (iii)
to the Company's knowledge, the Company is not liable for any off-site
contamination; (iv) to the Company's knowledge, the Company is not liable under
any Environmental Law; (v) the Company has all permits, licenses and other
authorizations required under any Environmental Law ("Environmental Permits");
(vi) the Company is in compliance with its Environmental Permits; and (vii)
there are no pending, or, to the knowledge of the Company, threatened claims
against the Company or any of its Subsidiaries relating to any Environmental Law
or Hazardous Substance.
SECTION 5.20. Brokers. KPMG Inc. has orally delivered to the
Company's Board of Directors its opinion that the consideration to be paid in
the Merger is fair to the holders of Shares from a financial point of view, and
shall deliver such opinion in writing to the Company's Board of Directors prior
to the date the Company files the Company Proxy Statement with the SEC. In
addition, no broker, investment banker, financial advisor or other Person, other
than KPMG Inc. and Katahdin Investment Partnership LLP, the fees and expenses of
which will be paid by the Company (and copies of whose engagement letters and a
calculation of the fees that would be due thereunder has been provided to
Parent), is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company or
any of its Subsidiaries. No such engagement letters obligate the Company to
continue to use their services or pay fees or expenses in connection with any
future transaction.
SECTION 5.21. Absence of Certain Commercial Practices. Neither
the Company nor any of its Subsidiaries, nor any director, officer, agent,
employee or other Person acting on behalf of the Company nor any of its
Subsidiaries, has given or agreed to give any gift or similar benefit of more
than nominal value to any customer, supplier or governmental employee or
official or any other Person who is in a position to help or hinder the Company
or any of its Subsidiaries in connection with any proposed transaction, which
gift or similar benefit, if not given in the past, has had or was likely to have
had an adverse effect on the prospects of the Company or its Subsidiary
transacting business with such customer or supplier, or which, if not continued
in the future, is likely to have such an effect after the Closing.
SECTION 5.22. Warranty Claims. To the Company's knowledge, no
defects exist in any products which would result in warranty or rebate claims
which the Company or any of its Subsidiaries would be liable in amounts
exceeding those reserved against (as determined in accordance with GAAP).
SECTION 5.23. Product Liability. There are no pending or, to
the Company's knowledge, threatened claims against the Company and, to the
Company's knowledge, there are no product defects or occurrences of events
forming the basis for specific material product liability claims against the
Company that are not adequately reserved against (as determined in accordance
with GAAP) or adequately covered by insurance.
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SECTION 5.24. Backlog. Exhibit 5.24 contains a true and
complete copy of the Company's and its Subsidiaries' open "firm" order reports
as of May 2, 1998, all of which represent bona fide orders received by the
Company in the ordinary course of business, and any options open as of May 2,
1998.
SECTION 5.25. Inventories. All inventories, whether or not
reflected in the financial statements in the SEC Documents, are of good, usable
and saleable quality in the ordinary course of business of the Company and its
Subsidiaries, except for obsolete items and items of below-standard quality as
to which adequate reserves (determined in accordance with GAAP) have been
provided. Except as set forth in the Company Disclosure Schedule, (i) all
inventories are of such quality as to meet the quality control standards of the
Company and its Subsidiaries, (ii) all inventories that are finished goods are
saleable as current inventory in the ordinary course of business, (iii) all
inventories are recorded on the books of the Company at the lower of actual cost
or market and (iv) all inventories disposed of by the Company since June 30,
1997 have been disposed of under terms consistent with past practices, except in
each case for exceptions that would not have a Company Material Adverse Effect.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as
follows:
SECTION 6.1. Organization, Standing and Corporate Power.
Parent is a public limited company incorporated under the laws of England and
Wales and has been in continuous existence since its incorporation. Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts. Each of Parent and Merger Sub has the
requisite corporate power and authority to carry on its business as now being
conducted.
SECTION 6.2. Authority; Noncontravention. (a) Parent and
Merger Sub have all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub (except for any approval required of such Person's shareholders). This
Agreement has been duly executed and delivered by Parent and Merger Sub and,
assuming this Agreement constitutes a valid and binding agreement of the
Company, constitutes a valid and binding obligation of such party, enforceable
against such party in accordance with its terms.
(c) The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of
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this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation, modification or acceleration of any
obligation or to a loss of a material benefit under, or result in the creation
of any Lien upon any of the properties or assets of Parent or any of its
Subsidiaries under, (i) the memorandum and articles of association of Parent or
the articles of organization or by-laws of Merger Sub, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or any other contract,
agreement, instrument, permit, concession, franchise or license applicable to
Parent or Merger Sub or their respective properties or assets, or (iii) subject
to the governmental filings and other matters referred to in paragraph (d) of
this Section 6.2, any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent, Merger Sub or any other Subsidiary of Parent or
their respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not impair the ability of Parent and
Merger Sub to perform their respective obligations under this Agreement or
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement (a "Parent Material Adverse Effect").
(d) No Consent of any Governmental Entity is required by or
with respect to Parent, Merger Sub or any other Subsidiary of Parent in
connection with the execution and delivery of this Agreement or the
consummation by Parent or Merger Sub, as the case may be, of any of the
transactions contemplated by this Agreement, except for (i) compliance with the
applicable requirements of the Exchange Act, (ii) the filing of the Articles of
Merger with the Secretary of State of the Commonwealth of Massachusetts, (iv)
the filing with the United States Department of Justice and the Federal Trade
Commission of such forms as may be required by the HSR Act, (vi) any filing
pursuant to the requirements of the Exon-Florio Provision of the Defense
Production Act or U.S. Government approval of necessary securities agreements to
mitigate foreign ownership, control or influence pursuant to the National
Investment Securities Program Operating Manual, (vii) any requirements imposed
by the United States Department of Defense, (viii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws and the laws of any
foreign country and (ix) such other consents, authorizations, filings, approvals
and registrations which, if not obtained or made, would not have a Parent
Material Adverse Effect or have a material adverse effect on the ability of the
parties to consummate the Offer, the Merger or the other transactions
contemplated by this Agreement.
SECTION 6.3. Disclosure Documents. Any information with
respect to Parent and its Subsidiaries that Parent furnishes to the Company in
writing, specifically for use in the Company Proxy Statement will not contain,
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading at the time of filing
the Company Proxy Statement with the SEC, at the time the Company Proxy
Statement or any amendment or supplement thereto is first mailed to stockholders
of the Company, at the time if any such stockholders vote on adoption of this
Agreement and at the Effective Time.
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SECTION 6.4. Brokers. No broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission from the Company in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or Merger Sub.
SECTION 6.5. Financial Resources. The Parent will have, and
will cause the Merger Sub to have, the financial resources necessary to perform
each of their respective obligations and to consummate the transactions
contemplated under this Agreement.
SECTION 6.6. Merger Sub. The Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated by this Agreement.
SECTION 6.7. Litigation. There is no action, suit, proceeding,
claim, arbitration or investigation pending, or as to which the Parent or any of
its Subsidiaries has received any notice or assertion nor, to Parent's
knowledge, is there a threatened action, suit, proceeding, claim, arbitration or
investigation against Parent or any of its Subsidiaries which would have a
Parent Material Adverse Effect, or which in any manner challenges or seeks to
prevent, enjoin, alter or delay any of the transactions contemplated by this
Agreement.
ARTICLE VII
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 7.1. Conduct of Business. During the period from the
date of this Agreement to the Effective Time, the Company shall, and shall cause
its Subsidiaries to, carry on their business in the ordinary course of business
in substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them. Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time, the Company shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
except as expressly permitted by this Agreement or with the prior written
approval of Parent:
(a) (i) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property) in respect of, any
of its capital stock, other than (A) dividends and distributions by any direct
or indirect wholly owned Subsidiary of the Company to its parent or (B) if the
Offer has not been consummated, any annual dividend payable in October 1998 in
an amount consistent with that paid in October 1997, (ii) adjust, split, combine
or reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) purchase,
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redeem or otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(b) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options, including Company
Options, to acquire, any such shares, voting securities or convertible
securities (other than the issuance of Shares upon the exercise of Company
Options outstanding as of the date hereof);
(c) amend its Articles of Organization, by-laws or other
comparable charter or organizational documents;
(d) acquire or agree to acquire, including, without
limitation, by merging or consolidating with, or purchasing a substantial equity
interest in or a substantial portion of the assets of, or by any other manner,
any business or any Person or division thereof;
(e) mortgage or otherwise encumber or subject to any Lien or,
except in the ordinary course of business consistent with past practice and
pursuant to existing contracts or commitments, sell, lease, license, transfer,
grant an option in respect of or otherwise dispose of any material properties or
assets;
(f) amend, modify or waive any material term of any
outstanding security of the Company and its Subsidiaries;
(g) incur, assume, guarantee or become obligated with respect
to any Indebtedness, or incur, assume, guarantee or become obligated with
respect to any other material obligations, other than in the ordinary course of
business and consistent with past practice;
(h) make or agree to make any new capital expenditures or
acquisitions of assets or property or other acquisitions or commitments in
excess of $100,000 in the aggregate or otherwise acquire or agree to acquire any
material assets or property;
(i) make any material tax election or take any material tax
position (unless required by law) or change its fiscal year or accounting
methods, policies or practices (except as required by changes in GAAP) or settle
or compromise any material income tax liability;
(j) make any loan, advance or capital contributions to or
investment in any Person other than in the ordinary course of business
consistent with past practice, but in no event in the amount of more than $7,500
to any one Person or $25,000 in the aggregate, and other than investments in
cash equivalents made in the ordinary course of business consistent with past
practice;
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(k) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction thereof, in the
ordinary course of business consistent with past practice and in accordance
with their terms, modify, amend or terminate any material contract or agreement
to which it is a party, or release or waive any material rights or claims, or
agree to modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any of its Subsidiaries is a party;
(l) (i) provide to any current or former director, officer or
employee of the Company or any of its Subsidiaries any material increase in
compensation or benefits or any severance payment or other benefit not required
under the terms of an existing Plan, except for employees who are not officers
or directors in the ordinary course of business consistent with past practice,
(ii) grant to any such director, officer, or employee any increase in severance
or termination pay (including the acceleration in the exercisability of Company
Options or in the vesting of Shares (or other property) except for automatic
acceleration in accordance with the terms of the Option Plans or the provision
of any tax gross-up), or (iii) enter into any employment, deferred compensation,
severance or termination agreement or arrangement with or for the benefit of any
such current or former director, officer, or employee; provided, however, that
notwithstanding any provision to the contrary, the Company shall be permitted to
hire new employees, at salary levels and with benefits packages consistent with
past practices, in the ordinary course of business;
(m) (i) take or agree or commit to take any action that would
make any representation or warranty of the Company hereunder inaccurate in any
material respect at, or as of any time prior to, the Effective Time, or (ii)
omit or agree or commit to omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any material respect at any
such time; or
(n) authorize any of, or commit or agree to take any of, the
foregoing actions.
SECTION 7.2. No Solicitation.
(a) The Company shall not, directly or indirectly, through any
officer, director or employee, representative or agent of the Company or any of
its Subsidiaries, (i) solicit, initiate or encourage or take any other action to
facilitate the institution of any inquiries or proposals regarding any
Acquisition Proposal (as hereinafter defined), (ii) engage in negotiations or
discussions concerning, or provide any nonpublic information or assistance to
any Person in connection with any Acquisition Proposal or (iii) agree to,
approve or recommend any Acquisition Proposal. Nothing contained in this Section
7.2(a) shall prevent the Company or the Board of Directors of the Company from
considering, negotiating, discussing, approving, entering into agreements with
respect to and recommending to the stockholders of the Company a bona fide
Acquisition Proposal not solicited in violation of this Agreement that
constitutes a Superior Proposal (as hereinafter defined), provided that the
Board of Directors of the Company determines in good faith (after consultation
with and based upon the advise of outside counsel)
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that it is required to do so in order to discharge properly its fiduciary duties
to the Company's stockholders; and provided, further, that the Company shall
keep Parent informed, on a current basis, as to the status and details of any
such consideration, negotiations or discussions and shall, upon receipt, provide
Parent with copies of all correspondence, offers and written communications
received by it with respect thereto. Nothing contained in this Section 7.2(a)
shall prohibit the Board of Directors of the Company from complying with Rules
14d-9 and 14e-2 promulgated under the Exchange Act with regard to a tender or
exchange offer.
(b) The Company shall immediately notify Parent after receipt
of any Acquisition Proposal or any modification of, or amendment to, any
Acquisition Proposal, or any request for nonpublic information relating to the
Company or any of its Subsidiaries in connection with an Acquisition Proposal or
for access to the properties, books or records of the Company or any Subsidiary
by any Person or entity that informs the Board of Directors of the Company or
such Subsidiary that it is considering making, or has made, an Acquisition
Proposal. Such notice to Parent shall be made orally and in writing, shall
indicate whether the Company is providing or intends to provide the Person
making the Acquisition Proposal with access to information concerning the
Company as provided in Section 7.2(c) and, if reasonably practicable, shall be
made prior to furnishing any such information to, or entering into negotiations
or discussions with, such Person.
(c) If the Board of Directors of the Company receives a
request for material nonpublic information by a Person who makes, or indicates
that it is considering making, a bona fide Acquisition Proposal, and the Board
of Directors determines in good faith and upon the advice of outside counsel
that it is required to cause the Company to act as provided in this Section
7.2(c) in order to discharge properly the directors' fiduciary duties to the
Company's stockholders, then, provided that such Person has executed a
confidentiality agreement substantially similar to the one then in effect among
the Company and Parent, the Company may provide such Person with access to
information regarding the Company.
(d) The Company shall immediately cease and cause to be
terminated any existing discussions or negotiations with any Persons (other than
Parent and Merger Sub) conducted heretofore with respect to any of the
foregoing. The Company agrees not to release any third party from the
confidentiality provision of any confidentiality agreement to which the Company
is a party.
(e) The Company shall ensure that the officers, directors and
employees of the Company and its Subsidiaries and any investment banker or other
advisor or representative retained by the Company are aware of the restrictions
described in this Section 7.2.
(f) For purposes of this Agreement, an "Acquisition Proposal"
shall mean any of the following involving the Company or any of its Subsidiaries
(other than the entering into or consummation of the Merger and the other
transactions contemplated hereby): (a) any merger, consolidation, share
exchange, business combination, or other similar transaction; (b) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of substantial
assets (other than
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assets held in inventory for resale in the ordinary course of business) of the
Company and its Subsidiaries, taken as a whole, in a single transaction or
series of transactions; (c) any tender offer or exchange offer that if
consummated would result in any Person beneficially owning 20% or more of the
outstanding shares of capital stock of the Company or the filing of a
registration statement under the Securities Act in connection therewith; (d) any
solicitation of proxies in opposition to approval by the Company's stockholders
of the Merger; (e) the acquisition by any Person, after the date hereof, of
beneficial ownership or the right to acquire beneficial ownership of, or the
formation of any "group" (as such term is defined under Section 13(d) of the
Exchange Act), that beneficially owns or has the right to acquire beneficial
ownership of 20% or more of the then outstanding shares of capital stock of the
Company, or the acquisition by any Person or "group" that, as of the date
hereof, beneficially owns 20% or more of the outstanding shares of capital stock
of the Company of beneficial ownership or the right to acquire beneficial
ownership of any additional shares of capital stock of the Company; (f) the
adoption by the Company of a plan of liquidation, the declaration or payment by
the Company of an extraordinary dividend on any of its shares of capital stock
or the effectuation by the Company of stock dividend or a distribution of assets
of any kind to the holders of such capital stock (except as permitted herein);
(g) the repurchase by the Company or any of its Subsidiaries of Shares; or (h)
any agreement to, or public announcement by the Company or any other Person,
entity or group of a proposal, plan or intention to, do any of the foregoing.
SECTION 7.3. Access to Information. From the date hereof until
the Effective Time, the Company will give Parent, its counsel, financial
advisors, auditors and other authorized representatives full and complete
access (during normal business hours and upon reasonable notice) to the offices,
properties, officers, employees, accountants, auditors, counsel and other
representatives, books and records of the Company and its Subsidiaries
(including to perform any environmental studies), will furnish to Parent, its
counsel, financial advisors, auditors and other authorized representatives,
subject to the provisions of the Confidentiality Agreement, such financial,
operating and property related data and other information as such Persons may
request, and will instruct the Company's and its Subsidiaries' employees,
counsel and financial advisors to cooperate with Parent in its investigation of
the business of the Company and its Subsidiaries.
SECTION 7.4. Company SEC Documents.
(a) The Company shall timely file all required SEC Documents,
each of which (i) shall be prepared in all material respects in accordance with
the requirement of the Securities Act and Exchange Act applicable to such SEC
Documents and (ii) shall not at the time they are filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the SEC Documents filed after the
date of this Agreement and prior to the Effective Time shall be prepared in
accordance with the published rules and regulations of the SEC and generally
accepted accounting principles applied on a consistent basis throughout
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the periods indicated and each shall present fairly, the consolidated financial
position, results of operations and cash flows of the Company and its
consolidated Subsidiaries as at the respective dates thereof and for the
respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which are not expected,
individually or in the aggregate, to be material).
SECTION 7.5. Notification of Certain Matters. The Company
shall give prompt notice to Parent of (a) any notice of, or other communication
relating to, a default or event which, with notice or lapse of time or both,
would become a default, received by the Company or any of its Subsidiaries
subsequent to the date of this Agreement and prior to the Effective Time, under
any contract material to the business, operations, properties, financial
condition or results of operations of the Company and its Subsidiaries, taken as
a whole, to which the Company or any of its Subsidiaries is a party or is
subject, (b) any Company Material Adverse Change involving the Company or the
occurrence of any event which, so far as reasonably can be foreseen at the time
of its occurrence, is reasonably likely to result in any such change or (c)(i)
any representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate in any respect, or (ii) the failure by it to comply with or
satisfy in any respect any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 7.6. Accountants. The Company shall cause Arthur
Andersen LLP, the Company's independent auditors, to deliver to Parent and
Merger Sub on or prior to the expiration of the Offer a letter (the
"Accountant's Letter"), dated such date, in form and substance reasonably
satisfactory to Parent to the effect that they have performed their usual
procedures and that based upon such procedures, nothing has come to their
attention which would cause them to believe that any financial statements
contained in any SEC Documents filed by the Company with respect to the periods
ending on or after the fiscal year ended June 30, 1997 do not comply in all
material respects with all applicable accounting requirements of the Exchange
Act or that such financial statements are not fairly presented in all material
respects in conformity with generally accepted accounting principles.
ARTICLE VIII
COVENANTS OF PARENT AND MERGER SUB
Parent and Merger Sub agree that:
SECTION 8.1. Confidentiality. Prior to the Effective Time and
after any termination of this Agreement, Parent will hold, and will use its
reasonable best efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
Company and its Subsidiaries furnished to Parent in connection with the
transactions contemplated by this Agree-
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ment, except to the extent that such information can be shown to have been (i)
previously known on a nonconfidential basis by Parent, (ii) in the public domain
through no fault of Parent or (iii) later lawfully acquired by Parent from
sources other than the Company; provided that Parent may disclose such
information to its officers, directors, employees, accountants, counsel,
consultants, advisors and agents in connection with the transactions
contemplated by this Agreement. Parent's obligation to hold any such information
in confidence shall be satisfied if it exercises the same care with respect to
such information as it would take to preserve the confidentiality of its own
similar information. If this Agreement is terminated, Parent will, and will use
its best efforts to cause its officers, directors, employees, accountants,
counsel, consultants, advisors and agents to, deliver to the Company, upon
request, or, at the election of Parent, destroy, all documents and other
materials and all copies thereof, obtained by Parent or on its behalf from the
Company in connection with this Agreement that are subject to such
confidentiality.
SECTION 8.2. Obligations of Merger Sub. Parent will take all
action, and provide all financing, necessary to cause Merger Sub to consummate
the Offer and the Merger on the terms and conditions set forth in this
Agreement.
SECTION 8.3. Voting of Shares. Each of Parent and Merger Sub
agrees to vote all Shares beneficially owned by it, if any, in favor of adoption
of this Agreement at the Company Stockholder Meeting.
SECTION 8.4. Director and Officer Liability. For six years
after the Effective Time, Parent will cause the Surviving Corporation to
indemnify and hold harmless the present and former officers, directors,
employees and agents of the Company (the "Indemnified Parties") in respect of
acts or omissions occurring on or prior to the Effective Time or arising out of
or pertaining to the transactions contemplated by this Agreement to the extent
provided under the Company's Articles of Organization and By-laws in effect on
the date hereof; provided that such indemnification shall be subject to any
limitation imposed from time to time under applicable law. Parent and Surviving
Corporation shall not amend the Articles of Organization or by-laws of the
Surviving Corporation to amend the indemnification provisions therein in a
manner inconsistent with this Section 8.4 for the six-year period referred to
above. For three years after the Effective Time, Parent will cause the Surviving
Corporation to use its best efforts to provide officers' and directors'
liability insurance in respect of acts or omissions occurring on or prior to the
Effective Time covering each such Person currently covered by the Company's
officers' and directors' liability insurance policy on terms substantially
similar to those of such policy in effect on the date hereof; provided that in
satisfying its obligation under this Section 8.4, Parent shall not be obligated
to cause the Surviving Corporation to pay premiums in excess of 125% of the
amount per annum the Company paid in its last full fiscal year, which amount has
been disclosed to Parent, and if the Surviving Corporation is unable to obtain
the insurance required by this Section , it shall obtain as much comparable
insurance as possible for an annual premium equal to such maximum amount.
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SECTION 8.5. Notice to Company of Certain Events. Each of the
Parent and Merger Sub shall give prompt notice to the Company of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
ARTICLE IX
COVENANTS AND FURTHER AGREEMENTS OF PARENT AND THE COMPANY
The parties hereto agree that:
SECTION 9.1. Reasonable Efforts; Notification; Further
Actions.
(a) Each of the parties agrees to use all reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable the Offer, the Merger and the other transactions contemplated
by this Agreement, including (i) the obtaining of all other necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all other necessary registrations and filings (including other filings
with Governmental Entities, if any), (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the preparation of the
Company Proxy Statement, if required, and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement.
(b) Notwithstanding anything to the contrary in Section 9.1
(a), (i) neither Parent nor any of its Subsidiaries or affiliates shall be
required to divest, or cause or permit the Company or its Subsidiaries or
affiliates to divest or agree to hold separate, any of their respective
businesses, product lines or assets, or to take or agree to take any other
action or agree to any limitation that could reasonably be expected to have a
material adverse effect on the value, condition (financial or otherwise),
prospects, business or results of operations or prospects of Parent and its
Subsidiaries taken as a whole or of the Company and its Subsidiaries taken as a
whole, or all such entities taken together, and (ii) neither Parent nor Merger
Sub shall be required to waive any of the conditions to the Merger set forth in
Article X.
(c) The Company shall give prompt notice to Parent, and Parent
or Merger Sub shall give prompt notice to the Company, of:
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(i) any notice or other communication from any Person alleging
that the con sent of such Person is or may be required in connection
with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any Governmental
Entity in connection with the transactions contemplated by this
Agreement; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against,
relating to or involving or otherwise affecting it or any of its
Subsidiaries which, if pending on the date of this Agreement would
have been required to have been disclosed pursuant to Article IV or
which relate to the consummation of the transactions contemplated by
this Agreement.
(d) Each of Parent, Merger Sub and the Company shall not
permit any of its respective Subsidiaries to take any action that would, or that
would reasonably be expected to, result in (i) any of its respective
representations and warranties set forth in this Agreement that are qualified as
to materiality becoming untrue, (ii) any of such respective representations and
warranties that are not so qualified becoming untrue in any material respect or
(iii) any of the conditions to the Merger set forth in Article X not being
satisfied except to the extent permitted under Sections 7.2 and 9.5 in the
exercise of the fiduciary duties referred to therein.
(e) Each of the Parent and Merger Sub shall give prompt notice
to the Company of (i) any representation or warranty made by it contained in
this Agreement that is qualified as to materiality becoming untrue or inaccurate
in any respect or any such representation or warranty that is not so qualified
becoming untrue or inaccurate in any material respect or (ii) the failure by it
to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
SECTION 9.2. Public Announcements. Parent and Merger Sub, on
the one hand, and the Company, on the other hand, will consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Merger, and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange or with the Nasdaq National Market. The parties agree that the initial
press release to be issued with respect to the transactions contemplated by this
Agreement will be in the form previously agreed to by the parties.
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SECTION 9.3. Directors.
(a) Promptly upon the acceptance for payment of, and payment
for, Shares constituting a majority of the then outstanding Shares by Parent or
Merger Sub, as applicable, pursuant to the Offer, Parent from time to time 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 will give Parent or Merger
Sub, as applicable, subject to compliance with Section 14(f) of the Exchange
Act, up to that percentage of the total number of directors on the Board of
Directors of the Company (giving effect to the election of any additional
directors pursuant to this Section 9.3) equal to the percentage of then
outstanding Shares owned by Parent or Merger Sub, and the Company shall, at such
time, cause Parent's or Merger Sub's designees, as applicable, to be so elected
by its existing Board of Directors; provided, however, that in the event that
such designees are elected to the Board of Directors of the Company, until the
Effective Time such Board of Directors shall have at least two directors who are
directors on the date of this Agreement [and who are neither officers of the
Company nor affiliates of Parent or Merger Sub (the "Independent Directors");
and provided further that if the number of Independent Directors shall be
reduced below two for any reasons whatsoever, the remaining Independent Director
shall designate a Person to fill such vacancy who shall be deemed to be an
Independent Director for purposes of this Agreement or, if no Independent
Directors then remain, the other directors shall designate two Persons to fill
such vacancies who shall not be officers or affiliates of the Company or
officers or affiliates of Parent of any of its Subsidiaries, and such Persons
shall be deemed to be Independent Directors for purposes of this Agreement.
(b) Subject to applicable law, the Company shall take all
actions requested by Parent necessary to effect any such election, including
mailing to its stockholders the Information Statement containing the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder by the SEC, and the Company agrees to make such mailing with the
mailing of the Schedule 14D-9 (or if requested by Parent promptly after a later
request for such mailing). In connection with the foregoing, the Company will
promptly, at the option of Parent, either increase the size of the Company's
Board of Directors and/or obtain the resignation of such number of its current
directors as is necessary to enable Parent's or Merger Sub's designees, as
applicable, to be elected or appointed to, and to constitute (rounded up to the
next whole number that percentage of the total number of directors on the Board
of Directors of the Company (giving effect to the election of any additional
directors pursuant to this Section 9.3) equal to the percentage of then
outstanding Shares owned by Parent or Merger Sub (provided that such percentage
of the total number of directors shall not be less than a majority of the Board
of Directors of the Company).
(c) Following the election of Parent's or Merger Sub's
designees, as applicable, pursuant to this Section 9.3, prior to the Effective
Time, any amendment or termination of this Agreement or waiver of any of the
Company's rights hereunder shall require the concurrence of a majority of the
Independent Directors.
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SECTION 9.4. Employees. Parent agrees to provide, after the
Effective Time, or cause the Surviving Corporation to provide employees of the
Company and its Subsidiaries retained and who continue to be employed by Parent
with employee benefits in the aggregate substantially no less favorable
than those benefits provided by the Company to its employees prior to the
Effective Time that are set forth in Schedule 9.4 for a period ending on the
first anniversary of the Effective Time. The benefits provided shall include
those listed in paragraphs 2 and 3 of Section 9.4 to the Company Disclosure
Schedule.
SECTION 9.5. Company Stockholder Meeting.
(a) The Company will take all action necessary in accordance with
applicable law and its Articles of Organization and by-laws to duly call and
convene a meeting of its shareholders (a "Company Stockholder Meeting") to
consider and vote upon the approval of this Agreement and the Merger and such
other matters as may be necessary to effectuate the transactions contemplated
hereby, if necessary to comply with applicable law, as promptly as practicable
after the expiration of the Offer.
(b) The Board of Directors of the Company shall recommend such
approval and take all lawful action to solicit such approval; provided, however,
that the Board of Directors of the Company at any time prior to the time of
acceptance for payment of at least two-thirds of the Shares pursuant to the
Offer may withdraw, modify or change any such recommendations to the extent that
the Board of Directors of the Company (i) determines in good faith after
consultation with and based upon the advice of outside legal counsel that it is
required to so withdraw, modify or change its recommendation in order to
discharge properly its fiduciary duties to the Company's stockholders under
applicable law and (ii) the Company has received in writing a Superior Proposal
(as hereinafter defined), which is then pending, which the Board of Directors of
the Company has determined to recommend to the stockholders of the Company. For
purposes of this Agreement, a "Superior Proposal" means any bona fide proposal
relating to an Acquisition Proposal made by a third party on terms which the
Board of Directors of the Company determines in its good faith judgment (based
upon the advice of a financial advisor of nationally recognized reputation,
including KPMG Inc.) to be more financially favorable to the Company's
stockholders than the Offer and the Merger and for which financing, to the
extent required, is then committed or which, in the good faith judgment (based
upon the advice of a financial advisor nationally recognized reputation,
including KPMG, Inc.) of the Board of Directors of the Company, is reasonably
capable of being financed by such third party. The Company agrees that it shall
notify Parent at least 48 hours prior to taking any action with respect to such
Superior Proposal or taking any action with respect to the withdrawal,
modification or change of its recommendation for approval of this Agreement, the
Offer, the Merger or the transactions contemplated hereby. Notwithstanding
anything to the contrary contained in this Agreement, any such withdrawal,
modification or change of recommendation in accordance with the provisions of
this Section 9.5(b) shall not constitute a breach of this Agreement by the
Company.
(c) Notwithstanding the foregoing, in the event that Parent
shall acquire at
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least 90 percent of the then outstanding Shares, the parties hereto agree,
subject to Article X, to take all necessary and appropriate action to cause the
Merger to become effective, in accordance with Section 82 of the BCL, as soon as
reasonably practicable after the Merger, without a meeting of the stockholders
of the Company.
(d) If paragraph (c) is inapplicable, as soon as practicable
after the expiration of the Offer, the Company shall file with the SEC the
Company Proxy Statement, which shall comply as to form with all applicable laws.
The Company shall obtain and furnish the information required to be included in
the Company Proxy Statement and shall respond promptly to any comments made by
the SEC with respect to the Company Proxy Statement and cause the Company Proxy
Statement to be mailed to the Company's stockholders at the earliest practicable
date. Parent and Merger Sub shall cooperate in the preparation of the Company
Proxy Statement and shall furnish the Company with all information with respect
to itself, and its directors, officers, stockholders and Subsidiaries, as may be
required for inclusion in the Company Proxy Statement. The Company agrees, as to
information with respect to the Company, its officers, directors, stockholders
and Subsidiaries contained in the Company Proxy Statement, and Parent agrees, as
to information with respect to Parent, its officers, directors, stockholders and
Subsidiaries contained in the Company Proxy Statement, that such information, at
the date the Company Proxy Statement is mailed and (as then amended or
supplemented) at the time of the Meeting, will not be false or misleading with
respect to any material fact, or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
Parent and its counsel shall be given an opportunity to review the Company Proxy
Statement, and all amendments or supplements thereof, prior to their being filed
with the SEC and the Company shall not make any such filing without the approval
of Parent (which shall not be unreasonably withheld). The Company will advise
Parent, promptly after it receives notice thereof, of the time when the Company
Proxy Statement has been cleared by the SEC or any request by the SEC for
amendment of the Company Proxy Statement or comments thereon and proposed
responses thereto or requests by the SEC for additional information.
ARTICLE X
CONDITIONS TO THE MERGER
SECTION 10.1. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) if required by applicable law, this Agreement shall have been
approved and adopted by the stockholders of the Company within the meaning
of, and in accordance with, applicable law and the Company's Articles of
Organization and by-laws;
(b) no provision of any applicable law or regulation and no judgment,
injunction, order, decree or other legal restraint shall prohibit the
consummation of the Merger; and
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(c) the Merger Sub shall have made the Offer on the terms and
conditions set forth herein and shall have purchased, or caused to be
purchased, all Shares validly tendered and not withdrawn pursuant to
the Offer; provided, however, this condition shall not be applicable to
the obligations of Parent or Merger Sub if, in breach of this Agreement
or the terms of the Offer, Merger Sub fails to purchase any Shares
validly tendered and not withdrawn pursuant to the Offer.
SECTION 10.2. Conditions to the Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to consummate the Merger
are further subject to the satisfaction of the condition that the Offer shall
not have been terminated in accordance with its terms prior to the purchase of
any Shares.
ARTICLE XI
TERMINATION
SECTION 11.1. Termination. This Agreement may be terminated
and the Merger and the other transactions contemplated hereby may be abandoned
at any time prior to the Effective Time (notwithstanding any requisite approval
and adoption of this Agreement and the transactions contemplated hereby):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent if the Merger shall not
have been consummated by October 31, 1998; provided, however, that the
right to terminate this Agreement under this Section 11.1(b) shall not
be available to any party whose action or failure to act has been a
principal cause of, or resulted in, the failure of the Merger to occur
on or before such date if such action or failure to act constitutes a
breach of this Agreement;
(c) by Parent, if at the Company Stockholder Meeting or any
adjournment thereof at which the Company Stockholder Approval is voted
upon, the Company Stockholder Approval shall not have been obtained
(provided that the right to terminate under this Section 11.1(c) shall
not be available to Parent where the failure to obtain the Company
Stockholder Approval shall have been caused by (i) the failure of the
Parent or Merger Sub to vote its Shares in favor of the Merger or (ii)
if it is legally able to do so because of its control of the Company's
Board of Directors, failure to call or convene a meeting of the
stockholders of the Company to vote on the Merger as provided in
Section 9.5(a) and (d));
(d) by either the Company or Parent, if Parent or Merger Sub
shall have terminated the Offer in accordance with its terms and
conditions without purchasing any Shares pursuant thereto;
40
<PAGE> 46
(e) by either the Company or Parent, if there shall be any law or
regulation that makes payment of, or payment for Shares pursuant to
the Offer or consummation of the Merger illegal or otherwise
prohibited or any judgment, injunction, order or decree is entered
enjoining Parent, the Merger Sub, or the Company from paying for the
Shares pursuant to the Offer or consummating the Merger and, in the
case of any action brought other than by a Governmental Entity, such
judgment, injunction, order or decree shall become final and
non-appealable; or
(f) by Parent, if the Board of Directors of the Company (i)
withdraws, modifies or changes its recommendation of this Agreement,
the Offer or the Merger in a manner adverse to Parent or Merger Sub,
(ii) shall have initiated, entered into, or recommended to the
stockholders of the Company any Acquisition Proposal (including a
Superior Proposal) or (iii) shall have resolved to do any of the
foregoing;
(g) by Parent, prior to the purchase of the Shares pursuant to
the Offer if there has been a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall
have become untrue (except, in all cases, where the failure to be so
true and correct would not have a Company Material Adverse Effect) (a
"Terminating Company Event"); provided, however, that, if such
Terminating Company Event is curable by the Company through the
exercise of its reasonable best efforts and for so long as the Company
continues to exercise such reasonable best efforts (but in no event
longer than 30 days after Parent's notification of the Company of the
occurrence of such Terminating Company Event), Parent may not
terminate this Agreement under this Section 11.1(g);
(h) by the Company, if there has been a breach of any
representation, warranty, covenant or agreement on the part of Parent
and Merger Sub set forth in this Agreement, or if any representation
or warranty of Parent and Merger Sub shall have become untrue (except,
in all cases, where the failure to be so true and correct would not
have a Parent Material Adverse Effect) ("Terminating Parent Event");
provided, however, that, if such Terminating Parent Event is curable
by Parent and Merger Sub through the exercise of its reasonable best
efforts and for so long as Parent and Merger Sub continue to exercise
such reasonable best efforts (but in no event longer than 30 days
after the Company's notification of Parent of the occurrence of such
Terminating Purchaser Event), the Company may not terminate this
Agreement under this Section 11.1(h);
(i) by the Company, if Merger Sub has not commenced the Offer
within five business days of the date on which Merger Sub's intention
to make the Offer is publicly announced;
(j) by the Company or the Parent, if the Company shall have
accepted a Superior Proposal; or
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(k) by the Company, if at a meeting of the shareholders of the
Parent or any adjournment thereof at which the approval of the
shareholders of the Parent to the acquisition by the Parent of the
Company is voted upon, such approval shall not have been obtained by
the requisite vote required.
SECTION 11.2. Effect of Termination. If this Agreement is
terminated pursuant to Section 11.1, this Agreement shall become void and of no
effect with no liability on the part of any party hereto or their respective
officers and directors, except that the agreements contained in Sections 8.1,
12.4 and 12.6 shall survive the termination hereof. Specifically, and without
limiting the generality of the foregoing, Parent and Merger Sub agree that
termination of this Agreement and remedies in Section 12.4 shall be their sole
and exclusive remedy for any nonwillful breach by the Company of its
representations, warranties and covenants under this Agreement and the Company
agrees that termination of this Agreement and remedies in Section 12.4 shall be
its sole and exclusive remedy for any nonwillful breach by Parent or Merger Sub
of their representations, warranties and covenants under this Agreement.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy or
similar writing) and shall be given,
if to Parent or Merger Sub, to:
Filtronic plc
Salts Mill Road, Saltaire
Shipley, BD 18 3TT
England
Telecopy: 011-44-1274-530622
Attention: Christopher Schofield, Solicitor
with a copy to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Telecopy: 212-836-7246
Attention: Nancy E. Fuchs, Esq.
if to the Company, to:
Sage Laboratories, Inc.
11 Huron Drive
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East Natick Industrial Park
Natick, Massachusetts 01760
Telecopy: (508) 653-5715
Attention: Carl A. Marguerite
Chief Executive Officer
with a copy to:
Palmer & Dodge, LLP
One Beacon Street
Boston, Massachusetts 02108
Telecopy: 617-227-4420
Attention: Stanley Keller, Esq.
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective when delivered at the address specified
in this Section 12.1.
SECTION 12.2. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement except for the
representations, warranties and agreements set forth in Sections 8.1, 12.4 and
12.6 which shall survive termination of this Agreement.
SECTION 12.3. Entire Agreement; Amendments; No Waivers. (a)
This Agreement and the Confidentiality Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and superede all prior
agreements and understandings of the parties with respect thereto.
(b) Any provision of this Agreement may be amended or waived
prior to the Effective Time if, and only if, such amendment or waiver is in
writing and signed, by the party to be charged therewith; provided that if and
after the adoption of this Agreement by the stockholders of the Company, no such
amendment or waiver shall, without the further approval of such stockholders,
alter or change (i) the amount or kind of consideration to be received in
exchange for any shares of capital stock of the Company or (ii) any of the
principal terms of the Merger.
(c) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
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SECTION 12.4. Expenses.
(a) Except as otherwise set forth in this Section 12.4, all
Expenses (as herein defined) incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not any transaction contemplated hereby is consummated.
"Expenses" as used in this Agreement shall include all reasonable out-of-pocket
expenses (including, without limitation, all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, filing and mailing of
the Company Proxy Statement if required and the Offer documents, the
solicitation of stockholder approvals and all other matters relating to the
closing of the transactions contemplated hereby.
(b) The Company agrees that, if
(i) Parent shall terminate this Agreement pursuant to Section
11.1(f), (g) or (j) or the Company shall terminate this
Agreement pursuant to Section 11.1(j); or
(ii) Parent shall terminate this Agreement pursuant to Section
11.1(c) or shall terminate the Offer because the Minimum
Condition (as defined in Exhibit 1.1 hereof) is not
satisfied and at the time the Company Stockholder Approval
in the case of a termination pursuant to 11(c) was voted
upon or the Offer was so terminated, as the case may be (A)
there was announced or commenced an Acquisition Proposal and
the Company shall have either (x) executed an agreement to
engage in the same or (y) the Board of Directors of the
Company shall not have recommended against such Acquisition
Proposal and maintained such recommendation in effect or (B)
there was announced an Acquisition Proposal with a third
party and the Company shall have initiated, recommended or
entered into an agreement to engage in, an Acquisition
Proposal with such third party or an affiliate thereof
within 12 months after the date of the Company Stockholder
Meeting or the termination of the Offer, as the case may be;
or
(iii) Parent shall terminate the Offer because the condition
under clause (iv)(f) of Exhibit 1.1 hereof shall exist;
then promptly after such termination (or, with respect to
clause (ii)(B) above, upon engaging in such Acquisition
Proposal or agreement) the Company shall pay to Parent an
amount equal to (i) in the case of a termination by Parent
pursuant to Section 11.1(g) or the termination event
referred to in Section 12.4(b)(iii), 3% of the amount of the
consideration to
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be paid to the stockholders of the Company hereunder and (ii) in the
case of a termination pursuant to Section 11(f) or (j) or the
termination events referred to in Section 12.4(b)(ii), that amount
which is equal to the greater of (x) 3% of the amount of the
consideration to be paid to the stockholders of the Company hereunder
and (y) the excess of the amount which the stockholders of the Company
who are parties to a Stockholder Agreement would receive in any
Superior Proposal over the amount to be paid to such stockholders
hereunder, but in no event shall such amount exceed 5% of such
consideration to be paid to the stockholders of the Company hereunder.
(c) Parent agrees that, if
(i) Company shall terminate this Agreement pursuant to Section
11.1(h), (i) or (k); or
(ii) Parent shall terminate the Offer because clause (iii) of
Exhibit 1.1 hereof is not satisfied;
then promptly after such termination, Parent shall pay to the
Company an amount equal to $250,000.
(d) Any payment required to be made pursuant to Section 12.4(b) or
12.4(c) shall be made to Parent or the Company, as the case may be, not later
than three business days after delivery to the Company or Parent of notice of
demand for payment and shall be made by wire transfer of immediately available
funds to an account designated by Parent or the Company in the notice of demand
for payment delivered pursuant to this Section 12.4.
(e) The payouts, if any, made pursuant to Section 12.4 shall not be
deemed to be liquidated damages, and the right to the payment of such amount
shall be in addition to (and not a maximum payment in respect of) any other
damages or remedies at law or in equity (i) to which Parent or Merger Sub may be
entitled as a result of the Company's willful violation or breach of any term or
provision of this Agreement or (ii) to which the Company may be entitled as a
result of Parent's or Merger Sub's willful violation or breach of any term or
provision of this Agreement.
SECTION 12.5. Successors and Assigns; Parties in Interest. The
provisions of this Agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns, provided that
no party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of the other parties hereto
except that Merger Sub may transfer or assign, in whole or from time to time in
part, to one or more of Parent or any of its wholly owned Subsidiaries, any or
all of its rights or obligations, but any such transfer or assignment will not
relieve Merger Sub of its obligations under this Agreement. Except as expressly
set forth herein nothing in this Agreement, express or implied, is intended to
or shall confer upon any Person not a party hereto any right, benefit or rem-
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<PAGE> 51
edy of any nature whatsoever under or by reason of this Agreement, including to
confer third party beneficiary rights.
SECTION 12.6. Governing Law; Jurisdiction. (a) This Agreement shall
be construed in accordance with and governed by the law of the Commonwealth of
Massachusetts, without giving effect to principles of conflicts of laws.
(b) Any action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this Agreement may be brought against any of
the parties in the courts of the Commonwealth of Massachusetts, or, if it has or
can acquire jurisdiction, in the United States District Court for the District
of Massachusetts, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
SECTION 12.7. Counterparts; Effectiveness; Interpretation. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto. When a reference is made in this Agreement to a Section, such
reference shall be to a Section of this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation."
The parties hereto have caused this Agreement to be duly executed by
their respective authorized officers as of the day and year first above
written.
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SAGE LABORATORIES, INC.
By: /s/ Carl A. Marguerite
-----------------------
Carl A. Marguerite
Chief Executive Officer
By: /s/ Carl A. Marguerite
-----------------------
Carl A. Marguerite
Treasurer
FILTRONIC PLC
By: /s/ Christopher Schofield
--------------------------
Name: Christopher Schofield
Title: Company Secretary
FIL ACQUISITION CORP.
By: /s/ Professor John Rhodes
--------------------------
Name: Professor John Rhodes
Title: President
By: /s/ Christopher Schofield
---------------------------
Name: Christopher Schofield
Title: Clerk
47
<PAGE> 53
EXHIBIT 1.1
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement,
Parent or the Merger Sub, as applicable, shall not be required to accept for
payment or pay for any Shares tendered pursuant to the Offer, and may terminate
or amend the Offer (subject to the provisions of the Agreement) and may postpone
the acceptance of, and payment for, subject to Rule 14e-1(c) of the Exchange
Act, any Shares tendered if:
(i) the Minimum Condition (as hereinafter defined) shall not
have been satisfied,
(ii) the period of time for any review process by the
Committee on Foreign Investment in the United States ("CFIUS") pursuant to
Section 721 of Title VII of the Defense Production Act of 1950 as amended by
Section 5021 of the Omnibus Trade and Competitiveness Act of 1988 (the "Exon
Florio Act") in relation to the determination of any threat to national security
shall not have expired, and CFIUS shall have taken any action or made any
recommendation to the President of the United States to block or prevent the
consummation of the transaction;
(iii) the shareholders of Parent shall not have approved the
acquisition of the Company by Parent;
(iv) at any time on or after the date of this Agreement, and
prior to the acceptance for payment of Shares, any of the following conditions
shall exist:
(a) there shall have been instituted by any
government or Governmental Entity, any action or proceeding before any
Governmental Entity (including such Governmental Entity instituting or
initiating such action or proceeding): (i) challenging or seeking to make
illegal, materially delay or otherwise directly or indirectly restrain or
prohibit the making of the Offer, the acceptance for payment of, or payment for,
any Shares by Parent, Merger Sub or any other affiliate of Parent, or the
consummation of any other transaction contemplated by this Agreement, or seeking
to obtain material damages in connection with any transaction contemplated by
the Agreement; (ii) seeking to prohibit or limit materially the ownership or
operation by the Company, Parent or any of their respective Subsidiaries of all
or any material portion of the business or assets of the Company, Parent or any
of their respective Subsidiaries, or to compel the Company, Parent or any of
their respective Subsidiaries to dispose of or to hold separate all or any
material portion of the business or assets of the Company, Parent or any of
their respective Subsidiaries, as a result of the transactions contemplated by
this Agreement; (iii) seeking to impose or confirm limitations on the ability of
Parent, Merger Sub or any other affiliate of Parent to exercise effectively full
rights of ownership of any Shares, including, without limitation, the right to
vote any Shares acquired by Merger Sub or Parent pursuant to the Offer or
<PAGE> 54
otherwise on all matters properly presented to the Company's stockholders,
including, without limitation, the approval and adoption of this Agreement and
the transactions contemplated by this Agreement; (iv) seeking to require
divestiture by Parent, Merger Sub or any other affiliate of Parent of any Share;
or (v) which otherwise has a Company Material Adverse Effect or which relates to
the transactions contemplated by this Agreement and has a Parent Material
Adverse Effect;
(b) there shall have been any action taken, or any
law enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to (i) Parent, the Company or any Subsidiary or affiliate of Parent
or the Company or (ii) any transaction contemplated by the Agreement, by any
government or Governmental Entity, which is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses (i)
through (v) of paragraph (a) above;
(c) there shall have occurred any change, condition,
event or development that has a Company Material Adverse Effect;
(d) there shall have occurred (i) any general
suspension of, or limitation on prices for, trading in securities on the New
York Stock Exchange or the Nasdaq National Market (excluding any coordinated
trading halt triggered solely as a result of a specified decrease in a market
index), (ii) a declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States, (iii) any limitation (whether or not
mandatory) by any government or Governmental Entity of the United States on the
extension of credit by banks or other lending institutions or (iv) a
commencement of a war or material armed hostilities or other national or
international calamity involving the United States;
(e) the Company or any of its Subsidiaries shall have
sustained a loss or interference with its business by fire, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or malicious act which
will, in the reasonable opinion of Parent, make it inadvisable or impractical to
proceed with the Offer;
(f) (i) it shall have been publicly disclosed or
Parent or Merger Sub shall have otherwise learned that beneficial ownership of
20% of more of the then outstanding Shares has been acquired by any Person,
other than Parent or any of its affiliates or any other Person not required to
file a Schedule 13D under the rules promulgated under the Exchange Act or (ii)
(A) the Board of Directors of the Company or any committee thereof shall have
withdrawn, modified or changed in a manner adverse to Parent or Merger Sub the
approval or recommendation of the Offer, the Merger or the Agreement, or
approved or recommended any Acquisition Proposal or any other acquisition of
Shares other than the Offer or the Merger or (B) the Board of Directors of the
Company or any committee thereof shall have resolved to do any of the foregoing;
(g) the representations and warranties of the Company
contained in this Agreement shall not be true and correct in all respects
(except, in all cases, where the failure to be so true and correct would not
have a Company Material Adverse Effect) as of the expiration of the
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<PAGE> 55
Offer, except for (i) changes specifically contemplated by this Agreement and
(ii) those representations and warranties that address matters only as of a
particular date (which shall remain true and correct as of such date);
(h) the Company shall not have performed or complied
in all material respects with all obligations, agreements and covenants of the
Company to be performed or complied with by it under this Agreement;
(i) the Agreement shall have been terminated in
accordance with its terms; or
(j) Parent and the Company shall have agreed that
Parent or Merger Sub, as applicable, shall terminate the Offer or postpone the
acceptance for payment of or payment for Shares thereunder.
For purposes hereof the term "Minimum Condition" shall mean at
least two-thirds of the Shares outstanding on a fully diluted basis (including
for purposes of such calculation all Shares issuable upon exercise of all stock
options that are or will be fully vested, currently exercisable and outstanding
immediately prior to the Effective Time and conversion of convertible securities
or other rights to purchase or acquire Shares that can be converted or purchased
prior to the Effective Time) being validly tendered and not withdrawn prior to
the expiration of the Offer.
The foregoing conditions are for the sole benefit of Parent
and Merger Sub and may be asserted by Parent or Merger Sub regardless of the
circumstances giving rise to any such condition or may be waived by Parent or
Merger Sub in whole or in part at any time and from time to time in their sole
discretion, subject in each case to the terms of this Agreement. The failure by
Parent or Merger Sub at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right; the waiver of any such right with
respect to particular facts and other circumstances shall not be deemed a waiver
with respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
3
<PAGE> 1
STOCKHOLDER AGREEMENT, dated as of May 13, 1998 (this "Agreement"), among
FILTRONIC PLC, a public limited company incorporated under the laws of England
and Wales ("Parent"), FIL ACQUISITION CORP., a Massachusetts corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and Carl A. Marguerite (the
"Stockholder").
WHEREAS, Parent, Merger Sub and Sage Laboratories, Inc., a
Massachusetts corporation (the "Company"), propose to enter into an Agreement
and Plan of Merger dated as of the date hereof (as the same may be amended or
supplemented, the "Merger Agreement") providing for (i) the making of the Offer
(as defined in the Merger Agreement) by Parent or Merger Sub for all the
outstanding shares of common stock, par value $.10 per share, of the Company
("Company Common Stock") and (ii) the merger of Merger Sub and the Company (the
"Merger");
WHEREAS, the Stockholder is the record and beneficial owner of
254,180 shares of Company Common Stock; such shares of Company Common Stock, as
such shares may be adjusted by stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company, together with shares of
Company Common Stock that may be acquired after the date hereof by the
Stockholder, including shares of Company Common Stock issuable upon the exercise
of options or warrants to purchase Company Common Stock (as the same may be
adjusted as aforesaid), and such options to purchase shares of Company Common
Stock being collectively referred to herein as the "Shares"; and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Merger Sub have requested that the Stockholder
enter into this Agreement.
NOW, THEREFORE, to induce Parent and Merger Sub to enter into, and
in consideration of their entering into, the Merger Agreement, and in
consideration of the premises and the representations, warranties and agreements
contained herein, the parties agree as follows:
1. AGREEMENT
(a) Purchase and Sale of Shares.
Parent or Merger Sub hereby agrees to purchase, and the Stockholder hereby
agrees to sell, all of the Stockholder's Shares at a price per Share of $17.50,
subject only to the condition that Merger Sub shall have accepted for payment
and paid for shares of Company Common Stock pursuant to the Offer (the
"Purchase"). The closing of the Purchase shall be effected by the Stockholder
delivering all of its Shares, and by Parent or Merger Sub paying for such Shares
at the time of the consummation of the Offer. Parent agrees to make available to
Merger Sub the funds required to effect the Purchase.
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<PAGE> 2
(b) Break-Up Fee. In the event the Merger Agreement is
terminated under circumstances entitling Parent to a termination fee pursuant to
Section 12.4(b) of the Merger Agreement, the Stockholder shall pay to Merger Sub
an amount equal to (i) the cash consideration and Fair Market Value (as defined
below) of any non-cash consideration received by the Stockholder in exchange for
the Stockholder's Shares upon consummation within twelve (12) months of the date
of termination of the Merger Agreement, or pursuant to an agreement entered into
within twelve (12) months of the date of termination of the Merger Agreement, of
an Acquisition Proposal (as defined in the Merger Agreement) with a third party
that was announced or commenced subsequent to the date hereof and on or prior to
the date of termination of the Merger Agreement, less the sum of (i) the amount
equal to the price per share of the Offer made by the Merger Sub multiplied by
the number of Stockholder's Shares and (ii) the amount paid to Merger Sub
pursuant to Section 12.4(b) of the Merger Agreement multiplied by a fraction the
numerator of which is the number of Stockholder's Shares, and the denominator of
which is the total number of Shares of the Company Common Stock subject to a
Stockholder Agreement (as defined in the Merger Agreement); provided, that such
amount shall be payable only if such amount calculated pursuant to this
paragraph is greater than zero.
"Fair Market Value" shall mean (i) in respect of any securities upon the
date such consideration is received by the Stockholder, the last sale price on
such day on the principal stock exchange (including the Nasdaq National Market)
on which such securities are then listed or admitted to trading, (ii) if no sale
takes place on such day on any such exchange, the average of the last reported
closing bid and asked prices on such day as officially quoted on any such
exchange, (iii) if the securities are not then listed or admitted to trading on
any stock exchange, the average of the last reported closing bid and asked
prices on such day in the over-the-counter market, as furnished by the National
Association of Securities Dealers Automatic Quotation System, the National
Quotation Bureau, Inc. or other similar firm then engaged in such business, (iv)
if there is no such firm, as furnished by any member of the National Association
of Securities Dealers, Inc., or any successor corporation thereto, selected by
Merger Sub and reasonably satisfactory to the Stockholder, or (v) if no such
quotation is available or the consideration paid is other than cash or
securities, then Fair Market Value shall be determined by a nationally
recognized investment banking or accounting firm selected by Parent or Merger
Sub and reasonably satisfactory to the Stockholder that does not have, or has
not within two years had, an indirect or direct material financial interest in
or pecuniary relationship with Parent, Merger Sub or Stockholder (other than
fees and expenses to be paid in respect of such appraisal). The fees and
expenses of such investment banking or accounting firm shall be borne by Parent.
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to Parent and Merger Sub as follows:
(a) Authority. The Stockholder has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Stockholder. This Agreement has been duly executed
and delivered by the Stockholder and, assuming this
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<PAGE> 3
Agreement constitutes a valid and binding obligation of Parent and Merger Sub,
constitutes a valid and binding obligation of the Stockholder enforceable
against the Stockholder in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
Except for the informational filings with the Securities and Exchange Commission
and any consents, approval, clearances or authorizations identified in the
Merger Agreement, neither the execution, delivery or performance of this
Agreement by the Stockholder nor the consummation by the Stockholder of the
transactions contemplated hereby will require any filing with, or permit,
authorization, consent or approval of, any Federal, state or local government or
any court, tribunal, administrative agency or commission or other domestic
governmental or regulatory authority or agency (a "Governmental Entity").
(b) Conflicting Instruments; No Transfer. Neither the
execution, delivery or performance of this Agreement by the Stockholder nor the
consummation by the Stockholder of the transactions contemplated hereby will
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default under, be in conflict with, or give rise to any
right of termination, amendment, cancellation or acceleration under, or result
in the creation of any pledge, claim, lien, charge, encumbrance or security
interest of any kind or nature whatsoever (a "Lien") upon any of the properties
or assets of the Stockholder under, any of the terms, conditions or provisions
of any contract, agreement or other instrument, or any judgment, injunction,
order, decree, law, regulation or arrangement to which the Stockholder is a
party or by which the Stockholder or any of the Stockholder's properties or
assets, including the Stockholder's Shares, may be bound, except for any breach,
violation, conflict, default, conflict or Lien which, individually or in the
aggregate, would not impair or affect the Stockholder's ability to sell, or to
deliver his proxy for, the Shares according to the terms of this Agreement and
to approve the Merger Agreement and the transactions contemplated thereby.
(c) The Shares. The Stockholder's Shares and the certificates
representing the Shares 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, and the Stockholder has good and valid title to the Shares and will
deliver the Shares, free and clear of any Liens, proxies, voting trusts or
agreements, understandings or arrangements, except for any such Liens or proxies
arising hereunder. Except as set forth in the Company's SEC Documents (as
defined in the Merger Agreement), the Stockholder owns of record or beneficially
no shares of Company Common Stock other than the Stockholder's Shares.
(d) Brokers. Except as disclosed in the Merger Agreement, no
broker, investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Stockholder.
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<PAGE> 4
(e) Merger Agreement. The Stockholder understands and
acknowledges that Parent is entering into, and causing Merger Sub to enter into,
the Merger Agreement in reliance upon the Stockholder's execution and delivery
of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent
and Merger Sub hereby jointly and severally represent and warrant to the
Stockholder as follows:
(a) Authority. Parent and Merger Sub have the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Parent and Merger Sub and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Merger Sub. This Agreement has been
duly executed and delivered by Parent and Merger Sub and, assuming this
Agreement constitutes a valid and binding obligation of the Stockholder,
constitutes a valid and binding obligation of Parent and Merger Sub enforceable
in accordance with its terms (except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies).
(b) Securities Act. The Shares will be acquired in compliance
with, and neither Parent nor Merger Sub will offer to sell or otherwise dispose
of any Shares so acquired by it in violation of the registration requirements
of, the Securities Act of 1933, as amended.
4. COVENANTS OF THE STOCKHOLDER. The Stockholder agrees as follows:
(a) The Stockholder shall not, except as contemplated by the
terms of this Agreement, (i) sell, transfer, pledge, assign or otherwise dispose
of, or enter into any contract, option or other arrangement (including any
profit sharing arrangement) or understanding with respect to the sale, transfer,
pledge, assignment or other disposition of, the Shares (including any options or
warrants to purchase Company Common Stock) to any person other than Parent,
Merger Sub or Merger Sub's designee, (ii) enter into any voting arrangement,
whether by proxy, voting agreement, voting trust, power-of-attorney or
otherwise, with respect to the Shares or (iii) 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.
(b) Other than pursuant to a fiduciary duty as a director or
officer of the Company and as permitted in Sections 7.2 and 9.5 of the Merger
Agreement, until the Merger is consummated or the Merger Agreement is
terminated, the Stockholder shall not, nor shall the Stockholder permit any
investment banker, financial adviser, attorney, accountant or other
representative or agent of the Stockholder to, directly or indirectly (i)
solicit, initiate or encourage (including by way of furnishing nonpublic
information), or take any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constitutes any
Acquisition Proposal (as defined in the Merger Agreement) or (ii) participate in
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<PAGE> 5
any discussions or negotiations regarding any Acquisition Proposal. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding sentence by an investment banker, financial advisor,
attorney, accountant or other representative or agent of the Stockholder shall
be deemed to be a violation of this Section 4(b) by the Stockholder.
(c) At any meeting of stockholders of the Company called to
vote upon the Merger and the Merger Agreement or at any adjournment thereof or
in any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Merger and the Merger
Agreement is sought, the Stockholder shall, including by executing a written
consent if requested by Parent, vote (or cause to be voted) the Stockholder's
Shares in favor of the Merger, the adoption by the Company of the Merger
Agreement and the approval of the other transactions contemplated by the Merger
Agreement. At any meeting of Stockholders of the Company or at any adjournment
thereof or in any other circumstances upon which the Stockholder's vote, consent
or other approval is sought, the Stockholder shall vote (or cause to be voted)
the Stockholder's Shares against (i) any action or agreement that would result
in a breach in any material respect of any covenant, representation or warranty
or any other obligation or agreement of the Company under the Merger Agreement
or of the Stockholder hereunder, (ii) any action or agreement that would impede,
interfere with, delay, postpone or attempt to discourage the Merger, including,
but not limited to: (A) any Acquisition Proposal, (B) any amendment of the
Company's articles of organization or by-laws or other proposal or transaction
involving the Company or any of its subsidiaries, which amendment or other
proposal or transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement or change in any manner the voting rights
of any class of the Company's capital stock; (C) any change in the management or
board of directors of the Company; (D) any material change in the present
capitalization or dividend policy of the Company; and (E) any other material
change in the Company's corporate structure or business (collectively,
"Frustrating Transactions"). The Stockholder further agrees not to commit or
agree to take any action inconsistent with the foregoing.
5. GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY. (a) The
Stockholder hereby irrevocably grants to, and appoints, Christopher Schofield
and John Samuel, and any other individual who shall hereafter be designated by
Parent, and each of them, 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 Stockholder's Shares, or grant a consent or approval in
respect of the Shares, at any meeting of Stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which their vote, consent
or other approval is sought, in favor of the Merger, the adoption by the Company
of the Merger Agreement and the approval of the other transactions contemplated
by the Merger Agreement and against any Acquisition Proposal or Frustrating
Transaction, and for no other purpose.
(b) The Stockholder represents that any proxies heretofore given in
respect of the Stockholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.
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<PAGE> 6
(c) The Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 5 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, subject to Section 8. The Stockholder hereby
ratifies and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof.
6. FURTHER ASSURANCES. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Merger Sub may reasonably request for the purpose of effectively
carrying out the transactions contemplated by this Agreement and to vest the
power to vote the Stockholder's Shares as contemplated by Section 5. Parent and
Merger Sub jointly and severally agree to use reasonable efforts to take, or
cause to be taken, all actions necessary to comply promptly with all legal
requirements that may be imposed with respect to the transactions contemplated
by this Agreement.
7. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Merger Sub
may assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. 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. The Stockholder agrees that this
Agreement and the obligations of the Stockholder hereunder shall attach to the
Stockholder's Shares and shall be binding upon any person or entity to which
legal or beneficial ownership of the Shares shall pass, whether by operation of
law or otherwise, including without limitation the Stockholder's heirs,
guardians, trustees, administrators or successors.
8. TERMINATION. This Agreement, and all rights and obligations of
the parties hereunder, shall terminate upon the earlier of the date upon which
the Merger Agreement is terminated pursuant to Section 11.1, the date that
Merger Sub shall have purchased and paid for all the Stockholders' Shares in the
Offer or pursuant to Section 1 and the date upon which the Offer is terminated.
Notwithstanding the foregoing, this sentence and Sections 1(b), 2, 6, 10, 11, 12
and 13 shall survive any termination of this Agreement
9. STOP TRANSFER. The Company agrees with, and covenants to, Parent
and Merger Sub that the Company shall not register the transfer of any
certificate representing the Stockholder's Shares unless such transfer is made
in accordance with the terms of this Agreement.
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<PAGE> 7
10. GENERAL PROVISIONS. (a) Payments. All payments required to be
made to any party to this Agreement shall be made by wire transfer of
immediately available funds to an account designated by such party at least one
trading day prior to such payment.
(b) Expenses. Except as expressly set forth herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(d) Notice. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed), sent by overnight courier (providing proof of delivery) or mailed
by registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) if to Parent, to
Filtronic plc
Salts Mill Road, Saltaire
Shipley, BD18 3TT
Attn: Chris Schofield
with a copy to:
Nancy Fuchs, Esq.
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
and
(ii) if to Stockholder, to:
Carl A. Marguerite
c/o Sage Laboratories, Inc.
11 Huron Drive
East Natick Industrial Park
Natick, MA 01760
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<PAGE> 8
with a copy to:
Stanley Keller, Esq.
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108-3190
(e) Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(f) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two 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.
(g) Entire Agreement; No Third-Party Beneficiaries. This Agreement
and the Merger Agreement (including the documents and instruments referred to
herein and therein) (i) 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 (ii) are not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
(h) Publicity. Except as otherwise required by law or as
contemplated or provided in the Merger Agreement, for so long as this Agreement
is in effect, none of the Stockholder, Merger Sub or Parent shall, nor shall
Parent or Merger Sub permit any of its subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement or the Merger Agreement without
the consent of the other parties.
11. STOCKHOLDER CAPACITY. No person executing this Agreement who is
or becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer. The Stockholder signs solely in his or her capacity as the record
holder and beneficial owner of, or the trustee of a trust whose beneficiaries
are the beneficial owners of, the Stockholder's Shares and nothing herein shall
limit or affect any actions taken by the Stockholder in its capacity as an
officer or director of the Company to the extent specifically permitted by the
Merger Agreement or required by applicable law.
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<PAGE> 9
12. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a)
This Agreement shall be construed in accordance with and governed by the law of
the Commonwealth of Massachusetts without regard to any applicable conflicts of
law principles.
(b) Each party to this Agreement hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any Massachusetts court, or any Federal court sitting in the Massachusetts
District. Each party hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in any such court and further waives the right to object,
with respect to such suit, action or proceeding, that such court does not have
jurisdiction over such party.
13. PERFORMANCE BY MERGER SUB. Parent covenants and agrees for the
benefit of the Stockholder that it shall cause Merger Sub to perform in full
each obligation of Merger Sub set forth in this Agreement.
14. 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 its 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 of this Agreement, without any bond or other security
being rendered, in any court of the United States located in the Commonwealth of
Massachusetts or any Massachusetts court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
IN WITNESS WHEREOF, each of Parent and Merger Sub has caused this
Agreement to be signed by its officer thereunto duly authorized and the
Stockholder has signed this Agreement, all as of the date first written above.
FILTRONIC PLC
By: /s/ Christopher Schofield
-------------------------------------------
Name: Christopher Schofield
Title: Company Secretary and Solicitor
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<PAGE> 10
FIL ACQUISITION CORP.
By: /s/ J. David Rhodes
-------------------------------------------
Name: Professor J. David Rhodes
Title: President
By: /s/ Christopher Schofield
-------------------------------------------
Name: Christopher Schofield
Title: Clerk
STOCKHOLDER:
By: /s/ Carl A. Marguerite
-------------------------------------------
Name: Carl A. Marguerite
Title: Chief Executive Officer
ACKNOWLEDGED AND AGREED TO AS TO SECTION 9 AS OF THE DATE FIRST WRITTEN ABOVE:
SAGE LABORATORIES, INC.
By: /s/ Janusz J. Majewski
--------------------------------
Name: Janusz J. Majewski
Title: Vice President, Research and Development
10
<PAGE> 1
STOCKHOLDER AGREEMENT, dated as of May 13, 1998 (this "Agreement"), among
FILTRONIC PLC, a public limited company incorporated under the laws of England
and Wales ("Parent"), FIL ACQUISITION CORP., a Massachusetts corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and John E. Miller (the
"Stockholder").
WHEREAS, Parent, Merger Sub and Sage Laboratories, Inc., a
Massachusetts corporation (the "Company"), propose to enter into an Agreement
and Plan of Merger dated as of the date hereof (as the same may be amended or
supplemented, the "Merger Agreement") providing for (i) the making of the Offer
(as defined in the Merger Agreement) by Parent or Merger Sub for all the
outstanding shares of common stock, par value $.10 per share, of the Company
("Company Common Stock") and (ii) the merger of Merger Sub and the Company (the
"Merger");
WHEREAS, the Stockholder is the record and beneficial owner of
12,000 shares of Company Common Stock; such shares of Company Common Stock, as
such shares may be adjusted by stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company, together with shares of
Company Common Stock that may be acquired after the date hereof by the
Stockholder, including shares of Company Common Stock issuable upon the exercise
of options or warrants to purchase Company Common Stock (as the same may be
adjusted as aforesaid), and such options to purchase shares of Company Common
Stock being collectively referred to herein as the "Shares"; and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Merger Sub have requested that the Stockholder
enter into this Agreement.
NOW, THEREFORE, to induce Parent and Merger Sub to enter into, and
in consideration of their entering into, the Merger Agreement, and in
consideration of the premises and the representations, warranties and agreements
contained herein, the parties agree as follows:
1. AGREEMENT
(a) Purchase and Sale of Shares.
Parent or Merger Sub hereby agrees to purchase, and the Stockholder hereby
agrees to sell, all of the Stockholder's Shares at a price per Share of $17.50,
subject only to the condition that Merger Sub shall have accepted for payment
and paid for shares of Company Common Stock pursuant to the Offer (the
"Purchase"). The closing of the Purchase shall be effected by the Stockholder
delivering all of its Shares, and by Parent or Merger Sub paying for such Shares
at the time of the consummation of the Offer. Parent agrees to make available to
Merger Sub the funds required to effect the Purchase.
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<PAGE> 2
(b) Break-Up Fee. In the event the Merger Agreement is
terminated under circumstances entitling Parent to a termination fee pursuant to
Section 12.4(b) of the Merger Agreement, the Stockholder shall pay to Merger Sub
an amount equal to (i) the cash consideration and Fair Market Value (as defined
below) of any non-cash consideration received by the Stockholder in exchange for
the Stockholder's Shares upon consummation within twelve (12) months of the date
of termination of the Merger Agreement, or pursuant to an agreement entered into
within twelve (12) months of the date of termination of the Merger Agreement, of
an Acquisition Proposal (as defined in the Merger Agreement) with a third party
that was announced or commenced subsequent to the date hereof and on or prior to
the date of termination of the Merger Agreement, less the sum of (i) the amount
equal to the price per share of the Offer made by the Merger Sub multiplied by
the number of Stockholder's Shares and (ii) the amount paid to Merger Sub
pursuant to Section 12.4(b) of the Merger Agreement multiplied by a fraction the
numerator of which is the number of Stockholder's Shares, and the denominator of
which is the total number of Shares of the Company Common Stock subject to a
Stockholder Agreement (as defined in the Merger Agreement); provided, that such
amount shall be payable only if such amount calculated pursuant to this
paragraph is greater than zero.
"Fair Market Value" shall mean (i) in respect of any securities upon the
date such consideration is received by the Stockholder, the last sale price on
such day on the principal stock exchange (including the Nasdaq National Market)
on which such securities are then listed or admitted to trading, (ii) if no sale
takes place on such day on any such exchange, the average of the last reported
closing bid and asked prices on such day as officially quoted on any such
exchange, (iii) if the securities are not then listed or admitted to trading on
any stock exchange, the average of the last reported closing bid and asked
prices on such day in the over-the-counter market, as furnished by the National
Association of Securities Dealers Automatic Quotation System, the National
Quotation Bureau, Inc. or other similar firm then engaged in such business, (iv)
if there is no such firm, as furnished by any member of the National Association
of Securities Dealers, Inc., or any successor corporation thereto, selected by
Merger Sub and reasonably satisfactory to the Stockholder, or (v) if no such
quotation is available or the consideration paid is other than cash or
securities, then Fair Market Value shall be determined by a nationally
recognized investment banking or accounting firm selected by Parent or Merger
Sub and reasonably satisfactory to the Stockholder that does not have, or has
not within two years had, an indirect or direct material financial interest in
or pecuniary relationship with Parent, Merger Sub or Stockholder (other than
fees and expenses to be paid in respect of such appraisal). The fees and
expenses of such investment banking or accounting firm shall be borne by Parent.
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to Parent and Merger Sub as follows:
(a) Authority. The Stockholder has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Stockholder. This Agreement has been duly executed
and delivered by the Stockholder and, assuming this
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<PAGE> 3
Agreement constitutes a valid and binding obligation of Parent and Merger Sub,
constitutes a valid and binding obligation of the Stockholder enforceable
against the Stockholder in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
Except for the informational filings with the Securities and Exchange Commission
and any consents, approval, clearances or authorizations identified in the
Merger Agreement, neither the execution, delivery or performance of this
Agreement by the Stockholder nor the consummation by the Stockholder of the
transactions contemplated hereby will require any filing with, or permit,
authorization, consent or approval of, any Federal, state or local government or
any court, tribunal, administrative agency or commission or other domestic
governmental or regulatory authority or agency (a "Governmental Entity").
(b) Conflicting Instruments; No Transfer. Neither the
execution, delivery or performance of this Agreement by the Stockholder nor the
consummation by the Stockholder of the transactions contemplated hereby will
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default under, be in conflict with, or give rise to any
right of termination, amendment, cancellation or acceleration under, or result
in the creation of any pledge, claim, lien, charge, encumbrance or security
interest of any kind or nature whatsoever (a "Lien") upon any of the properties
or assets of the Stockholder under, any of the terms, conditions or provisions
of any contract, agreement or other instrument, or any judgment, injunction,
order, decree, law, regulation or arrangement to which the Stockholder is a
party or by which the Stockholder or any of the Stockholder's properties or
assets, including the Stockholder's Shares, may be bound, except for any breach,
violation, conflict, default, conflict or Lien which, individually or in the
aggregate, would not impair or affect the Stockholder's ability to sell, or to
deliver his proxy for, the Shares according to the terms of this Agreement and
to approve the Merger Agreement and the transactions contemplated thereby.
(c) The Shares. The Stockholder's Shares and the certificates
representing the Shares 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, and the Stockholder has good and valid title to the Shares and will
deliver the Shares, free and clear of any Liens, proxies, voting trusts or
agreements, understandings or arrangements, except for any such Liens or proxies
arising hereunder. Except as set forth in the Company's SEC Documents (as
defined in the Merger Agreement), the Stockholder owns of record or beneficially
no shares of Company Common Stock other than the Stockholder's Shares.
(d) Brokers. Except as disclosed in the Merger Agreement, no
broker, investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Stockholder.
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<PAGE> 4
(e) Merger Agreement. The Stockholder understands and
acknowledges that Parent is entering into, and causing Merger Sub to enter into,
the Merger Agreement in reliance upon the Stockholder's execution and delivery
of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent
and Merger Sub hereby jointly and severally represent and warrant to the
Stockholder as follows:
(a) Authority. Parent and Merger Sub have the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Parent and Merger Sub and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Merger Sub. This Agreement has been
duly executed and delivered by Parent and Merger Sub and, assuming this
Agreement constitutes a valid and binding obligation of the Stockholder,
constitutes a valid and binding obligation of Parent and Merger Sub enforceable
in accordance with its terms (except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies).
(b) Securities Act. The Shares will be acquired in compliance
with, and neither Parent nor Merger Sub will offer to sell or otherwise dispose
of any Shares so acquired by it in violation of the registration requirements
of, the Securities Act of 1933, as amended.
4. COVENANTS OF THE STOCKHOLDER. The Stockholder agrees as follows:
(a) The Stockholder shall not, except as contemplated by the
terms of this Agreement, (i) sell, transfer, pledge, assign or otherwise dispose
of, or enter into any contract, option or other arrangement (including any
profit sharing arrangement) or understanding with respect to the sale, transfer,
pledge, assignment or other disposition of, the Shares (including any options or
warrants to purchase Company Common Stock) to any person other than Parent,
Merger Sub or Merger Sub's designee, (ii) enter into any voting arrangement,
whether by proxy, voting agreement, voting trust, power-of-attorney or
otherwise, with respect to the Shares or (iii) 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.
(b) Other than pursuant to a fiduciary duty as a director or
officer of the Company and as permitted in Sections 7.2 and 9.5 of the Merger
Agreement, until the Merger is consummated or the Merger Agreement is
terminated, the Stockholder shall not, nor shall the Stockholder permit any
investment banker, financial adviser, attorney, accountant or other
representative or agent of the Stockholder to, directly or indirectly (i)
solicit, initiate or encourage (including by way of furnishing nonpublic
information), or take any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constitutes any
Acquisition Proposal (as defined in the Merger Agreement) or (ii) participate in
4
<PAGE> 5
any discussions or negotiations regarding any Acquisition Proposal. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding sentence by an investment banker, financial advisor,
attorney, accountant or other representative or agent of the Stockholder shall
be deemed to be a violation of this Section 4(b) by the Stockholder.
(c) At any meeting of stockholders of the Company called to
vote upon the Merger and the Merger Agreement or at any adjournment thereof or
in any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Merger and the Merger
Agreement is sought, the Stockholder shall, including by executing a written
consent if requested by Parent, vote (or cause to be voted) the Stockholder's
Shares in favor of the Merger, the adoption by the Company of the Merger
Agreement and the approval of the other transactions contemplated by the Merger
Agreement. At any meeting of Stockholders of the Company or at any adjournment
thereof or in any other circumstances upon which the Stockholder's vote, consent
or other approval is sought, the Stockholder shall vote (or cause to be voted)
the Stockholder's Shares against (i) any action or agreement that would result
in a breach in any material respect of any covenant, representation or warranty
or any other obligation or agreement of the Company under the Merger Agreement
or of the Stockholder hereunder, (ii) any action or agreement that would impede,
interfere with, delay, postpone or attempt to discourage the Merger, including,
but not limited to: (A) any Acquisition Proposal, (B) any amendment of the
Company's articles of organization or by-laws or other proposal or transaction
involving the Company or any of its subsidiaries, which amendment or other
proposal or transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement or change in any manner the voting rights
of any class of the Company's capital stock; (C) any change in the management or
board of directors of the Company; (D) any material change in the present
capitalization or dividend policy of the Company; and (E) any other material
change in the Company's corporate structure or business (collectively,
"Frustrating Transactions"). The Stockholder further agrees not to commit or
agree to take any action inconsistent with the foregoing.
5. GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY. (a) The
Stockholder hereby irrevocably grants to, and appoints, Christopher Schofield
and John Samuel, and any other individual who shall hereafter be designated by
Parent, and each of them, 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 Stockholder's Shares, or grant a consent or approval in
respect of the Shares, at any meeting of Stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which their vote, consent
or other approval is sought, in favor of the Merger, the adoption by the Company
of the Merger Agreement and the approval of the other transactions contemplated
by the Merger Agreement and against any Acquisition Proposal or Frustrating
Transaction, and for no other purpose.
(b) The Stockholder represents that any proxies heretofore given in
respect of the Stockholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.
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<PAGE> 6
(c) The Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 5 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, subject to Section 8. The Stockholder hereby
ratifies and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof.
6. FURTHER ASSURANCES. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Merger Sub may reasonably request for the purpose of effectively
carrying out the transactions contemplated by this Agreement and to vest the
power to vote the Stockholder's Shares as contemplated by Section 5. Parent and
Merger Sub jointly and severally agree to use reasonable efforts to take, or
cause to be taken, all actions necessary to comply promptly with all legal
requirements that may be imposed with respect to the transactions contemplated
by this Agreement.
7. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Merger Sub
may assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. 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. The Stockholder agrees that this
Agreement and the obligations of the Stockholder hereunder shall attach to the
Stockholder's Shares and shall be binding upon any person or entity to which
legal or beneficial ownership of the Shares shall pass, whether by operation of
law or otherwise, including without limitation the Stockholder's heirs,
guardians, trustees, administrators or successors.
8. TERMINATION. This Agreement, and all rights and obligations of
the parties hereunder, shall terminate upon the earlier of the date upon which
the Merger Agreement is terminated pursuant to Section 11.1, the date that
Merger Sub shall have purchased and paid for all the Stockholders' Shares in the
Offer or pursuant to Section 1 and the date upon which the Offer is terminated.
Notwithstanding the foregoing, this sentence and Sections 1(b), 2, 6, 10, 11, 12
and 13 shall survive any termination of this Agreement
9. STOP TRANSFER. The Company agrees with, and covenants to, Parent
and Merger Sub that the Company shall not register the transfer of any
certificate representing the Stockholder's Shares unless such transfer is made
in accordance with the terms of this Agreement.
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<PAGE> 7
10. GENERAL PROVISIONS. (a) Payments. All payments required to be
made to any party to this Agreement shall be made by wire transfer of
immediately available funds to an account designated by such party at least one
trading day prior to such payment.
(b) Expenses. Except as expressly set forth herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(d) Notice. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed), sent by overnight courier (providing proof of delivery) or mailed
by registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) if to Parent, to
Filtronic plc
Salts Mill Road, Saltaire
Shipley, BD18 3TT
Attn: Chris Schofield
with a copy to:
Nancy Fuchs, Esq.
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
and
(ii) if to Stockholder, to:
Janusz J. Majewski
c/o Sage Laboratories, Inc.
11 Huron Drive
East Natick Industrial Park
Natick, MA 01760
7
<PAGE> 8
with a copy to:
Stanley Keller, Esq.
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108-3190
(e) Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(f) Counterparts.This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two 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.
(g) Entire Agreement; No Third-Party Beneficiaries. This Agreement
and the Merger Agreement (including the documents and instruments referred to
herein and therein) (i) 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 (ii) are not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
(h) Publicity. Except as otherwise required by law or as
contemplated or provided in the Merger Agreement, for so long as this Agreement
is in effect, none of the Stockholder, Merger Sub or Parent shall, nor shall
Parent or Merger Sub permit any of its subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement or the Merger Agreement without
the consent of the other parties.
11. STOCKHOLDER CAPACITY. No person executing this Agreement who is
or becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer. The Stockholder signs solely in his or her capacity as the record
holder and beneficial owner of, or the trustee of a trust whose beneficiaries
are the beneficial owners of, the Stockholder's Shares and nothing herein shall
limit or affect any actions taken by the Stockholder in its capacity as an
officer or director of the Company to the extent specifically permitted by the
Merger Agreement or required by applicable law.
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<PAGE> 9
12. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a)
This Agreement shall be construed in accordance with and governed by the law of
the Commonwealth of Massachusetts without regard to any applicable conflicts of
law principles.
(b) Each party to this Agreement hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any Massachusetts court, or any Federal court sitting in the Massachusetts
District. Each party hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in any such court and further waives the right to object,
with respect to such suit, action or proceeding, that such court does not have
jurisdiction over such party.
13. PERFORMANCE BY MERGER SUB. Parent covenants and agrees for the
benefit of the Stockholder that it shall cause Merger Sub to perform in full
each obligation of Merger Sub set forth in this Agreement.
14. 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 its 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 of this Agreement, without any bond or other security
being rendered, in any court of the United States located in the Commonwealth of
Massachusetts or any Massachusetts court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
IN WITNESS WHEREOF, each of Parent and Merger Sub has caused this
Agreement to be signed by its officer thereunto duly authorized and the
Stockholder has signed this Agreement, all as of the date first written above.
FILTRONIC PLC
By: /s/ Christopher Schofield
---------------------------------------
Name: Christopher Schofield
Title: Company Secretary and Solicitor
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<PAGE> 10
FIL ACQUISITION CORP.
By: /s/ J. David Rhodes
-----------------------------------------
Name: Professor J. David Rhodes
Title: President
By: /s/ Christopher Schofield
-----------------------------------------
Name: Christopher Schofield
Title: Clerk
STOCKHOLDER:
By: /s/ John E. Miller
---------------------------------------
Name: John E. Miller
Title: Director
ACKNOWLEDGED AND AGREED TO AS TO SECTION 9 AS OF THE DATE FIRST WRITTEN ABOVE:
SAGE LABORATORIES, INC.
By: /s/ Carl A. Marguerite
-----------------------------------
Name: Carl A. Marguerite
Title: Chief Executive Officer
10
<PAGE> 1
STOCKHOLDER AGREEMENT, dated as of May 13, 1998 (this "Agreement"), among
FILTRONIC PLC, a public limited company incorporated under the laws of England
and Wales ("Parent"), FIL ACQUISITION CORP., a Massachusetts corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and Janusz J. Majewski (the
"Stockholder").
WHEREAS, Parent, Merger Sub and Sage Laboratories, Inc., a
Massachusetts corporation (the "Company"), propose to enter into an Agreement
and Plan of Merger dated as of the date hereof (as the same may be amended or
supplemented, the "Merger Agreement") providing for (i) the making of the Offer
(as defined in the Merger Agreement) by Parent or Merger Sub for all the
outstanding shares of common stock, par value $.10 per share, of the Company
("Company Common Stock") and (ii) the merger of Merger Sub and the Company (the
"Merger");
WHEREAS, the Stockholder is the record and beneficial owner of 3,500
shares of Company Common Stock; such shares of Company Common Stock, as such
shares may be adjusted by stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company, together with shares of
Company Common Stock that may be acquired after the date hereof by the
Stockholder, including shares of Company Common Stock issuable upon the exercise
of options or warrants to purchase Company Common Stock (as the same may be
adjusted as aforesaid), and such options to purchase shares of Company Common
Stock being collectively referred to herein as the "Shares"; and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Merger Sub have requested that the Stockholder
enter into this Agreement.
NOW, THEREFORE, to induce Parent and Merger Sub to enter into, and
in consideration of their entering into, the Merger Agreement, and in
consideration of the premises and the representations, warranties and agreements
contained herein, the parties agree as follows:
1. AGREEMENT
(a) Purchase and Sale of Shares.
Parent or Merger Sub hereby agrees to purchase, and the Stockholder hereby
agrees to sell, all of the Stockholder's Shares at a price per Share of $17.50,
subject only to the condition that Merger Sub shall have accepted for payment
and paid for shares of Company Common Stock pursuant to the Offer (the
"Purchase"). The closing of the Purchase shall be effected by the Stockholder
delivering all of its Shares, and by Parent or Merger Sub paying for such Shares
at the time of the consummation of the Offer. Parent agrees to make available to
Merger Sub the funds required to effect the Purchase.
<PAGE> 2
(b) Break-Up Fee. In the event the Merger Agreement is
terminated under circumstances entitling Parent to a termination fee pursuant to
Section 12.4(b) of the Merger Agreement, the Stockholder shall pay to Merger Sub
an amount equal to (i) the cash consideration and Fair Market Value (as defined
below) of any non-cash consideration received by the Stockholder in exchange for
the Stockholder's Shares upon consummation within twelve (12) months of the date
of termination of the Merger Agreement, or pursuant to an agreement entered into
within twelve (12) months of the date of termination of the Merger Agreement, of
an Acquisition Proposal (as defined in the Merger Agreement) with a third party
that was announced or commenced subsequent to the date hereof and on or prior to
the date of termination of the Merger Agreement, less the sum of (i) the amount
equal to the price per share of the Offer made by the Merger Sub multiplied by
the number of Stockholder's Shares and (ii) the amount paid to Merger Sub
pursuant to Section 12.4(b) of the Merger Agreement multiplied by a fraction the
numerator of which is the number of Stockholder's Shares, and the denominator of
which is the total number of Shares of the Company Common Stock subject to a
Stockholder Agreement (as defined in the Merger Agreement); provided, that such
amount shall be payable only if such amount calculated pursuant to this
paragraph is greater than zero.
"Fair Market Value" shall mean (i) in respect of any securities upon the
date such consideration is received by the Stockholder, the last sale price on
such day on the principal stock exchange (including the Nasdaq National Market)
on which such securities are then listed or admitted to trading, (ii) if no sale
takes place on such day on any such exchange, the average of the last reported
closing bid and asked prices on such day as officially quoted on any such
exchange, (iii) if the securities are not then listed or admitted to trading on
any stock exchange, the average of the last reported closing bid and asked
prices on such day in the over-the-counter market, as furnished by the National
Association of Securities Dealers Automatic Quotation System, the National
Quotation Bureau, Inc. or other similar firm then engaged in such business, (iv)
if there is no such firm, as furnished by any member of the National Association
of Securities Dealers, Inc., or any successor corporation thereto, selected by
Merger Sub and reasonably satisfactory to the Stockholder, or (v) if no such
quotation is available or the consideration paid is other than cash or
securities, then Fair Market Value shall be determined by a nationally
recognized investment banking or accounting firm selected by Parent or Merger
Sub and reasonably satisfactory to the Stockholder that does not have, or has
not within two years had, an indirect or direct material financial interest in
or pecuniary relationship with Parent, Merger Sub or Stockholder (other than
fees and expenses to be paid in respect of such appraisal). The fees and
expenses of such investment banking or accounting firm shall be borne by Parent.
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to Parent and Merger Sub as follows:
(a) Authority. The Stockholder has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Stockholder. This Agreement has been duly executed
and delivered by the Stockholder and, assuming this
2
<PAGE> 3
Agreement constitutes a valid and binding obligation of Parent and Merger Sub,
constitutes a valid and binding obligation of the Stockholder enforceable
against the Stockholder in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
Except for the informational filings with the Securities and Exchange Commission
and any consents, approval, clearances or authorizations identified in the
Merger Agreement, neither the execution, delivery or performance of this
Agreement by the Stockholder nor the consummation by the Stockholder of the
transactions contemplated hereby will require any filing with, or permit,
authorization, consent or approval of, any Federal, state or local government or
any court, tribunal, administrative agency or commission or other domestic
governmental or regulatory authority or agency (a "Governmental Entity").
(b) Conflicting Instruments; No Transfer. Neither the
execution, delivery or performance of this Agreement by the Stockholder nor the
consummation by the Stockholder of the transactions contemplated hereby will
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default under, be in conflict with, or give rise to any
right of termination, amendment, cancellation or acceleration under, or result
in the creation of any pledge, claim, lien, charge, encumbrance or security
interest of any kind or nature whatsoever (a "Lien") upon any of the properties
or assets of the Stockholder under, any of the terms, conditions or provisions
of any contract, agreement or other instrument, or any judgment, injunction,
order, decree, law, regulation or arrangement to which the Stockholder is a
party or by which the Stockholder or any of the Stockholder's properties or
assets, including the Stockholder's Shares, may be bound, except for any breach,
violation, conflict, default, conflict or Lien which, individually or in the
aggregate, would not impair or affect the Stockholder's ability to sell, or to
deliver his proxy for, the Shares according to the terms of this Agreement and
to approve the Merger Agreement and the transactions contemplated thereby.
(c) The Shares. The Stockholder's Shares and the certificates
representing the Shares 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, and the Stockholder has good and valid title to the Shares and will
deliver the Shares, free and clear of any Liens, proxies, voting trusts or
agreements, understandings or arrangements, except for any such Liens or proxies
arising hereunder. Except as set forth in the Company's SEC Documents (as
defined in the Merger Agreement), the Stockholder owns of record or beneficially
no shares of Company Common Stock other than the Stockholder's Shares.
(d) Brokers. Except as disclosed in the Merger Agreement, no
broker, investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Stockholder.
3
<PAGE> 4
(e) Merger Agreement. The Stockholder understands and
acknowledges that Parent is entering into, and causing Merger Sub to enter into,
the Merger Agreement in reliance upon the Stockholder's execution and delivery
of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent
and Merger Sub hereby jointly and severally represent and warrant to the
Stockholder as follows:
(a) Authority. Parent and Merger Sub have the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Parent and Merger Sub and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Merger Sub. This Agreement has been
duly executed and delivered by Parent and Merger Sub and, assuming this
Agreement constitutes a valid and binding obligation of the Stockholder,
constitutes a valid and binding obligation of Parent and Merger Sub enforceable
in accordance with its terms (except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies).
(b) Securities Act. The Shares will be acquired in compliance
with, and neither Parent nor Merger Sub will offer to sell or otherwise dispose
of any Shares so acquired by it in violation of the registration requirements
of, the Securities Act of 1933, as amended.
4. COVENANTS OF THE STOCKHOLDER. The Stockholder agrees as follows:
(a) The Stockholder shall not, except as contemplated by the
terms of this Agreement, (i) sell, transfer, pledge, assign or otherwise dispose
of, or enter into any contract, option or other arrangement (including any
profit sharing arrangement) or understanding with respect to the sale, transfer,
pledge, assignment or other disposition of, the Shares (including any options or
warrants to purchase Company Common Stock) to any person other than Parent,
Merger Sub or Merger Sub's designee, (ii) enter into any voting arrangement,
whether by proxy, voting agreement, voting trust, power-of-attorney or
otherwise, with respect to the Shares or (iii) 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.
(b) Other than pursuant to a fiduciary duty as a director or
officer of the Company and as permitted in Sections 7.2 and 9.5 of the Merger
Agreement, until the Merger is consummated or the Merger Agreement is
terminated, the Stockholder shall not, nor shall the Stockholder permit any
investment banker, financial adviser, attorney, accountant or other
representative or agent of the Stockholder to, directly or indirectly (i)
solicit, initiate or encourage (including by way of furnishing nonpublic
information), or take any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constitutes any
Acquisition Proposal (as defined in the Merger Agreement) or (ii) participate in
4
<PAGE> 5
any discussions or negotiations regarding any Acquisition Proposal. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding sentence by an investment banker, financial advisor,
attorney, accountant or other representative or agent of the Stockholder shall
be deemed to be a violation of this Section 4(b) by the Stockholder.
(c) At any meeting of stockholders of the Company called to
vote upon the Merger and the Merger Agreement or at any adjournment thereof or
in any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Merger and the Merger
Agreement is sought, the Stockholder shall, including by executing a written
consent if requested by Parent, vote (or cause to be voted) the Stockholder's
Shares in favor of the Merger, the adoption by the Company of the Merger
Agreement and the approval of the other transactions contemplated by the Merger
Agreement. At any meeting of Stockholders of the Company or at any adjournment
thereof or in any other circumstances upon which the Stockholder's vote, consent
or other approval is sought, the Stockholder shall vote (or cause to be voted)
the Stockholder's Shares against (i) any action or agreement that would result
in a breach in any material respect of any covenant, representation or warranty
or any other obligation or agreement of the Company under the Merger Agreement
or of the Stockholder hereunder, (ii) any action or agreement that would impede,
interfere with, delay, postpone or attempt to discourage the Merger, including,
but not limited to: (A) any Acquisition Proposal, (B) any amendment of the
Company's articles of organization or by-laws or other proposal or transaction
involving the Company or any of its subsidiaries, which amendment or other
proposal or transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement or change in any manner the voting rights
of any class of the Company's capital stock; (C) any change in the management or
board of directors of the Company; (D) any material change in the present
capitalization or dividend policy of the Company; and (E) any other material
change in the Company's corporate structure or business (collectively,
"Frustrating Transactions"). The Stockholder further agrees not to commit or
agree to take any action inconsistent with the foregoing.
5. GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY. (a) The
Stockholder hereby irrevocably grants to, and appoints, Christopher Schofield
and John Samuel, and any other individual who shall hereafter be designated by
Parent, and each of them, 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 Stockholder's Shares, or grant a consent or approval in
respect of the Shares, at any meeting of Stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which their vote, consent
or other approval is sought, in favor of the Merger, the adoption by the Company
of the Merger Agreement and the approval of the other transactions contemplated
by the Merger Agreement and against any Acquisition Proposal or Frustrating
Transaction, and for no other purpose.
(b) The Stockholder represents that any proxies heretofore given in
respect of the Stockholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.
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<PAGE> 6
(c) The Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 5 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, subject to Section 8. The Stockholder hereby
ratifies and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof.
6. FURTHER ASSURANCES. The Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Merger Sub may reasonably request for the purpose of effectively
carrying out the transactions contemplated by this Agreement and to vest the
power to vote the Stockholder's Shares as contemplated by Section 5. Parent and
Merger Sub jointly and severally agree to use reasonable efforts to take, or
cause to be taken, all actions necessary to comply promptly with all legal
requirements that may be imposed with respect to the transactions contemplated
by this Agreement.
7. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Merger Sub
may assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. 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. The Stockholder agrees that this
Agreement and the obligations of the Stockholder hereunder shall attach to the
Stockholder's Shares and shall be binding upon any person or entity to which
legal or beneficial ownership of the Shares shall pass, whether by operation of
law or otherwise, including without limitation the Stockholder's heirs,
guardians, trustees, administrators or successors.
8. TERMINATION. This Agreement, and all rights and obligations of
the parties hereunder, shall terminate upon the earlier of the date upon which
the Merger Agreement is terminated pursuant to Section 11.1, the date that
Merger Sub shall have purchased and paid for all the Stockholders' Shares in the
Offer or pursuant to Section 1 and the date upon which the Offer is terminated.
Notwithstanding the foregoing, this sentence and Sections 1(b), 2, 6, 10, 11, 12
and 13 shall survive any termination of this Agreement
9. STOP TRANSFER. The Company agrees with, and covenants to, Parent
and Merger Sub that the Company shall not register the transfer of any
certificate representing the Stockholder's Shares unless such transfer is made
in accordance with the terms of this Agreement.
6
<PAGE> 7
10. GENERAL PROVISIONS. (a) Payments. All payments required to be
made to any party to this Agreement shall be made by wire transfer of
immediately available funds to an account designated by such party at least one
trading day prior to such payment.
(b) Expenses. Except as expressly set forth herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(d) Notice. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed), sent by overnight courier (providing proof of delivery) or mailed
by registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) if to Parent, to
Filtronic plc
Salts Mill Road, Saltaire
Shipley, BD18 3TT
Attn: Chris Schofield
with a copy to:
Nancy Fuchs, Esq.
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
and
(ii) if to Stockholder, to:
John E. Miller
c/o Sage Laboratories, Inc.
11 Huron Drive
East Natick Industrial Park
Natick, MA 01760
7
<PAGE> 8
with a copy to:
Stanley Keller, Esq.
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108-3190
(e) Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(f) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two 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.
(g) Entire Agreement; No Third-Party Beneficiaries. This Agreement
and the Merger Agreement (including the documents and instruments referred to
herein and therein) (i) 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 (ii) are not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
(h) Publicity. Except as otherwise required by law or as
contemplated or provided in the Merger Agreement, for so long as this Agreement
is in effect, none of the Stockholder, Merger Sub or Parent shall, nor shall
Parent or Merger Sub permit any of its subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement or the Merger Agreement without
the consent of the other parties.
11. STOCKHOLDER CAPACITY. No person executing this Agreement who is
or becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer. The Stockholder signs solely in his or her capacity as the record
holder and beneficial owner of, or the trustee of a trust whose beneficiaries
are the beneficial owners of, the Stockholder's Shares and nothing herein shall
limit or affect any actions taken by the Stockholder in its capacity as an
officer or director of the Company to the extent specifically permitted by the
Merger Agreement or required by applicable law.
8
<PAGE> 9
12. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a)
This Agreement shall be construed in accordance with and governed by the law of
the Commonwealth of Massachusetts without regard to any applicable conflicts of
law principles.
(b) Each party to this Agreement hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any Massachusetts court, or any Federal court sitting in the Massachusetts
District. Each party hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in any such court and further waives the right to object,
with respect to such suit, action or proceeding, that such court does not have
jurisdiction over such party.
13. PERFORMANCE BY MERGER SUB. Parent covenants and agrees for the
benefit of the Stockholder that it shall cause Merger Sub to perform in full
each obligation of Merger Sub set forth in this Agreement.
14. 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 its 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 of this Agreement, without any bond or other security
being rendered, in any court of the United States located in the Commonwealth of
Massachusetts or any Massachusetts court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
IN WITNESS WHEREOF, each of Parent and Merger Sub has caused this
Agreement to be signed by its officer thereunto duly authorized and the
Stockholder has signed this Agreement, all as of the date first written above.
FILTRONIC PLC
By: /s/ Christopher Schofield
-----------------------------------------
Name: Christopher Schofield
Title: Company Secretary and Solicitor
9
<PAGE> 10
FIL ACQUISITION CORP.
By: /s/ J. David Rhodes
---------------------------------------
Name: Professor J. David Rhodes
Title: President
By: /s/ Christopher Schofield
---------------------------------------
Name: Christopher Schofield
Title: Clerk
STOCKHOLDER:
By: /s/ Janusz J. Majewski
-----------------------------------------
Name: Janusz J. Majewski
Title: Vice President, Research and Development
ACKNOWLEDGED AND AGREED TO AS TO SECTION 9 AS OF THE DATE FIRST WRITTEN ABOVE:
SAGE LABORATORIES, INC.
By: /s/ Carl A. Marguerite
---------------------------------
Name: Carl A. Marguerite
Title: Chief Executive Officer
10
<PAGE> 1
1 May 1998
Carl A. Marguerite
Sage Laboratories, Inc.
11 Huron Drive
Natick, Massachusetts 01760-1338
Re: Subject to Definitive Agreements
FAX 001 508 653 5715
Dear Carl:
SAGE LABORATORIES, INC. ("THE COMPANY")
I refer to your conversation with David Rhodes yesterday and on behalf of the
board of Filtronic plc confirm that we wish to proceed with the acquisition of
the Company on the basis set out in my letter dated 2 April at a price of $17.50
per share. I am instructed to inform you that the proposed price will not be
improved upon.
This matter remains subject inter alia to completion of our due diligence and
satisfactory definitive agreements. Until definitive agreements are entered into
we shall be under no obligation to proceed.
I trust that this is sufficient for your present purposes.
Yours sincerely,
Chris Schofield
COMPANY SECRETARY AND SOLICITOR
<PAGE> 1
CONFIDENTIALITY AGREEMENT
In connection with our consideration of making an investment in Sage
Laboratories, Inc. (the "Company"), the undersigned Filtronic Comtek, plc, a
corporation organized under the laws of the United Kingdom ("Filtronic") will be
furnished with information regarding the business, financial condition,
marketing, operations and technical data of the Company. Filtronic will utilize
this information only upon your explicit agreement and in connection with its
evaluation of a possible investment in the Company and acknowledges that this
information is confidential and that disclosure to any person or entity is
restricted by the terms of this agreement.
Filtronic and the Company hereby agree as follows:
1. All non-public information received by Filtronic from the Company with
respect to the Company's business, including without limitation, the
existence of this agreement and the fact that conversations may be taking
place between the Company and Filtronic, shall be treated as confidential
and shall not be utilized for advantage or disclosed by Filtronic. Such
information will be furnished to Filtronic for the sole purpose of
evaluating the investment. Access to confidential information will be
limited to employees, officers and directors and professional
representatives of Filtronic who will participate in a decision with
regard to the investigation and evaluation of the Company.
2. Filtronic shall not disclose or make known to others that there are
discussions regarding a possible investment.
3. Filtronic will not contact the Company's banker, employees, suppliers or
others concerning the Company without written permission from the Company.
4. Filtronic will promptly advise the Company of any determination not to
pursue an investment and shall thereupon, and in any event upon the
Company's request, promptly deliver to the Company all information
furnished to Filtronic in a tangible format without retaining copies
thereof.
5. Confidential information that is the subject of this agreement shall not
include information which (1) is or generally becomes available to the
public other than as a result of a disclosure by the party receiving such
information pursuant to a non-disclosure obligation hereunder, (2) was
available on a non-confidential basis prior to its disclosure as can be
shown by competent proof, or (3) becomes available on a non-confidential
basis from another source, as can be shown by competent proof, and
provided that such source is not bound by a confidentiality agreement with
either party hereto.
6. This agreement shall take effect as a sealed instrument and shall be
binding upon the parties and their successors and assigns. This agreement
shall be governed by the substantive laws of the Commonwealth of
Massachusetts.
Dated: February 12, 1998 FILTRONIC COMTEK plc.
By: /s/ Christopher Schofield
----------------------------------
SAGE LABORATORIES, INC.
By: /s/ Carl A. Marguerite
----------------------------------
