<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 10, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
INDUSTRIAL SCIENTIFIC CORPORATION
(Name of Issuer)
INDUSTRIAL SCIENTIFIC CORPORATION
ISC ACQUISITION CORPORATION
KENTON E. MCELHATTAN
KENT D. MCELHATTAN
FLORENCE L. MCELHATTAN
(Name of Person(s) Filing Statement)
Common Stock, $.01 Par Value per Share
(Title of Class of Securities)
45631G-10-6
(CUSIP Number of Class of Securities)
Robert K. Morris James J. Barnes
Reed, Smith, Shaw & McClay Buchanan Ingersoll Professional Corporation
435 Sixth Avenue One Oxford Centre, 20th Floor
Pittsburgh, PA 15219 301 Grant Street
412/288-3126 Pittsburgh, PA 15219
412/562-1415
(Name, Address and Telephone Number of Persons Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
This statement is filed in connection with (check the appropriate box):
a. [X] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of
1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [X]
CALCULATION OF FILING FEE
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Transaction Valuation* Amount of Filing Fee
---------------------- --------------------
$24,566,235 $4,913.25
<PAGE>
* Determined by multiplying 842,727 (the number of outstanding shares of the
Common Stock of Industrial Scientific Corporation not owned by Kenton E.
McElhattan, Kent D. McElhattan, Florence L. McElhattan or their Affiliates) by
$28.50 per share and adding the aggregate amount anticipated to be paid to
certain persons holding options to purchase shares of the Common Stock of
Industrial Scientific Corporation in consideration of the cancellation of such
options.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: $4,913.25
Form or Registration Number: Schedule 14C
Filing Party: Industrial Scientific Corporation
Date Filed: March 10, 1999
This Rule 13e-3 Transaction Statement (this "Statement") is being filed
concurrently with the filing of a preliminary information statement pursuant to
Regulation 14C under the Securities Exchange Act of 1934 (the "Information
Statement"). The underlying Rule 13e-3 transaction relates to an Agreement and
Plan of Merger, dated as of February 23, 1999 (the "Merger Agreement"), by and
between Industrial Scientific Corporation, a Pennsylvania corporation (the
"Company") and ISC Acquisition Corporation, a Pennsylvania corporation
("Acquisition"). The Merger Agreement provides for the merger (the "Merger") of
Acquisition with and into the Company, with the Company as the corporation
surviving the Merger (the "Surviving Corporation"). Acquisition was formed by
the three largest shareholders of the Company, Kenton E. McElhattan, Chairman of
the Board of Directors of the Company, Kent D. McElhattan, President, Chief
Executive Officer and a director of the Company and Florence L. McElhattan
(collectively, the "Majority Shareholders"), in connection with the Merger.
The Majority Shareholders currently beneficially own approximately 74.2% of
the outstanding shares of common stock, par value $.01 per share (the "Common
Stock"), of the Company, representing approximately 74.2% of the voting power of
the shareholders of the Company. It is contemplated that the Majority
Shareholders and their Affiliates (as defined below) will contribute all of
their shares of Common Stock to Acquisition immediately prior to the
Consummation of the Merger. The Majority Shareholders proposed the Merger in
order to purchase all of the shares of Nonaffiliated Stock. For purposes of
this Statement Nonaffiliated Stock refers to shares of Common Stock not held by
Acquisition, the Majority Shareholders or certain members of their immediately
family and certain family trusts (their "Affiliates").
As a result of the Merger, (i) each share of Nonaffiliated Stock (other
than shares owned by those shareholders who have validly perfected their
dissenters rights under Pennsylvania law) will be converted into the right to
receive $28.50 in cash, without interest (the "Merger Consideration"), (ii) each
share of Common Stock owned by Acquisition and the Majority Shareholders will be
canceled with no consideration paid therefor and (iii) each share of the common
stock of Acquisition owned by the Majority Shareholders will be converted into
one share of the common stock of the Surviving Corporation. In addition, upon
consummation of the Merger, (a) each option to purchase shares of Common Stock
held by persons other than the Majority Shareholders (the "Nonaffiliated
Options") will be canceled and each holder of such canceled Nonaffiliated
Options will be paid by the Surviving Corporation, for each such Nonaffiliated
Option, an amount determined by multiplying (x) the excess, if any, of the
Merger Consideration over the applicable exercise price per share of such
Nonaffiliated Option and (y) the number of shares issuable upon exercise of such
Nonaffiliated Option, and (b) all options to purchase shares of Common Stock
held by the Majority Shareholders will be assumed by the Surviving Corporation.
As a result of the Merger, the Majority Shareholders will collectively own 100%
of the capital stock of the Surviving Corporation.
The cross-reference sheet below is being supplied pursuant to General
Instruction F to Schedule 13E-3 and shows the location in the Information
Statement of the information required to be included in response to the items
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of this Statement. The information in the Information Statement, including the
exhibits thereto, is hereby expressly incorporated herein by reference and
responses to each item in this Statement are qualified in their entirety by the
information contained in the Information Statement. Capitalized terms used but
not defined herein shall have the meanings ascribed thereto in the Information
Statement.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Schedule 13E-3
Item Number and Caption Location in Information Statement
- ---------------------------------------------------- ------------------------------------------------------------
Item 1. Issuer and Class of Security Subject to
the Transaction
<S> <C>
Item 1(a)......................................... QUESTIONS AND ANSWERS ABOUT THE MERGER AND ARTICLES
AMENDMENT; SUMMARY--Special Factors Regarding the
Merger--The Parties--The Company; CERTAIN INFORMATION
REGARDING THE COMPANY
Item 1(b)......................................... SUMMARY--Special Factors Regarding the Merger--Required
Vote for Merger; Written Consent in Lieu of Meeting;
REQUIRED VOTE FOR MERGER; WRITTEN CONSENT IN LIEU OF MEETING
Item 1(c)......................................... MARKET PRICE AND DIVIDENDS
Item 1(d)......................................... MARKET PRICE AND DIVIDENDS
Item 1(e)......................................... No offering responsive to Item 1(e) has been made by the
issuer or affiliate within the last three years
Item 1(f)......................................... MARKET PRICE AND DIVIDENDS
Item 2. Identity and Background
Item 2(a)-(d)..................................... SUMMARY--Special Factors Regarding the Merger--The
Parties--The Company;--Acquisition; MANAGEMENT--Directors
and Executive Officers of the Company;-- Directors and
Executive Officers of Acquisition
Item 2(e)......................................... Not applicable
Item 2(f)......................................... Not applicable
Item 2(g)......................................... SUMMARY--Special Factors Regarding the Merger--The
Parties--The Company;--Acquisition; MANAGEMENT--Directors
and Executive Officers of the Company;-- Directors and
Executive Officers of Acquisition
Item 3. Past Contacts, Transactions or Negotiations
Item 3(a)(1)...................................... Not applicable
</TABLE>
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<TABLE>
<CAPTION>
Schedule 13E-3
Item Number and Caption Location in Information Statement
- ---------------------------------------------------- ------------------------------------------------------------
<S> <C>
Item 3(a)(2) and 3(b)............................. SUMMARY--Special Factors Regarding the Merger--Purpose,
Background and Effects of the Merger; SPECIAL FACTORS
REGARDING THE MERGER--Background of the Merger
Item 4. Terms of the Transaction
Item 4(a)......................................... QUESTIONS AND ANSWERS ABOUT THE MERGER AND ARTICLES
AMENDMENT; SUMMARY; REQUIRED VOTE FOR MERGER; WRITTEN
CONSENT IN LIEU OF MEETING; SPECIAL FACTORS REGARDING THE
MERGER--Background of the Merger;--Interests of Certain
Persons in the Merger;--Certain Effects of the Merger;
THE MERGER AGREEMENT; DISSENTERS RIGHTS
Item 4(b)......................................... SUMMARY--Special Factors Regarding the Merger--Required
Vote for Merger; Written Consent in Lieu of Meeting;
--Interests of Certain Persons in the Merger; REQUIRED VOTE
FOR MERGER; WRITTEN CONSENT IN LIEU OF MEETING; SPECIAL
FACTORS REGARDING THE MERGER--Background of the Merger;
Interests of Certain Persons in the Merger;--Certain Effects
of the Merger;--THE MERGER AGREEMENT--Consideration to be Paid
in the Merger;--Treatment of Options; DISSENTERS RIGHTS
Item 5. Plans or Proposals of the Issuer or
Affiliate
Items 5(a) and 5(b)............................... SPECIAL FACTORS REGARDING THE MERGER--Background of the
Merger;--Certain Effects of the Merger; THE MERGER AGREEMENT;
REQUIRED VOTE FOR MERGER; WRITTEN CONSENT IN LIEU OF MEETING
Item 5(c)......................................... SPECIAL FACTORS REGARDING THE MERGER--Interests of Certain Persons
in the Merger;--Certain Effects of the Merger; THE MERGER
AGREEMENT--Treatment of Options; CERTAIN INFORMATION
REGARDING ACQUISITION
Items 5(d)-(g).................................... SUMMARY--Special Factors Regarding the Merger--Purpose,
Background and Effects of the Merger;--Interests of Certain
Persons in the Merger;--Financing of the Merger; SPECIAL FACTORS
REGARDING THE MERGER--Interests of Certain Persons in the
Merger;--Certain Effects of the Merger--Financing of the
Merger; AVAILABLE INFORMATION
Item 6. Source and Amounts of Funds or Other
Consideration
Items 6(a) and 6(c)............................... SUMMARY--Special Factors Regarding the Merger--Purpose,
Background and Effects of the Merger--Financing of the
Merger; SPECIAL FACTORS REGARDING THE MERGER--Financing of the Merger
Item 6(b)......................................... ESTIMATED FEES AND EXPENSES
</TABLE>
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<TABLE>
<CAPTION>
Schedule 13E-3
Item Number and Caption Location in Information Statement
- ---------------------------------------------------- ------------------------------------------------------------
<S> <C>
Item 6(d)......................................... Not applicable
Item 7. Purpose(s), Alternatives, Reasons and
Effects
Items 7(a), 7(b) and 7(c)......................... SUMMARY--Special Factors Regarding the Merger--Purpose,
Background and Effects of the Merger;--Financing of the
Merger; SPECIAL FACTORS REGARDING THE MERGER--Background
of the Merger;--The Majority Shareholders' Purpose and
Reasons for the Merger
Item 7(d)......................................... QUESTIONS AND ANSWERS ABOUT THE MERGER AND ARTICLES
AMENDMENT; SUMMARY--Special Factors Regarding the
Merger--Purpose, Background and Effects of the
Merger;--Federal Income Tax Consequences;--The Merger
Agreement--The Merger Consideration; REQUIRED VOTE FOR
MERGER; WRITTEN CONSENT IN LIEU OF MEETING; SPECIAL FACTORS
REGARDING THE MERGER--The Majority Shareholders' Purpose
and Reasons for the Merger;--Certain Effects of the Merger;
--Certain Federal Income Tax Consequences of the Merger;
--Accounting Treatment; THE MERGER AGREEMENT--Consideration to
be Paid in the Merger;--The Exchange Fund; Payment for Shares
of Common Stock
Item 8. Fairness of the Transaction
Item 8(a)......................................... QUESTIONS AND ANSWERS ABOUT THE MERGER AND ARTICLES
AMENDMENT; SUMMARY--Special Factors Regarding the
Merger--Approval by the Board of Directors; REQUIRED VOTE
FOR MERGER; WRITTEN CONSENT IN LIEU OF MEETING; SPECIAL FACTORS
REGARDING THE MERGER--Background of the Merger;--The Majority
Shareholders' Purpose and Reasons for the Merger;--Opinion
of Financial Advisor
Item 8(b)......................................... SUMMARY--Special Factors Regarding the Merger--Purpose,
Background and Effects of the Merger;--Approval by the
Board of Directors;--Ladenburg Thalmann Fairness Opinion;
SPECIAL FACTORS REGARDING THE MERGER--Background of the
Merger;--The Majority Shareholders' Purpose and Reasons for
the Merger;--Opinion of the Financial Advisor;--Certain Effects
of the Merger
Item 8(c)......................................... QUESTIONS AND ANSWERS ABOUT THE MERGER; SUMMARY--Special
Factors Regarding the Merger--Required Vote for Merger;
Written Consent in Lieu of Meeting;--The Merger
Agreement--Conditions to the Merger; REQUIRED VOTE FOR
MERGER; WRITTEN CONSENT IN LIEU OF MEETING; THE MERGER
AGREEMENT--Conditions to the Merger
</TABLE>
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<TABLE>
<CAPTION>
Schedule 13E-3
Item Number and Caption Location in Information Statement
- ---------------------------------------------------- ------------------------------------------------------------
<S> <C>
Item 8(d)......................................... QUESTIONS AND ANSWERS ABOUT THE MERGER AND ARTICLES
AMENDMENT; SUMMARY--Special Factors Regarding the
Merger--Approval by the Board of Directors; --Ladenburg
Thalmann Fairness Opinion; REQUIRED VOTE FOR MERGER;
WRITTEN CONSENT IN LIEU OF MEETING; SPECIAL FACTORS REGARDING
THE MERGER--Background of the Merger;--Opinion of the Financial
Advisor
Item 8(e)......................................... SPECIAL FACTORS REGARDING THE MERGER--Background of the Merger
Item 8(f)......................................... Not applicable
Item 9. Reports, Opinions, Appraisals and Certain
Negotiations
Items 9(a) and 9(b)............................... SUMMARY--Special Factors Regarding the Merger--Ladenburg
Thalmann Fairness Opinion; SPECIAL FACTORS REGARDING THE MERGER
--Background of the Merger;--Opinion of the Financial Advisor
Item 9(c)......................................... AVAILABLE INFORMATION
Item 10. Interest in Securities of the Issuer
Item 10(a)........................................ SUMMARY--Special Factors Regarding the Merger--Required
Vote for Merger; Written Consent in Lieu of
Meeting;--Interests of Certain Persons in the Merger;
REQUIRED VOTE FOR MERGER; WRITTEN CONSENT IN LIEU OF
MEETING; SPECIAL FACTORS REGARDING THE MERGER--Interests of
Certain Persons in the Merger; PRINCIPAL SHAREHOLDERS AND
STOCK OWNERSHIP OF MANAGEMENT
Item 10(b)........................................ MARKET PRICE AND DIVIDENDS
Item 11. Contracts, Arrangements or Understandings
with Respect to the Issuer's Securities
Item 11........................................... SUMMARY--Special Factors Regarding the Merger--Financing of
the Merger; SPECIAL FACTORS REGARDING THE MERGER--Background of the
Merger;--Interests of Certain Persons in the
Merger;--Financing of the Merger; THE MERGER AGREEMENT
</TABLE>
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<TABLE>
<CAPTION>
Schedule 13E-3
Item Number and Caption Location in Information Statement
- ---------------------------------------------------- ------------------------------------------------------------
<S> <C>
Item 12. Present Intention and Recommendation of
Certain Persons with Regard to the
Transaction
Item 12(a)........................................ SUMMARY--Special Factors Regarding the Merger--Approval by
the Board of Directors; --Interests of Certain Persons in
the Merger; --Required Vote for Merger; Written Consent in
Lieu of Meeting; REQUIRED VOTE FOR MERGER; WRITTEN CONSENT
IN LIEU OF MEETING; PRINCIPAL SHAREHOLDERS AND STOCK
OWNERSHIP OF MANAGEMENT
Item 12(b)........................................ SUMMARY--Special Factors Regarding the Merger--Approval by
the Board of Directors; --Interests of Certain Persons in
the Merger; -- Required Vote for Merger; Written Consent in
Lieu of Meeting; REQUIRED VOTE FOR MERGER; WRITTEN CONSENT
IN LIEU OF MEETING; SPECIAL FACTORS REGARDING THE MERGER--
Background of the Merger
Item 13. Other Provisions of the Transaction
Item 13(a)........................................ QUESTIONS AND ANSWERS ABOUT THE MERGER AND ARTICLES
AMENDMENT; SUMMARY--Special Factors Regarding the
Merger--Dissenters Rights; DISSENTERS RIGHTS
Item 13(b)........................................ Not applicable
Item 13(c)........................................ Not applicable
Item 14. Financial Information
Items 14(a)....................................... INDEX TO FINANCIAL STATEMENTS
Item 14(b)........................................ Not applicable
Item 15. Persons and Assets Employed, Retained or
Utilized
Item 15(a)........................................ REQUIRED VOTE FOR MERGER; WRITTEN CONSENT IN LIEU OF
MEETING; SPECIAL FACTORS REGARDING THE MERGER--Background
of the Merger; ESTIMATED FEES AND EXPENSES
Item 15(b)........................................ Not applicable
Item 16. Additional Information
Item 16........................................... Information Statement
Item 17. Material to be Filed as Exhibits
Item 17(a)........................................ Financing Commitment Letter from PNC Bank, National
Association to ISC Acquisition Corporation, dated as of
March 4, 1999
</TABLE>
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<TABLE>
<CAPTION>
Schedule 13E-3
Item Number and Caption Location in Information Statement
- ---------------------------------------------------- ------------------------------------------------------------
<S> <C>
Item 17(b)........................................ Opinion of Ladenburg Thalmann, dated February 23, 1999 (set
forth as Exhibit B the Information Statement)*
Item 17(c)........................................ Agreement and Plan of Merger by and between Industrial
Scientific Corporation and ISC Acquisition Corporation,
dated as of February 23, 1999 (set forth as Exhibit A to
the Information Statement)*
Item 17(d)........................................ Information Statement
Item 17(e)........................................ Part I, Chapter 15, Subchapter D of the Pennsylvania
Business Corporation Law of 1988 (set forth as Exhibit C to
the Information Statement)*
Item 17(f)........................................ No such written instrument, form or other material has been
furnished as of the date hereof
</TABLE>
* Incorporated by reference to the Information Statement.
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Item 1. Issuer and Class of Security Subject to the Transaction.
--------------------------------------------------------
(a) The information set forth in "QUESTIONS AND ANSWERS ABOUT THE MERGER
AND ARTICLES AMENDMENT," "SUMMARY--Special Factors Regarding the Merger--The
Parties--The Company" and "CERTAIN INFORMATION REGARDING THE COMPANY" of the
Information Statement is incorporated herein by reference.
(b) The information set forth in "SUMMARY--Special Factors Regarding the
Merger--Required Vote for Merger; Written Consent in Lieu of Meeting" and
"REQUIRED VOTE FOR MERGER; WRITTEN CONSENT IN LIEU OF MEETING" of the
Information Statement is incorporated herein by reference.
(c) The information set forth in "MARKET PRICE AND DIVIDENDS" of the
Information Statement is incorporated by reference herein.
(d) The information set forth in "MARKET PRICE AND DIVIDENDS" of the
Information Statement is incorporated by reference herein.
(e) No offering responsive to Item 1(e) has been made by the issuer or
affiliate within the last three years.
(f) The information set forth in "MARKET PRICE AND DIVIDENDS" of the
Information Statement is incorporated by reference herein.
Item 2. Identity and Background.
------------------------
This Statement is being filed jointly by the Company (which is the issuer
of the class of equity securities that is the subject of the Rule 13e-3
transaction), and Acquisition.
(a)-(d) The information set forth in "SUMMARY--Special Factors Regarding
the Merger--The Parties--The Company," "--Acquisition," "MANAGEMENT--Directors
and Executive Officers of the Company" and "-- Directors and Executive Officers
of Acquisition" of the Information Statement is incorporated herein by
reference.
(e) Not applicable.
(f) Not applicable.
(g) The information set forth in "SUMMARY--Special Factors Regarding the
Merger--The Parties--The Company," "--Acquisition," "MANAGEMENT--Directors and
Executive Officers of the Company" and "-- Directors and Executive Officers of
Acquisition" of the Information Statement is incorporated herein by reference.
Item 3. Past Contracts, Transactions or Negotiations.
--------------------------------------------
(a)(1) Not applicable.
(a)(2) and (b) The information set forth in "SUMMARY--Special Factors
Regarding the Merger--Purpose, Background and Effects of the Merger" and
"SPECIAL FACTORS REGARDING THE MERGER-- Background of the Merger" of the
Information Statement is incorporated herein by reference.
Item 4. Terms of the Transaction.
------------------------
(a) The information set forth in "QUESTIONS AND ANSWERS ABOUT THE MERGER
AND ARTICLES AMENDMENT," "SUMMARY," "REQUIRED VOTE FOR MERGER; WRITTEN CONSENT
IN LIEU OF MEETING," "SPECIAL FACTORS REGARDING THE MERGER-- Background of the
Merger," "--Interests of Certain Persons in the
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Merger," "--Certain Effects of the Merger," "THE MERGER AGREEMENT" and
"DISSENTERS RIGHTS" of the Information Statement is incorporated herein by
reference.
(b) The information set forth in "SUMMARY--Special Factors Regarding the
Merger--Interests of Certain Persons in the Merger,"--Required Vote for Merger;
Written Consent in Lieu of Meeting," "REQUIRED VOTE FOR MERGER; WRITTEN CONSENT
IN LIEU OF MEETING," "SPECIAL FACTORS REGARDING THE MERGER--Background of the
Merger," "--Interests of Certain Persons in the Merger," "--Certain Effects of
the Merger," "THE MERGER AGREEMENT--Consideration to be Paid in the Merger," "--
Treatment of Options" and "DISSENTERS RIGHTS" of the Information Statement is
incorporated herein by reference.
Item 5. Plans or Proposals of the Issuer or Affiliate.
---------------------------------------------
(a) and (b) The information set forth in "SPECIAL FACTORS REGARDING THE
MERGER-- Background of the Merger; "--Certain Effects of the Merger," "THE
MERGER AGREEMENT" and "REQUIRED VOTE FOR MERGER; WRITTEN CONSENT IN LIEU OF
MEETING" of the Information Statement is incorporated herein by reference.
(c) The information set forth in "SPECIAL FACTORS REGARDING THE MERGER--
Interests of Certain Persons in the Merger," --Certain Effects of the Merger,"
"THE MERGER AGREEMENT--Treatment of Options" and "CERTAIN INFORMATION REGARDING
ACQUISITION" of the Information Statement is incorporated herein by reference.
(d)-(g) The information set forth in "SUMMARY--Special Factors Regarding
the Merger--Purpose, Background and Effects of the Merger," "--Interests of
Certain Persons in the Merger," "Financing of the Merger," "SPECIAL FACTORS
REGARDING THE MERGER--Interests of Certain Persons in the Merger," "--Certain
Effects of the Merger," "--Financing of the Merger" and "AVAILABLE INFORMATION"
of the Information Statement is incorporated herein by reference.
Item 6. Source and Amounts of Funds or Other Consideration.
--------------------------------------------------
(a) and (c) The information set forth in "SUMMARY--Special Factors
Regarding the Merger--Purpose, Background and Effects of the Merger," "--
Financing of the Merger" and "SPECIAL FACTORS REGARDING THE MERGER--Financing of
the Merger" of the Information Statement is incorporated herein by reference.
(b) The information set forth in "ESTIMATED FEES AND EXPENSES" of the
Information Statement is incorporated herein by reference.
(d) Not applicable.
Item 7. Purpose(s), Alternatives, Reasons and Effects.
---------------------------------------------
(a)-(c) The information set forth in "SUMMARY--Special Factors Regarding
the Merger--Purpose, Background and Effects of the Merger," "--Financing of the
Merger," "SPECIAL FACTORS REGARDING THE MERGER--Background of the Merger" and
"--The Majority Shareholders' Purpose and Reasons for the Merger" of the
Information Statement is incorporated herein by reference.
(d) The information set forth in "QUESTIONS AND ANSWERS ABOUT THE MERGER
AND ARTICLES AMENDMENT," "SUMMARY--Special Factors Regarding the Merger--
Purpose, Background and Effects of the Merger," "--Federal Income Tax
Consequences," "--The Merger Agreement--The Merger Consideration," "REQUIRED
VOTE FOR MERGER; WRITTEN CONSENT IN LIEU OF MEETING," "SPECIAL FACTORS REGARDING
THE MERGER--The Majority Shareholders' Purpose and Reasons for the Merger," "--
Certain Effects of the Merger," "--Certain Federal Income Tax Consequences of
the Merger," "--Accounting Treatment," "THE MERGER AGREEMENT--Consideration to
be Paid in the Merger" and "--The Exchange Fund; Payment for Shares of Common
Stock" of the Information Statement is incorporated herein by reference.
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Item 8. Fairness of the Transaction.
---------------------------
(a) The information set forth in "QUESTIONS AND ANSWERS ABOUT THE MERGER
AND ARTICLES AMENDMENT," "SUMMARY--Special Factors Regarding the Merger--
Approval by the Board of Directors," "REQUIRED VOTE FOR MERGER; WRITTEN CONSENT
IN LIEU OF MEETING," "SPECIAL FACTORS REGARDING THE MERGER--Background of the
Merger," "--The Majority Shareholders' Purpose and Reasons for the Merger" and
"--Opinion of the Financial Advisor" of the Information Statement is
incorporated herein by reference.
(b) The information set forth in "SUMMARY--Special Factors Regarding the
Merger--Purpose, Background and Effects of the Merger," "Approval by the Board
of Directors," "--Ladenburg Thalmann Fairness Opinion," "SPECIAL FACTORS
REGARDING THE MERGER--Background of the Merger," "--The Majority Shareholders'
Purpose and Reasons for the Merger," "--Opinion of Financial Advisor" and "--
Certain Effects of the Merger" of the Information Statement is incorporated
herein by reference.
(c) The information set forth in "QUESTIONS AND ANSWERS ABOUT THE MERGER
AND ARTICLES AMENDMENT," "SUMMARY--Special Factors Regarding the Merger--
Required Vote for Merger; Written Consent in Lieu of Meeting," "--The Merger
Agreement--Conditions to the Merger," "REQUIRED VOTE FOR MERGER; WRITTEN CONSENT
IN LIEU OF MEETING" and "THE MERGER AGREEMENT--Conditions to the Merger" of the
Information Statement is incorporated herein by reference.
(d) The information set forth in "QUESTIONS AND ANSWERS ABOUT THE MERGER,"
"SUMMARY--Special Factors Regarding the Merger--Approval by the Board of
Directors," "--Ladenburg Thalmann Fairness Opinion," "REQUIRED VOTE FOR MERGER;
WRITTEN CONSENT IN LIEU OF MEETING," "SPECIAL FACTORS REGARDING THE MERGER--
Background of the Merger" and "--Opinion of the Financial Advisor" of the
Information Statement is incorporated herein by reference.
(e) The information set forth in "SPECIAL FACTORS REGARDING THE MERGER--
Background of the Merger" of the Information Statement is incorporated herein by
reference.
(f) Not applicable.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
------------------------------------------------------
(a) and (b) The information set forth in "SUMMARY--Special Factors
Regarding the Merger--Ladenburg Thalmann Fairness Opinion," "SPECIAL FACTORS
REGARDING THE MERGER--Background of the Merger" and "--Opinion of the Financial
Advisor" of the Information Statement is incorporated herein by reference.
(c) The information set forth in "AVAILABLE INFORMATION" of the
Information Statement is incorporated herein by reference.
Item 10. Interest in Securities of the Issuer.
------------------------------------
(a) The information set forth in "SUMMARY--Special Factors Regarding the
Merger--Required Vote for Merger; Written Consent in Lieu of Meeting,"
"Interests of Certain Persons in the Merger," "REQUIRED VOTE FOR MERGER; WRITTEN
CONSENT IN LIEU OF MEETING," "SPECIAL FACTORS REGARDING THE MERGER--Interests of
Certain Persons in the Merger;" "PRINCIPAL AND SHAREHOLDERS AND STOCK OWNERSHIP
OF MANAGEMENT" of the Information Statement is incorporated herein by reference.
(b) The information set forth in "MARKET PRICE AND DIVIDENDS" of the
Information Statement is incorporated herein by reference.
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Item 11. Contracts, Arrangements or Understandings with Respect to the Issuer's
----------------------------------------------------------------------
Securities.
----------
The information set forth in "SUMMARY--Special Factors Regarding the
Merger--Financing of the Merger," "SPECIAL FACTORS REGARDING THE MERGER--
Background of the Merger," "--Interests of Certain Persons in the Merger," "--
Financing of the Merger" and "THE MERGER AGREEMENT" of the Information Statement
is incorporated herein by reference.
Item 12. Present Intention and Recommendation of Certain Persons with Regard to
----------------------------------------------------------------------
the Transaction.
---------------
(a) The information set forth in "SUMMARY--Special Factors Regarding the
Merger--Approval by the Board of Directors," "--Interests of Certain Persons in
the Merger," "--Required Vote for Merger; Written Consent in Lieu of Meeting,"
"REQUIRED VOTE FOR MERGER; WRITTEN CONSENT IN LIEU OF MEETING" and "PRINCIPAL
SHAREHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT" of the Information Statement is
incorporated herein by reference.
(b) The information set forth in "SUMMARY--Special Factors Regarding the
Merger--Approval by the Board of Directors," "--Interests of Certain Persons in
the Merger," "--Required Vote for Merger; Written Consent in Lieu of Meeting,"
"REQUIRED VOTE FOR MERGER; WRITTEN CONSENT IN LIEU OF MEETING" and "SPECIAL
FACTORS REGARDING THE MERGER--Background of the Merger" of the Information
Statement is incorporated herein by reference.
Item 13. Other Provisions of the Transaction.
-----------------------------------
(a) The information set forth in "QUESTIONS AND ANSWERS ABOUT THE MERGER
AND ARTICLES AMENDMENT," "SUMMARY--Special Factors Regarding the Merger--
Dissenters Rights" and "DISSENTERS RIGHTS" of the Information Statement is
incorporated by reference herein.
(b) Not applicable.
(c) Not applicable.
Item 14. Financial Information.
---------------------
(a) The information set forth in "INDEX TO FINANCIAL STATEMENTS" of the
Information Statement is incorporated herein by reference.
(b) Not applicable.
Item 15. Persons and Assets Employed, Retained or Utilized.
-------------------------------------------------
(a) The information set forth in "REQUIRED VOTE FOR MERGER; WRITTEN
CONSENT IN LIEU OF MEETING," "SPECIAL FACTORS REGARDING THE MERGER--Background
of the Merger" and "ESTIMATED FEES AND EXPENSES" of the Information Statement is
incorporated herein by reference.
(b) Not applicable.
Item 16. Additional Information.
----------------------
Information Statement
Item 17. Material to be Filed as Exhibits.
--------------------------------
(a) Financing Commitment Letter from PNC Bank, National Association to ISC
Acquisition Corporation, dated March 4, 1999
-12-
<PAGE>
(b) Opinion of Ladenburg Thalmann, dated February 23, 1999 (set forth as
Exhibit B to the Information Statement)*
(c) Agreement and Plan of Merger by and between Industrial Scientific
Corporation and ISC Acquisition Corporation, dated as of February 23, 1999 (set
forth as Exhibit A to the Information Statement)*
(d) Information Statement.
(e) Part 1, Chapter 15, Subchapter D of the Pennsylvania Business
Corporation Law of 1988 (set forth as Exhibit C to the Information Statement)*
(f) As of the date of this Statement, no written instruction, form or
other material has been furnished to any person making the actual oral
solicitation or other recommendation for such person's use, directly or
indirectly in connection with the Rule 13e-3 transaction.
* Incorporated by reference to the Information Statement.
-13-
<PAGE>
SIGNATURE
After due inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: March 10, 1999
INDUSTRIAL SCIENTIFIC CORPORATION
By: /s/ James P. Hart
--------------------------
James P. Hart
Vice President Finance
ISC ACQUISITION CORPORATION
By: /s/ Kent D. McElhattan
--------------------------
Kent D. McElhattan
President
KENTON E. MCELHATTAN
By: /s/ Kenton E. McElhattan
----------------------------
KENT D. MCELHATTAN
By: /s/ Kent D. McElhattan
--------------------------
FLORENCE L. MCELHATTAN
By: /s/ Florence L. McElhattan
------------------------------
-14-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
<S> <C>
Exhibit 99.17(a) Financing Commitment Letter from PNC Bank, National Association to ISC
Acquisition Corporation, dated March 4, 1999
Exhibit 99.17(b) Opinion of Ladenburg Thalmann, dated February 23, 1999 (set forth as Exhibit
B to the Information Statement)*
Exhibit 99.17(c) Agreement and Plan of Merger by and between Industrial Scientific
Corporation and ISC Acquisition Corporation, dated as of February 23, 1999
(set forth as Exhibit A to the Information Statement)*
Exhibit 99.17(d) Information Statement
Exhibit 99.17(e) Part I, Chapter 15, Subchapter D of the Pennsylvania Business Corporation
Law of 1988 (set forth as Exhibit C to the Information Statement)*
</TABLE>
* Incorporated by reference to the Information Statement.
-15-
<PAGE>
Exhibit 99.17(a)
March 4, 1999
ISC Acquisition Corporation
1001 Oakdale Road
Oakdale, PA 15071
Attention: James P. Hart
Vice President/Chief Financial Officer
RE: $27,000,000 Acquisition Financing
Dear Jim:
PNC Bank, National Association (the "Bank"), is pleased to advise you that
we have approved a $10,000,000 Reducing Revolving Credit Facility (the "Credit
Facility") and a $17,000,000 90-Day Note (the "Note") to ISC Acquisition
Corporation (the "Borrower"), a corporation created to merge with Industrial
Scientific Corporation. The Credit Facility and Note are described in the
Summary of Terms and Conditions that is attached to and made a part of this
letter (the "Summary"). The Bank looks forward to working with you towards the
closing of the Credit Facility and the Note.
The Summary includes only a brief description of the principal terms of the
Credit Facility and Note. The definitive terms of the Credit Facility and Note
will be documented in a Loan Agreement and the other agreements, instruments,
certificates and documents called for by the Loan Agreement or which the Bank
may otherwise require (together with the Loan Agreement, the "Loan Documents").
Although the Bank has approved the Credit Facility and the Note, the Bank's
obligations are subject to several conditions. First, the Borrower must accept
this letter as provided below, and must comply with all the other conditions of
this letter and the Summary. After receiving the Borrower's acceptance, the
definitive Loan Documents can be prepared. The Bank's obligations are
conditioned on the Loan Documents being signed and delivered to the Bank in a
form that is satisfactory to the Bank and its counsel. This letter is also
issued subject to the statutory and other requirements by which the Bank is
governed. Finally, the Bank's obligations under this letter are subject to the
condition that no material adverse change occurs in the business, assets,
operations, financial condition or business prospects of the Borrower.
<PAGE>
ISC Acquisition Corporation
March 4, 1999
Page Two
We appreciate this opportunity to provide financial services to you, and
look forward to your acceptance of this letter.
Very truly yours,
PNC BANK, National Association
/s/ Mark J. Stasenko
By: Mark J. Stasenko
Title: Vice President
With the intent to be legally bound,
the above terms and conditions are
hereby agreed to and accepted.
ISC Acquisition Corporation
By:
----------------------------------
Title:
----------------------------------
Date:
----------------------------------
-2-
<PAGE>
March 4, 1999
Summary of Terms and Conditions
_________________________ ISC Acquisition Corporation (the "Company" or
Borrower the "Borrower")
_________________________ PNC Bank, National Association ("PNC", the
Bank "Bank")
_________________________ Subject to acceptable documentation,
Credit Facility the Bank will provide:
I. $10,000,000 Reducing Revolving
Credit Facility ("Revolver"). The
commitment under the Revolver will
reduce annually, on the anniversary
date by $2,000,000.
II. $17,000,000 90-day Note.
_________________________ To acquire all of the outstanding shares of
Purpose Industrial Scientific Corporation (ISCX) not
owned or controlled by the McElhattan family
for an amount not to exceed $28.50/share plus
transaction expenses.
_________________________ I. Five Years from the date of closing.
Maturity
II. 90 days from the date of closing
_________________________ I. At maturity. Until maturity, the Company
Repayment may borrow, repay and reborrow up to the
committed amount. The committed amount
reduces $2,000,000 annually until maturity.
II. At maturity.
_________________________ I,II. Floating Rate Option: PNC Bank Base Rate*
Interest Rates or Libor plus the credit spread based on
the Funded Debt/EBITDA Ratio on a
rolling four quarter basis,
determined each quarter as follows:
-3-
<PAGE>
Funded Debt LIBOR + Commitment
Ratio ** Fee ***
-----------------------------------------------
(Less than sign)=1.75 75 bps 30 bps
-----------------------------------------------
(Greater than sign)1.75 50 bps 20 bps
-----------------------------------------------
* The Base Rate is the higher of PNC
Bank's Prime rate or the Federal
Funds rate plus 1/2%.
** Funded Debt Ratio consists of the
Company's Total Indebtedness to
earnings before interest, taxes,
depreciation and amortization
("EBITDA"). Total Indebtedness is
defined as all indebtedness for
borrowed money (short and long
term), subordinated debt,
capitalized leases, reimbursement
obligations under letters of credit
and any guaranteed obligations.
*** The commitment fee is payable on
the unused portion of the Revolving
Credit Facility payable quarterly in
arrears.
Interest on Base Rate borrowings is
calculated on an actual/365 or 366
day basis and is payable quarterly.
Under the Revolving Credit Facility,
the Company may have no more than
five borrowing tranches, including
the Base Rate tranche, at any one
time.
II. Fixed Rate Option:
PNC Bank Cost of Funds + 50 bps. As
of March 1, 1999, the indicative
Fixed Rate is 6.22%. The actual rate
will be set at closing.
Prepayment under the Fixed Rate
Option may be subject to a
prepayment penalty if the current
rates on comparable treasury notes
are lower than the rates on treasury
notes at closing. If so, the penalty
is the present value of the
difference.
Interest on LIBOR borrowings is
calculated on an actual/360 day
basis and is payable the earlier of
quarterly or on the last day of each
interest period. LIBOR advances will
be available for periods of 1, 2, 3
or 6 months. LIBOR pricing will be
adjusted for any statutory reserves.
-4-
<PAGE>
Subsequent to an Event of Default
which continues beyond any
applicable cure period, outstandings
shall bear interest at 2% over the
rate of interest applicable under
the Base Rate pricing option.
_________________________ The Company shall pay the Banks such
Yield Protection additional amounts as will
compensate the Banks in the event
applicable law, or change in law,
subjects the Banks to reserve
requirements, capital requirements,
taxes (except for taxes on the
overall net income of the Banks) or
other charges which increase the
cost or reduce the yield to the
Banks, under customary yield
protection provisions.
_________________________
Fees
Closing $10,000 payable to Bank at closing.
_________________________ Reasonable out-of-pocket expenses
Expenses incurred by Bank shall be for the
account of the Company. These
include fees and expenses of any of
Bank's legal counsel. Initial
documentation will be prepared at
the Bank's expense. Subsequent
negotiations, if extensive, will
result in legal costs to be paid by
the Company.
_________________________ I. No collateral is required. The
Collateral Company will agree not to grant a
blanket lien on its assets to any
other creditor.
II. The Borrower will be required
to provide Cash Collateral to the
extent any portion of this Note
remains outstanding at the close of
business on the day the Borrower
merges with Industrial Scientific
Corporation. Additionally, the
Company will agree not to grant a
blanket lien on its assets to any
other creditor.
_________________________ a. Organization and qualification.
Representations and
Warranties
b. Capitalization and ownership.
c. Subsidiaries.
d. Power and authority.
-5-
<PAGE>
e. Validity, binding effect and
enforceability.
f. No conflict.
g. Litigation.
h. Title to properties.
i. Financial statements; no
material adverse change.
j. Margin stock.
k. Full disclosure.
l. Taxes.
m. Consents and approvals.
n. No Event of Default; compliance
with instruments.
o. Patents, trademarks, copyrights,
licenses.
p. Security interests.
q. Mortgage liens.
r. Insurance.
s. Compliance with laws.
t. Material contracts.
u. Investment companies.
v. Plans and benefit arrangements.
w. Employment matters.
x. Environmental matters.
y. Senior debt status.
z. Year 2000 compliant.
-6-
<PAGE>
Other Representations and Warranties
as appropriate.
_________________________ Receipt by Bank of the following, in
Conditions Precedent to form and substance satisfactory to
Lending the Bank:
a. Closing certificate as to
accuracy of Representation and
Warranties, compliance with
covenants and absence of Event of
Default or Potential Event of
Default.
b. Certified resolutions,
incumbency certificate and corporate
documents.
c. Delivery of all definitive
financing documents.
d. Opinion of counsel.
e. No material adverse change in
the Borrower and/or Industrial
Scientific Corporation.
f. No material litigation.
g. Payment of all fees and expenses
subject to reimbursement.
h. Evidence that Industrial
Scientific has not less than
$17,000,000 in cash.
i. Execution of an agreement
satisfactory to the Bank between the
Borrower, Bank and Exchange Agent.
j. Satisfactory review of an
Assumption Agreement between
Borrower and Industrial Scientific
Corporation providing for the full
and timely assumption of Borrowers
liabilities.
Other Conditions Precedent to
Lending as appropriate.
_________________________ a. Provide within 45 days after
Affirmative Covenants each fiscal quarter, consolidated
balance sheets and consolidated
statements of income, retained
earnings and cash flow together with
a Certificate of Compliance from the
Chief Executive Officer, President
or Chief Financial Officer of the
Company.
-7-
<PAGE>
b. Provide within 90 days after
each fiscal year-end, consolidated
balance sheets and consolidated
statements of income, retained
earnings and cash flow together with
(i) a report of an independent
certified public accountant
satisfactory to the Bank, (ii) any
management letters of such
accountants addressed to the Company
and (iii) a Certificate of
Compliance from the Chief Executive
Officer, President or Chief
Financial Officer of the Company.
Other Affirmative Covenants as
appropriate.
_________________________ a. Leverage - The Company's Funded
Negative Covenants Debt to EBITDA shall not exceed
2.00x.
b. Fixed Charge Coverage Ratio - As
of the end of each fiscal quarter,
for the previous four quarters, the
ratio of the Company's Cash Flow
from Operations to Fixed Charges
shall not be less than 1.0:1.
Cash Flow from Operations is defined
as Net Income + Interest Expense +
Depreciation + Amortization + Taxes
+ Non-Cash. Fixed Charges are
defined as Scheduled Principal
Payments or scheduled reductions in
the Revolver + Interest Expense +
Taxes + Dividends (including
distributions for S-Corp taxes if
the Borrower makes that election) +
Stock repurchases post
closing/merger + Capital
Expenditures.
c. Limitation on sale of assets.
d. Limitation on additional
indebtedness, liens and leases.
e. Prohibition on change of
business.
f. Prohibition on change of control.
g. Limitations on mergers and
acquisitions.
h. Limitations on Investments and
Advances to Officers.
-8-
<PAGE>
Other Negative Covenants as
appropriate.
_________________________ a. Payment default.
Events of Default
b. Breach of Representations or
Warranties.
c. Violation of covenant(s).
d. Cross default to other debt.
e. Bankruptcy, insolvency.
f. Failure of Borrower to merger
with Industrial Scientific
Corporation within 48 hours of
funding the Revolver.
Other Events of Default as
appropriate.
_________________________ Pennsylvania.
Governing Law
-9-
