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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Filed pursuant to Section 12, 13, or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 28, 1999
INTEGRATED CIRCUIT SYSTEMS, INC.
--------------------------------
(Exact name of issuer as specified in charter)
<TABLE>
<S> <C> <C>
PENNSYLVANIA 0-19299 23-2000174
(State or Other Jurisdiction Commission (I.R.S. Employer
of Incorporation or file number Identification
Organization) Number)
</TABLE>
2435 BOULEVARD OF THE GENERALS, NORRISTOWN, PENNSYLVANIA 19403
(Address of principal executive offices)
(610) 630-5300
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
------------
On January 28, 1999, Integrated Circuit Systems, Inc. (the "Company")
issued a press release announcing that a purported class action lawsuit was
filed with respect to the Company's recently announced merger agreement. The
Company believes that the purported class action lawsuit is without merit. The
Company intends to vigorously defend the action.
A copy of the press release and the complaint are being filed as
exhibits to this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
------------------------------------------------------------------
(c) Exhibits
99.1 Press release dated January 28, 1999.
99.2 Verified Class Action Complaint filed January 27, 1999 in the Montgomery
County, Pennsylvania Court of Common Pleas, Civil Action No. 99-01126.
-2-
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SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTEGRATED CIRCUIT SYSTEMS, INC.
Date: January 28, 1999 By: /s/ Hock E. Tan
-------------------------------------
Hock E. Tan
Chief Financial Officer
and Chief Operating Officer
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
99.1 Press release dated January 28, 1999.
99.2 Verified Class Action Complaint filed January 27, 1999 in the
Montgomery County, Pennsylvania Court of Common Pleas, Civil
Action No. 99-01126.
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Exhibit 99.1
[Logo of Intergrated Circuit Systems, Inc. appears here]
INTEGRATED CIRCUIT SYSTEMS, INC.
Corporate Headquarters
2435 Boulevard of the Generals
P.O. Box 968
Valley Forge, PA 19482-0968
Phone: 610-630-5300
Fax: 610-630-5399
Web Site: http://www.icst.com
FOR IMMEDIATE RELEASE
INTEGRATED CIRCUIT SYSTEMS BELIEVES
LAWSUIT IS WITHOUT MERIT
VALLEY FORGE, PA - JANUARY 28, 1999 - Integrated Circuit Systems, Inc. (Nasdaq:
ICST) announced today that a purported class action lawsuit was filed with
respect to the Company's recently announced merger agreement. ICS believes that
the purported class action lawsuit is without merit. The Company intends to
vigorously defend the action.
The purported class action lawsuit was filed on January 27, 1999, by two
individual stockholders of the Company in the Court of Common Pleas of
Montgomery County, Pennsylvania, seeking to enjoin the merger agreement
announced by ICS on January 20, 1999.
Rudolf Gassner, ICS' Chairman of the Board, said, "The Board of Directors of
Integrated Circuit Systems firmly believes that the merger agreement is in the
best interests of all ICS shareholders, and we are confident that the facts will
bear this out."
In reaching its decision to approve the merger, a Special Committee of the Board
of Directors, comprised of two independent Directors unaffiliated with the
investor group, was advised by its financial advisor, Pennsylvania Merchant
Group, which rendered a written opinion that the $21.25 acquisition price is
fair to the unaffiliated holders of common stock of Integrated Circuit Systems
from a financial point of view.
As announced on January 20, 1999, the Company entered into a definitive merger
agreement under which an investor group comprised of its senior management
together with affiliates of Bain Capital Inc. and Bear, Stearns & Co. Inc. will
acquire all of the outstanding shares of ICS at a cash price of $21.25 per
share. Shareholders will have an opportunity to vote on the merger at a Special
Meeting of Shareholders expected to take place in May or June 1999, after a
proxy statement providing more details about the merger is prepared and sent to
shareholders.
-more-
-2-
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The merger agreement and a letter containing additional information regarding
the merger agreement are on file with the Securities and Exchange Commission
(SEC). The Company's SEC filings are available to the public on the Internet at
http://www.sec.gov.
- ------------------
Integrated Circuit Systems Inc. is a manufacturer of integrated circuit products
focusing on the design and marketing of mixed signal integrated circuits for
frequency timing, multimedia and data communications applications. The Company
is headquartered in Valley Forge, Pennsylvania with a major facility in San
Jose, California.
# # #
Contact:
Dan Katcher/Brian Faw Arthur Crozier
Abernathy MacGregor Frank Innisfree M&A
212-371-5999 212-750-5833
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Exhibit 99.2
IN THE COURT OF COMMON PLEAS OF MONTGOMERY COUNT, PENNSYLVANIA
CIVIL ACTION - LAW
HARBOR FINANCE PARTNERS and : NO. 99-01126
JOHN P. MCCARTHY MONEY :
PURCHASE PLAN :
:
vs. :
:
HENRY I. BOREN and :
INTEGRATED CIRCUIT SYSTEMS, INC. :
NOTICE TO DEFEND AND CLAIM RIGHTS
---------------------------------
"You have been sued in Court. If you wish to defend against the claims
set forth in the following pages, you must take prompt action within twenty (20)
days after this Complaint and Notice are served by entering a written appearance
personally or by attorney, and filing in writing with the Court your defenses or
objections to the claims set forth against you. You are warned that if you fail
to do so, the case may proceed without you and a judgment may be entered against
you by the Court without further notice for any money claimed in the Complaint
or for any other claim or relief requested by the Plaintiff. You must lose money
or property or other rights important to you."
YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A
LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO
FIND OUT WHERE YOU CAN GET LEGAL HELP.
LAWYER REFERENCE SERVICE
409 Cherry Street
Norristown, PA 19401
(610) 279-9660, Ext. 201
Toll Free (800) 560-LAW1 (5291)
AMERICAN WITH DISABILITIES ACT OF 1990
--------------------------------------
The Court of Common Pleas of Montgomery County is required by law to
comply with the Americans with Disabilities Act of 1990. For information about
accessible facilities and reasonable accommodations available to disabled
individuals having business before the Court, please contact our office. All
arrangements must be made at least 72 hours prior to any hearing or business
before the Court. You must attend the scheduled conference or hearing.
<PAGE>
Mason Avrigian, Esq. (08538)
WISLER, PEALSTINE, TALONE,
CRAIG, GARRITY & POTASH LLP
434 Norristown Road, Suite 100
Blue Bell, PA 19422
(610) 825-8400
Stuart H. Savett, Esq. (03669)
SAVETT FRUTKIN PODELL & RYAN, P.C.
325 Chestnut Street, Suite 700
Philadelphia, PA 19106
(215) 923-5400
Jay S. Cohen, Esq. (19333)
LAW OFFICE OF JAY S. COHEN
768 N. Bethlehem Pike, Suite 200
Lower Gwynedd, PA 19002
(215) 619-0200
Attorneys for Plaintiffs
- ------------------------------------------------X
HARBOR FINANCE PARTNERS, a : MONTGOMERY COUNTY
:
Colorado Partnership, : COURT OF COMMON PLEAS
325 Chestnut Street, Suite 700 : TRIAL DIVISION
Philadelphia, PA 19106 :
:
and :
:
JOHN P. McCARTHY :
MONEY PURCHASE PLAN :
3600 Conshohocken Avenue : CLASS ACTION
Suite 1501A :
Philadelphia, PA 19131 :
Plaintiffs, : CIVIL ACTION NO. 99-01126
v. :
:
HENRY I. BOREEN, :
2435 Boulevard of the Generals :
Norristown, PA 19403 :
:
and :
:
INTEGRATED CIRCUIT SYSTEMS, INC., : JURY TRIAL DEMANDED
2435 Boulevard of the Generals :
Norristown, PA 19403 :
Defendants. :
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- --------------------------------------------X
VERIFIED CLASS ACTION COMPLAINT
-------------------------------
Plaintiffs, by their undersigned attorneys, for their complaint against
defendants, allege upon knowledge as to themselves and their own acts, and upon
information and belief, as to all other matters, as follows:
NATURE OF THE ACTION
--------------------
1. This is a class action on behalf of the public stockholders of
Integrated Circuit Systems, Inc. ("Integrated Circuit" or the "Company"), ("the
Class"), brought against Henry I. Boreen ("Boreen"), solely in his capacity as
Chief Executive Officer of Integrated Circuit, and Integrated Circuit. Plantiffs
seek injunctive relief herein to, inter alia, enjoin the implementation of the
----- ----
fundamentally unfair transaction in which undisclosed members of senior
management, together with affiliates of Bain Capital, Inc. and Bear, Stearns &
Co., Inc. (the "Management Group"), will acquire all of the outstanding shares
of Integrated Circuit at a cash price of $21.25 per share. Alternatively, in the
event that the proposed transaction is implemented, plaintiffs seek to recover
damages caused by defendants' actions.
PARTIES
-------
2. Plaintiff Harbor Finance Partners, a Colorado Partnership, is and,
at all relevant times, has been the owner of shares of Integrated Circuit common
stock.
3. Plaintiff John P. McCarthy Money Purchase Plan is and, at all
relevant times, has been the owner of shares of Integrated Circuit common stock.
4. Defendant Boreen is sued sole in his capacity as the Chief
Executive Officer of Integrated Circuit. Boreen owns 3.3% of the Company's
common stock. Boreen used his corporate office as Chief Executive Officer to
cause the Company to engage in the acts set
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forth below which culminated in the fundamentally unfair transaction which
enables the Management Group to acquire the Company.
5. Defendant Integrated Circuit is a corporation duly organized and
existing under the laws of the Commonwealth of Pennsylvania. Integrated Circuit
is a manufacturer of integrated circuit products focusing on the design and
marketing of mixed signal integrated circuits for frequency timing, multimedia
and data communications applications. The Company maintains its principal
executive offices at 2435 Boulevard of the Generals, Norristown, Pennsylvania.
As of November 23, 1998, Integrated Circuit had 12,254,175 shares of common
stock outstanding and thousands of stockholders of record. Integrated Circuit's
stock trades on the NASDAQ National Market System.
6. Because of his position as senior officer of the Company, Boreen
owes a duty of good faith and due care in performing his corporate duties and a
duty to act in a manner in the best interest of Integrated Circuit and its
shareholders.
SUBSTANTIVE ALLEGATIONS
-----------------------
7. By the acts, transactions, and courses of conduct alleged herein,
defendants, individually and as part of a common plan and scheme and/or aiding
and abetting one another in total disregard of their duties, are attempting to
deprive the Company's shareholders unfairly of the opportunity to maximize the
value of their investment in Integrated Circuit.
8. On January 20, 1999, the Company announced that it entered into a
definitive agreement under which the Management Group, would acquire all of the
outstanding shares of Integrated Circuit for $21.25 per share in cash (the
"Transaction"). The Company also announced that it had entered into a definitive
agreement to sell intellectual property and
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engineering hardware and software related to its data communications business to
3Com Corporation for approximately $16 million in cash (the "Asset Sale").
9. The Transaction and Asset Sale were announced just five days prior
to the Company's rescheduled annual meeting, where incumbent management was
facing a proxy contest that could have resulted in the ouster of Boreen and his
allies from their positions with the Company. In order to avoid such an
occurrence and further the personal interests of his corporate colleagues at the
expense of the Company and its public shareholders, defendants entered into the
Transaction and Asset Sale.
10. On December 3, 1998, Stavro E. Prodromou, Ph.D. ("Prodromou"), the
former president and chief executive officer of the Company, sought to nominate
a rival slate of director nominees (the "Competing Slate") for the Board to
compete with the management's slate of directors up for election at the
Company's annual meeting which was scheduled for December 30, 1998, thus
initiating a proxy fight with incumbent management.
11. On December 15, 1998, Rulolf Gassner, a current director and then
Chairman-elect of the Company, issued a letter to shareholders urging support of
the management's slate at the Company's annual meeting because, inter alia, the
----- ----
Board was committed to enhancing and sustaining shareholder value by focusing on
core competencies.
12. On December 24, 1998, Prodromou initiated litigation in the Court
of Common Pleas for Montgomery County, Pennsylvania, which sought to
preliminarily enjoin the December 30, 1998 annual meeting and access to the
shareholder list of the Company (the "Litigation").
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13. On December 29, 1998, the Company announced that it had postponed
the Company's annual meeting until January 25, 1999. In consideration for the
postponement, Prodromou agreed to dismiss the Litigation. The Company also
agreed to immediately provide Prodromou with a list of all Company shareholders,
and place his slate on the ballot.
14. The Transaction and Asset Sale comes at a time when the Company's
stock price has been depressed. Indeed, the price of Integrated Circuit's
stock has been trading well-below its 52 week high of $35 per share.
15. In light of what has been publicly disclosed about the Company's
present business and future prospects and the increased investment in new
product development, the proposed transaction is grossly unfair, inadequate, and
provides value to Integrated Circuit's stockholders substantially below the fair
or inherent value of the Company. The intrinsic value of the equity of the
Company is materially greater than the consideration contemplated by the
proposed offer price, taking into account the Company's asset value, liquidation
value, its expected growth, and its revenues and cash flow. Indeed, just
recently, the Company announced improved financial results. On October 22, 1998,
the Company had announced that its gross margin during the first quarter of
fiscal 1999 was 46% due to significant material cost reduction and favorable
product mix. Defendant Boreen stated "we are pleased that revenue from the core
frequency timing business gained 34% from the last quarter reflecting the market
share gains in PC motherboards and strong demand from digital set-top box
producers. We have stepped up significantly our investment in new product
development."
16. The proposed transaction is wrong, fundamentally unfair and
harmful to Plaintiffs and the Class, and is wholly inadequate in light of the
fact that public shares will no
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longer control the Company, and will deny shareholders their right to share
proportionately in the true value of the Company's valuable assets, profitable
business, and future growth in profits and earnings, while usurping the same for
the benefit of the Management Group. Indeed, shareholders have been deprived of
the right to share fully in the Asset Sale. The consideration offered and the
timing of the Asset Sale indicate that any financial benefit will not be
reflected in the consideration offered in the Transaction.
17. The Transaction is not the result of arm's-length negotiations
but was fixed arbitrarily by the parties as part of their unlawful plan and
scheme to permit the Management Group to obtain control over Integrated Circuit
at the lowest possible price.
18. Defendants have violated their corporate duties in that they have
not and are not performing their duties in good faith, with due care and in a
manner that furthers the best interests of the Company and its shareholders.
19. Unless enjoined by this Court, defendants will continue to breach
these duties and will succeed in their plan to deny shareholders the right to
elect directors and to exclude shareholders from their fair proportionate share
of Integrated Circuit's valuable assets and businesses.
CLASS ACTION ALLEGATIONS
------------------------
20. (a) The class is so numerous that joinder of all members is
impracticable;
(b) there are questions of law or act common to the Class;
(c) the claims or defenses of the representative parties are
typical of the claims or defenses of the Class;
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(d) the representative parties will fairly and adequately assert
and protect the interests of the Class;
(e) a class action provides a fair and efficient method for
adjudication of the controversy; and
(f) all of the criteria of Pa. R.C.P. No. 1708 are satisfied.
PRAYER FOR RELIEF
-----------------
WHEREFORE, plaintiffs pray for judgment and relief as follows:
a. declaring that the defendants and each of them have breached their
duties;
b. preliminarily and permanently enjoining defendants and their
counsel, agents, employees, and all persons acting under, in concert with, or
for them, from proceeding with or implementing the transaction proposed by the
Management Group;
c. in the event the transaction is consummated, rescinding it and
setting it aside;
d. awarding compensatory damages against defendants, jointly and
severally, in an amount to be determined at trial, together with prejudgment
interest at the maximum rate allowable by law;
e. awarding plaintiffs their costs and disbursements and reasonable
allowances for plaintiffs' counsel and experts' fees and expenses; and
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f. granting such other and further relief as may be just and proper.
Dated: January 22, 1999 WISLER, PEALSTINE, TALONE,
CRAIG, GARRITY & POTASH LLP
By: /s/ Mason Avrigian
----------------------------
Mason Avrigian (08538)
434 Norristown Road, Suite 100
Blue Bell, PA 19422
(610) 825-8400
SAVETT FRUTKIN PODELL & RYAN, P.C.
Stuart Savett (03669)
Robert Frutkin (21366)
325 Chestnut Street, Suite 700
Philadelphia, Pennsylvania 19160
(215) 923-5400
LAW OFFICES OF JAY S. COHEN
Jay S. Cohen (19333)
768 N. Bethlehem Pike
Suite 200
Lower Gwynedd, PA 19002
(215) 619-0200
Attorneys for Plaintiffs
Of Counsel:
WECHSLER HARWOOD HALEBIAN
& FEFFER LLP
488 Madison Avenue
New York, New York 10022
(212) 935-7400
<PAGE>
VERIFICATION
------------
John P. McCarthy, hereby states that he is one of the plaintiffs in this
action, and verifies that the statements in the foregoing Verified Class Action
Complaint are true and correct to the best of his knowledge, information and
belief. The undersigned understands that the foregoing statements are made
subject of 18 Pa.C.S. (S)4904 relating to unsworn falsification to authorities.
Dated: January 22, 1999 /s/ John P. McCarthy
--------------------------
JOHN P. MCCARTHY
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VERIFICATION
------------
Robert P. Frutkin, Esquire, states that he is one of the counsel for
plaintiff Harbor Finance Partners, and makes this Verification on its behalf
because it is outside of the jurisdiction. The statements in the foregoing
Verified Class Action Complaint are true and correct to the best of his
knowledge, information and belief. The undersigned understands that the
foregoing statements are made subject of 18 Pa.C.S. (S)4904 relating to unsworn
falsification to authorities.
Dated: January 22, 1999 /s/ Robert P. Frutkin
------------------------------
ROBERT P. FRUTKIN, ESQUIRE
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