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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
(AMENDMENT NO. 1)
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934
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MICRONICS COMPUTERS, INC.
(NAME OF SUBJECT COMPANY)
DIAMOND MULTIMEDIA SYSTEMS, INC.
BOARDWALK ACQUISITION CORPORATION
(BIDDERS)
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COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
595127101
(CUSIP NUMBER OF CLASS OF SECURITIES)
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JEFFREY D. SAPER, ESQ.
HOWARD S. ZEPRUN, ESQ.
WILSON SONSINI GOODRICH & ROSATI, P.C.
650 PAGE MILL ROAD, PALO ALTO, CA 94304
(650) 493-9300
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
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This Amendment No. 1 amends the Tender Offer Statement on Schedule 14D-1
relating to the offer by Boardwalk Acquisition Corporation, a Delaware
corporation ("Purchaser"), and a wholly owned subsidiary of Diamond Multimedia
Systems, Inc., a Delaware corporation ("Parent"), to purchase all of the
outstanding shares of Common Stock, par value $0.01 per share (collectively, the
"Shares"), of Micronics Computers, Inc., a Delaware corporation (the "Company"),
at a price of $2.45 per Share, net to the seller in cash and without interest
thereon, on the terms and subject to the conditions set forth in the Offer to
Purchase, dated May 15, 1998 (the "Offer to Purchase"), and the related Letter
of Transmittal (the "Letter of Transmittal," which together with the Offer to
Purchase, constitutes the "Offer"). A copy of the Offer to Purchase, as amended,
is attached hereto as Exhibit (a)(1).
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) No change.
(b) No change.
(c) No change.
ITEM 2. IDENTITY AND BACKGROUND
(a) through (d), (g) No change.
(e) No change.
(f) No change.
ITEM 3.PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) and (b) No change.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) through (c) No change.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS
(a) through (e) No change.
(d) No change.
(f) and (g) No change.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) and (b) No change.
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ITEM 7.CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES
No change except that Section 11 of the Offer to Purchase, "Background of
the Offer", is hereby amended as provided in the Offer to Purchaser attached as
Exhibit (a)(1) hereto.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
No change.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
No change.
ITEM 10. ADDITIONAL INFORMATION
(a) None or not applicable.
(b) and (c) No change, except that the information contained in Section 16
of the Offer to Purchase, "Certain Regulatory and Legal Matters" is hereby
amended as provided in the Offer to Purchase attached hereto as Exhibit (a)(1).
(d) No change.
(e) None.
(f) No change except that the Offer to Purchase attached as Exhibit (a)(1)
is hereby amended as set forth above.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C> <C>
(a)(1) -- Offer to Purchase, as amended, dated May 15, 1998.
(a)(2) -- Letter of Transmittal.*
(a)(3) -- Letter from MacKenzie Partners, Inc., as Information Agent,
to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.*
(a)(4) -- Letter to Clients from Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.*
(a)(5) -- Notice of Guaranteed Delivery.*
(a)(6) -- Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.*
(a)(7) -- Form of Summary Announcement, as published on May 15, 1998.*
(a)(8) -- Press Release, as issued by Parent on May 11, 1998.*
(b) -- None or not applicable.
(c)(1) -- The Agreement and Plan of Merger, dated as of May 11, 1998,
among Parent, Purchaser and the Company.*
(c)(2) -- Mutual Confidentiality Agreement, dated as of April 8, 1998,
between Parent and the Company.*
(d) through (f) -- None or not applicable.
</TABLE>
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* Previously Filed.
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SIGNATURES
After due inquiry and to the best of the knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: May 18, 1998
DIAMOND MULTIMEDIA SYSTEMS, INC.
By: /s/ WILLIAM J. SCHROEDER
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Name: William J. Schroeder
Title: President, Chief Executive
Officer
and Chairman of the Board
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
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<S> <C> <C>
(a)(1) Offer to Purchase, as amended, dated May 15, 1998.
(a)(2) Letter of Transmittal.*
(a)(3) Letter from MacKenzie Partners, Inc., as Information Agent,
to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.*
(a)(4) Letter to Clients from Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.*
(a)(5) Notice of Guaranteed Delivery.*
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.*
(a)(7) Form of Summary Announcement, as published on May 15, 1998.*
(a)(8) Press Release, as issued by Parent on May 11, 1998.*
(b) None or not applicable.
(c)(1) The Agreement and Plan of Merger, dated as of May 11, 1998,
among Parent, Purchaser and the Company.*
(c)(2) Mutual Confidentiality Agreement, dated as of April 8, 1998,
between Parent and the Company.*
(d) through (f) None or not applicable.
</TABLE>
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* Previously filed.
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OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MICRONICS COMPUTERS, INC.
AT
$2.45 NET PER SHARE
BY
BOARDWALK ACQUISITION CORPORATION
A WHOLLY-OWNED SUBSIDIARY OF
DIAMOND MULTIMEDIA SYSTEMS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 12, 1998, UNLESS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES OF COMMON STOCK, $0.01 PAR VALUE PER SHARE, OF MICRONICS
COMPUTERS, INC. (THE "COMPANY"), WHICH WOULD REPRESENT, ON A FULLY DILUTED BASIS
AT LEAST FIFTY-ONE PERCENT (51%) OF THE OUTSTANDING SHARES (THE "SHARES"). THE
OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN THIS OFFER TO
PURCHASE. SEE INTRODUCTION AND SECTIONS 1 AND 15 HEREOF.
THIS OFFER (THE "OFFER") IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND
PLAN OF MERGER, DATED AS OF MAY 11, 1998 (THE "MERGER AGREEMENT"), AMONG DIAMOND
MULTIMEDIA SYSTEMS, INC., BOARDWALK ACQUISITION CORPORATION AND THE COMPANY. THE
BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND THE
MERGER AND DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
------------------------
IMPORTANT
Any stockholder of the Company desiring to tender Shares should either (i)
complete and sign the Letter of Transmittal or a facsimile thereof in accordance
with the instructions in the Letter of Transmittal and deliver the Letter of
Transmittal with the Shares and all other required documents to the Depositary
(as defined herein) or follow the procedures for book-entry transfer set forth
in Section 3 or (ii) 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 person if they
desire to tender their Shares.
Any stockholder of the Company who desires to tender Shares and whose
certificates representing such Shares are not immediately available or who
cannot comply with the procedures for book-entry transfer on a timely basis or
who cannot deliver all required documents to the Depositary, in each case prior
to the expiration of the Offer, must tender such Shares pursuant to the
guaranteed delivery procedure set forth in Section 3.
Questions and requests for assistance may be directed to MacKenzie
Partners, Inc., the Information Agent, at the address and telephone number set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal and other related materials may be
obtained from the Information Agent or from brokers, dealers, commercial banks
and trust companies.
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May 15, 1998
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TABLE OF CONTENTS
<TABLE>
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SECTION PAGE
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<C> <S> <C>
Introduction ............................................................ 3
1. Terms of the Offer.......................................... 4
2. Acceptance for Payment and Payment for Shares............... 5
3. Procedure for Tendering Shares.............................. 6
4. Withdrawal Rights........................................... 8
5. Certain Federal Income Tax Consequences..................... 9
6. Price Range of Shares; Dividends on the Shares.............. 10
7. Effect of Offer on Nasdaq National Market Listing, Market
for Shares and SEC Registration........................... 10
8. Certain Information Concerning the Company.................. 11
9. Certain Information Concerning Purchaser and Parent......... 13
10. Source and Amount of Funds.................................. 15
11. Background of the Offer..................................... 15
12. Purpose of the Offer; The Merger; Plans for the Company..... 16
13. The Transaction Documents................................... 18
14. Dividends and Distributions................................. 27
15. Certain Conditions to Purchaser's Obligations............... 27
16. Certain Regulatory and Legal Matters........................ 29
17. Fees and Expenses........................................... 30
18. Miscellaneous............................................... 30
Annex I. Certain Information Concerning the Directors and Executive
Officers of Parent and Purchaser.......................... A-1
</TABLE>
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TO THE HOLDERS OF COMMON STOCK OF MICRONICS COMPUTERS, INC.:
INTRODUCTION
Boardwalk Acquisition Corporation, a Delaware corporation ("Purchaser") and
a wholly-owned subsidiary of Diamond Multimedia Systems, Inc., a Delaware
corporation ("Parent"), hereby offers to purchase all of the outstanding shares
of common stock, par value $0.01 per share (collectively, the "Shares"), of
Micronics Computers Inc., a Delaware corporation (the "Company") at a purchase
price of $2.45 per share (such amount, or any greater amount per share paid
pursuant to the Offer, being hereinafter referred to as the "Offer Price"), net
to the seller in cash, without interest thereon, less any required withholding
taxes, upon the terms and subject to the conditions set forth in this Offer to
Purchase and the related Letter of Transmittal (which together constitute the
"Offer"). Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant to
the Offer. Purchaser will pay all charges and expenses of BankBoston, N.A. (the
"Depositary"), and MacKenzie Partners, Inc. (the "Information Agent") for their
respective services in connection with the Offer and the Merger (as hereinafter
defined). See Section 17.
Purchaser is a corporation newly formed by Parent in connection with the
Offer and the transactions contemplated by the Merger Agreement (as hereinafter
defined).
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER AND DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO AND IN
THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES.
THE BOARD OF DIRECTORS OF THE COMPANY HAS RECEIVED THE OPINION OF ALLIANT
PARTNERS, THE COMPANY'S FINANCIAL ADVISOR ("ALLIANT PARTNERS"), DATED MAY 7,
1998, TO THE EFFECT THAT, AS OF SUCH DATE AND SUBJECT TO THE VARIOUS ASSUMPTIONS
AND LIMITATIONS SET FORTH THEREIN, THE CASH CONSIDERATION TO BE RECEIVED BY THE
STOCKHOLDERS OF THE COMPANY PURSUANT TO THE OFFER AND THE MERGER IS FAIR, FROM A
FINANCIAL POINT OF VIEW, TO SUCH HOLDERS. A COPY OF THAT OPINION IS SET FORTH IN
FULL AS AN EXHIBIT TO THE COMPANY'S SOLICITATION/ RECOMMENDATION STATEMENT ON
SCHEDULE 14D-9 WHICH IS BEING MAILED TO THE COMPANY'S STOCKHOLDERS, AND
STOCKHOLDERS ARE URGED TO READ THE OPINION IN ITS ENTIRETY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS HEREINAFTER DEFINED)
SHARES REPRESENTING AT LEAST FIFTY-ONE PERCENT (51%) OF SHARES OUTSTANDING, ON A
FULLY DILUTED BASIS ON THE DATE OF PURCHASE (INCLUDING SHARES ISSUABLE UPON
EXERCISE OR CONVERSION OF ALL STOCK OPTIONS VESTED OR SCHEDULED TO VEST PRIOR TO
JULY 31, 1998 AND ALL CONVERTIBLE SECURITIES OR OTHER RIGHTS TO PURCHASE OR
ACQUIRE SHARES) (THE "MINIMUM CONDITION"). SEE SECTION 15.
The Company has represented to Parent and Purchaser that, as of May 11,
1998, there were 12,902,565 Shares issued and outstanding and 3,120,084 Shares
reserved for issuance in connection with outstanding stock options (542,749 of
which are estimated to be vested or scheduled to vest as of July 31, 1998).
Based on the foregoing, Purchaser believes that approximately 6,857,111 Shares
must be validly tendered and not withdrawn prior to the expiration of the Offer
in order for the Minimum Condition to be satisfied. See Section 1.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 11, 1998 (the "Merger Agreement"), by and among Parent, Purchaser and
the Company. The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser, and further provides that, after the
purchase of Shares pursuant to the Offer and subject to the satisfaction or
waiver of certain conditions set forth therein, Purchaser will be merged with
and into the Company (the "Merger"), with the Company surviving the Merger as a
wholly-owned subsidiary of Parent. The Merger Agreement is more fully described
in Section 13. The Merger is subject to a number of conditions, including the
approval and adoption of the Merger Agreement by stockholders of the Company if
such approval is required by applicable law. See Section 12. In the Merger, each
outstanding Share shall automatically be canceled and extinguished and each
outstanding Share (other than Shares owned by the Company as treasury stock, by
Parent, or any subsidiary
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thereof, or Shares held by stockholders who perfect their appraisal rights under
Delaware law) will be converted into and represent the right to receive the
Offer Price, without interest thereon.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
This Offer to Purchase contains forward-looking statements that involve
risks and uncertainties, including the risks associated with satisfying the
various conditions to the Offer. Certain of these factors as well as additional
risks and uncertainties, are detailed in the Company's periodic filings with the
Securities and Exchange Commission (the "Commission").
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions set forth in the Offer
(including, if the Offer is extended or amended, the terms and conditions of any
extension or amendment), Purchaser will accept for payment and pay for all
Shares validly tendered prior to the Expiration Date and not theretofore
withdrawn in accordance with Section 4. The term "Expiration Date" means 12:00
midnight, New York City time, on Friday, June 12, 1998, unless and until
Purchaser, in accordance with the terms of the Offer and the Merger Agreement,
extends the period of time during which the Offer is open, in which event the
term "Expiration Date" means the latest time and date at which the Offer, as so
extended, expires.
Purchaser has agreed in the Merger Agreement that, without the prior
written approval of the Company, it will not extend the period during which the
Offer is open, except (subject to the Company's right of termination, discussed
under Section 13, "Merger Agreement -- Termination of the Merger Agreement,"
below) (A) as required to comply with any rule, regulation or interpretation of
the Commission, (B) until such time as all such conditions described under
Section 15, "Certain Conditions to Purchaser's Obligations," below, have been
satisfied or waived or (C) only if less than 90% of the outstanding Shares have
been tendered, for one or more times for a total number of days in the aggregate
for any extension in accordance with this clause (C) not to exceed 20 business
days for any reason other than those specified in the immediately preceding
clauses (A) and (B). Subject to the foregoing restrictions, Purchaser reserves
the right (but will not be obligated), in its sole discretion, to extend the
period during which the Offer is open by giving oral or written notice of such
extension to the Depositary and by making a public announcement of such
extension. There can be no assurance that Purchaser will exercise its right to
extend the Offer.
If Purchaser shall decide, in its sole discretion, to increase the
consideration offered in the Offer to holders of Shares and, if at the time that
notice of such increase is first published, sent or given to holders of Shares
in the manner specified below, the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that such notice is first so published, sent or given,
then the Offer will be extended until the expiration of such period of ten
business days. 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.
THE OFFER IS CONDITIONED UPON SATISFACTION OF THE MINIMUM CONDITION. THE
OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE SECTION 15. As
described in the Introduction to this Offer to Purchase, Purchaser believes that
in order to satisfy the Minimum Condition, Purchaser must purchase 6,857,111
Shares.
Subject to the applicable rules and regulations of the Commission,
Purchaser expressly reserves the right, in its sole discretion, to delay payment
for any Shares regardless of whether such Shares were theretofore accepted for
payment, or, subject to the limitations set forth in the Merger Agreement, to
terminate the Offer and not accept for payment or pay for any Shares not
theretofore accepted for payment or paid for, upon the occurrence of any of the
conditions set forth in Section 15 by giving oral or written notice of such
delay or termination to the Depositary. Purchaser's right to delay payment for
any Shares or not to pay for any Shares theretofore accepted for payment is
subject to the applicable rules and regulations of the Commission, including
Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), relating to Purchaser's obligation to pay for or return
tendered Shares promptly after the termination or
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withdrawal of the Offer. Any extension of the period during which the Offer is
open, or delay in acceptance for payment or payment, or 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
not later 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 14d-4(c) under the Exchange Act.
In the Merger Agreement, Purchaser has also agreed that it will not, (1)
reduce the cash price per Share to be paid pursuant to the Offer, (2) reduce the
number of Shares to be purchased pursuant to the Offer, (3) impose additional
conditions to the Offer, (4) extend the Offer beyond 120 days from the
commencement of the Offer without the prior written consent of the Company,
except as contemplated in the Merger Agreement, or (5) otherwise amend any other
material terms of the Offer in a manner that is materially adverse to the
stockholders of the Company.
If 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, Purchaser will disseminate additional tender offer materials and extend
the Offer if and to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1
under the Exchange Act or otherwise. The minimum period during which an offer
must remain open following material changes in the terms of the offer or
information concerning the offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the terms or information changes. With
respect to a change in price or a change in percentage of securities sought, a
minimum ten business day period is generally required to allow for adequate
dissemination to stockholders and investor response.
The Company has provided Purchaser with the Company's list of stockholders
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the Letter of Transmittal will be
mailed to record holders of the Shares and will be furnished to brokers,
dealers, commercial banks and similar persons whose names, or the names of whose
nominees, appear on the list of stockholders 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 FOR SHARES.
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), Purchaser will purchase, by accepting for payment, and will pay
for, all Shares validly tendered prior to the Expiration Date (and not properly
withdrawn in accordance with Section 4) promptly after the Expiration Date.
Subject to compliance with Rule 14e-1(c) under the Exchange Act, Purchaser
expressly reserves the right to delay payment for Shares in order to comply in
whole or in part with any applicable law. See Sections 1 and 15. 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 for such Shares or
timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company (collectively, the "Book-Entry Transfer
Facilities"), pursuant to the procedures set forth in Section 3, (ii) a properly
completed and duly executed Letter of Transmittal (or manually signed facsimile
thereof) with all required signature guarantees or, in the case of a book-entry
transfer, an Agent's Message (as defined below) and (iii) any other documents
required by the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to the Depositary of Purchaser's
acceptance of such Shares for payment. In all cases, payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
with the Depositary, which will
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act as agent for tendering stockholders for the purpose of receiving payment
from 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 Purchaser is unable to accept for payment Shares
tendered pursuant to the Offer, then, without prejudice to Purchaser's rights
under Section 15, the Depositary may, nevertheless, on behalf of 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 4 below and as otherwise required by Rule 14e-1(c) under
the Exchange Act. Under no circumstances will interest be paid on the purchase
price for Shares by Purchaser by reason of any delay in making such payment.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased or untendered
Shares will be returned, without expense to the tendering stockholder (or, in
the case of Shares delivered by book-entry transfer to a Book-Entry Transfer
Facility, such Shares will be credited to an account maintained within such
Book-Entry Transfer Facility), as promptly as practicable after the expiration,
termination or withdrawal of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration
offered to stockholders pursuant to the Offer, such increased consideration will
be paid to all stockholders whose Shares are purchased pursuant to the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to Parent or to one or more direct or indirect subsidiaries of
Parent, the right to purchase Shares tendered pursuant to the Offer, but any
such transfer or assignment will not relieve 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.
Valid Tenders. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other required
documents, must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase prior to the Expiration Date. In
addition, either (i) certificates representing such 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 a Book-Entry Confirmation must be
received by the Depositary, in each case prior to the Expiration Date, or (ii)
there must be compliance with the guaranteed delivery procedure set forth below.
No alternative, conditional or contingent tenders will be accepted. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at each Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in a Book-Entry
Transfer Facility's system may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at a Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. Although delivery of Shares may be
effected through book-entry at a Book-Entry Transfer Facility, the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees 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.
Signature Guarantees. Signatures on the Letter of Transmittal need not be
guaranteed by a member firm of a registered national securities exchange
(registered under Section 6 of the Exchange Act), by a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States or by any other "Eligible
Guarantor Institution," as defined in Rule 17Ad-15 under the Exchange Act
(collectively, "Eligible Institutions"), unless the Shares tendered thereby are
tendered (i) by a registered holder of Shares who has completed either the box
entitled
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"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (ii) as noted in the following
sentence. If the certificates evidencing Shares are registered in the name of a
person or persons other than the signer of the Letter of Transmittal, or if
payment is to be made or certificates for unpurchased Shares are to be issued to
a person other than the registered owner or owners, then the certificates must
be endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates, with the signatures on the certificates or stock powers guaranteed
as provided in the Letter of Transmittal. See Instructions 1 and 5 to the Letter
of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if such
tender complies with all of the following guaranteed delivery procedures:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser herewith, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), and any
required signature guarantees and any other documents required by the
Letter of Transmittal are received by the Depositary within three Nasdaq
National Market trading days after the date of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of certificates for the Shares (or a Book-Entry
Confirmation), a properly completed and duly executed Letter of Transmittal (or
a manually signed facsimile thereof) and any other documents required by the
Letter of Transmittal.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING WITH RESPECT TO PAYMENT OF THE PURCHASE PRICE OF 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 FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL. SEE INSTRUCTION 10 SET FORTH IN THE
LETTER OF TRANSMITTAL.
Determinations of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by Purchaser, in its sole discretion,
and its determination will be final and binding on all parties. Purchaser
reserves the absolute right to reject any or all tenders of any Shares that are
determined by it not to be in proper form or the acceptance of or payment for
which may, in the opinion of Purchaser, be unlawful. Purchaser also reserves the
absolute right to waive any of the conditions of the Offer (other than the
Minimum Condition, as described above) or any defect or irregularity in the
tender of any Shares. Purchaser's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal and the Instructions to the
Letter of Transmittal) will be final and binding on all parties. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of Purchaser, the Depositary, the
Information Agent or any other person will be under any duty to give
7
<PAGE> 8
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by Purchaser (and any and all other Shares or other securities or rights
issued or issuable in respect of such Shares on or after May 11, 1998). All such
proxies shall be considered coupled with an interest in the tendered Shares.
This appointment is effective when, and only to the extent that, Purchaser
deposits the payment for such Shares. Upon acceptance for payment, all prior
proxies given by the stockholder with respect to such Shares or other securities
or rights will, without further action, be revoked and no subsequent proxies may
be given (and, if given, will not be deemed effective). The designees of
Purchaser will, with respect to the Shares and other securities or rights, be
empowered to exercise all voting and other rights of such stockholder as they in
their sole judgment deem proper in respect of any annual or special meeting of
the Company's stockholders, or any adjournment or postponement thereof, or in
connection with any action by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting and other rights with
respect to such Shares and the other securities or rights, including voting at
any meeting of stockholders then scheduled.
The tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer as well as the tendering stockholder's representation
and warranty that (a) such stockholder has a net long position in the Shares
being tendered within the meaning of Rule 14e-4 under the Exchange Act and (b)
the tender of such Shares complies with Rule 14e-4. It is a violation of Rule
14e-4 for a person, directly or indirectly, to tender Shares for such person's
own account unless, at the time of tender, the person so tendering (i) has a net
long position equal to or greater than the amount of (x) Shares tendered or (y)
other securities immediately convertible into or exchangeable or exercisable for
the Shares tendered and such person will acquire such Shares for tender by
conversion, exchange or exercise and (ii) will cause such Shares to be delivered
in accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. Purchaser's acceptance for payment of Shares tendered pursuant
to the Offer will constitute a binding agreement between the tendering
stockholder and Purchaser upon the terms and subject to the conditions of the
Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment pursuant to the Offer, may also be withdrawn at any time
after July 13, 1998. If purchase of or payment for Shares is delayed for any
reason or if Purchaser is unable to purchase or pay for Shares for any reason,
then, without prejudice to Purchaser's rights under the Offer, tendered Shares
may be retained by the Depositary on behalf of Purchaser and may not be
withdrawn except to the extent that tendering stockholders are entitled to
withdrawal rights as set forth in this Section 4, subject to Rule 14e-1(c) under
the Exchange Act which provides that no person who makes a tender offer shall
fail to pay the consideration offered or return the securities deposited by or
on behalf of security holders promptly after the termination or withdrawal of
the Offer.
For a withdrawal 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 in which the certificates representing such Shares are registered, if
different from that of the person who tendered the Shares. If certificates for
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and,
8
<PAGE> 9
unless such Shares have been tendered by an Eligible Institution, the signatures
on the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been tendered pursuant to the procedures for book-entry transfer set
forth in Section 3, any notice of withdrawal must also specify the name and
number of the account at the applicable Book-Entry Transfer Facility to be
credited with the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
and its determination will be final and binding on all parties. None of
Purchaser, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be returned at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of the principal federal income tax consequences
of the Offer and the Merger to holders whose Shares are purchased pursuant to
the Offer or whose Shares are converted to cash in the Merger (including
pursuant to the exercise of appraisal rights). The discussion applies only to
holders of Shares in whose hands Shares are capital assets, and may not apply to
Shares received pursuant to the exercise of employee stock options or otherwise
as compensation, or to holders of Shares who are in special tax situations (such
as insurance companies, tax-exempt organizations or non-U.S. persons), or to
persons holding Shares as part of a "straddle," "hedge," or "conversion
transaction." This discussion does not address any aspect of state, local or
foreign taxation.
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR
GENERAL INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON CURRENT LAW. BECAUSE
INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH
HOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED
BELOW TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE
MERGER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger
(including pursuant to the exercise of appraisal rights) will be a taxable
transaction for federal income tax purposes (and also may be a taxable
transaction under applicable state, local and other income tax laws). In
general, for federal income tax purposes, a holder of Shares will recognize gain
or loss equal to the difference between the holder's adjusted tax basis in the
Shares sold pursuant to the Offer or converted to cash in the Merger 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 (other than, with respect to the
exercise of appraisal rights, amounts, if any, which are or are deemed to be
interest for federal income tax purposes, which amounts will be taxed as
ordinary income) and will be (i) long-term gain or loss if, on the date of sale
(or, if applicable, the date of the Merger), the Shares were held for more than
eighteen months, and (ii) mid-term gain or loss if, on the date of sale (or, if
applicable, the date of the Merger), the Shares were held for more than one year
but not more than eighteen months.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a 31% rate. Backup withholding generally applies if the
stockholder (a) fails to furnish his social security number or other taxpayer
identification number ("TIN"), (b) furnishes an incorrect TIN, (c) fails
properly to report interest or dividends or (d) under certain circumstances,
fails to provide a certified statement, signed under penalties of perjury, that
the TIN provided is his correct number and that he 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 the reportable payments in income. Each stockholder
9
<PAGE> 10
should consult with his own tax advisor as to his qualification for exemption
from withholding and the procedure for obtaining such exemption.
6. PRICE RANGE OF SHARES; DIVIDENDS ON THE SHARES.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1997 (the "Company 10-K"), the Shares are listed and traded
on the Nasdaq National Market under the symbol "MCRN" and the Company has not
paid any cash dividends on the Shares. Pursuant to the Merger Agreement, the
Company has agreed not to declare, set aside for payment or pay any dividends or
other distributions with respect to the Shares prior to consummation of the
Merger. The following table sets forth the high and low closing sales prices per
Share on the Nasdaq National Market for the periods indicated, as reported in
published financial sources.
<TABLE>
<CAPTION>
HIGH LOW
------- ------
<S> <C> <C>
Year Ended September 30, 1996:
First Quarter............................................ $4.875 $3.250
Second Quarter........................................... 4.250 2.500
Third Quarter............................................ 3.375 2.500
Fourth Quarter........................................... 3.000 1.875
Year Ended September 30, 1997:
First Quarter............................................ 2.875 2.156
Second Quarter........................................... 3.000 2.016
Third Quarter............................................ 3.875 1.781
Fourth Quarter........................................... 3.188 1.875
Year Ending September 30, 1998
First Quarter............................................ 2.688 1.688
Second Quarter........................................... 2.219 2.531
Third Quarter (through May 14, 1998)..................... 1.438 2.344
</TABLE>
The closing sale price per Share on the Nasdaq National Market on May 8,
1998, the last full day of trading prior to the public announcement of
Purchaser's intention to make the Offer, was $1.781. The closing sale price per
Share on the Nasdaq National Market on May 14, 1998, the last full day of
trading prior to the commencement of the Offer, was $2.344. Stockholders are
urged to obtain current market quotations for the Shares and to review all
information received by them from the Company, including the proxy materials and
annual and quarterly reports referred to in Section 8.
7. EFFECT OF OFFER ON NASDAQ NATIONAL MARKET LISTING, MARKET FOR SHARES AND SEC
REGISTRATION.
The purchase of the Shares by Purchaser pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and may reduce the
number of holders of Shares, which could adversely affect the liquidity and
market value of the remaining Shares held by stockholders other than Purchaser.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the standards for continued inclusion on the Nasdaq
National Market. If trading volume were lower than such standards, quotations
might continue to be published in the "additional list" or in one of the "local
lists," or such quotations might not be published at all. If the number of
holders of Shares (based on round lots) fell below 400, Nasdaq might cease to
provide quotations but quotations might still be available from other sources.
Purchaser cannot predict whether Nasdaq trading volume standards for publication
will be met after the Offer.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the Commission
if there are fewer than 300 record holders of Shares. It is the intention of
Purchaser to seek to cause an application for such termination to be made as
soon after consummation of the Offer as the requirements for termination of
registration of the Shares are met. If such
10
<PAGE> 11
registration were terminated, the Company would no longer legally be required to
disclose publicly in proxy materials distributed to stockholders the information
which it now must provide under the Exchange Act or to make public disclosure of
financial and other information in annual, quarterly and other reports required
to be filed with the Commission under the Exchange Act; the officers, directors
and 10% stockholders of the Company would no longer be subject to the
"short-swing" insider trading reporting and profit recovery provisions of the
Exchange Act or the proxy statement requirements of the Exchange Act in
connection with stockholders' meetings; and the Shares would no longer be
eligible for Nasdaq National Market reporting. Furthermore, if such registration
were terminated, persons holding "restricted securities" of the Company may be
deprived of their ability to dispose of such securities under Rule 144
promulgated under the Securities Act of 1933, as amended.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as specifically set forth herein, the information concerning the
Company contained in this Offer to Purchase has been taken from or is based upon
publicly available documents and records on file with the Commission and other
public sources. Neither Parent nor Purchaser has any knowledge that would
indicate that any statements contained herein based on such documents and
records are untrue. However, neither Parent nor Purchaser assumes any
responsibility for the accuracy or completeness of the information concerning
the Company, furnished by the Company or contained in such documents and records
or for any failure by the Company to disclose events which may have occurred or
which may affect the significance or accuracy of any such information but which
are unknown to Parent and Purchaser.
The Company is a Delaware corporation with its principal executive offices
located at 45365 Northport Loop West, Fremont, California 94538. According to
the Company 10-K, the Company is a supplier of advanced system boards for
high-performance personal computers sold by original equipment manufacturers,
distributors and value-added resellers, graphics accelerator products and the
nucleus of "barebones" system products.
Set forth below is certain summary consolidated financial information with
respect to the Company and its subsidiaries excerpted or derived from the
consolidated financial statements presented in the Company 10-K and the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997
and 1998. More comprehensive financial information is included in such reports
and in other documents filed by the Company with the Commission (which may be
inspected or obtained in the manner set forth below), and the following summary
is qualified in its entirety by reference to such reports and other documents
and all of the financial information and notes contained therein or incorporated
therein by reference.
MICRONICS COMPUTERS, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
------------------ --------------------------------
1998 1997 1997 1996 1995
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Net sales............................. $30,332 $60,470 $ 99,276 $171,245 $234,077
Income (loss) from operations......... (4,035) (2,998) (10,505) (5,391) (19,470)
Net income (loss)..................... (3,419) (2,498) (9,789) (13,288) (12,836)
Net income (loss) per common share.... (0.26) (0.18) (.70) (.96) (.95)
BALANCE SHEET DATA (END OF PERIOD)
Total assets.......................... $39,420 $51,547 $ 49,649 $ 61,563 $ 93,254
Long-term debt........................ -- -- -- -- 397
Stockholders' equity.................. 28,604 41,508 34,379 43,888 56,554
</TABLE>
11
<PAGE> 12
Certain Company Estimates. During the course of discussions between Parent
and the Company that led to the execution of the Merger Agreement (see Section
11), the Company provided Parent with certain information relating to the
Company which Purchaser believes is not publicly available. This information
included a preliminary pro forma income statement for the Company for fiscal
years 1998, 1999 and 2000 developed by the Company's senior management following
the Company's first quarter ended March 31, 1998 and predicated on preliminary
assumptions at that time (April 1997) for macroeconomic conditions, gross
profits and operating expenses. The projections also assumed that the Company
would close its motherboard and system business and take other actions to reduce
operating losses significantly (actions which the Company has not resolved to
undertake, and does not intend to undertake during the pendancy of the Offer).
Based on the foregoing, the projections showed a fiscal year 1998 operating
budget with estimated net sales of $72.0 million, gross profit of $12.1 million,
operating expenses of $13 million and operating losses of $800,000. The
Company's fiscal year 1999 pro forma income statement (prepared on the same
assumptions) estimated revenues of $65.0 million, gross profit of $13.1 million,
operating expenses of $11.6 million and operating income of $1.5 million. The
Company's fiscal year 2000 operating budget (also prepared on the same
assumptions) estimated net sales of $90 million, gross profit of $13.1 million,
operating expenses of $11.0 million and operating income of $3.8 million. The
foregoing information has been excerpted from the materials presented to Parent
by the Company and does not reflect consummation of the Offer or the Merger.
The foregoing estimates constitute forward-looking statements that involve
risks and uncertainties, including, but not limited to, risks associated with
fluctuations in operating results, the ability to retain existing and win new
OEM business, business conditions in the personal computer industry, product
introductions, competition, rapid technological change and other factors. These
risks and uncertainties are discussed in greater detail in the Company's
periodic filings with the Commission.
THE COMPANY DOES NOT AS A MATTER OF COURSE MAKE PUBLIC ANY ESTIMATES AS TO
FUTURE PERFORMANCE OR EARNINGS, AND THE ESTIMATES SET FORTH ABOVE ARE INCLUDED
IN THIS OFFER TO PURCHASE ONLY BECAUSE THE INFORMATION WAS MADE AVAILABLE TO
PARENT BY THE COMPANY. THE COMPANY HAS INFORMED PARENT THAT THE ESTIMATES WERE
NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED
GUIDELINES OF THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING ESTIMATES OR FORECASTS. THE
COMPANY HAS ALSO INFORMED PARENT THAT ITS INTERNAL FINANCIAL FORECASTS (UPON
WHICH THE ESTIMATES PROVIDED TO PARENT WERE BASED IN PART) ARE, IN GENERAL,
PREPARED SOLELY FOR INTERNAL USE AND CAPITAL BUDGETING AND OTHER MANAGEMENT
DECISION-MAKING PURPOSES AND ARE SUBJECTIVE IN MANY RESPECTS AND THUS
SUSCEPTIBLE TO VARIOUS INTERPRETATIONS AND PERIODIC REVISION BASED ON ACTUAL
EXPERIENCE AND BUSINESS DEVELOPMENTS. PROJECTED INFORMATION OF THIS TYPE IS
BASED ON ESTIMATES AND ASSUMPTIONS THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT
ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE
DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY,
PURCHASER OR PARENT OR THEIR RESPECTIVE FINANCIAL ADVISORS. MANY OF THE
ASSUMPTIONS UPON WHICH THE ESTIMATES WERE BASED, NONE OF WHICH WERE APPROVED BY
PARENT OR PURCHASER, ARE DEPENDENT UPON ECONOMIC FORECASTING (BOTH GENERAL AND
SPECIFIC TO THE COMPANY'S BUSINESSES), WHICH IS INHERENTLY UNCERTAIN AND
SUBJECTIVE. THE INCLUSION OF THE FOREGOING ESTIMATES SHOULD NOT BE REGARDED AS
AN INDICATION THAT THE COMPANY, PURCHASER, PARENT OR ANY OTHER PERSON WHO
RECEIVED SUCH INFORMATION CONSIDERS IT AN ACCURATE PREDICTION OF FUTURE EVENTS,
AND NEITHER PURCHASER NOR PARENT HAS RELIED ON THEM AS SUCH. NONE OF PURCHASER
OR PARENT OR THEIR FINANCIAL ADVISORS ASSUMES ANY RESPONSIBILITY FOR THE
ACCURACY OR VALIDITY OF ANY OF THE ESTIMATES.
Available Information. The Company is subject to the information and
reporting requirements of the Exchange Act and, in accordance therewith, is
obligated to file reports 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, any material interests of such persons in transactions
with the Company, and other matters is required to be disclosed in proxy
statements 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 Commission's Public Reference Room, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and copies should be obtainable
upon payment of the Commission's customary charges by writing to the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
Such material should also be available for inspection and copying at the
regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, New York, 10048 and Citicorp Center,
12
<PAGE> 13
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The Commission
also maintains a World Wide Web site on the Internet at http://www.sec.gov that
contains reports, proxy statements and other information regarding companies
that file electronically with the Commission.
9. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT.
Purchaser, a Delaware corporation, was recently incorporated for the
purposes of making the Offer and the Merger. All of the outstanding capital
stock of Purchaser is owned by Parent. The principal executive offices of
Purchaser are located at 2880 Junction Avenue, San Jose, California 95134.
Until, immediately prior to the time Purchaser purchases Shares and
immediately prior to the Merger, it is not anticipated that Purchaser will have
any significant assets or liabilities or engage in activities other than those
incidental to its formation and capitalization and the transactions contemplated
by the Offer, the Merger Agreement and the Merger. Since Purchaser is newly
formed and has minimal assets and capitalization, no meaningful financial
information is available with respect to it.
Parent is a Delaware corporation with its principal executive offices
located at 2880 Junction Avenue, San Jose, California 95134. Parent is engaged
in the business of designing, developing, manufacturing and marketing multimedia
and connectivity products for IBM-compatible personal computers and modems for
Apple MacIntosh computers.
The name, business address, past and present principal occupations and
citizenship of each of the directors and executive officers of Purchaser and
Parent are set forth in Annex I to this Offer to Purchase. None of Parent
Purchaser or, to the best knowledge of Parent and Purchaser, any of the persons
listed in Annex I of this Offer to Purchase or any associate or majority-owned
subsidiary of such person or entity beneficially owns or has any right to
acquire, directly or indirectly, any Shares, and, to the best knowledge of
Parent and Purchaser, no such person or entity has effected any transaction in
the Shares during the past 60 days.
Set forth below is certain summary condensed consolidated financial
information with respect to Parent and its subsidiaries excerpted or derived
from the condensed consolidated financial statements presented in Parent's
Annual Report on Form 10-K for the year ended December 31, 1997 and the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997
and 1998. More comprehensive financial information is included in such reports
and in other documents filed by Parent with the Commission (which may be
inspected or obtained in the manner set forth below), and the following summary
is qualified in its entirety by reference to such reports or other documents and
all of the financial information and notes contained therein or incorporated
therein by reference.
13
<PAGE> 14
DIAMOND MULTIMEDIA SYSTEMS, INC. AND SUBSIDIARIES
SELECTED CONDENSED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA
Net sales................................................. $443,281 $598,050 $467,635
Gross profit.............................................. 55,795 112,766 108,350
Write-off of in-process technology........................ -- -- 76,710
Income (loss) from operations............................. (67,719) 22,708 (19,273)
Net income (loss)......................................... (45,605) 16,337 (41,347)
Net income (loss) per share:
Basic.................................................. (1.33) 0.48 (1.55)
Diluted................................................ (1.33) 0.46 (1.55)
BALANCE SHEETS DATA
Total assets.............................................. 337,554 332,438 351,729
Current portion of long-term debt......................... 36,455 18,068 18,077
Long-term debt, net of current portion.................... 1,873 2,720 11,705
Total stockholders' equity................................ 180,521 224,295 208,610
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
STATEMENTS OF OPERATIONS DATA
Net sales................................................. $186,196 $112,402
-------- --------
Gross profit.............................................. 41,626 19,585
-------- --------
Income (loss) from operations............................. 11,132 (9,934)
-------- --------
Net income (loss)......................................... $ 7,927 $ (5,951)
-------- --------
Net income (loss) per share:
Basic.................................................. $ 0.23 $ (0.17)
Diluted................................................ $ 0.22 $ (0.17)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
BALANCE SHEETS DATA
Total assets.............................................. $349,762 $337,554
Current portion of long-term debt......................... 35,301 36,455
Long-term debt, net of current portion.................... 1,747 1,873
Total stockholders' equity................................ 190,842 180,521
</TABLE>
Available Information. Purchaser is not subject to the informational filing
requirements of the Exchange Act. Purchaser does not file reports or other
information with the Commission relating to its business, financial condition or
other matters. Parent is subject to the information and reporting requirements
of the Exchange Act and, in accordance therewith is obligated to file reports
and other information with the Commission relating to its business, financial
condition, and other matters. Information as of particular dates concerning
Parent's directors, officers, their renumeration, stock options granted to them,
the principal holders of Parent's securities, any material interest of such
persons in transactions with Parent, and other matters is required to be
disclosed in proxy statements distributed to Parent's stockholders and filed
with the Commission. Such reports, proxy statements, and other information
should be available for inspection at the Commission's Public Reference Room,
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies should be
obtainable upon payment of the Commission's customary charges by writing to the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
Such material should also be available for
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inspection and copying at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, New York, 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The
Commission also maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains reports, proxy statements and other information
regarding registrants that file electronically with the Commission.
10. SOURCE AND AMOUNT OF FUNDS.
If all Shares (including Shares issuable upon exercise or conversion of all
stock options, vested or scheduled to vest prior to July 31, 1998, and
convertible securities or other rights to purchase or acquire Shares, are
tendered to and purchased by Purchaser, the aggregate purchase price and all
estimated commissions, fees and expenses will be approximately $35.5 million.
Purchaser intends to obtain all of such funds from Parent which in turn would
obtain such funds from Parent's existing working capital.
11. BACKGROUND OF THE OFFER.
The Company engages in lines of business complimentary to those of Parent.
Accordingly, Parent has followed the business of the Company for several years,
and has also been aware for some time of the Company's efforts to identify an
acquiror. In early 1998, Parent began to consider seriously a bid to acquire the
Company, primarily as a result of developing trends in the multimedia systems
boards and PC gaming industries and Parent's perception of growing potential
value from a combination of the two companies.
On March 31, 1998, William Schroeder, Parent's President, Chief Executive
Officer and Chairman of the Board, met with Broadview Associates LLC
("Broadview") to discuss generally the status of pending strategic initiatives
in the multimedia systems board industry, including the possibility of a
potential combination of Parent and the Company. On that same date,
representatives of Broadview, on behalf of Parent, contacted Charles Hart,
President and Chief Executive Officer of the Company, to inquire about the
Company's interest in a possible combination with Parent. Mr. Hart referred
Broadview to Alliant Partners, the Company's financial advisor ("Alliant").
Broadview contacted Alliant and discussed certain parameters and alternatives
regarding a potential transaction.
On April 2, 1998, Mr. Schroeder, James Walker, Parent's Senior Vice
President, Finance and Administration and Chief Financial Officer, and certain
other members of senior management of Parent, along with representatives of
Broadview, met with Mr. Hart, Bill Finley, Vice President, Finance and Chief
Financial Officer of the Company, another member of the Company's senior
management team and representatives of Alliant at Alliant's offices. The parties
exchanged information on their respective financial condition, the strategies
and prospects of their respective companies, personnel matters, synergies
between the companies, and the possibility of a business combination. Based on
the discussion at the meeting, the parties agreed to continue discussions.
On April 6, 1998, Mr. Schroeder and Mr. Walker met with representatives of
Broadview to discuss pending strategic initiatives, including a potential
business combination with the Company.
During the week of April 6, 1998, the Company provided Parent with certain
confidential information regarding the Company, as part of Parent's preliminary
due diligence review of the Company and to assist Parent in its valuation
analysis. Numerous discussions were held between representatives of Broadview
and Alliant regarding parameters and terms of a potential transaction.
On April 8, 1998, Parent and the Company executed a mutual confidentiality
agreement.
On April 10, 1998, members of Parent's technical staff met and
representatives of Broadview met with Mr. Hart, Mr. Finley, members of the
Company's technical staff and Alliant at the Company's offices to conduct due
diligence and to discuss issues related to the Company's organization,
technology and product offering.
On April 9, 1998, Parent indicated to the Company orally the intent to
provide a preliminary proposal to acquire the Company for approximately $34.5
million in cash. On April 14, Parent provided to the Company in writing a
preliminary proposal to acquire the Company for $34.5 million in cash, subject
to the satisfactory completion of due diligence, execution of a definitive
agreement, as well as other customary conditions.
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On April 14, 1998, Mr. Walker, other members of Parent's management staff,
representatives of Broadview and representatives of Coopers & Lybrand LLP,
Parent's independent accountants, met with Mr. Hart and Mr. Finley at Parent's
offices to further discuss a potential transaction. Following such meeting,
Parent proposed transaction terms to the Company.
From April 14 to April 17, 1998, legal and financial representatives of
Parent and the Company continued to exchange information and met on four
occasions to conduct due diligence and to discuss the proposed transaction.
On April 15, 1998, at a regularly scheduled meeting of the Board of
Directors of Parent, Mr. Schroeder, Mr. Walker and representatives of Broadview
briefed the Board of Directors of Parent as to the status of discussions with
the Company, outlined the structure of the proposed transaction and presented
the strategic reasons for such a transaction. After discussion, the Board of
Directors unanimously authorized Mr. Schroeder and Mr. Walker to continue
discussions with the Company regarding the transaction.
On April 23, 1998, legal counsel to Parent provided a draft of a definitive
acquisition agreement to legal counsel to the Company. Over the subsequent two
week period, Parent and the Company, through their financial representatives and
legal counsel, negotiated the terms and conditions of the draft agreement.
On April 23, 1998 and April 24, 1998, Mr. Schroeder and members of Parent's
management met with Mr. Hart and members of the Company's management and
technical staff to discuss the proposed transaction and to evaluate the
capabilities of the Company's engineering organization.
On April 27, 1998, the Board of Directors of Parent held a special
telephonic meeting. At this meeting, Mr. Schroeder and Mr. Walker, together with
representatives of Broadview and legal counsel to Parent, discussed with the
Board the results of due diligence, the strategic reasons for the transaction,
the status of the negotiations with the Company and the terms of the definitive
agreement. Following discussion, the Board of Directors of Parent unanimously
approved the proposed transaction at a price up to $2.50 per share, subject to
continued due diligence by management. The Board directed management to complete
the transaction pursuant to such terms and with the advice of counsel.
On May 1, 1998, Parent, through representatives of Broadview, informed
representatives of Alliant that Parent, due to various considerations, including
the results of Parent's due diligence, was not prepared to proceed with the
preliminary offer of approximately $34.5 million Following a series of
discussions, Parent proposed a cash tender offer for the outstanding Shares at a
price of $2.45 per Share.
On May 7, 1998, the Board of Directors of the Company unanimously approved
entering into the proposed transaction at the $2.45 per share price and the
other terms proposed by Parent.
From May 4 to May 11, 1998, attorneys for the parties finalized the terms
of the agreement, with input from the respective management and directors of the
two companies. On May 11, 1998, the parties executed and delivered the Merger
Agreement and the transaction was publicly announced.
12. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY.
Purpose. The purpose of the Offer and the Merger is for Purchaser to
acquire control of, and the entire equity interest in, the Company. The purpose
of the Merger is for Purchaser to acquire all Shares not purchased pursuant to
the Offer. Upon consummation of the Merger, the Company will become a wholly
owned subsidiary of Purchaser. The Offer is being made pursuant to the Merger
Agreement.
Approval. Under the DGCL, the approval of the Board of Directors of the
Company and the affirmative vote of the holders of a majority of the outstanding
Shares are required to approve and adopt the Merger Agreement and the
transactions contemplated thereby, including the Merger. The Board of Directors
of the Company has unanimously approved and adopted the Merger Agreement and the
transactions contemplated thereby, and, unless the Merger is consummated
pursuant to the short-form merger provisions under the DGCL described below, the
only remaining required corporate action of the Company is the approval and
adoption of the Merger Agreement and the transactions contemplated thereby by
the affirmative vote of the holders of a majority of the Shares. Accordingly, if
the Minimum Condition is satisfied, Purchaser will have
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sufficient voting power to cause the approval and adoption of the Merger
Agreement and the transactions contemplated thereby without the affirmative vote
of any other stockholders.
Stockholder Meetings. In the Merger Agreement, the Company has agreed to
take all action necessary to convene a meeting of its stockholders as soon as
practicable after the consummation of the Offer for the purpose of considering
and taking action on the Merger Agreement and the transactions contemplated
thereby, if such action is required by the DGCL. Parent has agreed that all
Shares owned by it or any of its subsidiaries (including Purchaser) will be
voted in favor of the Merger Agreement and the transactions contemplated
thereby.
Board Representation. If Purchaser purchases at least fifty-one percent
(51%) of the outstanding Shares pursuant to the Offer, the Merger Agreement
provides that Parent will be entitled to designate a majority of the members of
the Board of Directors and the Company, upon request by the Parent, shall
increase the size of the Board of Directors or secure resignations of such
number of directors as is necessary to enable Parent's designees to be elected
to the Board of Directors. Parent currently intends to designate a majority of
the directors of the Company following consummation of the Offer. It is
currently anticipated that Parent will designate William J. Schroeder, Bruce C.
Edwards, Carl W. Neun and James T. Schraith, or such other persons listed on
Annex I as Parent shall determine, to serve as directors of the Company
following consummation of the Offer. See Annex I. Purchaser expects that such
representation would permit Purchaser to exert substantial influence over the
Company's conduct of its business and operations.
Short Form Merger. Under the DGCL, if Purchaser acquires, pursuant to the
Offer, at least 90% of the outstanding Shares, Purchaser will be able to approve
the Merger without a vote of the Company's stockholders. In such event, Parent
and Purchaser anticipate that they will take all necessary and appropriate
action to cause the Merger to become effective as soon as reasonably practicable
after such acquisition, without a meeting of the Company's stockholders. If,
however, Purchaser does not acquire at least 90% of the outstanding Shares
pursuant to the Offer or otherwise and a vote of the Company's stockholders is
required under the DGCL, a significantly longer period of time would be required
to effect the Merger. Pursuant to the Merger Agreement the Company has agreed to
take all action necessary under the DGCL and its certificate of incorporation
and by-laws to convene a meeting of its stockholders promptly following
consummation of the Offer to consider and vote on the Merger, if a stockholders'
vote is required.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders will have certain
rights under the DGCL to dissent and demand appraisal of, and to receive payment
in cash of the fair value of, their Shares. Such rights to dissent, if the
statutory procedures are complied with, could lead to a judicial determination
of the fair value of the Shares, as of the day prior to the date on which the
stockholders' vote was taken approving the Merger or similar business
combination (excluding any element of value arising from the accomplishment or
expectation of the Merger), 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 fair rate of interest 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 of the Shares, the court is 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 values and earning capacity. In
Weinberger v. UOP, Inc., the Delaware Supreme Court stated, among other things,
that "proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in an appraisal proceeding. Therefore, the value so determined in
any appraisal proceeding could be the same as, or more or less than, the Offer
Price.
In addition, several decisions by Delaware courts have held that, in
certain circumstances, a controlling stockholder of a company involved in a
merger has a fiduciary duty to other stockholders which requires that the merger
be fair to such other stockholders. In determining whether a merger is fair to
minority stockholders, Delaware courts have considered, among other things, the
type and amount of consideration to be received by the stockholders and whether
there was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the remedy
ordinarily available
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to minority stockholders in a cash-out merger is the right to appraisal
described above. However, a damages remedy or injunctive relief may be available
if a merger is found to be the product of procedural unfairness, including
fraud, misrepresentation or other misconduct.
Rule 13e-3. 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 or otherwise
in which Purchaser seeks to acquire the remaining Shares not held by it.
Purchaser believes, however, that Rule 13e-3 will not be applicable to the
Merger, if the Merger is consummated within one year after the Expiration Date
at the same per Share price as paid in the Offer. If applicable, Rule 13e-3
requires, among other things, that certain financial information concerning the
Company and certain information relating to the fairness of the proposed
transaction and the consideration offered to minority stockholders in such
transaction be filed with the Commission and disclosed to stockholders prior to
consummation of the transaction.
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 Company substantially as they
are currently being conducted. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will take such actions as it deems
appropriate under the circumstances then existing. Parent intends to seek
additional information about the Company during this period. Thereafter, Parent
intends to review such information as part of a comprehensive review of the
Company's business, operations, capitalization and management with a view to
optimizing exploitation of the Company's potential in conjunction with Parent's
business.
Confidentiality. In connection with each of Parent and the Company granting
the other party and its representatives access to certain confidential
information for purposes of evaluating the contemplated transaction, Parent and
the Company executed a Mutual Confidentiality Agreement, dated as of April 8,
1998 (the "Confidentiality Agreement"). Among other things, the Confidentiality
Agreement provides that, on and after the date of the Confidentiality Agreement,
neither Parent nor the Company will (i) disclose any evaluation material (as
defined in the Confidentiality Agreement) to any third party, except as required
by applicable law or legal process, and subject to certain additional exceptions
or (ii) solicit the other party's employees or contractors involved in the
discussions between the parties for a period of six months thereafter, in each
case without the prior written consent of the other party. In the event that the
contemplated transaction is not consummated, each party must return all
evaluation material upon the other party's request and may not use such material
without the prior written consent of the other party for any purpose.
Extraordinary Corporate Transactions. Except as indicated in this Offer to
Purchase, neither Parent nor Purchaser have any present plans or proposals which
relate to or would result in an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Company or any subsidiary,
a sale or transfer of a material amount of assets of the Company or any
subsidiary or any material change in the Company's capitalization or dividend
policy or any other material changes in the Company's corporate structure or
business, or the composition of the Company's Board of Directors or management.
13. THE TRANSACTION DOCUMENTS.
The Merger Agreement
Commencement. The Merger Agreement provides for the commencement of the
Offer not later than five business days after the public announcement of the
execution of the Merger Agreement, provided that the Merger Agreement has not
theretofore been terminated pursuant to its terms. Parent, Purchaser and the
Company are required to use all reasonable efforts to take all action as may be
necessary or appropriate in order to effectuate the Offer and the Merger as
promptly as possible and to carry out the transactions provided for or
contemplated by the Merger Agreement.
Merger. The Merger Agreement provides that, as soon as practicable after
expiration of the Offer and the receipt of any required approvals and adoption
of the Merger Agreement by the stockholders of the
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Company, to the extent required by the DGCL, and the satisfaction or waiver, if
possible, of certain other conditions contained in the Merger Agreement,
Purchaser (or another direct or indirect Delaware wholly-owned subsidiary of
Parent) will be merged with and into the Company, with the Company continuing as
the surviving corporation (the "Surviving Corporation") (the "Effective Time").
Notwithstanding the foregoing, the parties to the Merger Agreement have agreed
that Purchaser may make changes in the terms and conditions of the Offer
(including substitution of a wholly-owned subsidiary of Parent for Purchaser)
provided that any such changes do not (i) reduce the maximum number of Shares to
be purchased in the Offer, (ii) impose conditions to the Offer in addition to
those set forth in Annex I to the Merger Agreement, (iii) or amend any other
material terms of the Offer in a manner materially adverse to the Company's
stockholders, and provided, however, that the Offer may not, without the
Company's prior written consent, be extended beyond 120 days from the
commencement of the Offer except as necessary to provide time to satisfy the
conditions set forth in Annex I to the Merger Agreement or as required by any
rule, regulation, interpretation or position of the Commission and except that
Purchaser may extend the Offer for up to 20 business days, if as of such date,
there shall not have been tendered at least ninety percent (90%) of the
outstanding Shares so that the Merger could be effected without a meeting of the
Company's stockholders in accordance with applicable provisions of the DGCL.
Vote Required to Approve Merger. In the Merger Agreement, the Company has
agreed, if required by the DGCL, in order to consummate the Merger, to take all
action necessary in accordance with the DGCL to convene a meeting of its
stockholders promptly following consummation of the Offer for the purpose of
considering and approving the Merger. The Company, acting through its Board of
Directors, has further agreed that if a stockholders' meeting is convened, the
Company shall recommend that stockholders of the Company vote in favor of the
Merger and shall take all reasonable actions necessary to solicit such approval.
Subject to compliance with applicable fiduciary duties, the Company, acting
through its Board of Directors, shall include in the proxy statement the
unanimous recommendation of its Board of Directors that stockholders of the
Company vote in favor of the Merger and shall disclose that each of the
Company's directors and executive officers intend to tender all outstanding
shares beneficially owned by such persons to Purchaser pursuant to the Offer
unless to do so would subject such person to liability under Section 16(b) of
the Exchange Act. In the event that proxies are to be solicited from the
Company's stockholders, the Company shall, use all reasonable commercial efforts
to solicit from stockholders of the Company proxies in favor of the Merger, and
to take all other action necessary or, in the reasonable judgment of Parent and
Purchaser, advisable to secure the vote of its stockholders required by DGCL to
effect the Merger. At any such meeting, all of the Shares then owned by Parent,
Purchaser or any subsidiary of Parent, and all Shares for which the Company has
received proxies to vote, will be voted in favor of the Merger.
Conversion of Securities. At the Effective Time, each Share issued and
outstanding immediately prior thereto shall be canceled and extinguished and
each Share (other than Shares held by Parent or any subsidiary thereof, and
Shares with respect to which appraisal rights are properly exercised
("Dissenting Shares")) shall, by virtue of the Merger and without any action on
the part of Purchaser, the Company or the holders of the Shares, be converted
into the right to receive the Offer Price upon the surrender of the certificate
formerly representing such Share. Each share of common stock of Purchaser issued
and outstanding immediately prior to the Effective Time shall, at the Effective
Time, by virtue of the Merger and without any action on the part of Purchaser,
the Company or the holders of Shares, be converted into and shall thereafter
evidence one validly issued and outstanding share of common stock of the
Surviving Corporation.
Treatment of Stock Option Plans, 401(k) Plan and Employee Stock Purchase
Plan. The Company, Parent and Purchaser have agreed that Parent shall not assume
or continue any outstanding stock options (the "Outstanding Options") under any
of the Company's 1989 Stock Option Plan, 1992 Directors Stock Option Plan, the
1998 Equity Incentive Plan and options assumed in connection with the Company's
acquisition of Orchid Technology or any other agreement or arrangement, or
substitute any additional options for such outstanding options (collectively,
the "Stock Plans"). The Company shall take all actions necessary to provide that
at the Effective Time, (i) each Outstanding Option shall be canceled and (ii) in
consideration for such cancellation, each holder of an Outstanding Option shall
receive in consideration thereof an amount (subject to applicable withholding
requirements) in cash equal to the product of (x) the excess, if any, of the
Offer
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Price over the per Share exercise price of each Outstanding Option and (y) the
number of Shares subject to such Outstanding Option. The Company has agreed to
take all actions necessary to effectuate the foregoing including without
limitation amending the Stock Plans and obtaining any necessary consents from
holders of Outstanding Options.
The Company will take any and all actions necessary and appropriate to
terminate the Company's 401(k) Plan and the Employee Stock Purchase Plan (the
"ESPP"), including without limitation (i) adoption of resolutions by the
Company's Board of Directors terminating the 401(k) Plan and the ESPP
immediately prior to the Effective Time and (ii) timely delivery of any notices
required under the terms of the 401(k) Plan and the ESPP. Notwithstanding the
foregoing, the Company's 401(k) Plan in effect as of the date of the Merger
Agreement, to the extent practicable, will remain in effect until Company
employees are allowed to participate in a comparable benefit plan of Parent.
With respect to such comparable benefit plan of Parent, such plan shall give
full credit to each Company employee for each participant's respective period of
service with the Company prior to the Effective Time for all purposes for which
such period of service is relevant to benefits provided under such benefit plan
of Parent. From and after the Effective Time, Parent shall provide employees of
the Company with the opportunity to participate in any employee stock option or
other incentive compensation plan of Parent or Purchaser on substantially the
same terms and subject to substantially the same conditions as are available to
similarly situated employees of Parent and Purchaser, provided for any employee
that such employee otherwise fulfills all eligibility criteria.
Except as set forth above, the Company has agreed in the Merger Agreement
not to modify or accelerate the exercisability of any stock options, rights or
warrants presently outstanding.
Conditions to Obligations of All Parties to the Merger. The obligations of
each of the parties to effect the Merger following completion of the Offer are
subject to the following conditions: (i) the Merger shall have been approved and
adopted by the vote of the stockholders of the Company to the extent required by
the DGCL; (ii) any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "Hart-Scott-Rodino Act") shall have expired or been
terminated; (iii) Shares shall have been purchased pursuant to the Offer; and
(iv) no temporary restraining order, preliminary or permanent injunction,
judgment or other order, decree or ruling nor any statute, rule, regulation or
order shall be in effect which would (x) make the acquisition or holding by
Parent or its affiliates of Shares or shares of Common Stock of the Surviving
Corporation illegal or otherwise prevent the consummation of the Merger, (y)
prohibit Parent's or Purchaser's ownership or operation of, or compel Parent or
Purchaser to dispose of or hold separate, all or a material portion of the
business or assets of Purchaser, the Company or any subsidiary of the Company
thereof, (z) compel Parent, Purchaser or the Company to dispose of or hold
separate all or a material portion of the business or assets of Parent or any
such subsidiary or the Company or any such subsidiary, (xx) impose material
limitations on the ability of Parent or Purchaser or their affiliates
effectively to exercise full ownership and financial benefits of the Surviving
Corporation, or (yy) impose any condition to the Offer, the Merger Agreement or
the Merger that is materially adverse to the party objecting thereto.
Schedule 14D-9. In the Merger Agreement, the Company has agreed that
concurrently with the filing by Parent and Purchaser of the Schedule 14D-1, it
will file with the Commission and promptly mail to its stockholders, a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
containing the recommendation of the Board of Directors that the Company's
stockholders accept the Offer, tender their Shares thereunder to Purchaser and,
if required by applicable law, approve the Merger; provided, that such
recommendation may not be withdrawn, modified or amended in connection with a
Superior Proposal (as defined below).
Board of Directors. The Merger Agreement provides that promptly upon the
acquisition by Purchaser pursuant to the Offer of such number of Shares which
satisfies the Minimum Condition and from time to time thereafter, Parent shall
be entitled to designate a majority of the members of the Company's Board of
Directors, subject to compliance with Section 14(f) of the Exchange Act. The
Company shall, upon request by Parent, promptly increase the size of the Board
of Directors to the extent permitted by its certificate of incorporation and/or
secure the resignations of such number of directors as is necessary to enable
Parent's
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designees to be elected to the Board of Directors and shall use its reasonable
efforts to cause Parent's designees to be so elected. The Company shall take, at
its expense, all action necessary to effect any such election, including mailing
to its stockholders the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder in form and substance reasonably
satisfactory to Parent and its counsel. Following the election or appointment of
Parent's designees pursuant to the Merger Agreement and prior to the Effective
Time, any amendment or termination of the Merger Agreement, extension for the
performance or waiver of the obligations or other acts of Parent or Purchaser or
waiver of the Company's rights hereunder, shall require the concurrence of a
majority of the Company's directors (or the concurrence of the director, if
there is only one remaining) then in office who are directors on the date
thereof, or are directors (other than directors designated by Parent in
accordance with the Merger Agreement) designated by such persons to fill any
vacancy (the "Continuing Directors"); provided, however, that, if there shall be
no Continuing Directors, such actions may be affected by majority vote of the
entire Board of Directors, except that no such action shall amend the terms of
the Merger Agreement or waive any right or obligation under the Merger Agreement
in a manner adverse to the stockholders of the Company.
Parent currently intends to designate a majority of the directors of the
Company following consummation of the Offer. It is currently anticipated that
Parent will designate William J. Schroeder, Bruce C. Edwards, Carl W. Neun and
James T. Schraith, or such other persons listed on Annex I as Parent shall
determine, to serve as directors of the Company following consummation of the
Offer. See Annex I.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser,
including, but not limited to, representations and warranties relating to the
Company's organization and qualification, capitalization and authority to enter
into the Merger Agreement and carry out the transactions contemplated thereby,
the Company's subsidiaries, Commission filings (including financial statements),
the documents supplied by the Company relating to the Offer, required consents
and approvals, employee benefit plans, litigation, the material liabilities of
the Company and its subsidiaries, environmental matters relating to the Company
and its subsidiaries, labor matters, trademarks, patents and other intellectual
property, the payment of taxes, arrangements with financial advisors, related
party transactions, and the absence of certain material adverse changes or
events since March 31, 1998. The Company has also represented that it has taken
or will take all action necessary to render Section 203 of the DGCL (see Section
16, "State Takeover Laws," below) inapplicable to Parent or Purchaser solely by
virtue of the Offer, the Merger, the Merger Agreement, the purchase of Shares
pursuant to the Offer, the Merger and the transactions contemplated thereby or
therein.
Parent and Purchaser have also made customary representations and
warranties to the Company, including, but not limited to, representations and
warranties relating to Parent's and Purchaser's organization and qualification,
their authority to enter into the Merger Agreement and consummate the Offer and
the Merger, required consents and approvals, documents related to the Offer and
the availability of sufficient financing to consummate the Offer.
Conduct of Company's Business Pending Merger. Pursuant to the Merger
Agreement, the Company and its subsidiaries have agreed that, prior to the
Effective Time, unless Parent shall otherwise have agreed in writing or as
otherwise contemplated by the Merger Agreement, the Company (including its
subsidiaries) will carry on its business diligently and in accordance with good
commercial practice and to carry on its business in the usual, regular and
ordinary course, in substantially the same manner as conducted prior to the
execution of the Merger Agreement and in compliance with all applicable laws and
regulations, to pay its debts and taxes when due subject to good faith disputes
over such debts or taxes, to pay or perform other material obligations when due,
and use its commercially reasonable efforts consistent with past practices and
policies to preserve intact its present business organization, keep available
the services of its present officers and employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others with which it has business dealings. In addition, the Company will
promptly notify Parent of any material event involving its business or
operations.
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The Company has also agreed pursuant to the Merger Agreement that, prior to
the Effective Time, except as permitted by the terms of the Merger Agreement,
without the prior written consent of Parent, it will not, or permit any of its
subsidiaries to do any of the following:
(i) Waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant or director stock plans or authorize
cash payments in exchange for any options granted under any of such plans;
(ii) Grant any severance or termination pay to any director, officer
or employee except payments in amounts consistent with policies and past
practices or pursuant to written agreements outstanding, or policies
existing, on the date of the Merger Agreement and as previously disclosed
in writing to the other, or adopt any new severance plan, or provide any
other compensation or benefit to any employee, officer or director that
would accrue or become payable as a result of or in connection with the
Offer and/or Merger;
(iii) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Company
Intellectual Property (as defined in the Merger Agreement) or other
proprietary rights, or enter into grants to future patent rights, other
than in the ordinary course of business, consistent with past practice;
(iv) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any capital stock or
split, combine or reclassify any capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for any capital stock;
(v) Repurchase or otherwise acquire, directly or indirectly, any
shares of capital stock except pursuant to rights of repurchase of any such
shares under any employee, consultant or director stock plan existing on
the date of the Merger Agreement (which repurchase rights the Company shall
be obligated to exercise if the repurchase price is less than the Offer
Price);
(vi) Issue, deliver, sell, authorize or propose the issuance, delivery
or sale of, any shares of capital stock or any securities convertible into
shares of capital stock, or subscriptions, rights, warrants or options to
acquire any shares of capital stock or any securities convertible into
shares of capital stock, or enter into other agreements or commitments of
any character obligating it to issue any such shares or convertible
securities, other than the issuance of Shares pursuant to the exercise of
stock options therefor outstanding as of the date of the Merger Agreement;
(vii) Cause, permit or propose any amendments to any charter document
or bylaw (or similar governing instruments of any subsidiaries);
(viii) Acquire or agree to acquire by merging or consolidating with,
or by purchasing any equity interest in or a material portion of the assets
of, or by any other manner, any business or any corporation, partnership
interest, association or other business organization or division thereof,
or otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the business of the Company, or enter
into any joint ventures, strategic partnerships or alliances;
(ix) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate,
to the business of the Company, except in the ordinary course of business
consistent with past practice;
(x) Incur any indebtedness for borrowed money in excess of $100,000
(other than ordinary course trade payables or pursuant to existing credit
facilities in the ordinary course of business) or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire debt securities, or guarantee any debt securities of others;
(xi) Adopt or amend any employee benefit or employee stock purchase or
employee option plan, or enter into any employment contract, pay any
special bonus or special remuneration to any director or employee, or
increase the salaries or wage rates of its officers or employees other than
in the ordinary
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course of business, consistent with past practice, or change in any
material respect any management policies or procedures;
(xii) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business;
(xiii) Make any grant of exclusive distribution or other resale rights
to any third party; or
(xiv) Agree in writing or otherwise to take any of the actions
described in (i) through (xiii) above.
Non-Solicitation. The Company has agreed in the Merger Agreement that from
and after the date of the Merger Agreement until the earlier of the Effective
Time or termination of the Merger Agreement pursuant its terms, the Company and
its subsidiaries shall not, and will instruct their respective directors,
officers, employees, representatives, investment bankers, agents and affiliates
not to, directly or indirectly, (i) solicit or encourage submission of, any
proposals or offers by any person, entity or group of such entity (other than
Parent and its affiliates, agents and representatives), or (ii) participate in
any discussions or negotiations with, or disclose any non-public information
concerning the Company or any of its subsidiaries to, or afford any access to
the properties, books or records of the Company or any of its subsidiaries to,
or otherwise assist or facilitate, or enter into any agreement or understanding
with, any person, entity or group (other than Parent and its affiliates, agents
and representatives), in connection with any Acquisition Proposal with respect
to the Company. For the purposes of the Merger Agreement, an "Acquisition
Proposal" with respect to an entity means any proposal or offer relating to (i)
any merger, consolidation, sale or license of substantial assets or similar
transactions of such entity (other than sales of assets or inventory in the
ordinary course of business or as permitted under the terms of the Merger
Agreement), (ii) sale of 10% or more of the outstanding shares of capital stock
of the Company (including without limitation by way of a tender offer or an
exchange offer), (iii) the acquisition by any person of beneficial ownership or
a right to acquire beneficial ownership of, or the formation of any "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) which beneficially owns, or has the right to acquire beneficial
ownership of, 10% or more of the then outstanding shares of capital stock of the
entity (except for acquisitions for passive investment purposes only in
circumstances where the person or group qualifies for and files a Schedule 13G
with respect thereto or qualifies for and files a Schedule 13D with respect
thereto, indicating that the acquisition of such shares is for passive
investment purposes only, and such person or group does not subsequently file an
amendment to such 13D indicating that such shares were not acquired for passive
investment purposes only and the Minimum Condition is not satisfied); or (iv)
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing. The Company will
immediately cease any and all existing activities, discussions or negotiations
with any parties conducted previously with respect to any of the foregoing. The
Company will (i) notify Parent as promptly as practicable if any inquiry or
proposal is made or any information or access is requested in connection with an
Acquisition Proposal or potential Acquisition Proposal and (ii) as promptly as
practicable notify Parent of the terms and conditions of any such Acquisition
Proposal. In addition, subject to the other provisions of the Merger Agreement,
from and after the date of the Merger Agreement until the earlier of the
Effective Time and termination of the Merger Agreement pursuant to its terms,
the Company and its subsidiaries will not, and will instruct their respective
directors, officers, employees, representatives, investment bankers, agents and
affiliates not to, directly or indirectly, make or authorize any public
statement, recommendation or solicitation in support of any Acquisition Proposal
made by any person, entity or group (other than Parent or Purchaser); provided,
however, that nothing shall prohibit the Company' Board of Directors from taking
and disclosing to the Company's stockholders a position with respect to a tender
offer pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act.
Prior to consummation of the Offer, the Company may, to the extent the
Board of Directors of the Company determines, in good faith, after consultation
with outside legal counsel, that the Board's fiduciary duties under applicable
law require it to do so, participate in discussions or negotiations with, and,
subject to the requirements of the paragraph below, furnish information to any
person, entity or group after such person, entity or group has delivered to the
Company in writing, an unsolicited bona fide Acquisition Proposal which
23
<PAGE> 24
the Board of Directors of the Company in its good faith reasonable judgment
determines, after consultation with its independent financial advisors, would
result in a transaction more favorable than the Offer and the Merger to the
stockholders of the Company from a financial point of view and for which
financing, to the extent required, is then committed or which, in the good faith
reasonable judgment of the Board of Directors of the Company (based upon the
advice of independent financial advisors), is reasonably capable of being
financed by such person, entity or group and which is reasonably likely to be
consummated (a "Superior Proposal"). In the event the Company receives a
Superior Proposal, nothing contained in the Merger Agreement (but subject to the
terms hereof) will prevent the Board of Directors of the Company from
recommending such Superior Proposal to the Company's stockholders, if the Board
determines, in good faith, after consultation with outside legal counsel, that
such action is required by its fiduciary duties under applicable law; provided,
however, that the Company shall not recommend to its stockholders a Superior
Proposal for a period of not less than 48 hours after Parent's receipt of a copy
of such Superior Proposal (or a description of the terms and conditions thereof,
if not in writing).
The Company will not provide any non-public information to a third party
unless: (i) the Company provides such non-public information pursuant to a
nondisclosure agreement with terms regarding the protection of confidential
information at least as restrictive as such terms in the Confidentiality
Agreement; and (ii) such non-public information has been previously delivered to
Parent.
Public Announcements. Parent and Purchaser on the one hand and the Company
on the other hand will consult with each other before issuing any press release
or otherwise making any public statements with respect to the Merger Agreement,
the Offer or the Merger or the other transactions contemplated hereby, and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by law.
Indemnification. Pursuant to the terms of the Merger Agreement, all rights
to indemnification existing in favor of the current directors and officers of
the Company (the "Indemnified Persons") for acts and omissions occurring prior
to the Effective Time, as provided in the Company's certificate of incorporation
and/or bylaws (as in effect as of the date of the Merger Agreement) and as
provided in the indemnification agreements between the Company and the
Indemnified Persons (as in effect as of the date of the Merger Agreement), shall
survive the Offer and the Merger for a period of not less than four years after
the Effective Time; provided, however, that if, at any time prior to the fourth
anniversary of the Effective Time, any Indemnified Persons delivers to Parent or
the Surviving Corporation a written notice asserting a claim for
indemnification, then the claim asserted in such notice shall survive the fourth
anniversary of the Effective Time until such time as such claim is fully and
finally resolved. The certificate of incorporation and bylaws of the Surviving
Corporation will contain provisions with respect to exculpation and
indemnification that are at least as favorable to current Indemnified Persons as
those contained in the certificate of incorporation and bylaws of the Company as
in effect on the date of the Merger Agreement, which provisions will not be
amended, repealed or otherwise modified from the Effective Time until the fourth
anniversary of the date on which the Merger becomes effective in any manner that
would adversely affect the rights thereunder of any such Indemnified Person.
Parent has agreed in the Merger Agreement that from the Effective Time
until the fourth anniversary of the date on which the Merger becomes effective,
Parent shall maintain in effect, for the benefit of the Indemnified Persons with
respect to acts or omissions occurring prior to the Effective Time, the
directors' and officers' liability insurance policy currently carried: provided,
however, that Parent may substitute for such policy or policies of materially
equivalent coverage for acts or commissions prior to the Effective Date and
provided, further, that Parent shall not be obligated to maintain such coverage
for policy limits which would cause the annual cost of such coverage to exceed
$397,248, representing 150% of the cost of such coverage paid by the Company in
fiscal year 1998 and, provided, further, that if the annual premiums of such
insurance coverage exceed such amount, Parent shall be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount.
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Termination of Merger Agreement. The Merger Agreement provides grounds for
which it may be terminated at any time prior to the Effective Time, whether
before or after approval by the stockholders of the Company. The Merger
Agreement may be so terminated:
(a) by mutual written agreement of the Boards of Directors of Parent
and the Company;
(b) by either Parent or the Company:
(i) if the Offer shall be terminated or expire without any Shares
having been purchased pursuant to the Offer; provided, however, that a
party shall not be entitled to terminate the Merger Agreement if it is
in material breach of its representations and warranties, covenants or
other obligations under the Merger Agreement; or
(ii) if any court of competent jurisdiction in the United States or
other United States governmental body shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Offer or the Merger and such order, decree, ruling or
other action shall have become final and nonappealable;
(c) by Parent:
(i) if the Board of Directors of the Company or any committee
thereof shall have approved, or recommended (and not rescinded such
recommendation within two (2) business days) that stockholders of the
Company accept or approve, an Acquisition Proposal by a third party;
(ii) if the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified (and not rescinded such
recommendation within two (2) business days) its approval of, or
recommendation that the stockholders of the Company accept or approve
(as the case may be), the Offer, the Merger Agreement and the Merger;
(iii) if the Company shall have failed to include in the Schedule
14D-9 the recommendation of the Board of Directors of the Company that
the stockholders of the Company accept the Offer;
(iv) prior to the purchase of Shares pursuant to the Offer, in the
event that any waiting period (and any extension thereof) under the
Hart-Scott-Rodino Act applicable to the Purchase of Shares pursuant to
the Offer shall not have expired or been terminated, the Minimum
Condition shall not be satisfied or if any of the events set forth in
clause (iii) of Annex I to the Merger Agreement shall have occurred;
provided in the case of an event set forth in clause (iii), item (A),
(B), (C), (F) or (H) of Annex I to the Merger Agreement that if such
event is and continues to be reasonably probable of being cured by the
date which is 20 business days after commencement of the Offer, Parent
shall not terminate the Merger Agreement as a result of such event until
the date that is 20 business days after the commencement of the Offer;
or
(v) prior to the purchase of Shares pursuant to the Offer if the
Company is in material breach of any of its covenants or obligations
under the Merger Agreement, or any representation or warranty of the
Company contained in the Merger Agreement shall have been incorrect, in
any material respect, when made or shall have since the date of the
Merger Agreement ceased to be true and correct in any material respect;
provided, that, if such breach is curable through exercise of the
Company's commercially reasonable efforts, then Parent may not terminate
the Merger Agreement unless the breach is not cured within 10 days after
giving notice to the Company;
(d) by the Company:
(i) if the Offer shall not have been commenced in accordance with
the terms of the Merger Agreement, or Parent or Purchaser shall have
failed to purchase validly tendered Shares in violation of the terms of
the Offer within ten business days after the expiration of the Offer;
provided, however, that the Company shall not be entitled to terminate
the Merger Agreement if it is in material breach of its representations
and warranties, covenants or other obligations under the Merger
Agreement;
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(ii) if the Board of Directors of the Company has resolved to, and
in fact does, recommend to the Company's Stockholders that they accept a
Superior Proposal, and provided further that the Company shall have paid
to Parent the entire Break-up Fee (as defined below); or
(iii) prior to the purchase of Shares pursuant to the Offer, if
Parent or Purchaser is in material breach of any of its covenants or
obligations under the Merger Agreement, or any representation or
warranty of Parent or Purchaser contained in the Merger Agreement shall
have been incorrect, in any material respect, when made or shall have
since ceased to be true and correct in any material respect; provided,
that, if such breach is curable through exercise of the Parent's or
Purchaser's commercially reasonable efforts, then the Company may not
terminate the Merger Agreement unless the breach is not cured within 10
days after giving notice to the Parent.
In the event of the termination of the Merger Agreement by the Company or
Parent or both of them, the terminating party shall provide written notice of
such termination to the other party and the Merger Agreement shall forthwith
become void and there shall be no liability on the part of Parent, Purchaser or
the Company, except as otherwise provided in the Merger Agreement.
Fees and Expenses. The Merger Agreement provides that whether or not the
transactions contemplated by the Offer and the Merger Agreement are consummated,
all costs and expenses incurred in connection with the transactions contemplated
by the Offer and the Merger Agreement shall be paid by the party incurring such
expenses.
The Merger Agreement also provides that the Company shall pay Parent, in
same day funds, upon demand, a fee of $2,000,000 (the "Break-up Fee"), if any of
the following shall occur:
(i) if the Board of Directors of the Company or any committee thereof
shall have approved, or recommended that stockholders of the Company accept
or approve, an Acquisition Proposal by a third party, or shall have
resolved to do any of the foregoing;
(ii) if the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified its unanimous approval of, or unanimous
recommendation that the stockholders of the Company accept or approve (as
the case may be), the Offer, the Merger Agreement and the Merger, or shall
have resolved to do any of the foregoing;
(iii) if the Company shall have failed to include in the Schedule
14D-9 the unanimous recommendation of the Board of Directors of the Company
that the stockholders of the Company accept the Offer; or
(iv) the following shall occur: (A) prior to the Effective Time, any
person, entity or "group" (as that term is used in Section 13(d)(3) of the
Exchange Act), shall beneficially own (as that term is used in Section
13(d)(3) of the Exchange Act), or shall have acquired, 25% or more of the
Shares, or shall have been granted any option or right, conditional or
otherwise, to acquire 25% or more of the Shares (the "25% Person"), which
Shares are not tendered to Parent in connection with the Offer, (B) the
Minimum Condition shall not be met as of the Expiration Date and (C) either
(1) the 25% Person shall, at any time within twelve (12) months of the
expiration of the Offer, effect the Acquisition (as defined below) of the
Company or enter into an agreement with the Company or commence a tender
offer to effect such an Acquisition, and the transactions contemplated
thereby are subsequently consummated at any time, or (2) any person other
than Parent or any affiliate of Parent effects the Acquisition of the
Company during 1998, or during 1998 enters into an agreement with the
Company or commences a tender offer for the Acquisition of the Company and
the transactions contemplated thereby are subsequently consummated at any
time, in any such case under this clause (2) at a purchase price equivalent
to a price per Share in excess of $2.45. For the purposes of the Merger
Agreement, an "Acquisition" of the Company means any merger, consolidation
or other reorganization, any tender offer or other transaction or series of
related transactions involving the acquisition of securities of the
Company, or any sale or license of all or substantially all the business or
assets of the Company, unless the shareholders of the Company prior to such
transaction or series of related transactions retain following such
transaction or series of related
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transactions (in respect of their equity interest in the Company prior
thereto) more than 50% of the voting equity securities of the surviving or
successor corporation to the business of the Company.
The Break-up Fee is payable to compensate Parent and Purchaser for their
direct and indirect costs and expenses associated with the negotiation and
execution of the Merger Agreement and the undertaking of the transactions
contemplated therein in the event of the occurrence of all of the events set
forth in clauses (i), (ii), (iii) and (iv) of the paragraph above, and shall
constitute liquidated damages with respect to (but solely with respect to) the
events itemized in clauses (i), (ii), (iii) and/or (iv) of the paragraph above.
However, the right to the payment of the Break-up Fee shall be in addition to
any other damages or remedies at law or in equity to which Parent or Purchaser
may be entitled as a result of the Company's violation or breach of any other
term or provision of this Agreement.
14. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that neither the Company nor any of its
subsidiaries will, among other things, (a) waive any stock repurchase rights,
accelerate, amend or change the period of exercisability of options or
restricted stock, or reprice options granted under any employee, consultant or
director stock plans or authorize cash payments in exchange for any options
granted under any of such plans; (b) grant any severance or termination pay to
any director, officer or employee except payments in amounts consistent with
policies and past practices or pursuant to written agreement outstanding, or
policies existing, on the date of the Merger Agreement and as previously
disclosed in writing to the other, or adopt any new severance plan, or provide
any other compensation or benefit to any employee, officer or director that
would accrue or become payable as a result of or in connection with the Offer
and/or Merger; (c) declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any capital
stock or split, combine or reclassify any capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for any capital stock; (d) repurchase or otherwise acquire,
directly or indirectly, any shares of capital stock except pursuant to rights of
repurchase of any such shares under any employee, consultant or director stock
plan existing on the date of the Merger Agreement (which repurchase rights the
Company shall be obligated to exercise if the repurchase price is less than the
Offer Price); (e) issue, deliver, sell, authorize or propose the issuance,
delivery or sale of, any shares of capital stock or any securities convertible
into shares of capital stock, or subscriptions, rights, warrants or options to
acquire any shares of capital stock or any securities convertible into shares of
capital stock, or enter into other agreements or commitments of any character
obligating it to issue any such shares or convertible securities, other than the
issuance of Shares pursuant to the exercise of stock options therefor
outstanding as of the date of the Merger Agreement; See Section 13, "Conduct of
Company's Business Pending Merger."
15. CERTAIN CONDITIONS TO PURCHASER'S OBLIGATIONS.
In the Merger Agreement, Purchaser has agreed notwithstanding any other
provision of the Offer, and in addition to (and not in limitation of)
Purchaser's rights to extend and amend the Offer at any time, Purchaser shall
not be required to accept for payment, purchase or pay for, or may terminate or
amend the Offer and may postpone the acceptance of, and payment for, subject to
Rule 14e-1(c) under the Exchange Act (whether or not any Shares have theretofore
been accepted for payment or paid for pursuant to the Offer), any Shares
tendered pursuant to the Offer if:
(i) any waiting period (and any extension thereof) under the
Hart-Scott-Rodino Act applicable to the purchase of Shares pursuant to the
Offer shall not have expired or been terminated;
(ii) the Minimum Condition is not satisfied;
(iii) at any time on or after the date of the Merger Agreement, any of
the following events shall be determined by Parent or Purchaser to have
occurred through no fault of Parent or Purchaser:
(iv) there shall have been any action taken or threatened, or any
statute, rule, regulation, judgment, temporary restraining order,
preliminary or permanent injunction or other order, decree or ruling
promulgated, enacted, entered, enforced or deemed applicable to the Offer
or the Merger by any
27
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Governmental Entity (as defined in the Merger Agreement) could reasonably
be expected to, directly or indirectly, (1) make the acceptance for payment
or the payment for, or the purchase of some or all of the Shares pursuant
to the Offer illegal or otherwise materially prohibit, delay or restrict
consummation of the Offer or the Merger or the consummation of any
transaction contemplated by the Merger Agreement, (2) require the
divestiture by Parent, Purchaser, the Company or any of their respective
subsidiaries taken as a whole of all or any material portion of the
business, assets or property of any of them or any Shares or impose any
material limitation on the ability of any of them to conduct their business
and own such assets, properties or Shares, in each case, as a result of the
Offer the Merger or the transactions contemplated thereby (3) impose any
material limitation on the ability of Parent or Purchaser to acquire or
hold or to exercise effectively all rights of ownership of the Shares,
including the right to vote any Shares purchased by any of them on all
matters properly presented to the stockholders of the Company, including,
without limitation, the adoption and approval of the Merger Agreement and
the Merger (4) result in a material diminution in the benefits expected to
be derived by Parent or Purchaser as a result of the transactions
contemplated by the Offer or the Merger Agreement, (5) impose any material
condition to the Offer, the Merger Agreement or the Merger unacceptable to
Parent or Purchaser; or
(v) the Company shall have failed to obtain all of the consents of
third parties as described in the Merger Agreement by the Expiration Date
if such failure would result in a Material Adverse Effect (as defined in
the Merger Agreement); or
(vi) the Company shall have breached, or failed to comply with, in any
material respect, any of its covenants or obligations under the Merger
Agreement or any representation or warranty of the Company in the Merger
Agreement shall have been incorrect, in any material respect when made or
on and as of the date of any scheduled expiration or consummation of the
Offer.
(vii) the Board of Directors of the Company or any committee thereof
shall have (1) withdrawn or modified (including without limitation, by
amendment of the Company's Schedule 14D-9) in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer, the Merger or the
Merger Agreement, (2) approved or recommended any Acquisition Proposal by a
third party other than the Offer and the Merger, (3) publicly resolved to
do any of the foregoing, or (4) upon a request to reaffirm the Company's
approval or recommendation of the Offer, the Merger Agreement or the
Merger, the Board of Directors of the Company shall fail to do so within
two business days after such request is made, in any event described in the
Section (D), so long as such withdrawal modification, approval,
recommendation, resolution or failure has not been rescinded within two
business days; or
(viii) the Merger Agreement shall have been terminated in accordance
with its terms; or
(ix) there shall have occurred any Material Adverse Effect (as defined
in the Merger Agreement) on the Company, or any event, fact or change which
could reasonably be expected to result in a Material Adverse Effect (as
defined in the Merger Agreement) on the Company;
which in the sole but reasonable judgment of Parent in such case, and regardless
of the circumstances makes it inadvisable to proceed with the Offer or with
acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent, Purchaser and
their permitted assignees and may be asserted by Parent or Purchaser regardless
of the circumstances (including any action or inaction by Parent or Purchaser or
any of their assignees) giving rise to such condition. Except as otherwise
specified in the Merger Agreement, all the foregoing conditions may be waived by
Parent or Purchaser in whole or in part at any time and from time to time in the
sole discretion of Parent or Purchaser. The failure by Parent or Purchaser at
any time to exercise its rights with respect to the foregoing conditions shall
not be deemed a waiver of any such condition, and each condition shall be deemed
an ongoing condition with respect to which Parent or Purchaser may assert its
rights at any time prior to the completion of the Offer and from time to time.
Any determination by Parent or Purchaser concerning any event described in this
Section 15 is binding upon all persons to whom the Offer is made.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser and Parent regardless of the circumstances
(except in the case any such condition is not satisfied as
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the direct result of a breach by Parent or Purchaser of obligations under the
Merger Agreement) giving rise to such conditions, or may be waived (except for
the Minimum Condition) by Purchaser or Parent in whole at any time or in part
from time to time in their sole discretion. The failure by Purchaser or Parent
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right and may
be asserted at any time and from time to time. Any determination by Purchaser or
Parent concerning the conditions described in this Section shall be final and
binding upon all parties.
16. CERTAIN REGULATORY AND LEGAL MATTERS.
Except as set forth in this Section, Parent is not aware of any approval or
other action by any governmental or administrative agency which would be
required for the acquisition or ownership of Shares by Purchaser as contemplated
herein. Should any such approval or other action be required, it will be sought,
but Purchaser has no current intention to delay the purchase of Shares tendered
pursuant to the Offer pending the outcome of any such matter, subject, however,
to Purchaser's right to decline to purchase Shares if any of the conditions
specified in Section 15 shall have occurred. There can be no assurance that any
such approval or other action, if needed, would be obtained or would be obtained
without substantial conditions, or that adverse consequences might not result to
the Company's business or that certain parts of the Company's business might not
have to be disposed of if any such approvals were not obtained or other action
taken.
Antitrust. The Hart-Scott-Rodino Act provides that the acquisition of
Shares by Purchaser may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the
"Division") and the FTC and certain waiting period requirements have been
satisfied. The rules promulgated by the FTC under the Hart-Scott-Rodino Act
require the filing of a Notification and Report Form (the "Form") with the
Division and the FTC and that the acquisition of Shares under the Offer may not
be consummated until 15 days after receipt of the Form by the Division and the
FTC. Within such 15 day period the Division or the FTC may request additional
information or documentary material from Purchaser. In the event of such request
the acquisition of Shares under the Offer may not be consummated until 10 days
after receipt of such additional information or documentary material by the
Division or the FTC. Parent expects to file its Form with the Division and the
FTC on May 18, 1998. The Company has advised Parent that the Company also
expects to file its Form with the Division and the FTC on May 18, 1998.
State Takeover Laws. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of the DGCL prevents an "interested
stockholder" (generally a person who owns or has the right to acquire 15% or
more of a corporation's outstanding voting stock, or an affiliate or associate
thereof) from engaging in a "business combination" (defined to include mergers
and certain other transactions) with a Delaware corporation for a period of
three years following the date such person became an interested stockholder
unless, among other things, prior to such date the board of directors of the
corporation approved either the business combination or the transaction in which
the interested stockholder became an interested stockholder. On May 7, 1998,
prior to the execution of the Merger Agreement, the Board of Directors of the
Company, by unanimous vote of all directors present at a meeting held on such
date, (i) approved and adopted the Merger Agreement and the transactions
contemplated thereby, (ii) determined that the Merger Agreement and the
transactions contemplated thereby, including each of the Offer and the Merger,
is fair to and in the best interests of, the stockholders of the Company and
(iii) recommended that the stockholders of the Company accept the Offer and
approve and adopt the Merger Agreement and the transactions contemplated
thereby. Accordingly, Section 203 is inapplicable to the Offer or the Merger.
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, stockholders, 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
29
<PAGE> 30
disqualify a potential acquirer from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. Purchaser does not know whether any of these laws will, by their
terms, apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, Offeror will take such
action as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer
or the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be delayed in continuing
or consummating the Offer and the Merger. In such case, Purchaser may not be
obligated to accept for payment any Shares tendered. See Section 15.
17. FEES AND EXPENSES.
Except as set forth below, neither Parent nor Purchaser will pay any fees
or commissions to any broker, dealer or other person for soliciting tenders of
Shares pursuant to the Offer.
Parent and Purchaser have engaged Broadview Associates LLC ("Broadview") as
financial advisor in connection with their effort to acquire the Company. Parent
has agreed to pay a fee of $500,000 upon successful completion of the Offer. In
addition, Parent has agreed, whether or not the Offer is consummated, to
reimburse Broadview for its reasonable out-of-pocket expenses, including the
reasonable fees and expenses of its legal counsel, incurred in connection with
its engagement, and to indemnify Broadview against certain liabilities and
expenses in connection with its engagement. Broadview has rendered other
advisory services to Parent from time to time in the past and may continue to
represent Parent from time to time in the future, for which it would receive
customary compensation from Parent.
Parent and Purchaser have retained MacKenzie Partners, Inc. to act as
Information Agent and BankBoston, N.A. to act as Depositary in connection with
the Offer. Such firms each will receive reasonable and customary compensation
for their services. Purchaser has also agreed to reimburse each such firm for
certain reasonable out-of-pocket expenses and to indemnify each such firm
against certain liabilities in connection with their services, including certain
liabilities under federal securities laws.
Parent and Purchaser will no pay any fees or commissions to any broker or
dealer or other person (other than the Information Agent) for making
solicitations or recommendations in connection with the Offer. Brokers, dealers,
banks and trust companies will be reimbursed by Purchaser for customary mailing
and handling expenses incurred by them in forwarding material to their
customers.
18. MISCELLANEOUS.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares residing in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the securities or blue sky
laws of such jurisdiction. In any jurisdiction where the securities or blue sky
laws require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of Purchaser by one or more registered
brokers or dealers which are licensed under the laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Purchaser other than as contained in this Offer to
Purchase or in the Letter of Transmittal, and, if any such information or
representation is given or made, it should not be relied upon as having been
authorized by Purchaser.
30
<PAGE> 31
Purchaser has filed with the Commission a statement on Schedule 14D-1,
pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-1 promulgated
thereunder, furnishing certain information with respect to the Offer. Such
statement and any amendments thereto, including exhibits, may be examined and
copies may be obtained at the same places and in the same manner as set forth
with respect to the Company in Section 8 (except that they will not be available
at the regional offices of the Commission).
BOARDWALK ACQUISITION CORPORATION
May 15, 1998
31
<PAGE> 32
ANNEX I
DIRECTORS AND EXECUTIVE OFFICERS
OF PARENT AND PURCHASER
The names and ages of the directors and executive officers of Parent and
Purchaser, and their present principal occupations, are set forth below. Each
individual is a U.S. citizen and unless otherwise indicated, each individual's
business address is 2880 Junction Avenue, San Jose, California 95134.
PARENT
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT WITH PARENT; MATERIAL POSITIONS
NAME AGE HELD DURING THE PAST FIVE YEARS
---- --- ------------------------------------------
<S> <C> <C>
William J. Schroeder 53 Chairman of the Board since January 1998. President and
Chief Executive Officer and a member of the Board since May
1994. Formerly Vice Chairman of the Board of Directors of
Conner Peripherals, Inc. from 1989 to 1994.
Bruce C. Edwards(a) 44 Director since January 1995. President and Chief Executive
Officer of Powerwave Technologies, Inc. since February
1996. Senior Vice President, Chief Financial Officer of AST
Research, Inc. from 1988 until July 1994.
Carl W. Neun(b) 54 Director since January 1998. Senior Vice President of
Tektronix from 1995 to present. Vice President and Chief
Financial Officer of Tektronix from 1993 to 1995.
Gregorio Reyes(c) 57 Director since January 1995. Chairman of the Board of Sync
Research. Chairman of the Board and Chief Executive Officer
of Sunward Technologies, Inc. from 1985 to August 1994.
Jeffrey D. Saper(d) 50 Director and Secretary since December 1992. Partner of the
law firm Wilson Sonsini Goodrich & Rosati, Professional
Corporation, since 1980.
James T. Schraith(e) 40 Director since March 1998. President and Chief Executive
Officer of ShareWave, Inc. Vice President and General
Manager of the North America Division of Compaq Computer
from October 1996 to January 1998. President, Chief
Operating Officer and Director of AST Research, Inc. from
1987 to 1995.
Jeffrey T. Chambers(f) 42 Director from 1994 to present. Managing Director of TA
Associates, Inc. Employed by TA Associates, Inc., or its
predecessor since 1980.
Walter G. Kortschak(g) 38 Director since December 1994. General Partner of Summit
Partners. Employed by Summit Partners since 1987.
James M. Walker 49 Senior Vice President and Chief Financial Officer since
December 1996. Vice President and Chief Financial Officer
of Global Village Communication from 1993 to 1996.
Franz Fichtner 45 President, Diamond Europe since October 1997. Employed by
3Com from 1990 to 1997.
C. Scott Holt 56 Senior Vice President, Worldwide Sales since January 1995.
Previously Executive Vice President, Corporate Accounts and
Americas Sales at Conner Peripherals, Inc. from 1986 to
1994.
Hyung Hwe Huh 45 Senior Vice President and Chief Technical Officer since
1994. Employed by Parent in various capacities since 1983.
Wade Meyercord 57 Senior Vice President, Management Systems and Continuous
Improvement since November 1997. Previously employed as
President of Meyercord and Associates from 1987 to 1997.
Dennis D. Praske 50 Senior Vice President, Worldwide Operations since April
1997. Previously Vice President of Worldwide Operations
from October 1995 to April 1997. Previously Vice President
of Worldwide Materials for Storage Division of IBM from
1993 to 1997.
</TABLE>
A-1
<PAGE> 33
PURCHASER
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT WITH PURCHASER; MATERIAL POSITIONS
NAME HELD DURING THE PAST FIVE YEARS
---- ---------------------------------------------
<S> <C> <C>
William J. Schroeder President and Director since May 1998 (see notation above
for age and employment history).
James M. Walker Secretary, Treasurer and Director since May 1998 (see
notation above for age and employment history).
</TABLE>
- ---------------
(a) Mr. Edwards' business address is 2026 McGaw Avenue, Irvine, CA 92614.
(b) Mr. Neun's business address is 26600 SW Parkway, MS 63-815, Wilsonville, OR
97070.
(c) Mr. Reyes' business address is 40 Parker, Irvine, CA 92618.
(d) Mr. Saper's business address is 650 Page Mill Road, Palo Alto, CA 94304.
(e) Mr. Schraith's business address is 5175 Hillsdale Circle, El Dorado Hills,
CA 95762.
(f) Mr. Chambers' business address is 70 Willow Road, Suite 100, Menlo Park, CA
94025.
(g) Mr. Kortschak's business address is 499 Hamilton Avenue, Suite 200, Palo
Alto, CA 94301.
A-2
<PAGE> 34
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent or delivered by each stockholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary, at one of the addresses set forth below:
The Depositary is:
BANKBOSTON, N.A.
<TABLE>
<S> <C> <C>
By Mail By Overnight Mail or Courier By Hand
c/o Boston Equiserve c/o Boston Equiserve Securities Transfer &
Corporate Reorganization Corporate Reorganization Department Reporting
Department 150 Royall Street Services, Inc.
P.O. Box 8029 Mail Stop 45-01-40 55 Broadway -- 3rd Floor
Boston, MA 02266-8029 Canton, MA 02021 New York, NY
Attention: Delivery Window
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent as set forth below and will
be furnished promptly at Purchaser's expense. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC. LOGO
156 5th Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll Free (800) 322-2885
