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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
(Rule 14D-101)
(Amendment No. 2)
SOLICITATION/RECOMMENDATION STATEMENT
UNDER SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
OBJECTIVE SYSTEMS INTEGRATORS, INC.
(Name of Subject Company)
OBJECTIVE SYSTEMS INTEGRATORS, INC.
(Name of Person(s) Filing Statement)
Common Stock, par value $.00l per share
(Title of Class of Securities)
674424-10-6
(CUSIP Number of Class of Securities)
Philip N. Cardman, Esq.
Vice President, General Counsel and Secretary
Objective Systems Integrators, Inc.
101 Parkshore Drive
Folsom, California 95630
(916) 353-2400
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
Copies to:
Charles S. Farman, Esq.
Morrison & Foerster LLP
400 Capitol Mall, 23rd floor
Sacramento, California 95814
(916) 448-3200
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This Amendment No. 2 (the "Amendment") amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 (as amended and
supplemented, the "Schedule 14D-9") filed with the Securities and Exchange
Commission (the "SEC") on December 6, 2000 by Objective Systems Integrators,
Inc., a Delaware corporation ("OSI" or the "Company") as amended by Amendment
No. 1 to the Schedule 14D-9 filed with the SEC on December 15, 2000, relating
to the tender offer by Tahoe Acquisition Corp., a Delaware corporation
("Merger Sub") and a wholly-owned subsidiary of Agilent Technologies, Inc., a
Delaware corporation, disclosed in a Tender Offer Statement on Schedule TO,
dated December 6, 2000, as amended, to purchase all of the issued and
outstanding shares of the Company's common stock, par value $.001 per share
("Common Stock"), at a purchase price of $17.75 per share, net to the seller
in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated December 6, 2000 (the
"Offer to Purchase") and in the related Letter of Transmittal (which, together
with the Offer to Purchase, as amended or supplemented from time to time,
constitute the "Offer"). This Amendment is being filed on behalf of the
Company. Capitalized terms used and not defined herein shall have the meanings
assigned to such terms in the Schedule 14D-9.
Item 3. Past Contacts, Transactions, Negotiations and Agreements.
Item 3 is hereby amended and supplemented as follows:
The second, third, fourth and sixth paragraphs of Item 3 are replaced in
their entirety with the following:
Lawrence F. Fiore, the Chief Financial Officer of the Company, entered into
a Severance Agreement in December of 1999. This agreement provides that, as a
result of a termination on a "change in control," Mr. Fiore would be entitled
to: (a) payment of any accrued and unpaid compensation; (b) payment of
severance compensation in an amount equal to his compensation for 24 months;
(c) payment of 100% of Company-paid benefits for up to 24 months; (d) full
vesting of all options he holds before termination (such options to remain
exercisable for 12 months after termination, or for 24 months if the
termination results from disability, but in no event longer than the original
terms of the options); and (e) a payment sufficient to pay certain taxes
should the benefits under the Severance Agreement constitute a "parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986. The purchase by Merger Sub of at least 50% of the voting power of the
Company, or the closing of the Merger, would constitute a "change in control"
for purposes of the Severance Agreement. Were Mr. Fiore's termination, as such
term is defined in the Severance Agreement, to occur, Mr. Fiore would be
entitled to receive, among other things, approximately $562,500, constituting
the severance compensation described above, and 77,500 options would be fully
vested.
Bud J. Mullanix, the Vice President, Human Resources of the Company,
entered into a Severance Agreement in March of 1999. This agreement provides
that, as a result of a termination on a "change in control," Mr. Mullanix
would be entitled to: (a) payment of any accrued and unpaid compensation; (b)
payment of severance compensation in an amount equal to his compensation for
12 months; (c) payment of 100% of Company-paid benefits for up to 12 months;
(d) full vesting of all options he holds before termination (such options to
remain exercisable for 12 months after termination, or for 24 months if the
termination results from disability, but in no event longer than the original
terms of the options); and (e) a payment sufficient to pay certain taxes
should the benefits under the Severance Agreement constitute a "parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986. The purchase by Merger Sub of at least 50% of the voting power of the
Company, or the closing of the Merger, would constitute a "change in control"
for purposes of the Severance Agreement. Were Mr. Mullanix's termination, as
such term is defined in the Severance Agreement, to occur, Mr. Mullanix would
be entitled to receive, among other things, approximately $227,500,
constituting the severance compensation described above, and 60,000 options
would be fully vested.
Roger A. Hosier, Vice President and Chief Technology Officer of the
Company, entered into a Severance Agreement in December of 1999. This
agreement provides that, as a result of a termination on a "change in
control," Mr. Hosier would be entitled to: (a) payment of any accrued and
unpaid compensation; (b) full vesting of all options he holds before
termination (such options to remain exercisable for 12 months after
termination, or
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for 24 months if the termination results from disability, but in no event
longer than the original terms of the options); and (c) a payment sufficient
to pay certain taxes should the benefits under the Severance Agreement
constitute a "parachute payment" within the meaning of Section 280G of the
Internal Revenue Code of 1986. The purchase by Merger Sub of at least 50% of
the voting power of the Company, or the closing of the Merger, would
constitute a "change in control" for purposes of the Severance Agreement. Were
Mr. Hosier's termination, as such term is defined in the Severance Agreement,
to occur, 54,270 options would be fully vested.
Mr. Fiore and Mr. Dan D. Line, Senior Vice President, Worldwide Sales and
Operations of the Company, have also each entered into employment agreements
with the Company. Mr. Fiore's employment agreement provides for a single
payment equal to one year's salary upon termination without cause, or a total
of $155,000, provided Mr. Fiore enters into a standard release and termination
agreement. Mr. Line's employment agreement provides for two years of
continuing salary if termination is without cause, or a total of $350,000 paid
over the course of two years, provided Mr. Line enters into a standard release
and termination agreement.
The Merger Agreement
Item 3, under the subsection "The Merger Agreement" is amended and
supplemented by the following:
The following sentence is added to the end of the second paragraph under
the subsection "The Merger Agreement--The Offer":
All conditions to the Offer, other than the Antitrust Condition, will be
satisfied or waived prior to the Expiration Date.
In the first two lines of the second paragraph of "The Merger Agreement--
Conditions to the Offer", "Parent" is hereby replaced with "Merger Sub."
The first paragraph under the subsection "The Merger Agreement--Conditions
to the Offer" is hereby replaced in its entirety by the following:
The obligation of Merger Sub to accept for payment and to pay for any
Shares tendered (and the obligation of Parent to cause Merger Sub to accept
for payment and to pay for any Shares tendered) shall be subject to various
conditions, including the condition that each of (A) a majority of Shares on a
fully-diluted basis (including for purposes of such calculation all Shares
issuable upon exercise of all vested Company Stock Options (as defined in
Merger Agreement) and unvested Company Stock Options that vest prior to
January 31, 2001 (but excluding any Shares held by the Company or any of its
subsidiaries) and (B) a majority of those Shares held by persons who have not
executed Tender and Voting Agreements be validly tendered (but excluding any
Shares held by Parent, Merger Sub or their respective affiliates)
(collectively, the "Minimum Condition"). Each condition, other than the
Antitrust Condition (as described below) is to be satisfied or waived prior to
the Expiration Date.
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The first sentence of the fifth to last paragraph under the subsection "The
Merger Agreement--Conditions to the Offer is hereby revised as follows:
The foregoing conditions are for the sole benefit of Parent and Merger Sub.
Other than the Minimum Condition, these conditions may be waived by Parent or
Merger Sub, in whole or in part at any time and from time to time prior to the
Expiration Date in the sole discretion of Parent or Merger Sub.
Tender Agreement
Item 3, under the subsection "Tender Agreement" is hereby amended and
supplemented by the following:
On December 20, 2000, the Stockholders tendered their 20,360,546 Shares
pursuant to the Tender Agreement.
Offer Letters
Item 3, under the subsection "Offer Letters" is hereby amended and
supplemented by replacing that subsection with the following:
Pursuant to letters, (each an "Offer Letter"), Parent has offered
employment to certain employees of the Company. Each such offer is contingent
upon the successful closing of the proposed acquisition. Parent and the
Company agree that a termination, as such term is defined in the Severance
Agreements and employment agreements discussed under the headings "--Past
Contacts, Transactions, Negotiations and Agreements" above and "Employment
Contracts and Change-in-Control Arrangements" in the Information Statement
attached as Schedule I hereto, will be deemed to have occurred upon the
successful closing of the proposed acquisition. Certain terms of the Offer
Letters are summarized below, however, each description is qualified in its
entirety by such Offer Letters, which are attached, along with any amendments
thereto, as Exhibit (e)(4) hereto.
Jeffrey T. Boone. Mr. Boone's Offer Letter dated December 15, 2000,
provides for an annual base salary of $200,000 and he has been offered an
option to purchase 5,000 shares of Parent Common Stock, subject to customary
vesting. In addition, Parent will pay all sums and benefits due under Mr.
Boone's Severance Agreement, as described in the Information Statement
attached as Schedule I hereto, under the heading "Employment Contracts and
Change-in-Control Arrangements," including the treatment of his outstanding
Company Stock Options, which will be converted into options to purchase Parent
Common Stock. In addition, as a result of Mr. Boone's acceptance of Parent's
offer, Parent will extend the life of the such options to purchase Parent
Common Stock to the original term of the underlying Company Stock Options.
Lawrence F. Fiore. Mr. Fiore's Offer Letter dated December 19, 2000
provides for a temporary position, not to exceed six months. Mr. Fiore's base
monthly salary will be $18,500. In addition, as a result of Mr. Fiore's
acceptance of Parent's offer, any agreements Mr. Fiore entered into with the
Company will terminate, excluding Mr. Fiore's Severance Agreement and
employment agreement, and Parent will pay all sums and benefits due under Mr.
Fiore's Severance Agreement and employment agreement (see "--Past Contacts,
Transactions, Negotiations and Agreements" above).
Roger A. Hosier. Mr. Hosier's Offer Letter dated December 4, 2000 and
amended on December 18, 2000, provides for an annual salary of $170,000 and he
has been offered an option to purchase 3,000 shares of Parent Common Stock,
subject to customary vesting. In addition, Parent will pay all sums and
benefits due under Mr. Hosier's Severance Agreement, as described in "--Past
Contacts, Transactions, Negotiations and Agreements" above, including the
treatment of his outstanding Company Stock Options, which will be converted
into options to purchase Parent Common Stock. In addition, as a result of Mr.
Hosier's acceptance of Parent's offer, Parent will extend the life of the such
options to purchase Parent Common Stock to the original term of the underlying
Company Stock Options.
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Bud J. Mullanix. Mr. Mullanix's Offer Letter dated December 4, 2000,
provides for an annual salary of $150,000 and he has been offered an option to
purchase 3,000 shares of Parent Common Stock, subject to customary vesting. In
addition, Parent will pay all sums and benefits due under Mr. Mullanix's
Severance Agreement, as described in "--Past Contacts, Transactions,
Negotiations and Agreements" above, including the treatment of his outstanding
Company Stock Options, which will be converted into options to purchase Parent
Common Stock. In addition, as a result of Mr. Mullanix's acceptance of Parent's
offer, Parent will extend the life of the such options to purchase Parent
Common Stock to the original term of the underlying Company Stock Options.
James T. Olsen. Mr. Olsen's Offer Letter dated December 4, 2000 and amended
on December 8, 2000, provides for an annual salary of $225,000 and he has been
offered an option to purchase 30,000 shares of Parent Common Stock, subject to
customary vesting. In addition, Parent will pay all sums and benefits due under
Mr. Olsen's Severance Agreement, as described in the Information Statement
attached as Schedule I hereto, under the heading "Employment Contracts and
Change-in-Control Arrangements," including the treatment of his outstanding
Company Stock Options, which will be converted into options to purchase Parent
Common Stock. In addition, if Mr. Olsen accepts Parent's offer, Parent will
extend the life of the such options to purchase Parent Common Stock to the
original term of the underlying Company Stock Options. As of December 22, 2000,
Mr. Olsen had not accepted Parent's offer.
Dan D. Line. Mr. Line's Offer Letter dated December 20, 2000, provides for a
temporary position, not to exceed nine months. Mr. Line's base monthly salary
will be $20,000. As a result of Mr. Line's acceptance of Parent's offer, Parent
will pay all sums and benefits due under Mr. Line's Severance Agreement, as
described in the Information Statement attached as Schedule I hereto, under the
heading "Employment Contracts and Change-in-Control Arrangements," including
the treatment of his outstanding Company Stock Options, which will be converted
into options to purchase Parent Common Stock with a one-year exercise period.
In addition, Parent will pay all sums due under Mr. Line's employment agreement
(see "--Past Contacts, Transactions, Negotiations and Agreements" above).
Item 4. The Solicitation or Recommendation.
(b) Reasons.
Background of the Offer
Item 4, under the subsection "Background of the Offer" is hereby amended and
supplemented by replacing the third, fourth, fifth, seventh, twelfth,
eighteenth, twentieth, and twenty second paragraphs with the following:
Between April and July of 2000, GKM or AHH contacted approximately 70
possible strategic partners and engaged in further preliminary discussions with
over 30 companies that had expressed an interest in a business combination with
the Company, including a large telecommunication equipment provider ("Bidder
A") and Agilent. Of the over 30 companies who initially expressed interest in a
possible business combination with the Company, seven (including Bidder A and
Agilent) engaged in further discussions with the Company. During this time
period, GKM and AHH provided the Board and the Company's senior management with
periodic updates as to the results of these contacts. The Company and Bidder A
entered into a Non-Disclosure Agreement on April 28, 2000. The remaining five
companies all entered into Non-Disclosure Agreements between May 1 and August
1, 2000 and performed preliminary due diligence on the Company. However, none
of these five companies submitted any proposals for possible business
combinations with the Company.
On July 28, 2000, representatives of AHH presented the Board with a report
on the services that they had provided to date, the status of AHH's preliminary
discussions with Bidder A, Agilent, the five other companies that were still
potential strategic partners, and various strategic alternatives available to
the Company. At this meeting, the Board determined to form a special committee
composed of Gary D. Cuccio, George F. Schmitt
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and Dr. Kornel Terplan, the three non-management directors (the "Special
Committee"). The Board authorized the Special Committee to pursue a possible
business combination involving the Company and to review, evaluate and
negotiate the proposed structure, price and terms of such a transaction. The
Board also authorized the Special Committee to recommend a possible business
combination involving the Company to the Board if the Special Committee
believed such proposal would be in the best interests of the Company and its
stockholders.
At its initial meeting on August 15, 2000, the Special Committee authorized
AHH to pursue further discussions with five potential strategic partners
(including Bidder A and Agilent). The Special Committee also authorized one of
its members to contact an officer of Bidder A to discuss a possible strategic
transaction.
In August 2000, Bidder A conducted a due diligence investigation of the
Company. Following this investigation and other meetings between
representatives of Bidder A and the Company, on August 31, 2000, Bidder A
delivered to the Special Committee a non-binding indication of interest
relating to an acquisition of the Company by Bidder A. AHH provided the
Special Committee with their analysis of the proposed price, structure, terms
and conditions of the proposed offer. Following discussion, the Special
Committee determined that the economic terms in the non-binding indication of
interest were not in the best interests of the Company and its stockholders.
The Special Committee directed AHH to pursue further discussions with the
financial advisors for Bidder A, Agilent and the other remaining potential
strategic partners.
At a Special Committee meeting on November 2, 2000, AHH reported on the
current status of its ongoing discussions with Agilent and Bidder A. AHH also
reported on its analysis of the price and other terms of the potential
transaction that had been proposed by Bidder A. The Special Committee
authorized AHH to pursue further discussions with Bidder A. On November 2,
2000 and November 3, 2000, Agilent continued its on-site and off-site due
diligence investigation of the Company.
On November 16, 2000, counsel for Agilent delivered to the Special
Committee a revised non-binding proposal and draft definitive agreement,
providing for, among other things, an all cash tender offer of the outstanding
shares of the Company at the purchase price of $17.75 per share to be followed
by a second-step merger. The proposal included a three percent termination
fee, a non-solicitation provision and a requirement that stockholders holding
at least 50% of the outstanding Common Stock enter into the Tender Agreement.
The proposal stated that execution of a definitive agreement was subject to
the approval of Agilent's Board of Directors and satisfactory completion of
due diligence. Counsel for Bidder A also delivered a draft definitive
agreement, providing for, among other things, an all cash tender offer for the
outstanding shares of the Company at an orally expressed per share price less
than that offered by Agilent.
The Special Committee met on the afternoon of November 17, 2000, at which
time Company counsel, AHH and GKM reviewed the principal terms and conditions
of the agreements submitted by Bidder A and Agilent with the Special
Committee. AHH and GKM again analyzed the relative merits of the final
proposals from Bidder A and Agilent, as well as the perceived likelihood and
timing of closing a transaction with each of the parties. The Special
Committee observed that while both Bidder A and Agilent had proposed all cash
tender offers, Agilent had proposed a higher price per share than Bidder A.
Following this discussion, the Special Committee unanimously determined to
proceed with immediate negotiation and finalization of the draft merger
agreement with Agilent. The Special Committee also instructed AHH to inform
the financial advisors for Bidder A that another party had proposed the
acquisition of the Company at a higher per share price than that proposed by
Bidder A. That evening, the financial advisors to Bidder A informed AHH that
Bidder A had delivered its best and final offer.
At the Board meeting immediately following the meeting of the Special
Committee, the Board reviewed the terms of the draft merger agreement with
AHH, GKM and Company counsel. At this meeting, AHH reviewed the course of
negotiations with Bidder A and Agilent. GKM presented its financial analysis
of the proposed transaction and its written opinion that, as of that date, the
Offer Price to be received by holders of Common Stock in connection with the
Offer and the Merger was fair to such holders from a financial point of view.
The Special Committee then presented its recommendation to the Board that the
Offer and the Merger are in the best
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interests of the Company's stockholders. After further discussion, the Board
approved, by unanimous vote of the directors, the transaction and the entry
into the definitive agreements by the Company, subject to finalization of the
merger agreement and the receipt of an updated fairness opinion from GKM on
the date that the draft merger agreement was finalized.
Reasons for the Recommendation of the Board
Item 4, under the subsection "Reasons for the Recommendation of the Board"
is hereby amended and supplemented by replacing the first, sixth, seventh,
eighth and thirteenth bulleted paragraphs with the following:
. The historical and recent trading activity and market prices of Shares,
and the fact that the Offer and the Merger will enable the holders of
Shares to realize (1) a premium of 31% over the last sale price of
Shares reported on the Nasdaq National Market on November 24, 2000,
prior to the decision by the Board to approve the transaction, (2) a
premium of 77% over the last sale price of Shares reported on the Nasdaq
National Market over a 30 day mean prior to the decision by the Board to
approve the transaction, (3) a premium of 56% over the last sale price
of Shares reported on the Nasdaq National Market over a 90 day mean
prior to the decision by the Board to approve the transaction, and (4) a
premium of 54% over the last sale price of Shares reported on the Nasdaq
National Market over the last twelve months mean prior to the decision
by the Board to approve the transaction. The Board considered these
periods the most relevant to demonstrate the recent performance of the
Shares.
. The recommendation of the Special Committee that the Offer and the
Merger are in the best interests of the Company and its stockholders.
The Special Committee based its recommendation principally on the price
per Share and its view that the other material terms of the Offer and
the Merger, taken as a whole, were no less favorable than those found in
comparable acquisition transactions.
. The Company's financial performance and outlook, and the Company's
assets, business, financial condition, business strategy, results of
operations and the Company's prospects if it were to remain an
independent, publicly traded entity, including the risks of competing
against companies that have far greater resources, distribution capacity
and product offerings than the Company. In particular, the Board
considered the rapid consolidation that had been taking place within the
telecommunications industry, and the Board's assessment of the Company's
ability to effectively compete in the industry as an independent entity.
. The Board's determination that, as compared with the Company's
alternatives (including the possibility of pursuing a sale to a
strategic buyer, making a series of strategic acquisitions, or entering
into a strategic partnership with a larger company), a sale of the
Company would more likely result in greater benefits to the Company's
stockholders.
. The Board's determination that the termination fee would not materially
impair the ability of a third party to make a competing proposal. In
making its determination the Board considered that the amount of the
termination fee was comparable to termination fees in transactions of a
similar size.
Opinion of Gerard Klauer Mattison & Co., Inc.
Item 4, under the subsection "Opinion of Gerard Klauer Mattison & Co.,
Inc." is amended and supplemented as follows:
The first sentence of the paragraph just above the subheading "The
Company's Stock Trading History" is hereby replaced by the following sentence:
The following is a brief summary of the material financial analyses
performed by GKM in connection with its oral opinion and the preparation of
its opinion letter dated November 24, 2000.
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Item 4, under the subsection "Opinion of Gerard Klauer Mattison & Co.,
Inc.--Discounted Cash Flow Analysis" is hereby amended and supplemented as
follows:
The discount rates of 14.0% to 22.0% were selected based on the estimated
industry weighted average cost of capital.
Item 4, the first paragraph under the subsection "Fees and Expenses " is
hereby amended and supplemented by adding the following:
Based on the 37,609,227 shares of Common Stock that were outstanding on
December 1, 2000, the total amount to be paid to holders of Common Stock by
Parent in the Offer and Merger would be approximately $668 million. The
Transaction Fee based on this valuation would be approximately $8 million.
Item 8. Additional Information.
Information Statement
Schedule I of the Schedule 14D-9, referenced in Item 8, under the
subsection "Information Statement" is hereby amended and supplemented by the
following:
The seventh paragraph of the Information Statement is hereby replaced with
the following:
The information contained in this Information Statement (including
information incorporated by reference) concerning Parent, Merger Sub and the
Designees has been furnished to the Company by Parent, and the Company cannot
assure you that this information is accurate or complete.
The compensation information for Philip N. Cardman and Dan D. Line in the
Summary Compensation Table under the subsection "Executive Compensation and
Other Matters-Executive Compensations" of the Information Statement is hereby
replaced with the following:
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
----------------------------------- ----------------------
Restricted Securities
Name and Principal Fiscal Stock Underlying All Other
Position Year Salary ($) Bonus ($) Commission ($) Awards ($) Options ($) Commission
------------------ ------ ---------- --------- -------------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Philip N. Cardman....... 2000 214,181 2,276 -- -- 40,000 3,979(2)
Vice President, General 1999 205,384 -- -- -- 65,000 4,041(2)
Counsel and Secretary 1998 203,750 155 -- -- -- 4,075(2)
Dan D. Line............. 2000 187,454 55,000 462,082 -- 150,000 3,482(2)
Sr. Vice President, 1999 107,500 -- 178,193 -- 25,000 2,895(2)
Worldwide Sales 1998 95,000 155 562,129 -- 40,000 4,339(2)
</TABLE>
The first four paragraphs of the section entitled "Employment Contracts and
Change-in-Control Arrangements" of the Information Statement are hereby
replaced in their entirety with the following:
Jeffrey T. Boone entered into a Severance Agreement with the Company in
December of 1999. This agreement provides that, as a result of a termination
on a "change in control," Mr. Boone would be entitled to: (a) payment of any
accrued and unpaid compensation; (b) payment of severance compensation in an
amount equal to his compensation for 12 months; (c) payment of 100% of
Company-paid benefits for up to 12 months; (d) full vesting of all options he
holds before termination (such options to remain exercisable for 12 months
after termination, or for 24 months if the termination results from
disability, but in no event longer than the original terms of the options);
and (e) a payment sufficient to pay certain taxes should the benefits under
the Severance Agreement constitute a "parachute payment" within the meaning of
Section 280G of the Internal Revenue Code of 1986. The purchase by Merger Sub
of at least 50% of the voting power of the Company, or the closing of the
Merger, would constitute a "change in control" for purposes of the Severance
Agreement. Were Mr. Boone's
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termination, as such term is defined in the Severance Agreement, to occur, Mr.
Boone would be entitled to receive, among other things, approximately
$291,250, constituting the severance compensation described above, and 79,792
options would be fully vested.
Philip N. Cardman entered into an employment agreement, as amended, with
the Company in May of 1996. This agreement includes payment of base salary for
two years from termination in the event of involuntary termination without
cause, or a total of $310,000 paid over the course of two years. Mr. Cardman
also entered into a Severance Agreement with the Company in December of 1999.
This agreement provides that, as a result of a termination on a "change in
control," Mr. Cardman would be entitled to: (a) payment of any accrued and
unpaid compensation; (b) payment of severance compensation in an amount equal
to his compensation for 24 months; (c) payment of 100% of Company-paid
benefits for up to 24 months; (d) full vesting of all options he holds before
termination (such options to remain exercisable for 12 months after
termination, or for 24 months if the termination results from disability, but
in no event longer than the original terms of the options); and (e) a payment
sufficient to pay certain taxes should the benefits under the Severance
Agreement constitute a "parachute payment" within the meaning of Section 280G
of the Internal Revenue Code of 1986. The purchase by Merger Sub of at least
50% of the voting power of the Company, or the closing of the Merger, would
constitute a "change in control" for purposes of the Severance Agreement. Were
Mr. Cardman's termination, as such term is defined in the Severance Agreement,
to occur, Mr. Cardman would be entitled to receive, among other things,
approximately $612,500, constituting the severance compensation described
above, and 186,935 options would be fully vested.
Dan D. Line entered into a Severance Agreement with the Company in December
of 1999. This agreement provides that, as a result of a termination on a
"change in control," Mr. Line would be entitled to: (a) payment of any accrued
and unpaid compensation; (b) payment of severance compensation in an amount
equal to his compensation for 12 months; (c) payment of 100% of Company-paid
benefits for up to 12 months; (d) full vesting of all options he holds before
termination (such options to remain exercisable for 12 months after
termination, or for 24 months if the termination results from disability, but
in no event longer than the original terms of the options); and (e) a payment
sufficient to pay certain taxes should the benefits under the Severance
Agreement constitute a "parachute payment" within the meaning of Section 280G
of the Internal Revenue Code of 1986. The purchase by Merger Sub of at least
50% of the voting power of the Company, or the closing of the Merger, would
constitute a "change in control" for purposes of the Severance Agreement. Were
Mr. Line's termination, as such term is defined in the Severance Agreement, to
occur, Mr. Line would be entitled to receive, among other things,
approximately $175,000, constituting the severance compensation described
above, and 97,291 options would be fully vested.
James T. Olsen entered into a Severance Agreement with the Company in
December of 1999. This agreement provides that, as a result of a termination
on a "change in control," Mr. Olsen would be entitled to: (a) payment of any
accrued and unpaid compensation; (b) payment of severance compensation in an
amount equal to his compensation for 12 months; (c) payment of 100% of
Company-paid benefits for up to 12 months; (d) full vesting of all options he
holds before termination (such options to remain exercisable for 12 months
after termination, or for 24 months if the termination results from
disability, but in no event longer than the original terms of the options);
and (e) a payment sufficient to pay certain taxes should the benefits under
the Severance Agreement constitute a "parachute payment" within the meaning of
Section 280G of the Internal Revenue Code of 1986. The purchase by Merger Sub
of at least 50% of the voting power of the Company, or the closing of the
Merger, would constitute a "change in control" for purposes of the Severance
Agreement. Were Mr. Olsen's termination, as such term is defined in the
Severance Agreement, to occur, Mr. Olsen would be entitled to receive, among
other things, approximately, $323,750, constituting the severance compensation
described above, and 163,542 options would be fully vested.
8
<PAGE>
Antitrust
Item 8, under the subsection "Antitrust" is hereby amended and supplemented
by adding the following:
Parent filed a Premerger Notification and Report Form under the HSR Act
with the FTC and the Antitrust Division in connection with the purchase of
Shares in the Offer and the Merger on December 11, 2000, and received
notification from the Premerger Notification Office of the FTC of early
termination, effective December 22, 2000, of the required waiting period with
respect to the Offer and the Merger.
Parent has been advised that in connection with Merger Sub's acquisition of
the Shares pursuant to the Offer a regulatory filing will be required in the
Republic of China in Taiwan (the "ROC"). In the ROC, a combination filing must
be made with its Fair Trade Commission (the "ROC FTC") for prior approval. The
ROC FTC must respond to the combination filing within two months of receipt.
Parent made the combination filing on December 11, 2000. The ROC FTC may
approve Merger Sub's acquisition of the Shares pursuant to the Offer prior to
the expiration of the full two-month period, but there can be no assurance
that it will do so. In the event the ROC FTC does not approve the transaction
prior to the expiration date, the acceptance of the Shares by the Merger Sub
may be delayed and the proposed transaction may not be consummated until such
approval is received. This may result in a delay of payment to the
Stockholders.
Item 9. Exhibits.
Item 9 of the Schedule 14D-9 is hereby amended and supplemented by adding
the following exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
(a)(1)(I) Joint Press Release of Agilent Technologies, Inc. and the Company,
dated December 26, 2000.
(e)(4) Offer Letters from Agilent Technologies, Inc. to each of Dan D.
Line, Jeffrey Boone, Lawrence Fiore.*
</TABLE>
--------
* Incorporated by reference to Amendment No. 1 to the Schedule TO filed by
Tahoe Acquisition Corp. and Agilent Technologies, Inc. on December 26, 2000.
9
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule 14D-9 is true, complete and
correct.
Dated: December 26, 2000
/s/ Philip N. Cardman
By: _________________________________
Philip N. Cardman
Vice President, General Counsel
and Secretary
10
