As filed with the Securities and Exchange Commission on October 26, 1999
Registration No. 333-____
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
Form S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
-------------------
MICRO COMPONENT TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Minnesota 3825 41-0985960
(State or other (Primary Standard (I.R.S. Employer
jurisdiction Industrial Identification No.)
of incorporation or Classification
organization) Code Number)
2340 West County Road C
St. Paul, Minnesota 55113-2528
(651) 697-4111
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
-------------------
Roger E. Gower
President
Micro Component Technology, Inc.
2340 West County Road C
St. Paul, Minnesota 55113-2528
(651) 697-4111
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
It is respectfully requested that the Commission send copies of all
notices, orders and communications to:
James C. Diracles, Esq. Robert V. Jahrling, III, Esq.
Best & Flanagan LLP Choate, Hall & Stewart
4000 U.S. Bank Place Exchange Place
601 Second Avenue South 53 State Street
Minneapolis, Minnesota 55402 Boston, Massachusetts 02109
(612) 339-7121 (617) 248-5000
-------------------
Approximate date of commencement of proposed sale to the public: As
promptly as practicable after this registration statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement of the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement of the same offering. [ ]
- --------------------------------------------------------------------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================
Proposed Proposed
Maximum Maximum
Title of each class of Amount to be offering price aggregate Amount of
securities to be registered registered per unit(1)(2) offering price(1)(2) registration fee
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 4,572,230 $2.833 $12,953,658 $ 3,601.12
=====================================================================================================
</TABLE>
(1) Based on the maximum number of shares of common stock of Aseco
Corporation that may be outstanding immediately before the merger
described in this registration statement (4,505,620 shares), assuming
conversion of outstanding options and warrants exercisable before
December 31, 1999, the assumed effective time.
(2) Pursuant to Rules 457(f)(1) and (c), the registration fee has been
calculated based on a price of $2.875 per share of Aseco common stock
(the average of the high and low price per share of Aseco common stock
as reported in the Nasdaq National Market on October 20, 1999), and the
maximum number of shares of Aseco common stock that may be outstanding
on December 31, 1999, the assumed effective date of the merger.
-------------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such a date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
(LOGO)
MICRO COMPONENT TECHNOLOGY, INC.
2340 WEST COUNTY ROAD C
ST. PAUL, MINNESOTA 55113
--------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
To the Stockholders of
MICRO COMPONENT TECHNOLOGY, INC.
The annual meeting of the stockholders of Micro Component Technology,
Inc. will be held at the Marquette Hotel, Minnesota River Room, 710 Marquette
Avenue, Minneapolis, Minnesota, on _____________________, at 9:00 a.m., for the
purpose of considering and voting upon the following matters:
1. To elect a board of six directors.
2. To consider and vote on a proposal to approve and adopt the
merger agreement among Aseco Corporation, MCT and MCT
Acquisition, Inc., a wholly owned subsidiary of MCT. Under the
terms of the merger, Aseco will become a subsidiary of MCT.
3. To approve an amendment to the Incentive Stock Option Plan to
increase the number of shares reserved for issuance under the
Plan from 1,250,000 shares to 1,500,000 shares, or, if the
merger is approved, to increase the number to 2,300,000
shares.
4. To transact other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The directors have fixed the close of business on _________________,
1999 as the record date for the determination of stockholders entitled to notice
of and to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Roger E. Gower
President and CEO
St. Paul, Minnesota
_____________, 1999
PLEASE SIGN THE ENCLOSED FORM OF PROXY AND MAIL IT PROMPTLY. YOU MAY
NEVERTHELESS VOTE IN PERSON IF YOU DO ATTEND THE MEETING.
<PAGE>
LOGO
ASECO CORPORATION
500 Donald Lynch Boulevard
Marlboro, MA 01752
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To be held on ________, 1999
To the Stockholders of
Aseco Corporation:
A special meeting of stockholders of Aseco Corporation will be held on
________, 1999 at 10:00 a.m. local time, at the offices of Choate, Hall &
Stewart, Exchange Place, 53 State Street, 36th Floor, Boston, Massachusetts, for
the following purposes:
1. To consider and vote on a proposal to adopt the merger
agreement among Aseco, Micro Component Technology, Inc. and
MCT Acquisition, Inc., a wholly owned subsidiary of MCT. Under
the terms of the merger, Aseco will become a wholly owned
subsidiary of MCT.
2. To transact other business related to the proposal above that
may properly come before the special meeting or any
postponement or adjournment.
We describe these items of business in more detail in the Joint Proxy
Statement/Prospectus accompanying this notice.
Holders of record of Aseco common stock at the close of business on
__________, 1999 are entitled to notice of, and to vote at, the special meeting
or any postponement or adjournment.
If the merger is approved, your shares of Aseco common stock will be
automatically converted into the right to receive the merger consideration.
By Order of the Board of Directors,
Robert V. Jahrling, III, Secretary
Marlboro, Massachusetts
_____________, 1999
Your vote is important.
To vote your shares, please sign, date,
complete and mail the enclosed proxy card
promptly in the enclosed return envelope.
You may revoke your proxy at any time before it is voted by delivering to
Aseco at 500 Donald Lynch Boulevard, Marlboro, MA 01960, Attention:
Mary R. Barletta, a written notice of such revocation or a duly executed,
later-dated proxy or by attending the special meeting and voting in person.
Please do not send in any stock certificates at this time.
<PAGE>
[MCT LOGO] [ASECO LOGO]
JOINT PROXY STATEMENT/PROSPECTUS
PROPOSED MERGER -- YOUR VOTE IS VERY IMPORTANT
The Boards of Directors of Micro Component Technology, Inc. and Aseco
Corporation have approved a merger agreement that would result in Aseco becoming
a wholly owned subsidiary of MCT. If the merger is completed, Aseco stockholders
will receive, for each Aseco share, MCT common stock, as described in this
document. MCT shareholders will continue to own their existing shares after the
merger.
Here is what we are asking you to approve:
MCT Shareholders:
1. To elect a board of six directors.
2. To consider and vote on a proposal to approve and adopt the
merger agreement among Aseco, MCT and MCT Acquisition, Inc., a
wholly owned subsidiary of MCT. Under the terms of the merger,
Aseco will become a subsidiary of MCT.
3. To approve an amendment to the Incentive Stock Option Plan to
increase the number of shares reserved for issuance under the
Plan from 1,250,000 shares to 1,500,000 shares, or, if the
merger is approved, to increase the number to 2,300,000
shares.
4. To transact other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Aseco Stockholders:
1. To adopt the merger agreement.
We urge you to consider the risk factors beginning on page ___ that
describe various risks related to the proposed merger.
Neither the Securities and Exchange Commission nor any state securities
regulators have approved the MCT common stock to be issued in connection with
this document or determined if this document is accurate or adequate. Any
representation to the contrary is a criminal offense.
_________, 1999.
References to Additional Information
This document incorporates important business and financial information
about our companies from documents we have filed with the SEC but have not
included in or delivered with this document. If you write or call us, we will
send you these documents without charge. You may contact us at:
Micro Component Technology, Inc. Aseco Corporation
2340 West County Road C 500 Donald Lynch Boulevard
St. Paul, Minnesota 55113 Marlboro, Massachusetts 01752
(651) 697-4000 (508) 481-8896
Please request documents from MCT by __________, 1999 and from Aseco by
___________, 1999. If you request any incorporated documents, we will mail the
documents you request by first class mail, or another equally prompt means, by
the next business day after we receive your request.
See "Where You Can Find More Information" on page ______ for more
information about the incorporated documents.
<PAGE>
JOINT PROXY STATEMENT/PROSPECTUS
TABLE OF CONTENTS
Page
----
QUESTIONS AND ANSWERS ABOUT THE MERGER........................................1
WHO CAN HELP ANSWER YOUR QUESTIONS.............................................1
SUMMARY........................................................................2
The Companies..............................................................2
MCT.....................................................................2
ASECO...................................................................2
The Merger.................................................................2
WHAT ASECO STOCKHOLDERS WILL RECEIVE....................................2
Material United States Federal Income Tax Consequences.....................3
Appraisal Rights of Stockholders...........................................3
Regulatory Approvals.......................................................3
Comparative Market Price Information.......................................3
Ownership of MCT Following the Merger......................................3
Conditions to the Merger...................................................4
Termination of the Merger Agreement........................................4
Termination Fees...........................................................4
Reasons for the Merger.....................................................4
Opinions of Financial Advisors.............................................4
Comparative Per Share Data.................................................4
Other Proposals............................................................5
AMENDMENT OF MCT INCENTIVE STOCK OPTION PLAN............................5
ELECTION OF MCT BOARD OF DIRECTORS......................................5
The Shareholders Meetings..................................................5
Recommendations to Shareholders............................................5
TO MCT SHAREHOLDERS:....................................................5
TO ASECO STOCKHOLDERS:..................................................5
Selected Historical and Pro Forma Financial Data...........................5
MCT Selected Historical Financial Data.....................................6
Aseco Selected Historical Financial Data...................................6
Selected Unaudited Pro Forma Condensed Combined Financial Data.............7
RISK FACTORS...................................................................8
THE COMPANIES.................................................................10
MCT.......................................................................10
Aseco.....................................................................10
MCT Acquisition, Inc......................................................11
MCT ANNUAL MEETING............................................................11
General...................................................................11
Recommendation of the MCT Board...........................................11
Solicitation, Voting and Revocability of Proxies..........................11
ASECO SPECIAL MEETING.........................................................12
General...................................................................12
Recommendation of the Aseco Board.........................................13
Solicitation, Voting and Revocability of Proxies..........................13
THE MERGER....................................................................13
Background of the Merger..................................................13
Reasons of MCT for the Merger.............................................14
Reasons of Aseco for the Merger...........................................15
Opinion of MCT's Financial Advisor........................................16
Opinion of Aseco's Financial Advisor......................................18
SELECTED PUBLICLY TRADED COMPANY ANALYSIS..............................19
SELECTED MERGER AND ACQUISITION TRANSACTIONS ANALYSIS..................19
INTERESTS OF CERTAIN PERSONS IN THE MERGER....................................20
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS....................................22
Federal Income Tax Consequences to Aseco Stockholders.....................22
Federal Income Tax Consequences to Aseco and MCT..........................23
Other Tax Issues..........................................................23
ACCOUNTING TREATMENT..........................................................23
APPRAISAL RIGHTS..............................................................23
NASDAQ LISTING OF MCT COMMON STOCK............................................24
FEDERAL SECURITIES LAW CONSEQUENCES...........................................24
THE MERGER AGREEMENT..........................................................24
The Merger................................................................24
Merger Consideration......................................................24
i
<PAGE>
Exchange of Certificates for Shares.......................................25
Representations and Warranties............................................25
Continuation of Business Pending the Merger...............................26
No Solicitation...........................................................27
Conditions to the Obligations of MCT, MCT Acquisition and Aseco to
Complete the Merger......................................................27
Additional Conditions to the Obligations of MCT and MCT Acquisition
to Complete the Merger...................................................27
Additional Conditions to the Obligations of Aseco to Complete the
Merger...................................................................28
Termination...............................................................28
Liquidated Damages........................................................28
Options...................................................................28
Expenses..................................................................28
Indemnification...........................................................28
Amendments; Waiver........................................................28
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS...................29
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET..........................30
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS...............31
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS..........32
COMPARATIVE MARKET PRICES AND DIVIDENDS.......................................32
DESCRIPTION OF CAPITAL STOCK..................................................33
Common Stock..............................................................33
Preferred Stock...........................................................33
Minnesota Control Share Acquisition and Business Combination Statutes.....34
COMPARISON OF SHAREHOLDERS' RIGHTS............................................34
Number of Directors.......................................................34
Classified Board of Directors.............................................34
Removal of Directors......................................................34
Vacancies on the Board of Directors.......................................34
Shareholder Action by Written Consent.....................................34
Amendments of Articles of Incorporation/Organization......................34
Amendment of Bylaws.......................................................35
Calling of Special Meeting of Shareholders................................35
Anti-Takeover Legislation.................................................35
Other Anti-Takeover Provisions............................................36
Indemnification...........................................................36
Appraisal Rights in Connection with Corporate Reorganizations and
other Actions............................................................36
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE...............................37
MCT ANNUAL MEETING............................................................37
Election of Directors.....................................................37
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS......................38
COMPENSATION OF DIRECTORS..............................................39
Executive Officers........................................................39
Executive Compensation....................................................40
SUMMARY COMPENSATION...................................................40
STOCK OPTION GRANTS....................................................40
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES.................41
AGREEMENTS WITH OFFICERS...............................................41
Report Of Compensation Committee On Executive Compensation................41
OVERVIEW AND PHILOSOPHY................................................41
BASE SALARY............................................................41
ANNUAL INCENTIVES......................................................41
LONG-TERM INCENTIVES...................................................41
CHIEF EXECUTIVE OFFICER COMPENSATION...................................42
CONCLUSION.............................................................42
Stock Performance Graph...................................................42
Security Ownership of Certain Beneficial Owners and Management............42
Approval of Amendment to Incentive Stock Option Plan..........................43
Section 16 Beneficial Ownership Reporting Compliance......................44
Other Business................................................................44
Proposals of Stockholders.................................................44
LEGAL MATTERS.................................................................44
EXPERTS.......................................................................44
WHERE YOU CAN FIND MORE INFORMATION...........................................45
APPENDIX A - Agreement and Plan Of Merger..................................A-1
APPENDIX B - Fairness Opinion of Alliant Partners..........................B-1
APPENDIX C - Fairness Opinion of Adams, Harkness and Hill, Inc.............C-1
APPENDIX D - Micro Component Technology, Inc. Incentive Stock Option
Plan, as amended..............................................D-1
ii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: What do I need to do now?
A: After carefully reading and considering the information contained in
this Joint Proxy Statement/Prospectus, please complete and sign your
proxy card. Then, mail your signed proxy card in the enclosed return
envelope as soon as possible so that your shares may be represented at
the shareholders meeting.
Q: If my shares are held in "street name" by my broker, will my broker
vote my shares for me?
A: Your broker will vote your MCT or Aseco shares on the matters presented
only if you provide instructions on how to vote. You should follow the
directions provided by your broker regarding how to instruct your
broker to vote your shares.
Q: Can I change my vote after I have mailed my signed proxy card?
A: You can change your vote at any time before your proxy is voted at the
MCT or Aseco shareholders meeting. If your shares are held in your own
name, you can do this in one of three ways. First, you can send a
written notice stating that you would like to revoke your proxy.
Second, you can complete and submit a new proxy card. If you choose
either of these two methods, you must submit your notice of revocation
or your new proxy card to MCT at the address at the bottom of this page
if you are a MCT shareholder, or to Aseco at the address at the bottom
of this page if you are an Aseco stockholder. Third, you can attend the
shareholders meeting of the company of which you are a shareholder and
vote in person. Simply attending the meeting, however, will not revoke
your proxy. If your shares are held in street name by your broker, you
must follow directions received from your broker to change your vote.
Q: If I am an Aseco stockholder, should I send in my stock certificates
now?
A: No. After the merger is completed, MCT will send written instructions
to Aseco stockholders explaining how to exchange their stock
certificates. MCT shareholders will keep their existing share
certificates.
Q: When do you expect the merger to be completed?
A: We are working toward completing the merger as quickly as possible. At
the earliest, the merger will be completed by __________ 1999.
Q: Where can I find more information about MCT and Aseco?
A: This document is accompanied by the latest annual reports on Form 10-K,
each of which includes the latest annual report to stockholders, as
amended, for each of MCT and Aseco, as well as Aseco's latest quarterly
report on Form 10-Q. You may also obtain additional information as
described below under "Where You Can Find More Information" on page
___.
WHO CAN HELP ANSWER YOUR QUESTIONS
If you have more questions about the merger, you should contact:
MCT Shareholders:
Micro Component Technology, Inc.
2340 West County Road C
St. Paul, MN 55113-2528
(503) 640-7500
Attention: Ms. Diane Nordenstrom
Aseco Stockholders:
Aseco Corporation
500 Donald Lynch Boulevard
Marlboro, MA 01752
(508) 481-8896
Attention: Mary R. Barletta
1
<PAGE>
SUMMARY
This summary highlights selected information from this document and may
not contain all of the information that is important to you. To understand the
merger and related matters and the other MCT shareholder proposals more fully
and for a more complete description of the legal terms of the merger, you should
read carefully this entire document and the documents to which we have referred
you. Each item in this summary includes a page reference directing you to a more
complete description of that item.
The Companies
MCT. Micro Component Technology, Inc. (see page __), 2340 West County Road C,
St. Paul, Minnesota 55113-2528, (651) 697-4000
MCT is a leading manufacturer and marketer of automated test handling
equipment satisfying the complete range of handling requirements of the global
semiconductor industry. MCT has the largest installed integrated circuit test
handler base of any manufacturer. Headquartered in St. Paul, Minnesota, the
Company has sales and support offices worldwide.
ASECO. Aseco Corporation (see page __), 500 Donald Lynch Boulevard, Marlboro,
Massachusetts 01752, (508) 481-8896
Aseco designs, manufactures and markets test handlers used to automate
the testing of integrated circuits in surface mount packages. Aseco provides
high quality, versatile test handlers designed to maximize the productivity of
the significantly more costly testers with which they operate. Aseco also
designs, manufactures and markets integrated circuit wafer handling and
inspection systems. These systems are used to load, sort and transport wafers
during both manual and automatic inspection as well as other wafer processing
steps in the semiconductor manufacturing process. Manufacturing of Aseco's
products is done at its facility in Marlboro, Massachusetts. Aseco sells its
products to customers in the United States, Europe and certain countries in the
Asia Pacific region (excluding Japan).
The Merger
The merger agreement is attached as Appendix A to this document. We
encourage you to read the merger agreement because it is the legal document that
governs the merger.
WHAT ASECO STOCKHOLDERS WILL RECEIVE. As a result of the merger, your shares of
Aseco common stock will be converted into:
* a number of shares of MCT common stock determined by
multiplying your number of shares of Aseco common stock times
the exchange ratio, calculated as set forth below; plus
* cash, in lieu of any fractional shares of MCT common stock
calculated using the exchange ratio.
To obtain the number of shares of MCT stock for the merger, $16.3
million will be divided by the average closing sale price per share of MCT stock
over the twenty trading days prior to the day of the closing. However, if this
twenty day average price is less than $3.565, $3.565 will be used as the
divisor, and if this twenty day average price is more than $5.563, $5.563 will
be used as the divisor. The exchange ratio will be computed by dividing that
number of shares of MCT stock by the aggregate of the number of shares of Aseco
stock outstanding immediately before the closing plus 709,152 shares to reflect
shares reserved for Aseco options.
For example, under this formula, if the transaction had closed on
___________, 1999, the exchange ratio would have been approximately ____ shares
of MCT stock for every share of Aseco stock. This exchange ratio would have been
obtained by:
1. Dividing $16.3 million by $_____ (the average trading price of MCT
stock over the twenty days before _________, 1999);
2. Dividing the result (___) by ______ (the total number of Aseco
shares outstanding on __________, 1999 plus 709,152 shares).
The following table shows examples of possible exchange ratios using
this formula at various MCT twenty day average stock price levels, and the
number of outstanding shares for Aseco at October 1, 1999 which was 3,908,570.
2
<PAGE>
MCT Twenty Day
Average Stock Price Total MCT Shares Issuable Exchange Ratio
------------------- ---------------------------- --------------
$ 3.565 or below 4,572,230 0.990
4.25 3,835,294 0.831
4.5877 3,552,979 0.769
4.95 3,292,929 0.713
5.563 or above 2,930,074 0.635
The merger consideration will be reduced if Aseco's expenses connected
to the merger exceed $650,000.
Aseco stockholders should not send in their stock certificates until
instructed to do so after the merger is completed. After the merger is
completed, Aseco stockholders will no longer have any rights as Aseco
stockholders. Aseco stockholders who turn in their Aseco stock certificates will
receive the merger consideration from the exchange agent on terms described in a
letter of transmittal to be sent to Aseco stockholders.
Material Federal Income Tax Consequences (see page __)
The merger is intended to qualify as a reorganization under ss.368(a)
of the Internal Revenue Code of 1986. MCT and Aseco will be obtaining opinions
from legal counsel that the merger will so qualify, as a condition to closing.
If this assumption is correct:
* no gain or loss will be recognized by MCT, MCT Acquisition or
Aseco as a result of the merger; and
* Aseco stockholders will not recognize gain or loss upon the
merger, except that they will recognize gain to the extent of
cash they receive for any fractional shares of MCT, if their
tax basis in their Aseco common stock is less than the value
of the MCT common stock plus the cash which they will receive
in the merger.
These opinions are based in part upon representations we have made to
counsel. For more detailed information, you should review the discussion of
federal income tax consequences to shareholders beginning on page __.
This summary addresses only U.S. federal income taxes. This summary
does not address other taxes that may be relevant to you, such as state, local
or foreign taxes. In addition, the tax consequences described above and
elsewhere in this document may not apply to all Aseco stockholders. You should
consult the paragraph headed "Other Tax Issues" on page __.
The tax consequences of the merger to you will depend on the facts of
your own situation. We urge you to consult your tax advisor for a full
understanding of the tax consequences of the merger to you.
Appraisal Rights of Stockholders
(see page __). Neither MCT nor Aseco stockholders have the right to
assert appraisal rights under Minnesota or Delaware law.
Regulatory Approvals.
No federal or state government regulatory approvals are required in
order to complete the merger.
Comparative Market Price Information
(see page __). Shares of MCT and Aseco are listed for trading on the
Nasdaq National Market System. On September 17, 1999, the last full trading day
before the public announcement of the proposed merger, MCT common stock closed
at $5.563 per share and Aseco common stock closed at $3.469 per share. On
October __, 1999, MCT common stock closed at $______ per share and Aseco common
stock closed at $_______ per share. We urge you to obtain current market
quotations.
Based on the trading price of Aseco's stock on September 17, 1999, and
on the average trading price of MCT's stock on the twenty days preceding
September 17, 1999, MCT's offer to acquire Aseco represented a premium of
approximately $0.09 per share over Aseco's trading price. As of
_________________, the premium was ____________________.
MCT and Aseco have never paid cash dividends and neither company
expects to do so in the foreseeable future.
Listing of MCT Common Stock
(see page __). MCT will list the shares of MCT common stock to be
issued to Aseco shareholders in the merger for trading on the Nasdaq National
Market System.
Ownership of MCT Following the Merger.
Following the completion of the merger:
* MCT shareholders will hold approximately __% of the
outstanding shares of the combined company; and
* Aseco stockholders will hold approximately __% of the
outstanding shares of the combined company.
These percentages are based on the number of shares of each company
outstanding on _________, 1999 and using the average trading price of MCT stock
for the twenty trading days prior to ____________, 1999.
3
<PAGE>
Conditions to the Merger
(see page __). The completion of the merger depends upon MCT and Aseco
each meeting a number of closing conditions, including approval of the
transaction by their respective shareholders.
Termination of the Merger Agreement
(see page __). MCT and Aseco can agree to terminate the merger
agreement without completing the merger, and either MCT or Aseco may terminate
the merger agreement if:
* the merger is not completed by February 28, 2000; or
* the other party breaches the merger agreement; or
* either party receives a superior proposal to enter into a
merger, sale of assets or similar transaction.
Termination Fees.
The merger agreement requires Aseco or MCT to pay a termination fee of
$1 million if the merger agreement is terminated in specified circumstances.
Reasons for the Merger.
The boards of directors of our companies have identified various
benefits that are likely to result from the merger. The boards of directors
believe the merger will:
* enhance the long-term interests of each company's
shareholders, as well as the interests of each company's
employees, customers, creditors, suppliers and the communities
in which each company operates;
* create a business of sufficient size to enable the combined
company to compete more effectively against larger companies
in the semiconductor capital equipment industry;
* enable the combined company's research and development
activities to bring new products to market more quickly and
cost-effectively;
* provide the opportunity to use economies of scale and
operating efficiencies through combined purchasing,
consolidation of infrastructure and integration of
distribution channels; and
* create the potential for cost savings and increased revenues
from a broader customer base.
These and other reasons for approving and recommending the merger
identified by each board are explained in greater detail on pages __ through __
of this document.
Opinions of Financial Advisors
(see pages __ and __). In deciding to approve the merger, the MCT board
considered an opinion from Alliant Partners, its financial advisor, as to the
fairness to MCT from a financial point of view of the merger consideration to be
paid to the Aseco stockholders. In deciding to approve the merger agreement, the
Aseco board considered an opinion from Adams, Harkness & Hill, Inc., its
financial advisor, as to the fairness to the stockholders of Aseco of the merger
consideration from a financial point of view. These opinions are included as
Appendices B and C to this document, and we encourage you to read them.
Comparative Per Share Data
Set forth below is historical per share data for MCT and Aseco for the
years ending June 26, 1999 and March 28, 1999, respectively, and pro forma per
share data for the year ended June 26, 1999. We have derived this data from
MCT's most recent Annual Report on Form 10-K, as amended and Aseco's most recent
Annual Report on Form 10-K. You should read this comparative per share data with
the audited consolidated financial statements and related notes of MCT and Aseco
referred to above.
Under "Pro Forma Combined per Aseco Equivalent Share Data" below, we
show the effect of the merger from the perspective of an owner of shares of
Aseco common stock. We computed the information set out under that caption by
multiplying the combined company pro forma information by the exchange ratio of
0.769, the exchange ratio as determined as of October 1, 1999. The actual
exchange ratio will change based upon the twenty-day average trading price of
MCT common stock immediately prior to the transaction date.
4
<PAGE>
MCT Aseco
-------- -------- Pro Forma
Year Ended ----------
--------------------- Year Ended
June 26, March 28, June 26,
1999 1999 1999
-------- -------- --------
Net loss per share -
basic and assuming dilution $ (.20) $ (3.64) $ (1.44)
Book value per share 0.94 2.66 2.16
Pro Forma Combined per Aseco Equivalent Share Data:
Net income (loss) per share -
Basic and assuming dilution (1.11)
Book value per share 1.66
Other Proposals
MCT is also asking its shareholders to approve an increase in shares
reserved for its Incentive Stock Option Plan and to elect the nominated slate of
directors.
AMENDMENT OF MCT INCENTIVE STOCK OPTION PLAN (see page __). The MCT board is
proposing an amendment to the MCT Incentive Stock Option Plan to increase the
number of shares reserved for issuance under the plan from 1,250,000 to
1,500,000 or, if the merger is approved, to increase the number to 2,300,000
shares.
ELECTION OF MCT BOARD OF DIRECTORS (see page ___). The MCT shareholders meeting
will be the annual meeting of shareholders. The MCT board has proposed a slate
of nominees for six positions on the board of directors.
The Shareholders Meetings
The MCT annual meeting will be held at the Marquette Hotel, Minnesota
Room, 710 Marquette Avenue, Minneapolis, Minnesota at 9:00 a.m. local time on
_______, 1999.
The Aseco special meeting will be held at the offices of Choate, Hall &
Stewart, Exchange Place, 53 State Street, 36th Floor, Boston, Massachusetts, at
10:00 a.m. local time on _____________, 1999.
Recommendations to Shareholders
TO MCT SHAREHOLDERS: The MCT board believes the merger is in the best interests
of MCT shareholders and unanimously recommends MCT shareholders vote FOR the
proposals to:
1. To elect a board of six directors.
2. To consider and vote on a proposal to approve the merger
agreement among Aseco, MCT, and MCT Acquisition, Inc., a
wholly owned subsidiary of MCT. Under the terms of the merger,
Aseco will become a subsidiary of MCT.
3. To approve an amendment to the Incentive Stock Option Plan to
increase the number of shares reserved for issuance under the
Plan from 1,250,000 shares to 1,500,000 shares, or, if the
merger is approved, to increase the number to 2,300,000
shares.
4. To transact other business as may properly come before the
meeting or any adjournment or adjournments thereof.
As of _____________, 1999, directors and executive officers of MCT and
their affiliates beneficially owned an aggregate of approximately _______ shares
of MCT common stock, or approximately ___% of the shares outstanding on that
date. No director or executive officer has indicated an intention to vote his
shares against any of the proposals.
TO ASECO STOCKHOLDERS: The Aseco board believes the merger is in the best
interests of Aseco and its stockholders and unanimously recommends Aseco
stockholders vote FOR the proposal to adopt the merger agreement.
As of _____________, 1999 directors and executive officers of Aseco and
their affiliates beneficially owned an aggregate of approximately _______ shares
of Aseco common stock, or approximately ___% of the shares outstanding on that
date. No director or executive officer has indicated an intention to vote his
shares against any of the proposals.
Selected Historical and Pro Forma Financial Data
The following tables show summary historical financial data for each of
our companies and also show similar information reflecting the merger of our two
companies, which we refer to as "pro forma" information. In presenting the
comparative pro forma information for certain time periods, we assumed our
companies had been merged throughout those periods. The following tables show
information about each of our companies' earnings per share and book value per
share and similar pro forma information.
We base some of the information in the following tables on the
historical financial information of our companies that we have presented in our
prior filings with the SEC. When you read the summary financial information we
provide in the following tables, you should also read the historical financial
information we provided in the enclosed documents we have filed with the SEC,
and the more detailed financial information we provide in this document, which
you can find beginning on page __, as well as the historical financial
5
<PAGE>
information in the other documents to which we refer. See "Where You Can Find
More Information" on page ___ for instructions on how to obtain documents each
of our companies has filed with the SEC.
MCT Selected Historical Financial Data
This summary of financial information for MCT for the fiscal years 1995
through 1999 was taken from and should be read along with the audited financial
statements contained in MCT's most recent annual report on Form 10-K, as
amended. See "Where You Can Find More Information" on page ___.
Selected Historical Financial Data of MCT
(in thousands, except per share data)
<TABLE>
<CAPTION>
June 26, June 27, June 28, June 29, June 24,
1999 1998 (1) 1997 1996 (2) 1995 (2)(3)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data - Fiscal Years Ended:
Net sales $ 15,171 $ 16,975 $ 16,129 $ 22,318 $ 23,635
Income (loss) from operations (1,447) (4,202) (1,836) 2,330 1,923
Income (loss) from continuing operations (1,466) (3,879) (1,563) 2,568 1,566
Income (loss) per share from continuing operations - basic (0.20) (0.54) (0.22) 0.39 0.31
Income (loss) per share from continuing operations - diluted (0.20) (0.54) (0.22) 0.35 0.30
Selected Balance Sheet Data:
Total assets (4) 9,990 11,226 15,792 16,980 11,532
Long-term debt and financing
obligations 33 83 133 183 41
Redeemable convertible preferred
stock -- -- 1,500 1,500 1,500
</TABLE>
(1) Includes charges totaling $2.3 million, comprised of a $2.0 million
provision for excess and obsolete inventory, and $0.3 million related
primarily to cost reduction actions and operational adjustments related
to the depressed semiconductor capital equipment market.
(2) Includes unusual and non-recurring items primarily comprised of: 1995 -
$5.2 million gain on the sale of the 1149 tester product line, $1.9
million gain on the settlement with Sym-Tek Systems, $0.8 million
charge for severance costs for MCT's former Chief Executive Officer,
and a $0.2 million charge for closing a Japanese facility; 1996 - $1.5
million gain on the resolution of the escrow fund created from the sale
of the 1149 tester product line.
In fiscal year 1995, MCT initiated a formal plan to sell its European
subsidiary, Intertrade Scientific, Inc. (ITS). A provision for the loss
on the sale of approximately $3.0 million was recorded in the results
of operations for the year ended June 24, 1995. As a result of the
final sales agreement, MCT realized a net gain of $0.7 million on the
disposal of ITS, which was completed in fiscal 1996.
(3) In fiscal year 1995, MCT used $3.5 million of the proceeds from the
sale of the 1149 tester product line in settlement of approximately
$4.5 million of outstanding trade payables, not including the payables
assumed by Megatest as part of the sale transaction. The difference
between the trade payables and the cash used resulted in an
extraordinary gain of approximately $1.0 million, net of $21,000
provision for taxes.
(4) Includes $1.0 million of net assets of the discontinued ITS operations,
comprised primarily of cash, accounts receivable, inventory, property,
plant and equipment, accounts payable, and accrued liabilities at June
24, 1995.
Aseco Selected Historical Financial Data
This summary of financial information for Aseco for the fiscal years
1995 to 1999 was taken from and should be read along with the audited financial
statements contained in Aseco's most recent annual report on Form 10-K.
Information for the three months ended June 27, 1999 and June 28, 1998 is taken
from financial statements that have not been audited but which, Aseco believes,
fairly present its financial position and results of operations and cash flows
for the period and should be read along with Aseco's most recently filed
quarterly reports on Form 10-Q. See "Where You Can Find More Information" on
page ___.
6
<PAGE>
Selected Historical Financial Data of Aseco
(in thousands, except per share data)
<TABLE>
<CAPTION>
Quarter
Ended Fiscal Years Ended
June 27, June 28, March 28, March 29, March 30, March 31, April 2,
1999 1998 1999 (1) 1998 (2) 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net sales $ 4,717 $ 6,630 $ 19,218 $ 44,246 $ 34,320 $ 41,569 $ 29,192
Income (loss) from operations (566) (1,475) (14,320) (8,411) 2,623 6,397 3,987
Net income (loss) (551) (1,119) (13,673) (8,143) 2,288 4,406 3,088
Net income (loss) per share - basic (0.14) (0.30) (3.64) (2.20) 0.63 1.24 0.90
Net income (loss) per share - diluted (0.14) (0.30) (3.64) (2.20) 0.62 1.17 0.85
Selected Balance Sheet Data:
Total assets 15,255 30,198 15,324 33,691 36,640 36,681 29,267
Long-term debt and financing
obligations -- 11 -- 25 29 42 53
</TABLE>
(1) In the second quarter of fiscal 1999, Aseco announced a plan to
consolidate its UK wafer handling and inspection operations. This plan
included the closure of Aseco's UK facility and related transfer of
manufacturing and other operations to the United States as well as the
discontinuation of several older product models in an effort to focus
the operation's product offerings. In conjunction with this plan, Aseco
recorded a $2.2 million special charge including a $850,000 charge to
cost of sales for inventory write-downs related to product
discontinuation and a $1.3 million restructuring charge. The principal
components of the restructuring charge include $627,000 for a
write-down of fixed and other long-term assets no longer used by the
operation, $241,000 for severance related charges, $325,000 for a
write-down of goodwill related to the impairment of such assets
indicated using estimated future cash flows, and $65,000 of lease
termination and related costs. As of January 1999, the closure and
transfer were substantially complete, fixed assets were disposed of and
severance related costs were paid.
In the fourth quarter of fiscal 1999, Aseco recorded a special charge
of $6.2 million. The charge reflects the impact of continuing
unfavorable conditions in the semiconductor capital equipment market, a
more gradual recovery than was previously anticipated and expected
future technology changes in this market upon Aseco's product line,
cost structure and asset base. Components of the charge include 1) a
$5.0 million charge to cost of goods sold for write-downs related
principally of excess inventory based on revised fiscal year 2000 and
beyond forecasted operating plans; 2) a $351,000 charge to research and
development for the write-down of development equipment no longer used
by Aseco as a result of a refocusing of development efforts to address
expected technology changes and; 3) a $854,000 charge to selling,
general and administrative expense including $544,000 related to the
write-down of various assets whose net realizable value was adversely
affected based on revised fiscal year 2000 and beyond forecasted
operating plans, $280,000 related to costs associated with the layoff
of 13 employees and $30,000 related to the closure of Aseco's Malaysian
subsidiary.
(2) Net loss for the year ended March 29, 1998 includes i) $1.8 million of
charges resulting from valuation adjustments for inventory being
carried in excess of normal replacement cost and the discontinuation of
certain products, ii) acquired in process research and development
costs totaling $6.1 million, and the write down of goodwill and other
intangible assets totaling $963,000, related to Aseco's fiscal 1998
acquisition of Western Equipment Development (Holdings), Ltd., and iii)
approximately $500,000 of expenses related to the layoff of 40
employees.
Selected Unaudited Pro Forma Condensed Combined Financial Data And Per Share
Data
This table shows unaudited pro forma condensed combined financial data
for the combined company and is based on adjustments to the historical financial
statements of MCT and Aseco to give effect to the merger using the purchase
method of accounting for business combinations. We have derived this data from
the Unaudited Pro Forma Condensed Combined Financial Data beginning on page __.
You should read this selected information along with the Unaudited Pro Forma
Condensed Combined Financial Data.
Aseco's fiscal year ends on the Sunday closest to the end of March.
MCT's fiscal year ends on the last Saturday in June. To present the pro forma
information for the fiscal year ended June 26, 1999, we have combined MCT's
results for its fiscal year ended June 26, 1999 with Aseco's results for the
fiscal year ended March 28, 1999. Pro forma adjustments have been applied to the
statements of operations to give effect to the purchase accounting adjustments
arising from the merger.
Anticipated cost savings and benefits are not reflected in the pro
forma information. The pro forma information also does not attempt to show how
the combined company would actually have performed had the companies been
combined throughout these periods. The pro forma information, therefore,
although helpful in illustrating the financial characteristics of the combined
company under one set of assumptions, does not attempt to predict or suggest
future results.
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<PAGE>
Selected Unaudited Pro Forma Combined Financial Data
(in thousands, except per share data)
June 26,
1999
---------
Statement of Operations Data - Fiscal Year Ended:
Net sales $ 34,389
Income (loss) from operations (16,637)
Net income (loss) (16,009)
Net income (loss) per share - basic (1.44)
Net income (loss) per share - diluted (1.44)
Selected Balance Sheet Data:
Total assets 32,147
Long-term debt and financing
obligations 33
RISK FACTORS
In addition to the other information in this document, you should
carefully consider the following risk factors in evaluating an investment in the
combined company and its business.
MERGER BENEFITS - THE EXPECTED BENEFITS OF THE MERGER MAY NOT BE REALIZED.
MCT and Aseco entered into the merger agreement with the expectation
that the merger will result in benefits to the combined company, including cost
savings and product development efficiencies. If we are not able to integrate
effectively our technologies, operations and personnel in a timely and efficient
manner, then the benefits of the merger may not be realized. The difficulties,
costs and delays involved in integrating the companies, which may be
substantial, may include:
* distracting management and key personnel from the business of
the combined company;
* perceived and potential adverse changes in business focus or
product offerings;
* potential incompatibility of business cultures;
* costs and delays in implementing common systems and
procedures, especially information systems; and
* an inability to retain and integrate key management,
technical, sales and customer support personnel.
LIQUIDITY NEEDS - THE COMBINED COMPANY MAY REQUIRE ADDITIONAL CASH, WHICH MAY
NOT BE AVAILABLE FROM OPERATIONS.
After completion of the merger, the cash resources of the combined
company will be depleted by costs associated with the merger. If required, the
additional cash may not be available from operations of the combined company.
Therefore, management may find it necessary to borrow money on MCT's line of
credit after the merger in order to meet cash needs. If the line of credit was
unavailable for any reason, and if the combined company was not able to obtain
cash from any other sources, it would experience severe financial difficulties,
and the price of its common stock may drop.
HISTORY OF LOSSES - BOTH MCT AND ASECO HAVE EXPERIENCED LOSSES IN PREVIOUS
PERIODS.
The past several years have been extremely difficult ones in the
semiconductor capital equipment industry. MCT has experienced substantial losses
in six consecutive quarters through the quarter ended March 27, 1999, and
reported a modest profit in its quarters ended June 26 and September 25, 1999.
Aseco has experienced substantial losses in seven consecutive quarters through
September 26, 1999. MCT has reported losses for each of its last three fiscal
years, and Aseco has reported losses in each of its last two fiscal years. Given
this history of losses, there can be no assurance that the combined company will
be able to achieve or maintain profitability.
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<PAGE>
PRODUCT DEVELOPMENT - IF THE COMBINED COMPANY DOES NOT CONTINUE TO DEVELOP AND
MARKET NEW AND ENHANCED PRODUCTS, IT WILL NOT BE ABLE TO COMPETE SUCCESSFULLY IN
ITS MARKETS, AND ITS GROSS PROFITS WILL LIKELY DECLINE.
The markets for which our products are designed are intensely
competitive and are characterized by rapidly changing technology, evolving
industry standards and changing customer demands. As a result, the combined
company cannot succeed unless we consistently develop and market new products.
To succeed in this environment, we must anticipate the features and
functionality that customers will demand. We believe that this will require
substantial expenditures for research and development. There can be no assurance
that developments by competitors will not render the company's products or
technologies obsolete or non-competitive in the future.
RISKS ASSOCIATED WITH THE MERGER CONSIDERATION -- THE VALUE OF YOUR MERGER
CONSIDERATION MAY FLUCTUATE.
If the merger is completed, Aseco stockholders will receive, for each
Aseco share, MCT common stock and cash for any resulting fractional shares.
Consequently, the value of the consideration received by Aseco stockholders in
the merger may be different than the value at the time of the signing of the
merger agreement, the date of this document and the date of the shareholder
meetings, since it may vary depending on fluctuations in the value of the MCT
shares. Factors that could cause these fluctuations include:
* changes in the business, operations or prospects of MCT or
Aseco;
* market assessments of the likelihood that the merger will be
completed;
* industry developments; and
* general market and economic conditions.
Accordingly, we urge you to obtain current market quotations for Aseco
shares and MCT shares.
PURCHASE METHOD OF ACCOUNTING - THE MERGER WILL BE ACCOUNTED FOR UNDER THE
PURCHASE METHOD OF ACCOUNTING.
The total estimated purchase price relating to the merger has been
allocated on a preliminary basis to the assets acquired and liabilities assumed
based on MCT's estimates of their respective fair values. To the extent this
purchase price exceeds the fair value of the net tangible assets acquired at the
effective time of the merger, MCT will allocate the purchase price to intangible
assets that may include purchased in-process research and development, acquired
technology, and other identified intangible assets with the remainder allocated
to goodwill. While the amortization of acquired technology and other identified
intangible assets and goodwill will have no effect on MCT's operating cash flow,
such amortization may have an adverse effect on MCT's reported earnings per
share. The allocation of purchase price is subject to change pending a final
analysis of the value of the assets acquired and liabilities assumed. The impact
of such changes could be material and any increases in the amounts allocated to
acquired technology and other identified intangible assets and goodwill
resulting from changes could increase the negative effect of such amortization
on MCT's earnings per share.
CYCLICAL NATURE OF AND DEPENDENCE ON CUSTOMERS -- THE COMBINED COMPANY'S
OPERATING RESULTS MAY BE ADVERSELY AFFECTED BY DOWNTURNS IN THE SEMICONDUCTOR
INDUSTRY.
The combined company's sales will depend in large part upon capital
expenditures by its customers. These capital expenditures in turn depend heavily
on the market demand for integrated circuits and products using integrated
circuits. This demand has been highly cyclical and the semiconductor industry
has experienced periodic downturns. These downturns have resulted in
disproportionately lower demand for each company's products. The combined
company will be adversely affected by any future downturns in its customers'
businesses.
COMPETITION -- THE COMBINED COMPANY'S OPERATING RESULTS MAY BE ADVERSELY
AFFECTED BY COMPETITIVE PRESSURES.
The semiconductor capital equipment industry is highly competitive.
Many MCT competitors have much greater financial, marketing and production
resources than will the combined company. MCT believes that the main competitive
factors in the industry are design effectiveness, time-to-market, total product
cost, product quality, and long-term stability of both the product and the
supplier.
We cannot assure you that the combined company will be able to
compete effectively or that competitive pressures will not adversely affect its
business, financial condition and results of operations.
LOSS OF SUPPLIERS - CERTAIN SUPPLIERS MAY NOT WISH TO DO BUSINESS WITH THE
COMBINED COMPANY.
The consummation of the merger may disrupt relationships with
suppliers of certain products sold by, or used in manufacture of products sold
by, the combined company, particularly if these suppliers otherwise compete with
the combined company. If this occurs, the combined company may lose customers
who wish to purchase these products. To the extent that these relationships are
terminated or curtailed and the combined company loses customers, revenues could
be reduced significantly.
INCREASE IN OUTSTANDING SHARES - THE MERGER WILL GREATLY INCREASE THE NUMBER OF
FREELY TRADABLE MCT SHARES, WHICH COULD DRIVE DOWN THE MCT STOCK PRICE.
If the merger is consummated, MCT will issue between approximately
2.9 million and 4.6 million shares of MCT common stock to stockholders of Aseco,
depending upon the share price of MCT during the twenty trading days prior to
the effective date. Furthermore, additional MCT shares will be issued in
satisfaction of severance benefits due to certain officers and directors of
Aseco and will also be reserved for issuance pursuant to Aseco options. Almost
all of these newly issued shares will be freely tradable upon consummation of
the merger. As a result, substantial sales of MCT common stock could occur
immediately after the merger, which could cause the price of MCT common stock to
drop.
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<PAGE>
TRANSACTION EXPENSES - THERE WILL BE SUBSTANTIAL EXPENSES RESULTING FROM THE
MERGER THAT COULD REDUCE EARNINGS OF THE COMBINED COMPANY.
MCT and Aseco estimate that the combined cash expenses incurred by them
related to the merger will be approximately $1.4 million. These expenses will
prevent the combined company from spending those amounts on other, possibly more
productive, uses. These costs will primarily be payment of fees of financial
advisors, attorneys and accountants, severance benefits, printing and proxy
solicitation. Although we believe that the costs will not exceed the estimate,
the estimate may be incorrect or contingencies may occur that substantially
increase the costs of combining our operations.
STOCK PRICE VOLATILITY - OUR STOCK PRICES ARE HIGHLY VOLATILE AND WE EXPECT
MCT'S STOCK PRICE TO CONTINUE TO BE SO AFTER THE MERGER.
The market price of both MCT and Aseco common stock, like the common
stock of many other companies in the semiconductor capital equipment industry,
has been highly volatile, and it is likely that it will continue to be so. This
volatility may increase as a result of the additional shares to be issued in the
merger. This volatility may result from:
* general market conditions and market conditions affecting
technology and semiconductor capital equipment company stocks
generally;
* actual or anticipated fluctuations in our quarterly operating
results;
* announcements of design and technological renovations,
acquisitions, investments or orders by us or our competitors;
and
* the commencement of, developments in, or outcome of
litigation.
The market price of Aseco and MCT common stock has also been
significantly affected by expectations of analysts and investors, especially
when operating results do not meet those expectations. This can be expected to
continue for the combined company. Reports and statements of analysts do not
necessarily reflect our views. The fact that we have in the past met or exceeded
analyst or investor expectations does not necessarily mean that we will do so in
the future.
In the past, following periods of volatility in the market price of a
particular company's securities, securities class action litigation has often
been brought. This type of litigation, if instituted against us, could result in
substantial cost and a diversion of our management's attention and resources.
This could significantly affect business performance, and our stock price.
YEAR 2000 PROBLEMS - WE MAY ENCOUNTER YEAR 2000 COMPLIANCE PROBLEMS INVOLVING
BUSINESS AND ADMINISTRATIVE SYSTEMS, INCLUDING PHONE AND OTHER COMMUNICATIONS
AND ADMINISTRATIVE SUPPORT SYSTEMS, THAT COULD NEGATIVELY AFFECT THEIR
OPERATIONS AND FINANCIAL RESULTS.
MCT and Aseco use a significant number of computer software programs
and operating systems to support internal operations. These include applications
used in financial business systems and various administration functions,
including phone and other communications and administrative support systems, and
also software programs in our products. If these software applications are
unable to interpret appropriately dates occurring in the upcoming calendar year
2000, some level of modification or replacement of such software may be
necessary. We have conducted year 2000 compliance testing and we believe that
all of our existing products and information systems are year 2000 compliant.
Despite this belief, our products or information systems may not be year 2000
compliant. We do not currently expect year 2000 compliance costs to be material,
however, any year 2000 problems could have a negative effect on our operations
and financial results. In addition, our customers and suppliers may not be year
2000 compliant, which could also negatively affect us.
THE COMPANIES
MCT
MCT manufactures, markets, services and distributes automated test
handling equipment for integrated circuit devices manufactured by the
semiconductor industry. MCT has the largest installed integrated circuit test
handler base of any manufacturer. Headquartered in St. Paul, Minnesota, the
Company has sales and support offices worldwide.
The mailing address of MCT's principal executive offices is 2340 West
County Road C, St. Paul, Minnesota 55113-2528, and its telephone number is (651)
697-4000.
Aseco
Aseco designs, manufactures and markets test handlers used to automate
the testing of integrated circuits in surface mount packages. Aseco provides
high quality, versatile test handlers designed to maximize the productivity of
the significantly more costly testers with which they operate. Aseco also
designs, manufactures and markets integrated circuit wafer handling and
inspection systems. These systems are used to load, sort and transport wafers
during both manual and automatic inspection as well as other wafer processing
steps in the semiconductor manufacturing process.
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<PAGE>
The mailing address of Aseco's principal executive offices is 500
Donald Lynch Boulevard, Marlboro, Massachusetts 01752, and its telephone number
is (508) 481-8896.
MCT Acquisition, Inc.
MCT Acquisition, Inc., a wholly owned subsidiary of MCT, was formed by
MCT solely for the purpose of effecting the proposed merger. The mailing address
is 2340 West County Road C, St. Paul, Minnesota 55113-2528, and its telephone
number is (651) 697-4000.
MCT ANNUAL MEETING
General
This document is being furnished to shareholders of MCT as part of the
solicitation of proxies by the MCT board of directors for use at the annual
meeting of shareholders to be held on ______, 1999 at 9:00 a.m. local time, at
Marquette Hotel, Minnesota River Room, 710 Marquette Avenue, Minneapolis,
Minnesota. This document and the enclosed form of proxy are first being mailed
to shareholders of MCT on or about ________________, 1999.
The purposes of the MCT annual meeting are:
1. To elect a board of six directors.
2. To consider and vote on a proposal to approve and adopt the
merger agreement among Aseco, MCT and MCT Acquisition, Inc., a
wholly owned subsidiary of MCT. Under the terms of the merger,
Aseco will become a subsidiary of MCT.
3. To approve an amendment to the Incentive Stock Option Plan to
increase the number of shares reserved for issuance under the
Plan from 1,250,000 shares to 1,500,000 shares, or, if the
merger is approved, to increase the number to 2,300,000
shares.
4. To transact other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Each copy of this document mailed to holders of MCT common stock is
accompanied by a form of proxy for use at the MCT annual meeting.
The merger is subject to a number of conditions, including the receipt
of required regulatory and shareholder approvals. See "The Merger Agreement."
As of ________, 1999, directors and executive officers of MCT and their
affiliates beneficially owned an aggregate of approximately ____________ shares
of MCT common stock, or approximately ____% of the shares of MCT common stock
outstanding on that date. No director or executive officer of MCT has indicated
an intention to vote his shares of MCT common stock against any of the
proposals.
Recommendation of the MCT Board
The MCT board unanimously approved the merger agreement. The MCT board
believes that the transactions contemplated by the merger agreement are
advisable and in the best interests of the MCT shareholders. Accordingly, the
MCT board unanimously recommends MCT shareholders vote FOR the merger proposal
and the amendment to the incentive stock option plan.
In making these determinations, the MCT board considered the written
opinion of Alliant Partners, MCT's financial advisor, that as of September 17,
1999, the merger consideration is fair from a financial point of view to MCT.
See "Reasons of MCT for the Merger" and "Opinion of MCT's Financial Advisor."
The MCT board also recommends the shareholders vote FOR the slate of
nominees for the board of directors, and FOR the amendment to the Incentive
Stock Option Plan.
Solicitation, Voting and Revocability of Proxies
The MCT board has fixed the close of business on _________, 1999 as the
record date to determine the shareholders entitled to receive notice of and to
vote at the MCT annual meeting. Each holder of MCT common stock on the MCT
record date is entitled to one vote per share held on all matters properly
presented at the MCT annual meeting. As of the close of business on the MCT
record date, __________ shares of MCT common stock were outstanding and entitled
to vote, held by approximately ___ holders of record. The presence, in person or
by proxy, of a majority of the outstanding shares of common stock entitled to be
voted at the MCT shareholders meeting is necessary to constitute a quorum for
the transaction of business. The MCT common stock does not have cumulative
voting rights.
In order to approve each proposal, a majority of the outstanding shares
of MCT must be present at the annual meeting in person or by proxy and a
majority of the votes cast must vote in favor of the proposals or in favor of
electing the director.
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Proxies for shares of MCT common stock may be submitted by completing
and mailing the enclosed proxy card that accompanies this document. To submit a
proxy, holders of MCT common stock should complete, sign, date and mail the
proxy card in accordance with the instructions set forth on the card.
If an executed proxy card is returned and the shareholder has
explicitly abstained from voting on any matter, the shares represented by the
proxy will be considered present at the MCT shareholders meeting for purposes of
determining a quorum and will count as votes cast on the matter but will not
count as votes cast in favor of any proposal and, therefore, will have the same
effect as a vote against the matter. Broker non-votes will be counted for
purposes of determining whether a quorum exists at the MCT annual meeting, but
will not be considered to have been voted on any matter and, with respect to the
proposal to amend the articles of incorporation, will have the effect of a vote
against the matter.
If the enclosed proxy card is properly executed and returned to MCT in
time to be voted at the MCT annual meeting, the shares represented by it will be
voted in accordance with the instructions marked on it. Executed proxies without
instructions will be voted "FOR" each of the MCT proposals. If any other
business is properly brought before the MCT annual meeting, one or more of the
persons named in the proxy card will vote the shares represented by the proxy
upon these matters as determined in their discretion. Such matters may include:
* a motion to adjourn or postpone the meeting to another time or
place for the purpose of soliciting additional proxies in
favor of the approval of each of the proposals; or
* to permit the dissemination of information regarding material
developments relating to the proposals or otherwise germane to
the MCT annual meeting.
If the MCT shareholders meeting is adjourned for any reason, the
approval of any of the proposals may be considered and voted upon by
shareholders at the subsequent reconvened meeting. All proxies will be voted in
the same manner as they would have been voted at the original meeting, except
for any proxies that have been properly withdrawn or revoked.
A proxy may be revoked by:
* filing with the Secretary of MCT, at or before the vote at the
MCT annual meeting, a written notice of revocation dated after
the date of the proxy;
* signing a later proxy relating to the same shares and
delivering it to the Secretary of MCT before the MCT annual
meeting; or
* attending the MCT annual meeting and voting in person.
Attendance at the MCT annual meeting, however, will not in and of
itself constitute a revocation of a proxy. All written notices of revocation and
other communications about revocation of MCT proxies should be addressed to
Micro Component Technology, Inc., 2340 West County Road C, St. Paul, Minnesota
55113-2528, Attention: Ms. Diane Nordenstrom, or hand delivered to the Secretary
at or before the taking of the vote at the MCT annual meeting.
The cost of soliciting proxies and mailing this document to
stockholders for the MCT annual meeting will be borne by MCT. The cost of
printing this document, however, will be borne 65% by MCT and 35% by Aseco. In
addition to soliciting proxies by mail, proxies may be solicited personally or
by telephone, facsimile, or other means of communications by directors, officers
and employees of MCT. These persons will not be specifically compensated for
these activities, but they may be reimbursed for reasonable out-of-pocket
expenses in connection with this solicitation. Arrangements also will be made
with brokerage firms and other custodians, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of shares held of record by
these persons. MCT will reimburse these brokerage firms, custodians, nominees
and fiduciaries for reasonable out-of-pocket expenses incurred by them in
connection with this solicitation.
ASECO SPECIAL MEETING
General
This document is being furnished to stockholders of Aseco as part of
the solicitation of proxies by the Aseco board of directors for use at a special
meeting of the stockholders of Aseco to be held on ________, 1999, at 10:00
a.m., local time, at the offices of Choate, Hall & Stewart, 36th Floor, Exchange
Place, 53 State Street, Boston, Massachusetts 02109. This document and the
enclosed form of proxy are first being mailed to stockholders of Aseco on or
about ________, 1999.
The purposes of the Aseco special meeting are:
* to consider and vote upon the proposal to adopt the merger
agreement; and
* to transact any other business related to that proposal that
may properly come before the Aseco special meeting and any
adjournments. The Aseco board is not now aware of any other
business.
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The close of business on _________, 1999 has been fixed by the Aseco
board as the record date for the determination of holders of shares of Aseco
common stock entitled to notice of and to vote at the Aseco special meeting. At
the close of business on the Aseco record date, there were ________________
shares of Aseco common stock issued and outstanding held by approximately ___
holders of record. Holders of record of common stock on the Aseco record date
are entitled to one vote per share of common stock.
A majority of the outstanding shares of Aseco must vote in favor of the
adoption of the merger agreement to approve the proposal.
Recommendation of the Aseco Board
The Aseco board has unanimously approved the merger agreement and
determined that the proposed merger is in the best interests of Aseco and its
stockholders and recommends that the Aseco stockholders vote FOR the adoption of
the merger agreement. The Aseco board has the right, in certain circumstances,
to withdraw or modify its recommendation. See "The Merger Agreement
- --Termination."
Solicitation, Voting and Revocability of Proxies
A proxy card for use at the Aseco special meeting accompanies this
document. Proxies may be solicited by using the mails and by means of personal
interview, telephone and wire. The cost of soliciting proxies from the holders
of Aseco common stock will be borne by Aseco except that the expenses incurred
in connection with the printing of this document will be shared 35% by Aseco and
65% by MCT. Proxies may be solicited by officers and other employees of Aseco.
Officers and other employees of Aseco will not receive additional compensation
for the solicitation of proxies. Aseco will reimburse brokers, fiduciaries,
custodians and other nominees for reasonable out-of-pocket expenses incurred in
sending this document and other proxy materials to, and obtaining instructions
relating to such materials from, beneficial owners of Aseco common stock. A
holder of Aseco common stock may use his or her proxy if he or she does not
attend the Aseco special meeting or wishes to have his or her shares voted by
proxy even if he or she does attend the Aseco special meeting. The proxy may be
revoked in writing by the person giving it at any time before it is exercised by
notice of such revocation to the Secretary of Aseco, or by submitting a proxy
having a later date, or by such person appearing at the Aseco special meeting
and electing to vote in person. Attendance at the Aseco special meeting will not
in itself constitute revocation of a proxy. All proxies validly submitted and
not revoked will be voted in the manner specified in the proxies.
Under the applicable provisions of the Delaware General Corporation Law
and Aseco's charter documents, the presence, in person or by proxy, of holders
of a majority in interest of the shares of Aseco common stock outstanding on the
Aseco record date is necessary to constitute a quorum of stockholders to take
action at the Aseco special meeting. For these purposes, shares which are
present, or represented by proxy, at the Aseco special meeting will be counted
for quorum purposes regardless of whether the holder of the shares or proxy
fails to vote on the merger agreement ("abstentions") or whether a broker with
discretionary authority fails to exercise its discretionary authority to vote
shares with respect to the merger agreement ("broker non-votes"). For voting
purposes with respect to the merger agreement, only shares voted for the
adoption of the merger agreement, and neither abstentions nor broker non-votes,
will be counted as voting for adoption by the holders of Aseco common stock. As
a consequence, abstentions and broker non-votes will have the same effect as
votes against adoption of the merger agreement. For voting purposes with respect
to any other proposals at the Aseco special meeting, abstentions and broker
non-votes will not be deemed voting on these matters and therefore will not be
counted as negative votes as to these matters.
THE MERGER
Background of the Merger
The MCT board and management believe that consolidation within the
semiconductor capital equipment market is inevitable and that, in order to keep
pace with changes in that industry, it is necessary to develop the critical mass
to provide economies of scale and to accelerate development of new products.
Roger Gower, MCT's President and Chief Executive Officer, had been familiar with
Sebastian J. Sicari, President and Chief Executive Officer of Aseco, for a
number of years through mutual participation in trade shows and trade
organizations. Mr. Gower had had discussions on an informal basis with Mr.
Sicari about combining the two companies at various times over the last few
years.
On October 8, 1998, Aseco engaged Adams, Harkness & Hill, Inc. as its
financial advisor to undertake a review of its strategic alternatives, including
the sale of Aseco or a portion of Aseco's assets to or combination with another
company, and to ascertain the parties that may have a potential interest in
partnering or combining with or acquiring Aseco.
Between October 1998 and March 1999, Adams, Harkness & Hill contacted
or held discussions with six companies. Aseco entered into confidentiality
agreements with three of the companies contacted during this period, and some of
those companies received non-public information regarding Aseco, including
projected financial information. Of the companies that entered into such
confidentiality agreements, one submitted a proposal or other indication of
interest specifying the price at which it would be interested in acquiring all
of the equity interest in Aseco or a portion of Aseco's assets. Discussions
continued and proposals were exchanged between Aseco and the interested party,
but ultimately no definitive agreement was reached. During the period from
October through March, at both regularly scheduled and special meetings, the
Aseco board reviewed the activities of Adams, Harkness & Hill, including the
contacts made with potentially interested parties, and further discussed various
strategic opportunities for Aseco.
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On April 12, 1999, Mr. Gower and Mr. Sicari, along with Aseco's
financial advisors, met in Boston, Massachusetts to conduct exploratory
discussions regarding a possible strategic transaction. These discussions
continued through May 1999.
On June 14, 1999, Mr. Gower and Mr. Sicari met at the offices of
Choate, Hall & Stewart, Aseco's counsel, in Boston. The parties agreed to share
certain financial information with Adams, Harkness & Hill, for the purpose of
deriving a range of possible valuations for Aseco. Mr. Gower proposed that any
business combination be structured as a stock-for-stock merger. On June 29,
1999, Aseco renewed its engagement with Adams, Harkness & Hill as its financial
advisor to undertake a review of Aseco's strategic alternatives.
On July 14, 1999, Mr. Gower contacted Norman T. Hall of Alliant
Partners and requested that his firm act as MCT's financial advisor in regards
to a possible acquisition of Aseco. On July 14, 1999, Mr. Sicari updated the
Aseco board concerning his discussions with Mr. Gower. On July 20, 1999 there
was an introductory call between Mr. Sicari and Mr. Gower along with Mr. Hall
and Kevin Ainsworth from Alliant Partners. The purpose of the call was for
background on Aseco and to set up meetings between Aseco and MCT to discuss a
possible merger. Over the next few weeks, Mr. Gower and Mr. Sicari communicated
via telephone and email to discuss issues germane to the valuations of MCT and
Aseco, respectively. On July 22, 1999, MCT and Aseco entered into a mutual
non-disclosure agreement to permit confidential exchange of financial and other
information.
On July 29 and 30, 1999, Mary R. Barletta, Vice President and Chief
Financial Officer and Robert E. Sandberg, Vice President, Sales and Aseco's
financial advisors met with Mr. Gower, Jeffrey S. Mathiesen, MCT's Vice
President and Chief Financial Officer, Mr. Hall and Mr. Ainsworth of Alliant
Partners at the Minneapolis offices of Best & Flanagan, counsel to MCT. The
purpose of this meeting was to begin financial due diligence. Mr. Sicari
participated during the second day of these talks.
On August 6, 1999, Mr. Sicari and Mr. Gower met at the offices of
Aseco's legal counsel in Boston. Also participating in the meeting were Mr.
Mathiesen from MCT, and Mr. Hall, Mr. Ainsworth, and Mr. Jevan Anderson from
Alliant Partners. Ms. Barletta, Mr. Sandberg and Aseco's financial and legal
advisors also attended. The parties reviewed product and financial synergies of
the two companies and agreed on a schedule for financial and legal due
diligence.
On August 11, 1999, Mr. Sicari updated the Aseco board as to the status
of its talks with MCT. Also on August 11, 1999, the MCT board reviewed a
proposed term sheet and discussed with MCT's officers, financial advisors and
counsel the continuing negotiation of the principal terms for the proposed
transaction, and initiating drafting of a definitive agreement. Following these
discussions, Mr. Gower contacted Mr. Sicari to clarify and resolve certain
matters related to the proposed merger, including the exchange ratio and the
termination provisions in the draft merger agreement. On August 13, 1999, the
representatives of MCT presented the representatives of Aseco with a revised
term sheet for the transaction. The MCT board met again on August 18, 1999,
together with its outside counsel and financial advisors to discuss the status
of negotiations with Aseco. There were further negotiations between the parties
and a further revision of a proposed term sheet was submitted by MCT to Aseco on
August 20, 1999.
During the last part of August 1999 and into September 1999, Mr. Sicari
and Mr. Gower had multiple telephone conversations discussing aspects of the
proposed term sheet as the due diligence review of the respective companies
continued. Legal and financial due diligence continued through September and
each company and its respective advisors made site visits to review the other
company's operations. On September 9, 1999, the Aseco board met at the offices
of its legal counsel to review the status of the negotiations and the terms of
the transaction. Aseco's legal and financial advisors each made presentations to
the Aseco board. The Aseco board instructed members of Aseco management to
continue negotiations with MCT along the lines discussed by the Aseco board.
From September 13 through September 16, 1999, each of the parties
reviewed drafts of a proposed merger agreement, and negotiation continued
regarding various issues, including the determination of the exchange ratio and
various closing conditions.
On Friday, September 17, 1999, after the close of Nasdaq, the Aseco
board and the MCT board met separately and each unanimously approved the merger.
Prior to taking a vote at the Aseco board meeting, presentations were made to
the board by Aseco's financial and legal advisors updating the Aseco board on
the status of negotiations with MCT and informing the Aseco board that all
substantive issues had been resolved. Aseco's legal advisor reviewed the terms
of the proposed merger agreement with MCT. Aseco's financial advisor rendered
its opinion to the effect that, as of September 17, 1999, based on and subject
to the matters stated in the opinion, the merger consideration was fair to the
Aseco stockholders from a financial point of view.
At the MCT board meeting on September 17, 1999, Alliant Partners
provided the MCT board with background concerning the terms of the transaction
and valuation issues and rendered its opinion that, as of that date, the merger
consideration was fair to the MCT stockholders from a financial point of view.
MCT's management and counsel reviewed the terms of the proposed merger agreement
and the financial and business impact of the proposed transaction.
On the following day, September 18, 1999, all documentation, including
Aseco's disclosure schedules was finalized to the satisfaction of the designated
officers and the merger agreement was signed by the parties. Immediately prior
to the opening of the markets on Monday, September 20, 1999, the parties jointly
announced that a definitive merger agreement had been entered into between MCT
and Aseco.
Reasons of MCT for the Merger
The MCT board unanimously approved the merger agreement and the merger
and unanimously recommends MCT shareholders approve the merger proposal.
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In reaching their determinations regarding the merger agreement and the
proposals, the MCT board consulted with MCT management, as well as its financial
and legal advisors, and considered the following material factors:
* the long-term interests of MCT and its shareholders, as well
as the interests of MCT employees, customers, creditors,
suppliers and the communities in which MCT operates;
* information concerning the business, earnings, operations,
financial condition and prospects of MCT and Aseco, both
individually and on a combined basis, including information
with respect to the historic earnings performance of each
company;
* the expectation that the merger will provide the combined
company with the economies of scale, geographic scope, product
diversity and complementary research and development
competencies to enable it to serve its customers better, which
should allow the combined company to benefit, over the long
run, from increased financial strength, revenue
diversification and financial flexibility compared to either
company on a stand-alone basis;
* the expectation that the merger will create a business of
sufficient size to enable the combined company to compete more
effectively against larger companies;
* the presentations made by Alliant Partners at the August 11,
August 18 and September 17, 1999 meetings of the MCT board,
and the opinion of Alliant that, as of September 17, 1999,
based on and subject to the matters reviewed with the MCT
board, the proposed merger consideration was fair to MCT from
a financial point of view. This opinion was considered
together with the financial and other analyses presented to
the MCT board by Alliant. A description of the opinion and the
material financial analyses considered by Alliant in
connection with its opinion are set forth below under
"--Opinion of MCT's Financial Advisor";
* accretion/dilution analyses based on analysts' estimates that
indicated that the effect of the merger would be slightly
accretive to MCT earnings per share;
* the uncertainties related to the integration of Aseco's
business and the risks of diverting management's attention to
the assimilation of operations and personnel of Aseco;
* the recent and historical trading prices of MCT common stock
and Aseco common stock relative to those of other industry
participants, and the potential for appreciation in the value
of MCT common stock following the merger;
* the relative ownership interests of MCT shareholders and Aseco
stockholders in the combined company immediately following the
effective time of the merger, based on the shares of MCT
common stock and Aseco common stock outstanding at
approximately the time the merger agreement was executed;
* the terms of the merger agreement, including that the merger
will likely qualify as a tax-free reorganization for federal
income tax purposes;
* the proposed termination fee to be payable in certain
circumstances, including the effect the termination fee may
have on the ability of other parties to make competing
business combination proposals with respect to Aseco;
* the ability to complete the merger;
* the fact that Aseco stockholders will receive a premium over
the market price for their stock at the time the merger was
announced; and
* the acceleration of vesting of some outstanding Aseco stock
options immediately before closing of the merger and the
impact of severance arrangements for certain Aseco officers.
The discussion above sets forth the material information and factors
considered by the MCT board in their consideration of the merger agreement. In
view of the wide variety of factors considered, the MCT board did not find it
practicable to make, and did not make, specific assessments of, quantify or
otherwise attempt to assign relative weights to the specific factors considered
in reaching their determination. The determination was made after consideration
of all of the factors as a whole. In addition, individual members of the MCT
board may have given different weights to different factors.
Reasons of Aseco for the Merger
In reaching its decision on September 17, 1999 to approve the merger
agreement and recommend its adoption to the stockholders, the Aseco board
consulted with Aseco's management and financial and legal advisers regarding the
proposed merger and based its decision on a number of factors, including:
* the opportunity for the combined company to eliminate
redundant research and development projects associated with
future products responsive to changes in packaging technology
and to offer such new products in a shorter time-to-market;
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* possible economies of scale that could result from the
combined company, including potential operating efficiencies
and opportunities to enhance distribution and service to
Aseco's domestic and international customers;
* opportunities for cross-selling of products given the minimal
overlap of both current products and current customer bases of
each Aseco and MCT;
* opportunities for growth in the business of Aseco resulting
from the greater critical mass of the combined organization,
including the greater combined sales and marketing
capabilities and the increase in available capital resources;
* concerns that the current market for semiconductor capital
equipment favors and will continue to favor companies with
sufficient critical mass to compete in an industry dominated
by large companies that have greater access to liquidity,
greater capacities to invest in research and development and
larger installed customer bases across domestic and
international markets;
* the presentation made by Adams Harkness & Hill at the
September 17, 1999 meeting of the Aseco board and its opinion
that, as of that date, the proposed consideration to be
received by the Aseco stockholders in the merger, taken as a
whole, is fair to the Aseco stockholders from a financial
point of view, as discussed under "--Opinion of Aseco's
Financial Advisor";
* the Aseco board's review with its legal and financial advisers
of the provisions of the merger agreement, including
provisions which would not prevent Aseco from considering or
the Aseco board from approving an alternative business
combination proposal from a third party, as discussed under
"The Merger Agreement--No Solicitation";
* the likelihood that MCT common stock received by Aseco
stockholder as consideration in the merger will be tax-free
for federal income tax purposes to its stockholders, as
discussed under "--Material Federal Income Tax Consequences";
* historical and prospective financial information regarding MCT
and presentations by Aseco's representatives as to their due
diligence review of MCT's business and financial statements;
and
* the recent and historical trading prices of Aseco common stock
and MCT common stock, as well as those of other industry
participants, and the potential for appreciation in value of
MCT common stock following the date of the merger agreement.
The Aseco board also considered a number of other factors that could
potentially arise in connection with the merger, including:
* the risks associated with respect to the value of the MCT
common stock received as merger consideration as a result of
(a) uncertainties related to the integration of the companies'
businesses; (b) the possibility that the integration of the
companies' businesses will unduly divert management's
attention from the ongoing operations of the combined
companies; and (c) possibilities that MCT's newest products
will not be accepted by current or potential customers at the
level currently forecast;
* the possibility that the merger might not be consummated,
including the risk that the announcement of the merger could
result in decisions by customers to defer purchases of
products or services of Aseco or MCT;
* the likelihood that, and the terms on which, other entities
might be interested in combining with Aseco if the merger
agreement were not entered into; and
* the interests of the officers and directors of Aseco in the
merger, including the matters described under "--Interests of
Certain Persons in the Merger."
The discussion above sets forth the material information and factors
considered by the Aseco board in its consideration of the merger. In view of the
wide variety of factors considered, the Aseco board did not find it practicable
to make, and did not make, specific assessments of, quantify or otherwise
attempt to assign relative weights to the specific factors considered in
reaching its determination. The determination was made after consideration of
all of the factors as a whole. In addition, individual members of the Aseco
board may have given different weights to different factors.
Opinion of MCT's Financial Advisor
MCT engaged Alliant Partners to act as its exclusive financial advisor
in connection with the evaluation of the merger based on the terms and
conditions set forth in the merger agreement. Alliant Partners, as part of its
investment banking business, is regularly engaged in the valuation of businesses
and their securities in connection with mergers and acquisitions, corporate
restructurings, corporate partnerings, strategic alliances and valuations for
corporate or other purposes. The management of MCT and the MCT board were
familiar with Alliant Partners because Norman T. Hall, Managing Partner of
Alliant Partners, and Alliant Partners and its predecessors have provided
financial advisory services to MCT in the past. MCT also selected Alliant
Partners as its financial advisor on
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the basis of its experience and expertise in transactions similar to the merger
and its reputation as an investment banker in transactions involving technology
companies.
At the September 17, 1999 meeting of the MCT board, Alliant Partners
delivered its opinion that, as of such date, the acquisition price was fair,
from a financial point of view, to the stockholders of MCT. See "The Merger --
Background of the Merger." The acquisition price was determined pursuant to
negotiations between MCT and Aseco with advice from Alliant Partners and Adams,
Harkness & Hill, respectively. No limitations were imposed by MCT on Alliant
Partners with respect to the investigations made or procedures followed in
rendering its opinion. The full text of Alliant Partners' written opinion to the
MCT board which sets forth the assumptions made, matters considered and
limitations of review by Alliant Partners, is attached as Appendix B, and is
incorporated herein by reference and should be read carefully in its entirety.
The following summary of Alliant Partners' opinion is qualified in its entirety
by reference to the full text of the opinion, attached as Appendix B.
In arriving at its opinion, Alliant Partners reviewed financial and
other information that was publicly available or furnished to Alliant Partners
by MCT and Aseco. Alliant Partners also reviewed certain internal financial
reports and forecasts for MCT and Aseco prepared by their respective management
and held discussions with members of the senior management of both MCT and Aseco
regarding the historic and current business operations and future prospects of
the merged entities including their expectations for certain strategic benefits
of the transaction. In addition, Alliant Partners compared certain financial
data of Aseco with those of various other companies engaged in businesses
Alliant Partners considered comparable and whose securities are traded in public
markets, analyzed the acquisition premiums paid for similar companies, reviewed
the overall risks presented by the business plan, reviewed, to the extent
publicly available, prices paid in certain other similar business transactions,
reviewed the current market value of Aseco, analyzed the relative contribution
of each of MCT and Aseco to the merger, reviewed the merger agreement, discussed
the tax and accounting treatment of the merger with MCT and MCT's legal counsel
and accountants, and conducted such other financial studies, analyses and
investigations as Alliant Partners deemed appropriate for purposes of its
opinion.
Alliant Partners assumed, without independent verification, the
accuracy, completeness and fairness of all of the financial and other
information regarding MCT and Aseco that has been provided to Alliant Partners
by them and their representatives. Alliant Partners did not make any independent
evaluation of MCT's or Aseco's businesses nor did Alliant Partners review any of
their corporate records. For purposes of its opinion, Alliant Partners assumed
that the merger will be qualified as a tax-free reorganization under the
Internal Revenue Code for holders of MCT common stock and that the merger will
be accounted for as a purchase transaction.
Alliant Partners utilized five different methods to develop five
separate indications of value for MCT. These indicators were considered equally
important and were therefore averaged to create a range of values for MCT. The
fairness opinion rendered by Alliant Partners on September 17, 1999 determined
the transaction price to be fair to the holders of MCT common stock from a
financial point of view.
While the foregoing summary describes the analyses and examinations
that Alliant Partners deemed material to its opinion, it is not a comprehensive
description of all analyses and examinations actually performed. The preparation
of a fairness opinion necessarily is not susceptible of partial analysis or
summary description. Alliant Partners believes that such analysis and the
summary set forth above must be considered as a whole and that selecting
portions of its analyses and of the factors considered, without considering all
such analyses and factors, would create an incomplete view of the analyses set
forth in its presentation to the MCT board. In addition, Alliant Partners may
have deemed various assumptions more or less probable than other assumptions, so
that the ranges or valuations resulting form any particular analysis should not
be taken to be Alliant Partners' view of the actual value of MCT, Aseco or the
combined company.
In performing its analyses, Alliant Partners made numerous assumptions
with respect to industry performance, general business and economic conditions
and other matters, many of which are beyond the control of MCT or Aseco. The
analyses performed by Alliant Partners are not necessarily indicative of actual
values or actual future results, which may be significantly more of less
favorable than suggested by such analyses. Such analyses were prepared solely as
part of Alliant Partners' analysis of the fairness of the merger to the
stockholders of MCT from a financial point of view and were provided to the MCT
board in connection with the delivery of Alliant Partners' opinion. The analyses
do not purport to be appraisals or to reflect the prices at which a company
might actually be sold or the prices at which any securities may trade at the
present time or at any time in the future. Alliant Partners used in its analyses
various projections of results of operations prepared by the management of MCT
and Aseco and by research analysts of third party brokerage firms. The
projections are based on numerous variables and assumptions that are inherently
unpredictable and must be considered not certain of occurrence as projected.
Accordingly, actual results could vary significantly from those set forth in
such projections.
As described above, Alliant Partners' opinion and presentation to the
MCT board were among the many factors taken into consideration by the MCT board
in making its determination to approve, and to recommend that MCT's stockholders
approve the merger. Alliant Partners rendered the September 17, 1999 fairness
opinion based on a purchase accounting method for the transaction. This opinion
concluded that the acquisition price was fair to the MCT shareholders from a
financial point of view.
For acting as MCT's financial advisor in connection with the merger,
MCT has agreed to pay Alliant Partners a fee of $375,000 as follows: (i) $50,000
at inception; (ii) $75,000 due upon Alliant Partners' delivery of its fairness
opinion; and (iii) the remainder due upon consummation of the merger. MCT has
also agreed to reimburse Alliant Partners for its reasonable out-of-pocket
expenses. In addition, certain principals of Alliant Partners may own shares of
common stock of MCT and Aseco.
The full text of Alliant Partners' opinion, dated September 17, 1999
and delivered by Robert Horstmeyer of Alliant Partners, which sets forth the
assumptions made, general procedures followed, matters considered and
limitations on the scope of review undertaken by Alliant Partners in rendering
its opinion, is attached as Appendix B to this Joint Proxy Statement/Prospectus
and is
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incorporated herein by reference. Alliant Partners' opinion is addressed to the
MCT board and is directed only to the fairness from a financial point of view,
as of September 17, 1999, of the acquisition price and does not constitute a
recommendation to any MCT stockholder as to how such stockholder should vote
with respect to the merger.
Opinion of Aseco's Financial Advisor
Aseco asked Adams Harkness & Hill in its role as financial advisor to
Aseco's board of directors, to render an opinion to Aseco's board as to the
fairness to Aseco's stockholders, from a financial point of view, of the
consideration to be received by such stockholders under the merger agreement.
On September 17, 1999, Adams, Harkness & Hill delivered its opinion to
Aseco's board that, as of such date and based upon and subject to the
assumptions, limitations and qualifications in such opinion, the consideration
to be received by holders of Aseco's common stock was fair, from a financial
point of view, to such stockholders. Adams, Harkness & Hill reconfirmed its
September 17, 1999 opinion by delivery of a written opinion dated September 19,
1999.
A copy of Adams, Harkness & Hill's September 19, 1999 opinion is
attached as Exhibit C to this document. You should read this opinion for the
assumptions made, the procedures followed, the matters considered and the limits
of the review made by Adams, Harkness & Hill. Adams, Harkness & Hill prepared
its opinion for Aseco's board. Adams, Harkness & Hill's opinion addresses only
the fairness, from a financial point of view, of the consideration to be
received by Aseco's stockholders under the merger agreement. Adams, Harkness &
Hill's opinion does not constitute a recommendation to any stockholder as to how
such stockholder should vote on the merger.
Although subsequent developments may affect this opinion, Adams,
Harkness & Hill does not have any obligation to update, revise or reaffirm its
opinion, other than if requested by Aseco pursuant to the terms of Adams,
Harkness & Hill's engagement. Adams, Harkness & Hill expressed no opinion as to:
* the price at which either company's common stock will actually
trade at any time;
* the relative merits of the merger and other business
strategies being considered by Aseco's board; or
* the decision of Aseco's board to proceed with the merger.
In arriving at its opinion, Adams, Harkness & Hill, among other things:
* reviewed Aseco's Annual Reports, Reports on Form 10-K and
related financial information for the three fiscal years ended
March 28, 1999, and Aseco's Report on Form 10-Q and the
related financial information for the three month period
ending June 27, 1999;
* reviewed MCT's Annual Reports, Reports on Form 10-K and
related financial information for the three fiscal years ended
June 26, 1999;
* analyzed certain internal financial statements and other
financial and operating data concerning Aseco prepared by the
management of Aseco and MCT;
* conducted due diligence discussions with members of senior
management of Aseco and MCT, and discussed with members of
senior management of Aseco and MCT their views regarding
future business, financial and operating benefits arising from
the merger;
* reviewed the historical market prices and trading activity for
the common stock and compared them with those of certain
publicly traded companies Adams, Harkness & Hill deemed to be
relevant and comparable to Aseco and MCT;
* compared the results of operations of Aseco and MCT with those
of certain companies Adams, Harkness & Hill deemed to be
relevant and comparable to Aseco and MCT;
* compared the financial terms of the merger with the financial
terms of certain other mergers and acquisitions Adams,
Harkness & Hill deemed to be relevant and comparable to the
merger;
* participated in certain discussions among representatives of
Aseco and MCT and their respective advisors;
* reviewed the merger agreement; and
* reviewed such other financial studies and analyses and
performed such other investigations and took into account such
other matters as Adams, Harkness & Hill deemed necessary,
including Adams, Harkness & Hill's assessment of general
economic, market and monetary conditions.
In preparing its opinion, Adams, Harkness & Hill relied on the accuracy
and completeness of all information that was publicly available, supplied or
otherwise made available to it by or on behalf of Aseco and MCT. Adams, Harkness
& Hill did not assume any
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responsibility to independently verify such information. With respect to the
financial forecasts it examined, Adams, Harkness & Hill assumed, with Aseco's
consent, that they were reasonably prepared on bases reflecting the best
currently available estimates and good faith judgements of the managements of
Aseco and MCT as to the future performance of Aseco and MCT. Adams, Harkness &
Hill also relied upon assurances of the management of Aseco and MCT that they
were unaware of any facts that would make the information or financial forecasts
provided to Adams, Harkness & Hill incomplete or misleading. Adams, Harkness &
Hill did not undertake an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of Aseco or MCT, nor was it furnished with
any such evaluations or appraisals. Adams, Harkness & Hill also assumed the
following, with Aseco's consent:
* the merger will be accounted for under the purchase accounting
treatment;
* the merger will qualify as a tax-free reorganization; and
* any material liabilities, whether contingent or otherwise, of
Aseco and MCT were as set forth in the consolidated financial
statements of Aseco and MCT.
The Adams, Harkness & Hill opinion is based upon economic, monetary and
market conditions existing on the date of the opinion.
The following paragraphs summarize the significant analyses performed
by Adams, Harkness & Hill in arriving at the Adams, Harkness & Hill opinion.
HISTORICAL STOCK PERFORMANCE. Adams, Harkness & Hill reviewed
historical trading prices for the shares of both Aseco and MCT common stock
prior to the date of delivery of its opinion.
RELATIVE CONTRIBUTION ANALYSIS. Adams, Harkness & Hill considered the
relative contribution of Aseco and MCT to the combined company. Adams, Harkness
& Hill considered historical and projected financial performance, including
revenue, gross profits, operating income and net income for the income
statements of both companies, as well as balance sheet items for each company,
including: cash, working capital, total assets and book value.
SELECTED PUBLICLY TRADED COMPANY ANALYSIS. Using publicly available information,
Adams, Harkness & Hill analyzed, among other things, the trading multiples of 11
publicly traded companies in the semiconductor capital equipment and test
handler industries, including:
* Aetrium, Inc.;
* Cerprobe Corporation;
* Cohu, Inc.;
* Credence Systems Corporation;
* DuPont Photomasks, Inc.;
* Electroglas, Inc.;
* inTEST Corporation;
* LTX Corporation;
* Photronics, Inc.;
* Quad Systems Corporation; and
* Teradyne, Inc.
For each company, Adams, Harkness & Hill analyzed:
* the stock price, equity value and enterprise value as of
September 16, 1999, where enterprise value is defined as the
equity value plus the book value of debt and preferred stock
less cash and marketable securities;
* the equity value as a multiple of book value and prior twelve
months net income;
* the enterprise value as a multiple of revenues for the prior
twelve months; and
* the stock price as a multiple of earnings per share for the
calendar years 1999 and 2000, where the earnings per share
estimates were based upon First Call Research Network
consensus research analyst estimates.
SELECTED MERGER AND ACQUISITION TRANSACTIONS ANALYSIS. Using publicly available
information, Adams, Harkness & Hill analyzed the implied transaction multiples
paid in 14 selected transactions in the semiconductor and semiconductor capital
equipment industries since 1996.
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For each acquisition, Adams, Harkness & Hill analyzed:
* the equity purchase price and implied enterprise value at the
date of announcement;
* the implied enterprise value as a multiple of revenues and
earnings before interest and taxes for the twelve months prior
to announcement of the transaction; and
* the premium to target share price one day, one week and one
month prior to the announcement of the transaction.
No company or business utilized in the "Selected Publicly Traded
Company Analysis" is identical to Aseco. Similarly, no transaction utilized in
the "Selected Merger and Acquisition Transactions Analysis" is identical to the
merger. Accordingly, an analysis of the results of the foregoing necessarily
involves complex considerations and judgements concerning differences in
financial and operating characteristics of Aseco and other factors that could
affect the public trading value of the companies to which it is being compared.
In evaluating the selected publicly traded companies and selected merger and
acquisition transactions, Adams, Harkness & Hill made judgments and assumptions
with regard to industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
Aseco, such as the impact of competition on Aseco and the industry generally,
industry growth and/or technological change and the absence of any adverse
material change in the financial conditions and prospects of Aseco or in the
industry or the financial markets in general. Mathematical analysis (such as
determining the mean and median) is not, in itself, a meaningful method of using
comparable company data.
The summary set forth above does not purport to be a complete
description of the analyses performed by Adams, Harkness & Hill but describes,
in summary form, the principal elements of the presentation of Adams, Harkness &
Hill to Aseco's board in connection with the delivery of Adams, Harkness &
Hill's opinion. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of these methods to the particular circumstances,
and, therefore, such an opinion is not readily susceptible to summary
description. Each of the analyses conducted by Adams, Harkness & Hill was
carried out in order to provide a different perspective on the acquisition and
add to the total mix of information available. Adams, Harkness & Hill did not
form a conclusion as to whether any individual analysis, considered in
isolation, supported or failed to support an opinion as to fairness, from a
financial point of view. Rather, in reaching its conclusion, Adams, Harkness &
Hill considered the results of the analyses in light of each other and did not
place particular reliance or weight on any individual analysis and ultimately
reached its opinion based on the results of all analyses taken as a whole.
Accordingly, notwithstanding the separate factors summarized above, Adams,
Harkness & Hill believes that its analyses must be considered as a whole and
that selecting portions of its analysis and the factors considered by it,
without considering all analyses and factors, could create an incomplete or
misleading view of the evaluation process underlying its opinions. The analyses
performed by Adams, Harkness & Hill are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable than
suggested by such analyses.
Adams, Harkness & Hill is an internationally recognized investment
banking firm and was selected by Aseco based on Adams, Harkness & Hill's
experience and expertise, as well as its familiarity with Aseco. Adams, Harkness
& Hill regularly engages in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
bids, secondary distributions of listed and unlisted securities, private
placements and valuations for corporate and other purposes.
Adams, Harkness & Hill has advised Aseco that, in the ordinary course
of business, Adams, Harkness & Hill and its affiliates may actively trade or
hold the securities of Aseco and MCT for their own account or for the account of
customers and, accordingly, may at any time hold a long or short position in
such securities. Adams, Harkness & Hill has, in the past, performed investment
banking and other services for Aseco, including lead managing its initial public
offering of common stock on September 16, 1993 for which Adams, Harkness & Hill
received usual and customary compensation. Adams, Harkness & Hill also served as
financial advisor to Aseco in conjunction with the acquisition of Western
Equipment Developments (Holdings) Ltd. on May 23, 1997. In addition, Adams,
Harkness & Hill and its affiliates may in the future provide investment banking
services to MCT.
For acting as Aseco's financial advisor in connection with the merger,
Aseco had agreed (according to contract dated June 29, 1999) to pay Adams,
Harkness & Hill fees as follows: (i) $250,000 for delivery of its fairness
opinion, of which $200,000 may be deferred at Aseco's option until the closing
of the transaction and (ii) upon closing of the transaction, a fee in an amount
equal to 2% of the aggregate consideration. Actual fees to be paid to Adams,
Harkness & Hill is subject to a cap as described in the merger agreement. Aseco
has also agreed to reimburse Adams, Harkness & Hill for its reasonable
out-of-pocket expenses.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendations of the Aseco board, you should be
aware that certain members of the Aseco board and Aseco management have
interests in the merger that are generally different from your interests. The
Aseco board was aware of the interests described below and considered them in
approving the merger agreement.
ASSUMPTION OF STOCK OPTIONS. The merger agreement provides that MCT
will assume the obligation to issue shares upon the exercise of Aseco stock
options, including those options held by Aseco directors and executive officers,
at the same exchange ratio as used for the outstanding Aseco common stock, as
described in "The Merger Agreement - Options". The exercise price of each option
to purchase MCT common stock will also be adjusted correspondingly, as described
in "The Merger Agreement - Options." As of the record date of the Aseco special
meeting, the directors and executive officers of Aseco, as a group, held options
to purchase ________ shares of Aseco common stock at prices ranging from $______
to $_______ a share, with a weighted average exercise price of $_______ per
share, as shown in the table below and discussed in more detail in "Severance
and Separation Arrangements with Directors" and "Severance Arrangements with
Executive Officers."
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As of September 26, 1999:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Vested shares Unvested shares to vest Weighted average
immediately prior to upon merger exercise price per
Directors and Executive Officers merger share
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sebastian J. Sicari, Director, President and 155,863 118,138 $ .76
Chief Executive Officer
- ---------------------------------------------------------------------------------------------------------------------------------
Mary R. Barletta, Vice President and Chief 36,141 47,709 $ .76
Financial Officer
- ---------------------------------------------------------------------------------------------------------------------------------
Robert L. Murray, Vice President, Worldwide 10,938 24,263 $ .77
Customer Support
- ---------------------------------------------------------------------------------------------------------------------------------
Robert E. Sandberg, Vice President, Sales 12,595 19,631 $ .76
- ---------------------------------------------------------------------------------------------------------------------------------
Richard S. Sidell, Vice President and 10,000 35,000 $ .78
Chief Technologist
- ---------------------------------------------------------------------------------------------------------------------------------
Phillip J. Villari, Vice President, Engineering and 27,406 63,594 $ .76
Manufacturing Operations
- ---------------------------------------------------------------------------------------------------------------------------------
Non-Employee Directors as a group* 213,031 N/A $ 1.20
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The final calculation will be based on the closing price of Aseco common stock
the day prior to the effective date of the merger; these pro forma numbers are
based on a fair market value of Aseco common stock as of September 17, 1999, the
date of the Aseco board meeting approving the merger agreement.
SEVERANCE AND SEPARATION ARRANGEMENTS WITH CERTAIN DIRECTORS. Mr.
Sicari is a party to a severance agreement with Aseco which provides, in part,
that Aseco will pay Mr. Sicari severance equal to twenty-four months of base
salary, two times the average of the annual bonus amounts paid to him for each
of the two previous fiscal years and will provide twenty-four months of
continued life and health insurance benefits if Aseco terminates his employment
for any reason other than for cause following a change of control. Mr. Sicari's
severance agreement further provides that any unvested options to purchase Aseco
common stock held by him will vest and become fully exercisable in the event of
a change of control. If Mr. Sicari's employment is terminated without cause, all
stock options held by him may be exercised at any time before the earlier of the
expiration date of the applicable option or three years from the date of his
termination. It is expected that Mr. Sicari's employment will be terminated and
that he will be entitled to such severance benefits and his stock options will
vest and become exercisable. Mr. Sicari has agreed to accept registered MCT
common stock valued at $400,000 in lieu of cash in full satisfaction of the base
salary and annual bonus components of his severance arrangements. In connection
with the merger, Mr. Sicari has agreed to shorten the period in which he may
elect to exercise his stock options from three years to 18 months following the
effective date of the merger and will lose any vested but unexercised options
remaining at the end of such period.
Mr. Archer, the chairman and a director of Aseco, is a party to a
separation agreement with Aseco, for which Aseco has accrued certain severance
and retirement benefits. The agreement provides, in part, that in the event of a
change of control, Aseco will pay Mr. Archer the remaining benefits pursuant to
this agreement . It is expected that such amount will total approximately
$300,000 if the merger is effective on or prior to December 31, 1999. Mr. Archer
has agreed to accept registered MCT common stock valued at the amount of such
lump sum payment in lieu of cash. Aseco has agreed further that Mr. Archer can
exercise his stock options at any time before the earlier of the expiration date
of the applicable option or August 11, 2001. In connection with the merger, Mr.
Archer has agreed to shorten the period in which he may elect to exercise his
stock options to within 6 months following the effective date of the merger and
will lose any vested but unexercised options remaining at the end of such
period.
SEVERANCE ARRANGEMENTS WITH EXECUTIVE OFFICERS (OTHER THAN MR. SICARI).
Aseco's severance agreement with each of Messrs. Murray, Sandberg, Sidell,
Villari and Ms. Barletta provides, in part, that Aseco will pay each of these
executive officers severance equal to twelve months of base salary and will
provide twelve months of continued life and health insurance benefits if Aseco
terminates his or her employment for any reason other than for cause (including
constructive termination) following a change of control of Aseco. Furthermore,
each executive officer's severance agreement provides that any unvested options
to purchase Aseco common stock held by each of these executive officers will
vest and become fully exercisable in the event of a change of control.
EXCHANGE OF OPTIONS. On September 17, 1999, the non-employee directors
of Aseco (other than Mr. Archer whose options are dealt with in his separation
agreement) agreed that, effective immediately prior to the merger, they would
reduce the time period for exercising their options for purchasing (after giving
effect to the merger) MCT common stock from no more than 2 years to within 6
months of the effective date of the merger. As a result of the shortened
exercise period, options held by non-employee directors would be exchanged for
that smaller number of new Aseco stock options which, when issued at the fair
market value of Aseco common stock on the date immediately prior to the merger,
will have no greater economic value than the current Aseco stock options,
calculated according to the Black-Scholes model.
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DIRECTORS AND OFFICERS. Following the merger, Mr. Sicari, President and
Chief Executive Officer and a director of Aseco, and another person to be
designated by Aseco will become members of the MCT board.
INDEMNIFICATION OF ASECO DIRECTORS AND OFFICERS. Under Aseco's charter
documents, Aseco is obligated to indemnify its current and former directors and
officers against all liabilities by reason of their being or having served as a
director or officer. Aseco also maintains directors' and officers' liability
insurance covering these officers and directors in their capacities as such.
Upon completion of the merger, MCT will become obligated to indemnify these
officers and directors to an extent not materially less advantageous than they
are now indemnified by Aseco. In addition, for three years following completion
of the merger, MCT will maintain directors' and officers' liability insurance
covering these directors and officers of at least $3 million dollars, which is
less than the $5 million dollar coverage level currently maintained by Aseco.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material federal income tax
consequences of the merger under the Internal Revenue Code of 1986, existing IRS
regulations (including final, temporary or proposed), and current administrative
rulings and court decisions. All of these regulations, rulings and decisions are
subject to change. This discussion is based on the qualified opinions and advice
of Best & Flanagan LLP and Choate, Hall & Stewart, tax counsel for MCT and
Aseco, respectively. These opinions and the consequences described in these tax
sections, assume that the merger will be completed on the terms described in the
merger agreement. The following discussion is intended only as a summary of the
principal U.S. federal income tax consequences of the merger and does not
purport to be a complete analysis or listing of all of the potential tax effects
of the merger. The tax opinions and this discussion are based on important
assumptions and representations concerning the merger and the actions of the
corporations and stockholders involved. Also, the following discussion does not
address tax consequences arising under state, local, or foreign laws, and does
not address the circumstances of special classes of taxpayers or the individual
circumstances of taxpayers. By way of example, it does not address the U.S.
Federal tax consequences of the merger for foreign persons, Aseco stockholders
who acquired their Aseco common stock from the exercise of stock options or
otherwise as compensation, holders of Aseco stock options, dealers in
securities, banks, insurance companies, and tax-exempt organizations.
ACCORDINGLY, EACH HOLDER OF ASECO COMMON STOCK SHOULD CONSULT A TAX ADVISOR
REGARDING THE TAX CONSEQUENCES OF THE MERGER IN LIGHT OF THE HOLDER'S OWN
SITUATION, INCLUDING THE APPLICATION AND EFFECT OF ANY FEDERAL, STATE, LOCAL, OR
FOREIGN INCOME AND OTHER TAX LAWS. The following discussion is based upon
federal income tax laws as in effect on the date of this proxy
statement/prospectus, which are subject to change, possibly retroactively.
Future legislation, regulations, administrative rulings, or court decisions may
affect these expectations as to federal income tax consequences.
Federal Income Tax Consequences to Aseco Stockholders
The merger has been structured with the intent that it qualifies as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code. Section 368(a) defines the categories of transactions that will qualify as
reorganizations for purposes of the Internal Revenue Code. If the merger
qualifies as a reorganization under Section 368(a), then:
* neither MCT nor Aseco will recognize any gain or loss as a
result of the merger;
* Aseco stockholders will not recognize any gain or loss on the
receipt of MCT common stock in exchange for their Aseco common
stock in the merger; and
* the aggregate tax basis of the MCT common stock received by
the Aseco stockholders in exchange for their Aseco common
stock in the merger will equal the aggregate tax basis of the
Aseco common stock surrendered in exchange therefor (excluding
any basis allocable to fractional shares of MCT common stock
for which cash is received).
It is a condition to the obligations of MCT and Aseco to complete the
merger, that MCT and Aseco receive opinions from their respective counsel, Best
& Flanagan LLP and Choate, Hall & Stewart and that the merger will be treated
for federal income tax purposes as a reorganization within the meaning of
Section 368(a). Those tax opinions will be based on and subject to assumptions
and limitations as well as representations to be received from MCT and Aseco. An
opinion of counsel only represents counsel's best legal judgment, and has no
binding effect or official status of any kind, and no assurance can be given
that contrary positions may not be taken by the IRS or a court. Neither MCT nor
Aseco has requested or will request a ruling from the IRS with regard to any of
the U.S. federal income tax consequences of the merger. Upon the advice of its
counsel, Choate, Hall & Stewart, provided that the merger qualifies as a
reorganization within the meaning of Section 368(a), Aseco believes that its
stockholders will not recognize gain or loss as a result of the exchange of
shares of Aseco common stock solely for voting shares of MCT common stock in the
merger. This result does not apply to any cash received in lieu of a fractional
share of MCT common stock. Subject to the same qualifications, Aseco also
believes that the aggregate tax basis of the MCT common stock received by Aseco
stockholders in the merger will be the same, in each instance, as the aggregate
tax basis of the Aseco common stock surrendered, excluding any basis allocable
to fractional shares of MCT common stock for which cash is received. In
addition, provided that the merger qualifies as a reorganization within the
meaning of Section 368(a), the holding period for the shares of MCT common stock
received in the merger by Aseco stockholders will include the period during
which the shares of Aseco common stock surrendered in exchange therefor were
held, provided that such shares of Aseco common stock were held as capital
assets at the time of the merger.
Either company may waive the condition to receive its respective
counsel's tax opinion and proceed with the merger without such opinion. If Aseco
waives the receipt of such opinion, it will resolicit proxies from its
stockholders after informing them about Aseco's expectations of changes in the
tax consequences of its stockholders or material changes in tax consequences to
it, if any, as a result of the merger.
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Holders of Aseco common stock who receive cash in the merger in lieu of
fractional shares of MCT common stock will be treated, in each instance, as
having received the fractional share and then as having received the cash in
redemption of such fractional share. This deemed redemption will generally
result in the recognition of gain or loss for federal income tax purposes,
measured by the difference between the amount of cash received and the portion
of the tax basis of the holder's share of Aseco common stock allocable to such
fractional share.
Section 302 of the Internal Revenue Code provides general rules
regarding the federal income tax treatment of corporate redemptions of stock.
Section 302 treats cash or property distributed in specific qualifying
redemptions of corporate stock as distributed in exchange for such stock.
Distributions in redemption of corporate stock that do not qualify under Section
302 may be treated as dividends and taxed at ordinary income rates. Among the
categories of redemptions that are treated as exchanges under Section 302 are
those redemptions that are "not essentially equivalent to a dividend". A
redemption of shares held by a stockholder with a minimal interest in a publicly
held corporation who exercises no control with respect to corporate affairs is
generally considered to be "not essentially equivalent to a dividend" if such
redemption results in any actual reduction of the stockholder's percentage stock
ownership.
Assuming that the deemed redemption of any fractional shares meets the
test under Section 302, the holders of Aseco common stock will recognize gain or
loss on the deemed redemption of any fractional shares of MCT common stock. That
gain or loss generally will be capital gain or loss, provided that the holder's
Aseco common stock was held as a capital asset at the time of the merger, and
will be long-term capital gain or loss if the Aseco common stock has been held
for more than one year. Long-term capital gain realized by an individual U.S.
holder is generally subject to a maximum tax rate of 20%.
Federal Income Tax Consequences to Aseco and MCT
Upon the advice of its counsel, Choate, Hall & Stewart, and provided
that the merger qualifies as a reorganization within the meaning of Section
368(a), Aseco will not recognize any gain or loss as a result of the merger.
Upon the advice of its counsel, Best & Flanagan LLP, and provided that the
merger qualifies as a reorganization within the meaning of Section 368(a), MCT
also will not recognize any gain or loss as a result of the merger.
Additionally, Aseco's tax basis in its assets after the merger will be equal to
Aseco's tax basis in such assets immediately prior to the time of the merger.
Provided that the merger qualifies as a reorganization within the meaning of
Section 368(a), Aseco's holding period in its assets after the merger will
include the period during which Aseco held such assets prior to the merger.
Other Tax Issues
A successful IRS challenge to the status of the merger as a
reorganization under Section 368(a) would result in the Aseco stockholders being
treated as if they sold their Aseco shares in a taxable transaction. If that
happened, each Aseco stockholder would be required to recognize all of his or
her realized gain or loss on the disposition of each of his or her Aseco shares
equal to the difference between the Aseco stockholder's basis in such shares and
the fair market value, as of the date the merger becomes effective, of the MCT
shares received in exchange for Aseco shares, plus any cash received for
fractional shares. That gain or loss would be treated as capital gain or capital
loss for a stockholder if he or she held his or her Aseco shares as a capital
asset at the time of the merger. In such event, an Aseco stockholder's aggregate
basis in the MCT shares would be equal to their fair market value as of the
effective time of the merger, and the Aseco stockholder's holding period for
such MCT shares would begin the day after the merger.
ACCOUNTING TREATMENT
The merger will be treated as a purchase of Aseco by MCT, which means
that for accounting and financial reporting purposes the consideration to be
paid in the merger will be allocated to assets acquired and liabilities assumed
based on their estimated fair values at the completion of the merger. Income (or
loss) of the combined company will not include income (or loss) of Aseco before
the completion of the merger.
The merger will be accounted for as a "purchase" transaction for
accounting and financial reporting purposes, in accordance with generally
accepted accounting principles. The total estimated purchase price relating to
the merger has been allocated on a preliminary basis to the assets acquired and
liabilities assumed based on MCT's estimates of their respective fair values. To
the extent this purchase price exceeds the fair value of the net tangible assets
acquired at the effective time of the merger, MCT will allocate the purchase
price to intangible assets that may include purchased in-process research and
development, acquired technology, and other identified intangible assets with
the remainder allocated to goodwill. While the amortization of acquired
technology and other identified intangible assets and goodwill will have no
effect on MCT's operating cash flow, such amortization may have an adverse
effect on MCT's reported earnings per share. The allocation of purchase price is
subject to change pending a final analysis of the value of the assets acquired
and liabilities assumed. The impact of such changes could be material and any
increases in the amounts allocated to acquired technology and other identified
intangible assets and goodwill resulting from changes could increase the
negative effect of such amortization on MCT's earnings per share.
APPRAISAL RIGHTS
Under Minnesota and Delaware law, no holder of MCT common stock or of
Aseco common stock will be entitled to demand appraisal of, or to receive
payment for, the shareholder's shares as a result of the merger or the other
transactions contemplated by the merger agreement.
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NASDAQ LISTING OF MCT COMMON STOCK
Prior to the merger, MCT will obtain approval to list on the Nasdaq
National Market System the shares of MCT common stock to be issued in the merger
and upon the exercise of the Aseco stock options. This listing is a condition to
the completion of the merger. See "The Merger Agreement--Conditions to Our
Obligations to Complete the Merger."
FEDERAL SECURITIES LAW CONSEQUENCES
The shares of MCT common stock received by Aseco stockholders in the
merger generally will be freely transferable. Shares of MCT common stock
received by persons who are affiliates of Aseco before the merger, however, may
be resold by them only in transactions permitted by the resale provisions of
Rule 145 under the Securities Act, or as otherwise permitted under the
Securities Act. Persons who may be deemed to be affiliates of Aseco generally
include individuals or entities that control, are controlled by, or are under
common control with, Aseco, and may include officers and directors as well as
principal stockholders of Aseco.
This document does not cover resales of MCT common stock received by
any person.
THE MERGER AGREEMENT
The Merger
The merger agreement provides for the acquisition of Aseco by MCT
Acquisition, Inc., a wholly-owned subsidiary of MCT.
The completion of the merger will take place as soon as practicable
following the date when the last of the conditions to the merger is satisfied or
waived, or at any other time and date to which MCT and Aseco mutually agree in
writing. As soon as practicable following the closing of the merger, MCT and
Aseco will cause articles of merger to be filed with the Secretary of State of
the State of Delaware. At that time, or at any other time that the parties may
agree upon in writing, the merger will become effective.
Merger Consideration
As a result of the merger, your shares of Aseco common stock will be
converted into:
* a number of shares of MCT common stock determined by
multiplying your number of shares of Aseco common stock times
the exchange ratio, calculated as set forth below; plus
* cash in lieu of any fractional shares of MCT common stock
calculated using the exchange ratio.
To obtain the number of shares of MCT stock for the merger, $16.3
million will be divided by the average closing sale price per share of MCT stock
over the twenty trading days prior to the day of the closing. However, if this
twenty day average price is less than $3.565, $3.565 will be used as the divisor
and if this twenty day average price is more than $5.563, $5.563 will be used as
the divisor. The exchange ratio will be computed by dividing that number of
shares of MCT stock by the aggregate of the number of shares of Aseco stock
outstanding immediately before the closing plus 709,152 shares to reflect shares
reserved for Aseco options.
For example, under this formula, if the transaction had closed on
_________ __, 1999, the exchange ratio would have been approximately _____
shares of MCT stock for every share of Aseco stock. This exchange ratio would
have been obtained by:
1. Dividing $16.3 million by $_______ (the average trading price of MCT
stock over the twenty days before __________, 1999);
2. Dividing the result (_________) by ________ (the total number of
Aseco shares outstanding on _________, 1999 plus 709,152 shares).
The following table shows examples of possible exchange ratios using
this formula at various MCT twenty day average stock price levels, and the
number of outstanding shares for Aseco at October 1, 1999 which was 3,908,570.
24
<PAGE>
MCT Twenty Day
Average Stock Price Total MCT Shares Issuable Exchange Ratio
------------------- ------------------------- --------------
$ 3.565 or below 4,572,230 0.990
4.25 3,835,294 0.831
4.5877 3,552,979 0.769
4.95 3,292,929 0.713
5.563 or above 2,930,074 0.635
The merger consideration will be reduced if, and to the extent that,
Aseco's expenses connected to this transaction exceed $650,000.
Exchange of Certificates for Shares
As soon as practicable after the effective time of the merger, the
exchange agent, Norwest Stock Transfer, Inc., will mail to each record holder of
outstanding certificates that immediately before the effective time represented
shares of Aseco common stock:
* a letter of transmittal advising the holders that the merger
has become effective, and
* instructions for exchanging the Aseco certificates for the
merger consideration.
On surrender to the exchange agent of an Aseco certificate, together
with any other required documents, the holder of the Aseco certificate will be
entitled to receive a new certificate representing that number of whole shares
of MCT common stock plus cash in lieu of any fractional shares and the Aseco
certificate will be canceled.
If the exchange of certificates representing shares of Aseco common
stock is to be made to a person other than the person in whose name the
surrendered Aseco certificate is registered,
* the Aseco certificate must be properly endorsed or otherwise
in proper form for transfer; and
* the person requesting the exchange must have paid any required
transfer and other taxes.
Until properly surrendered, after the effective time of the merger each
Aseco certificate will represent only the right to receive merger consideration.
No interest will be paid or will accrue on the cash portion of the merger
consideration payable on surrender of any Aseco certificate.
Holders of Aseco common stock should not forward Aseco certificates to
the exchange agent until they have received transmittal forms. Holders of Aseco
common stock should not return Aseco certificates with the enclosed proxy.
Representations and Warranties
The merger agreement contains customary representations and warranties
by both MCT and Aseco relating to, among other things,
* corporate organization and similar corporate matters;
* authorization, execution, delivery, performance and
enforceability of the merger agreement and related matters;
* the absence of any material adverse changes as a result of
entering into the merger agreement;
* capital structure;
* the accuracy of reports and financial statements filed with
the SEC;
* the absence of any adverse material suits, claims or
proceedings and other litigation;
* compliance with applicable laws and agreements; and
* the absence of any undisclosed liabilities.
The merger agreement also contains additional customary representations
and warranties by Aseco relating to, among other things,
* material contracts and commitments;
* ownership of real property and material assets;
* environmental matters;
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<PAGE>
* tax matters;
* employee and labor matters;
* employee benefits;
* insurance matters;
* intellectual property;
* the inapplicability of state takeover statutes to the merger
and the merger agreement; and
* the amount of aggregate indebtedness.
Continuation of Business Pending the Merger
MCT and Aseco have each agreed that during the period from the date
of the merger agreement until the closing of the merger, each company will
* operate and maintain our businesses in the usual manner and in
the ordinary course;
* not declare or pay any dividend or other distribution;
* with some exceptions, not issue or sell any capital stock or
rights to acquire capital stock;
* acquire assets only in the ordinary course; and
* not amend our charter documents.
In addition, Aseco has agreed that in this period it will not:
* incur additional debt, encumber any of its material assets or
make any material commitments related to these assets, except
in the ordinary course and after written notice to MCT;
* acquire any voting securities of MCT;
* make any tax election, except in the ordinary course;
* make any payment to discharge or satisfy any lien or
encumbrance or pay any obligation or liability other than as
required by their terms and other than amounts not to exceed a
specified amount;
* increase the compensation payable to its officers, employees
or agents, other than as required by existing employment
arrangements or in the ordinary course;
* enter into any contracts or transactions with affiliates;
* implement or amend any employee benefit plan or arrangement
other than as required by applicable law or regulation;
* make any capital expenditures, other than in the ordinary
course, with certain exceptions;
* change its accounting methods, policies or practices; and
* settle or compromise any material claims or litigation or,
except in the ordinary course, modify, amend or terminate any
of its material contracts or waive, release or assign any
material rights or claims.
Further, Aseco has agreed to, in this period:
* use its reasonable best efforts to preserve its business
organization intact;
* maintain its existing relations with customers, suppliers,
employees and business associates;
* suspend participation in its employee stock purchase plan;
* rescind or modify certain stock grants and compensation
actions;
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<PAGE>
* amend or terminate its rights plan for its shareholders, or
redeem the rights; and
* amend non-employee director stock options to require exercise
within six months of the merger.
Aseco also has agreed to use its best efforts to obtain any required
consent of any third party to the transactions contemplated by the merger
agreement.
MCT has agreed to appoint Mr. Sebastian J. Sicari and one other
individual to be designated by Aseco to be appointed to its Board of Directors
within thirty (30) days after completion of the merger.
No Solicitation
Aseco has agreed it will not solicit or initiate any proposal
concerning a merger, business combination or similar transaction or the purchase
of a material amount of its assets or equity securities. Aseco and the Aseco
board may, however,
* provide information to anyone who has made an unsolicited
proposal;
* engage in any discussions with anyone who has made an
unsolicited proposal;
* withdraw or modify the approval or recommendation by the Aseco
board of the merger agreement in connection with an
unsolicited proposal; and
* take actions to comply with specified rules under the
Securities Exchange Act of 1934.
The Aseco board may engage in the first three actions listed above only
if it determines, after receipt of advice of counsel, that the action is
required to comply with its fiduciary duties under applicable law.
Aseco has agreed to notify MCT promptly of any proposals it may receive
and to keep MCT informed of the principal terms (other than the identity of such
interested party) relating to any proposal.
Conditions to the Obligations of MCT, MCT Acquisition and Aseco to Complete the
Merger
MCT, MCT Acquisition and Aseco will not be obligated to complete the
merger unless the following conditions are satisfied:
* Aseco and MCT stockholders shall have approved the merger;
* no law or ruling shall have been enacted or entered that
prohibits the completion of the merger;.
* the shares of MCT common stock to be issued to Aseco
stockholders shall have been authorized for listing on the
Nasdaq National Market;
* no action or other proceeding to prevent the closing of the
merger shall be pending against us;
* the registration statement of which this document forms a part
shall have become and shall remain effective;
* no condition shall have been imposed by any governmental
entity which we determine would have certain specified
material adverse effects on the merger;
* the delivery of fairness opinions by financial advisors;
Additional Conditions to the Obligations of MCT and MCT Acquisition to Complete
the Merger
MCT and MCT Acquisition will not be obligated to complete the merger
unless the following additional conditions are satisfied:
* the representations and warranties of Aseco shall be true and
correct as of the merger closing date, and Aseco shall have
performed and complied with all material obligations and
agreements required to be performed or complied with at before
the merger closing date;
* MCT shall have received an opinion of Aseco's counsel as to
certain matters;
* MCT shall have received the other agreements specified in the
merger agreement and a closing certificate from Aseco
officers;
* Aseco shall not have experienced certain material adverse
financial changes in its business or results of operations,
specified in the merger agreement;
* Aseco shall have amended the severance agreements with Mr.
Sicari and Mr. Archer to provide for payment of required
severance amount in MCT common stock, rather than cash, and to
require exercise of their stock options, on specified terms;
and
* MCT shall have received an opinion of its counsel as to
certain tax matters.
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<PAGE>
Additional Conditions to the Obligations of Aseco to Complete the Merger
Aseco will not be obligated to complete the merger unless the following
additional conditions are satisfied:
* the representations and warranties of MCT shall be true and
correct as of the merger closing, and MCT shall have performed
and complied with all material obligations and agreements
required to be performed and complied with at or before the
merger closing date;
* Aseco shall have received an opinion of MCT's counsel as to
certain matters;
* Aseco shall have received a closing certificate from an MCT
officer; and
* Aseco shall have received an opinion of its counsel as to
certain tax matters.
Termination
The merger agreement may be terminated and the merger may be abandoned
at any time by
* our mutual consent; or
* either of us if:
* the merger is not completed on or before February 28,
2000;
* any order permanently prohibiting completion of the
merger has become final and nonappealable;
* at any time prior to the effective time of the
merger, if all of the following conditions are met:
(a) The terminating party is not in material
breach of the merger agreement;
(b) The terminating party's board of directors
determines in good faith, with advice of
financial and legal counsel, that its
fiduciary duties require termination due to
the receipt of a proposal from a third party
to enter into a merger, exchange, sale of
substantially all if its assets, or similar
transaction;
(c) The board of directors receives a written
legal opinion of counsel that its fiduciary
duties require termination; and
(d) The terminating party promptly pays to the
other party a $1 million termination fee.
* The other party has materially breached any
representation, warranty, covenant or agreement that
is not cured.
Liquidated Damages
The merger agreement provides that any party which fails to complete
the merger in breach of the agreement must pay the other party liquidated
damages of $1 million.
Options
Existing Aseco stock options will become options to purchase MCT stock.
The exercise price of the options will be adjusted by dividing the stated
exercise price by the exchange ratio. The number of shares subject to the option
will be adjusted by multiplying the stated number by the exchange ratio.
Expenses
Each party will be responsible for payment of its own expenses incurred
in connection with the Merger Agreement, except that MCT will pay 65% of any
printing costs, and Aseco will pay 35% of such costs. Any expenses of Aseco
which exceed $650,000 will directly reduce the $16.3 million merger
consideration, on a dollar-for-dollar basis.
Indemnification
MCT has agreed to indemnify Aseco's current officers and directors
against claims arising out of their tenure with Aseco, to the full extent which
MCT would be permitted to indemnify its own officers and directors in similar
circumstances. MCT has agreed to provide $3 million of officers' and directors'
liability insurance coverage for these individuals for a period of three years
following completion of the merger.
Amendments; Waiver
The merger agreement may be modified or amended only by our written
agreement. A party may waive its rights under the merger agreement only in
writing. The failure of any party to require performance of any provision of the
merger agreement will not
28
<PAGE>
limit that party's right to enforce the provision. No waiver of any breach of
any provision of the merger agreement will constitute a waiver of any subsequent
breach of the provision or a waiver of the provision itself.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial
statements reflect the combination of MCT and Aseco and the issuance of MCT
shares to Aseco shareholders. The unaudited pro forma condensed combined
financial statements have been derived from audited consolidated financial
statements of MCT and Aseco, which are incorporated in this document by
reference. Aseco's fiscal year ends on the Sunday closest to the end of March.
The unaudited pro forma condensed combined balance sheet as of June 26,
1999 was prepared as if the merger had occurred on that date. The unaudited pro
forma condensed combined statement of operations for the year ended June 26,
1999 was prepared as if the transaction had occurred on June 28, 1998.
In addition to the stated purchase price of $16.3 million, the total
purchase consideration includes approximately $1.2 million of identified
severance and MCT transaction costs, of which $700,000 of severance costs will
be paid in MCT common stock and the remainder will be paid in cash. The total
estimated purchase price relating to the merger has been allocated on a
preliminary basis to the assets acquired and liabilities assumed based on MCT's
estimates of their respective fair values. To the extent this purchase price
exceeds the fair value of the net tangible assets acquired at the effective time
of the merger, MCT will allocate the purchase price to intangible assets that
may include purchased in-process research and development, acquired technology,
and other identified intangible assets with the remainder allocated to goodwill.
While the amortization of acquired technology and other identified intangible
assets and goodwill will have no effect on MCT's operating cash flow, such
amortization may have an adverse effect on MCT's reported earnings per share.
The allocation of purchase price is subject to change pending a final analysis
of the value of the assets acquired and liabilities assumed. The impact of such
changes could be material and any increases in the amounts allocated to acquired
technology and other identified intangible assets and goodwill resulting from
changes could increase the negative effect of such amortization on MCT's
earnings per share.
In the opinion of management of MCT, all adjustments necessary to
present fairly the pro forma condensed combined financial statements have been
made based on the proposed terms and structure of the transaction. MCT and
Aseco, however, anticipate that changes in the composition of assets acquired
and liabilities assumed will occur due to changes in the ordinary course of
business of each company before the merger closing date. In addition, Aseco has
reported net losses totaling approximately $1.0 million since the balance sheet
date of Aseco shown in the unaudited pro forma condensed combined statements.
Such losses will reduce the net tangible assets of Aseco, and increase goodwill
recorded in the transaction. Pursuant to the merger agreement, MCT and Aseco are
required to operate their businesses in the ordinary course until the merger
closing date. As a result of the merger, however, Aseco will incur transaction
costs approximating $650,000. Such costs will be expensed by Aseco on or before
the merger closing date, and the tangible net assets of Aseco will be reduced by
the amount of such costs. As a result, the portion of the purchase price
allocated to tangible assets will decrease, likely resulting in the recognition
of additional goodwill by the combined company.
These unaudited pro forma condensed combined financial statements are
not necessarily indicative of what actual results would have been had the merger
or issuance of MCT shares to Aseco shareholders occurred at the beginning of the
period nor do they purport to indicate the results of future operations of MCT
and Aseco. The unaudited pro forma condensed combined financial statements do
not reflect synergies that may be realized as a result of the merger. The
unaudited pro forma condensed combined financial statements should be read in
conjunction with the accompanying notes and historical financial statements and
notes to the financial statements of MCT and Aseco incorporated by reference in
this document.
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<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
MCT Aseco Pro Forma Pro Forma
June 26,1999 March 28, 1999 Adjustments Combined
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,927 $ 1,229 $ (612)(1) $ 2,544
Accounts receivable 3,596 4,041 7,637
Inventories 3,616 5,893 (1,250)(2) 8,259
Other 131 1,918 2,049
--------- --------- --------- ---------
Total current assets 9,270 13,081 (1,862) 20,489
Property, plant and equipment, less
accumulated depreciation 673 2,134 2,807
Goodwill 8,695 (3) 8,695
Other assets 47 109 156
--------- --------- --------- ---------
Total assets $ 9,990 $ 15,324 $ 6,833 $ 32,147
========= ========= ========= =========
Liabilities and Stockholder's Equity
Current liabilities:
Current portion of long-term debt $ 51 $ 12 $ 63
Line of credit -- 475 475
Accounts payable 1,548 1,964 $ (162)(1) 3,350
Accrued expenses 1,406 2,868 4,274
--------- --------- --------- ---------
Total current liabilities 3,005 5,319 (162) 8,162
Long-term debt 33 -- 33
Stockholders' equity:
Common stock 74 38 0 (4)(5) 112
Additional paid-in capital 44,035 18,321 (1,359)(4)(5) 60,997
Cumulative other comprehensive income (69) 28 (28)(5) (69)
Accumulated deficit (37,088) (8,382) 8,382 (5) (37,088)
--------- --------- --------- ---------
Total stockholders' equity 6,952 10,005 6,995 23,952
--------- --------- --------- ---------
Total liabilities and stockholders' equity $ 9,990 $ 15,324 $ 6,833 $ 32,147
========= ========= ========= =========
</TABLE>
See notes to the unaudited pro forma condensed combined financial statements.
30
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 26, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
MCT Aseco Adjustments Combined
------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 15,171 $ 19,218 $ 34,389
Cost of sales 7,539 17,856 25,395
--------- --------- ---------
Gross profit 7,632 1,362 8,994
Operating expenses:
Selling, general and administrative 6,279 9,077 $ 870(1) 16,226
Research and development 2,800 5,305 8,105
Restructuring charge -- 1,300 1,300
--------- --------- --------- ---------
Total operating expenses 9,079 15,682 870 25,631
Loss from operations (1,447) (14,320) (870) (16,637)
Other income (expense):
Interest income (expense), net 67 (50) 17
Other income (expense) (86) 7 (79)
--------- --------- --------- ---------
Loss before income taxes (1,466) (14,363) (870) (16,699)
Income tax benefit -- (690) (690)
--------- --------- --------- ---------
Net loss $ (1,466) $ (13,673) $ (870) $ (16,009)
========= ========= ========= =========
Net loss per share:
Basic $ (0.20) $ (3.64) $ (1.44)
Diluted (0.20) (3.64) (1.44)
Weighted average common and common
Equivalent shares outstanding:
Basic 7,396 3,758 11,102
Diluted 7,396 3,758 11,102
</TABLE>
See notes to the unaudited pro forma condensed combined financial statements.
31
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The unaudited pro forma condensed combined statements were prepared
using MCT's twenty-day average stock price ending October 1, 1999 of $4.5877,
which was assumed to be the closing price of MCT stock on the date the
transaction is completed. Total purchase consideration used in the preparation
of these statements was computed as follows:
Stated merger consideration $16,300
Estimated severance costs and
transaction costs of MCT 1,150
-------
Total purchase consideration $17,450
=======
The actual total purchase consideration may change based upon the
closing price of MCT common stock on the date the transaction is completed, and
any differences in actual transaction costs incurred versus estimated costs.
Pro Forma adjustments giving effect to the merger in the unaudited pro
forma condensed combined balance sheets reflect the following:
1. Cash disbursements and liabilities recorded by MCT for transaction
costs related to the merger.
2. To adjust inventory to estimated fair value and establish valuation
reserves for products that will be discontinued.
3. Record value assigned to goodwill arising from merger.
4. Common stock issued by MCT to Aseco shareholders to effect the merger.
5. Elimination of the Aseco stockholders' equity accounts.
Pro Forma adjustments giving effect to the merger in the unaudited pro
forma condensed combined statements of income reflect the following:
1. Amortization of goodwill acquired on a straight-line basis over 10
years.
COMPARATIVE MARKET PRICES AND DIVIDENDS
The MCT common stock and the Aseco common stock are listed in the
Nasdaq National Market under the ticker symbols "MCT" and "ASEC," respectively.
The following table sets forth, for the calendar quarters indicated, the high
and low bid prices of the MCT common stock and the Aseco common stock as
reported on Nasdaq. The bid prices quotations reflect interdealer prices,
without retail mark-up, mark-down or commission and may not represent actual
transactions.
MCT Aseco
Common Stock Common Stock
-------------------- --------------------
High Low High Low
------ ----- ------ -----
Calendar Year 1997
Second Quarter $3.875 $2.25 $13.38 $8.63
Third Quarter 5.63 3.25 19.00 10.63
Fourth Quarter 5.38 1.50 18.88 8.38
Calendar Year 1998
First Quarter $2.50 $1.38 $11.38 $7.25
Second Quarter 2.00 1.00 8.00 3.66
Third Quarter 1.06 0.47 4.31 1.00
Fourth Quarter 2.00 0.44 2.50 0.63
Calendar Year 1999
First Quarter $2.88 $1.16 $2.66 $1.19
Second Quarter 2.75 1.84 1.97 0.72
Third Quarter 6.00 2.00 4.88 0.81
On September 17, 1999, the last trading day before the public
announcement of the merger, the closing price on Nasdaq was $5.563 per share of
MCT common stock and $3.469 per share of Aseco common stock. On ________, 1999,
the most recent practicable date before the date of this document, the closing
price on Nasdaq was $_____ per share of MCT common stock and $_______ per share
of Aseco common stock. We urge shareholders to obtain current market quotations
before making any decision about the merger.
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<PAGE>
On _________, 1999 there were approximately
* _____ holders of record of MCT common stock
* _____ holders in street name of MCT common stock
* _____ holders of record of Aseco common stock
* _____ holders in street name of Aseco common stock.
Neither of us has ever declared or paid a dividend and neither of us
anticipates doing so in the foreseeable future. We expect the combined company
to retain earnings to finance the expansion and development of its business. The
payment of dividends will be within the discretion of the MCT board of directors
and will depend in part on the earnings, capital requirements and operating and
financial condition of the combined company.
DESCRIPTION OF CAPITAL STOCK
MCT's authorized capital stock consists of 20,000,000 shares of common
stock and 1,000,000 shares of preferred stock.
Common Stock.
As of ________, 1999, _______ shares of MCT common stock were
outstanding, held of record by ___ shareholders.
Holders of MCT common stock are entitled to receive any dividends
properly declared by the MCT board. Holders of MCT common stock are entitled to
one vote per share on all matters on which the holders of MCT common stock are
entitled to vote. Holders of MCT common stock do not have any cumulative voting
rights. Holders of MCT common stock have no preemptive, conversion, redemption
or sinking fund rights.
If MCT is liquidated, dissolved or wound up, holders of MCT common
stock are entitled to share equally and ratably in the remaining assets of MCT
after
* the payment of all liabilities of MCT and
* the liquidation preference of any outstanding class or series
of MCT preferred stock.
The outstanding shares of MCT common stock are, and the shares of MCT
common stock to be issued as a result of the merger will be, fully paid and
nonassessable. The rights, preferences and privileges of holders of MCT common
stock are subject to any series of MCT preferred stock that MCT may issue in the
future, as described below.
Preferred Stock.
MCT's board has the authority to issue preferred stock in one or more
series and to fix:
* the number;
* the preferences;
* the limitations;
* the relative rights, including dividend rights;
* the dividend rate;
* the voting rights;
* the terms of redemption;
* the redemption price or prices;
* the conversion rights; and
* the liquidation preferences
of the shares constituting the series, without any further vote or action by the
shareholders of MCT. The issuance of MCT preferred stock by the MCT board could
adversely affect the rights of holders of MCT common stock.
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<PAGE>
The potential issuance of MCT preferred stock may
* have the effect of delaying or preventing a change in control
of MCT;
* discourage bids for the MCT common stock at a premium over the
market price of the MCT common stock; and
* adversely affect the market price of, and the voting and other
rights of the holders of, MCT common stock.
MCT has no plans to issue shares of preferred stock.
Minnesota Control Share Acquisition and Business Combination Statutes.
MCT is subject to the Minnesota Control Share Acquisition Statutes.
These statutes are fully described below. See "Comparison of Shareholder Rights
- - Anti-Takeover Legislation".
COMPARISON OF SHAREHOLDERS' RIGHTS
The rights of Aseco's stockholders are governed by Aseco's charter
documents and the Delaware Corporation Law. The rights of Aseco stockholders who
become MCT shareholders will be governed by MCT's Articles of Incorporation and
Bylaws and the Minnesota Business Corporation Act. Upon completion of the
merger, Aseco stockholders will become shareholders of MCT. The following
summary compares the key differences between the rights of Aseco stockholders
and the rights of MCT shareholders.
Number of Directors.
The MCT board is composed of between three and nine directors, as fixed
by the MCT board. The MCT board now consists of six directors and will be
increased by two additional directors if the merger is completed.
The Aseco board is composed of between three and fifteen directors, as
fixed by the board. The Aseco board now consists of five directors.
Classified Board of Directors.
The MCT board is not classified. The directors are elected each year at
the annual meeting of shareholders. Aseco's charter provides for three classes
of directors with the classes serving staggered three year terms and with each
class being as nearly equal in size as possible. At each annual meeting,
stockholders elect one class to a three-year term.
Removal of Directors.
Any director may be removed from the MCT board at any meeting of the
shareholders called for that purpose by a majority of the MCT common stock
represented and entitled to vote at the meeting. Aseco directors may be removed
only "for cause" by the vote of a majority of the shares outstanding and
entitled to vote in the election of directors.
Vacancies on the Board of Directors.
Vacancies on the MCT board may be filled by the shareholders, the MCT
board or the vote of a majority of the remaining directors if the remaining
directors constitute less than a quorum of the MCT board. A director so elected
to fill a vacancy serves until the next annual meeting of shareholders and until
the director's successor is elected and qualified. Under Aseco's charter,
vacancies on the Aseco board may be filled only by the vote of a majority of the
remaining directors, even if these directors do not constitute a quorum of the
Aseco board or if only one director remains on the board. Any director so
elected will hold office for the remainder of the full term of the class to
which the director is elected and until the director's successor is elected and
qualified.
Shareholder Action by Written Consent.
Any action required or permitted to be taken at an MCT shareholders
meeting may be taken without a meeting if the action is taken by all the
shareholders entitled to vote on the action and evidenced by written consent of
all the shareholders. Aseco's charter documents provide that any action required
or permitted to be taken must be taken at a duly called annual or special
meeting. Such action may not be taken by written consent of the stockholders.
Amendments of Articles of Incorporation/Organization.
In general, amendments to MCT's articles of incorporation must be
recommended to the MCT shareholders by the board and approved by a majority of
the votes entitled to be cast by any voting group that has a right to vote on
the amendment, unless a higher percentage is specified by the Minnesota Business
Corporation Act, MCT's articles of incorporation or MCT's board. Aseco's
Articles of Incorporation may be altered, amended, or repealed only upon the
board's recommendation and by a vote of two-thirds of the stock outstanding and
entitled to vote.
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Amendment of Bylaws.
The MCT Bylaws may be amended or repealed and new bylaws may be adopted
by the MCT board or the MCT shareholders, except that amendments affecting the
qualifications, classifications, number, term, removal or filling of vacancies
of the board of directors, or fixing a quorum for shareholders' meetings, may
only be made by a majority vote of shareholders. The Aseco board may make,
alter, amend or repeal new bylaws, except as the Delaware General Corporation
Law may limit or restrict this power. The Aseco bylaws may also be made,
altered, amended at any annual or special meeting of the stockholders by the
vote of a majority of the holders of shares of capital stock issued, outstanding
and entitled to vote on this issue.
Calling of Special Meeting of Shareholders.
Special meetings of MCT shareholders may only be called by the
president, any vice-president, or the MCT board, and must be called by the
president at the request of the holders of not less than 10 percent of the
outstanding shares of MCT entitled to vote at the meeting. The Aseco bylaws
provide that the board, the chief executive officer, the president, or the
secretary may call a special meeting of shareholders at the written request of a
majority of the board. Shareholders must be provided written notice of a special
meeting no less than ten days and no more than sixty days before the special
meeting is to occur.
Anti-Takeover Legislation.
Both Minnesota law and Delaware Law contain provisions intended to
protect stockholders from individuals or companies attempting a takeover of a
corporation in certain circumstances. The anti-takeover provisions of Minnesota
law and the Delaware General Corporation Law differ in a number of respects, and
the following is a summary of certain significant differences. A comparison of
the Delaware and Minnesota statutes reveals that Minnesota law is somewhat more
restrictive with respect to a prospective takeover attempt than Delaware. In
Minnesota, an interested stockholder is one who owns ten percent of the
outstanding shares while in Delaware 15 percent is the threshold. An interested
stockholder must wait four years in Minnesota to engage in prohibited business
combinations, while the waiting period is only three years in Delaware.
Minnesota also has a potentially broader definition of a business combination
which encompasses a larger variety of transactions.
CONTROL SHARE ACQUISITION. The Minnesota "control share
acquisition" statute establishes various disclosure and stockholder
approval requirements to be met by individuals or companies attempting
a takeover. Delaware has no comparable provision. The Minnesota statute
applies to an "issuing public corporation." An "issuing public
corporation" is one which is incorporated under or governed by
Minnesota law and has at least fifty stockholders. MCT is subject to
the statute; Aseco, because it is a Delaware corporation, is not
subject to the statute.
The Minnesota statute requires disinterested stockholder
approval for any acquisition of shares of an "issuing public
corporation" which results in the "acquiring person" owning 20 percent
or more of the outstanding shares of such corporation. Stockholders
which exceed this threshold without stockholder approval lose their
voting rights and are subject to certain redemption privileges of the
corporation. Such shares regain their voting rights only if the
acquiring person discloses certain information to the corporation and
such voting rights are granted by the stockholders at a special or
annual meeting of the stockholders. The Minnesota control share
acquisition statute applies unless the "issuing public corporation"
opts out of the statute in its articles of incorporation or bylaws.
Neither the Articles of Incorporation nor the Bylaws of MCT contain
such an opt out provision.
BUSINESS COMBINATIONS. While there is no Delaware statute
comparable to the Minnesota control share acquisition statute, both
Minnesota and Delaware have business combination statutes that are
intended primarily to deter highly leveraged takeover bids which
propose to use the target's assets as collateral for the offeror's debt
financing and to liquidate the target, in whole or in part, to satisfy
financing obligations.
The Minnesota statute provides that an issuing public
corporation (as described above with respect to the Minnesota control
share acquisition statute) may not engage in certain business
combinations with any person that acquires beneficial ownership of ten
percent or more of the voting stock of that corporation (i.e., an
interested stockholder) for a period of four years following the date
that the person became a ten percent stockholder (the share acquisition
date) unless, prior to that share acquisition date, a committee of the
corporation's disinterested directors approve either the business
combination or the acquisition of shares.
In contrast to the Minnesota provisions, the Delaware statute
provides that if a person acquires 15 percent or more of the voting
stock of a Delaware corporation, the person is designated an interested
stockholder and the corporation may not engage in certain business
combinations with such person for a period of three years. However, an
otherwise prohibited business combination may be permitted if one of
three conditions is met. First, if prior to the date the person became
an interested stockholder, the board of directors approved either the
business combination or the transaction which resulted in becoming an
interested stockholder, then the business combination is permitted.
Second, a business combination is permitted if the tender offer or
other transaction pursuant to which the person acquires 15 percent
stock ownership is attractive enough such that the interested
stockholder is able to acquire ownership in the same transaction of at
least 85 percent of the outstanding voting stock (excluding for
purposes of determining the number of shares outstanding are those
shares owned by directors who are also officers and shares owned by
certain employee stock ownership plans). Finally, the business
combination is permissible if approved by the board and authorized at
an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of two-thirds of the outstanding
voting shares held by disinterested stockholders.
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<PAGE>
The Delaware provisions do not apply to any business
combination in which the corporation, with the support of a majority of
those directors who were serving as directors before any person became
an interested stockholder, proposes a merger, sale, lease, exchange or
other disposition of at least 50 percent of its assets, or supports (or
does not oppose) a tender offer for at least 50 percent of its voting
stock. In such a case, all interested stockholders are released from
the three year prohibition and may compete with the corporation
sponsored transaction.
Another difference between the two statutes is the method by
which prohibited transactions become permissible. In Delaware, an
otherwise prohibited business combination may be permitted by board
approval, by stockholder approval, or by an acquisition of 85 percent
of the outstanding shares of voting stock. In Minnesota, a prohibited
transaction is only permitted by advance board committee approval. In
addition, the Delaware statute provides that if the corporation
proposes a merger or sale of assets, or does not oppose a tender offer,
all interested stockholders are released from the three year
prohibition and may compete with the company-sponsored transaction in
certain circumstances. The Minnesota statute does not have a comparable
provision.
Both the Minnesota and Delaware provisions permit a corporation to "opt
out" of the business combination statute by electing to do so in its articles or
certificate of incorporation or bylaws. Neither the Certificate of Incorporation
nor the Bylaws of Aseco contain such an "opt out" provision. Similarly, neither
the Articles of Incorporation nor the Bylaws of MCT contain such an "opt out"
provision.
Other Anti-Takeover Provisions. Minnesota law includes three other provisions
relating to takeovers that are not included in the Delaware General Corporation
Law. These provisions address a corporation's use of golden parachutes,
greenmail and the standard of conduct of the board of directors in connection
with the consideration of takeover proposals.
Minnesota law contains a provision which prohibits a publicly-held
corporation from entering into or amending agreements (commonly referred to as
golden parachutes) that increase current or future compensation of any officer
or director during any tender offer or request or invitation for tenders.
Minnesota law also contains a provision which limits the ability of a
corporation to pay greenmail. The statute provides that a publicly-held
corporation is prohibited from purchasing or agreeing to purchase any shares
from a person who beneficially owns more than five percent of the voting power
of the corporation if the shares had been beneficially owned by that person for
less than two years, and if the purchase price would exceed the market value of
those shares. However, such a purchase will not violate the statute if the
purchase is approved at a meeting of the stockholders by a majority of the
voting power of all shares entitled to vote or if the corporation's offer is of
at least equal value per share and to all holders of shares of the class or
series and to all holders of any class or series into which the securities may
be converted. Minnesota law also authorizes the board of directors, in
considering the best interests of the corporation with respect to a proposed
acquisition of an interest in the corporation, to consider the interest of the
corporation's employees, customers, suppliers and creditors, the economy of the
state and nation, community and social considerations and the long-term as well
as short-term interests of the corporation and its stockholders, including the
possibility that these interests may best be served by the continued
independence of the corporation.
Indemnification.
Minnesota law generally provides for mandatory indemnification of
persons acting in an official capacity on behalf of the corporation if such a
person acted in good faith, received no improper personal benefit, acted in a
manner the person reasonably believed to be in or not opposed to the best
interest of the corporation and, in the case of criminal proceeding, had no
reasonable cause to believe that the conduct was unlawful.
Delaware law permits a corporation to indemnify officers, directors,
employees or agents and expressly provides that the indemnification provided for
therein shall not be deemed exclusive of any indemnification right provided
under any bylaw, vote of stockholders or disinterested directors or otherwise.
In this way, the provision in Delaware law is broader than that in Minnesota
law. Delaware law permits indemnification against expenses and certain other
liabilities arising out of legal actions brought or threatened against parties
entitled to indemnity for their conduct on behalf of the corporation, provided
that each such person acted in good faith and in a manner such person reasonably
believed was in or not opposed to the best interests of the corporation.
Indemnification is available in a criminal action only if the person seeking
indemnity had no reasonable cause to believe that the person's conduct was
unlawful. Delaware law does not allow indemnification for directors in the case
of an action by or in the right of the corporation (including stockholder
derivative suits) as to which such director shall have been adjudged to be
liable to the corporation unless indemnification (limited to expenses) is
ordered by a court.
The Bylaws of MCT provide for indemnification to the full extent
provided by Minnesota law. The Bylaws of Aseco also provide for indemnification
to the full extent permitted by Delaware law.
Appraisal Rights in Connection with Corporate Reorganizations and other Actions.
Under Minnesota law and Delaware law, stockholders have the right, in
some circumstances, to dissent from certain corporate transactions by demanding
payment in cash for their shares equal to the fair value as determined by
agreement with the corporation or by a court in an action timely brought by the
dissenters. Minnesota law, in general, affords dissenters' rights upon certain
amendments to the articles that materially and adversely affect the rights or
preferences of the shares of the dissenting stockholder, upon the sale of
substantially all corporate assets, and upon merger or exchange by a
corporation, regardless of whether the shares of the corporation are listed on a
national securities exchange or widely held. The merger currently under
consideration is between Aseco and MCT Acquisition, Inc., MCT's wholly owned
subsidiary, so MCT shareholders do not have dissenter's rights.
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<PAGE>
Delaware law allows for dissenters' rights only in connection with
certain mergers or consolidations. No such appraisal rights exist, however, for
corporations whose shares are listed on a national securities exchange or the
Nasdaq National Market System (such as Aseco), unless the certificate of
incorporation provides otherwise. Aseco's Certificate of Incorporation does not
provide otherwise. The procedures for asserting dissenters' rights in Delaware
impose most of the initial costs of such assertion on the dissenting
stockholder, whereas the Minnesota procedures pose little financial risk to the
dissenting stockholder in demanding payment in excess of the amount the
corporation determined to be the fair value of its shares. Therefore, the
stockholders of Aseco will have expanded dissenters' rights under Minnesota law
after the merger.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This document and the accompanying documents or documents incorporated
by reference contain forward-looking statements that are subject to risks and
uncertainties. You can find many of these statements by looking for words such
as "believes," "expects," "anticipates," "estimates" or similar expressions in
this document or in the materials included with this document. Shareholders are
cautioned not to place undue reliance on these statements, which only speak as
of the date of the document in which they are contained. Forward-looking
statements include information concerning possible or assumed future results of
operations of MCT or Aseco, including any forecasts, projections and
descriptions of anticipated cost savings or other anticipated synergies related
to the merger. Shareholders should note that many factors could affect our
actual financial results, and could cause actual results to differ materially
from those in the forward-looking statements. In addition to the factors set
forth previously in the "Risk Factors" Section, these factors include the
following:
* the merger may not be completed;
* expected cost savings from the merger may not be fully
realized or realized within the expected time frame;
* revenues following the merger may be lower than expected;
* competitive pressures facing our companies may increase
significantly;
* costs or difficulties related to the integration of the
businesses of our companies may be greater than expected;
* demands placed on management may increase because of the
substantial increase in the combined company's size;
* financing and other costs may increase unexpectedly;
* general economic or business conditions where our companies do
business, either nationally or internationally, may be less
favorable than expected; and
* other opportunities may be presented to and pursued by our
companies.
All subsequent written and oral forward-looking statements attributable
to either of us or persons acting on our behalf are qualified in their entirety
by the cautionary statements contained or referred to in the paragraph above.
Neither of us promises to release publicly any revisions to any forward-looking
statements to reflect
* events or circumstances after the date of this document or the
accompanying document or the documents incorporated by
reference; or
* the occurrence of unanticipated events.
You should also read the risk factors beginning on page __.
MCT ANNUAL MEETING
Election of Directors
Six directors are to be elected at the MCT annual meeting to hold
office until the next annual meeting of stockholders following their election
and until their respective successors are elected. It is the intention of the
persons named in the accompanying form of Proxy to nominate and to vote such
Proxy for the election of the persons named below. To be elected as a director,
a nominee must receive the affirmative vote of a majority of the stockholders
present at the meeting in person or by proxy. An abstention has the same effect
as voting no. The merger agreement provides that within 30 days after completion
of the merger, Mr. Sebastian J. Sicari and one other individual to be named by
Aseco, will be appointed to the board.
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<PAGE>
All of the nominees listed below are currently directors and have
consented to be named in this Proxy Statement and to serve as directors if
elected. If any such person should be unable to serve, or becomes unavailable
for any reason, or if a vacancy should occur before the election (which events
are not anticipated), the Proxy will be voted for such other person or persons
as shall be determined by the persons named in the Proxy in accordance with
their judgment. The names and ages of the intended nominees and their current
positions with MCT are as follows:
Director
Name and Age Position Since
------------ -------- --------
Roger E. Gower, 59 Chairman of the Board, President, Chief 1995
Executive Officer, Secretary and Director
D. James Guzy, 63 Director 1993
Donald J. Kramer, 67 Director 1997
David M. Sugishita, 51 Director 1994
Donald R. VanLuvanee, 55 Director 1995
Patrick Verderico, 55 Director 1992
Mr. Gower joined MCT as Chairman of the Board, President, Chief
Executive Officer and Director in April, 1995. Prior to that time, Mr. Gower was
employed by Datamedia Corporation of Nashua, New Hampshire, a network and PC
security software development company, where he served as President and Chief
Executive Officer from 1991. Prior to 1991 he was President and Chief Executive
Officer of Intelledex, Inc., a Corvallis, Oregon-based manufacturer of robotic
and automation systems for the semiconductor and disk drive manufacturing
industries. Earlier in his career, Mr. Gower served as President of Qume, a $200
million printer manufacturer and wholly-owned subsidiary of ITT, and as a
general manager with Texas Instruments. Mr. Gower holds a BS degree in
Electrical Engineering.
Mr. Guzy became a director of MCT in July 1993. He has been President
of the Arbor Company, a Nevada limited partnership engaged in the electronics
and computer industry, since 1969, and Chairman of SRC Computers, Inc., a
supercomputer manufacturer, since 1996. Mr. Guzy is also a director of Intel
Corporation, Cirrus Logic, Inc., Novellus Systems, Inc., PLX Technology Inc.,
Alliance Capital Management Technology Fund and the Davis Selected Group of
Mutual Funds.
Mr. Kramer was appointed to the Board in February 1997 to fill a
vacancy. He was also a director of MCT from 1986 to 1990, and from 1991 through
1995. He is currently a private investor. Until 1996, and for more than five
years, he was a principal of TA Associates, a private equity capital firm
located in Boston, Massachusetts. He is also a director of Robotic Vision
Systems, Inc.
Mr. Sugishita was appointed Senior Vice President of Finance and Chief
Financial Officer in April 1994, and became a director of MCT in August 1994.
Following the end of the term of his employment agreement in February 1995, Mr.
Sugishita continued as an unpaid officer until September 25, 1996. Since July
1997, he has been the Senior Vice President and Chief Financial Officer of
Synopsys, Inc., an electronic design automation company. From August 1995
through June 1997, he was Senior Vice President and Chief Financial Officer of
Actel Corporation, a manufacturer of field programmable gate arrays. From 1991
until he joined MCT in 1994, he served as Vice President and Corporate
Controller as well as Chief Accounting Officer at Applied Materials, Inc., a
manufacturer of semiconductor wafer fabrication equipment. Mr. Sugishita has an
MBA degree.
Mr. VanLuvanee became a director of MCT in November 1995. He has been
President and Chief Executive Officer of Electro Scientific Industries, Inc., a
Portland, Oregon company which designs and manufactures sophisticated
manufacturing equipment for the worldwide electronics industry, since July 1992.
From 1991 to July 1992, he was President and Chief Executive Officer of
Mechanical Technology Incorporated, a supplier of contract research and
development services and a manufacturer of technologically advanced equipment.
He is also a director of Electro Scientific Industries, Inc. and FEI Corp.
Mr. Verderico has been a director of MCT since December 1992. Since
July 1997, he has been President and Chief Executive Officer of Integrated
Packaging Assembly Corporation, a semiconductor packaging foundry. From May 1997
to July 1997, he was Executive Vice President and Chief Operating Officer of
that corporation. From August 1996 through April 1997, he was an independent
business consultant. From April 1996 through July 1996 he served as Chief
Operating Officer and Executive Vice President of Maxtor Corporation. From
January 1994 through March 1996, he was Vice President, Finance and Chief
Financial Officer of Creative Technology, Ltd., a California and Singapore based
manufacturer and distributor of multi-media products. From October 1992 to
January 1994, he was Vice President, Finance and Administration, and Chief
Financial Officer of Cypress Semiconductor, Inc., a manufacturer of integrated
circuits. He is also a director of Integrated Packaging Assembly Corporation and
Catalyst Semiconductor, Inc.
Directors serve until the next annual meeting of the stockholders at
which their successors are elected, or until their prior resignation, removal or
incapacity.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS. During fiscal 1999, MCT's
board met six times. Each director attended at least 75 percent of the aggregate
of all meetings of the board and committees of the board on which he served.
Standing committees of the board include the Audit Committee and the
Compensation Committee.
The Audit Committee recommends the selection of MCT's independent
accountants, approves the services performed by such accountants, and reviews
and evaluates MCT's financial and reporting systems and the adequacy of internal
controls for compliance with corporate guidelines. Members of the Audit
Committee, which consists of four outside directors, are D. James Guzy, Donald
J. Kramer, Donald R. VanLuvanee and Patrick Verderico. The Audit Committee met
two times in fiscal 1999.
The Compensation Committee reviews and recommends to the Board
compensation arrangements for all executive officers of MCT. In addition, the
Compensation Committee is responsible for administration of MCT's Incentive
Stock Option Plan, Employee Stock Purchase Plan, and its cash bonus plans.
Members of the Compensation Committee, which consists of four outside directors,
are D. James Guzy, David M. Sugishita, Donald R. VanLuvanee and Patrick
Verderico. The Compensation Committee met three times in fiscal 1999.
COMPENSATION OF DIRECTORS. Outside directors are paid out-of-pocket expenses
plus $1,500 for each board meeting which they attend. On November 4, 1998, the
outside directors were each granted nonqualified options for 10,000 shares of
common stock, at a price of $1.125 per share, pursuant to the Stock Option Plan
for Outside Directors, upon their reelection as directors at the Annual Meeting
of Stockholders. All options granted under the Plan become exercisable in 50
percent increments on the first and second anniversaries of the date of grant.
The options must be exercised within ten years after the date of grant or, if
earlier, within 12 months after the director ceases being a director. Prior to
an amendment to the Plan on April 29, 1999, the maximum option term was five
years. Directors who are employees of MCT receive no compensation for their
services as directors.
Executive Officers
The names and ages of the executive officers, their current positions
with MCT, and their years of appointment are as follows:
Officer
Name and Age Position Since
------------ -------- -----
Roger E. Gower, 59 Chairman of the Board, President, Chief 1995
Executive Officer, Secretary and Director
Jeffrey S. Mathiesen, 38 Vice President and Chief Financial Officer 1996
Dennis L. Nelson, 53 Executive Vice President of Sales and 1996
Marketing
Lawrence J. Brezinski, 48 Vice President of Engineering 1998
The business experience of Mr. Gower is described in the previous
section.
Mr. Mathiesen joined MCT as Vice President and Chief Financial Officer
in September 1996. Prior to that time, he was employed by Recovery Engineering,
Inc., a manufacturer and marketer of proprietary water purifiers and filters,
from 1991 to 1996 where he was Vice President and Chief Financial Officer and
previously Controller. Previously, he was Corporate Controller at Osmonics,
Inc., a manufacturer of water filtration and purification systems. Mr. Mathiesen
is a Certified Public Accountant.
Mr. Nelson joined MCT as Executive Vice President of Sales and
Marketing in June 1996. Prior to that time, Mr. Nelson was employed by Credence
Systems Corporation, a manufacturer of test systems for the semiconductor
industry, for seven years as Vice President of Western Sales. Prior to 1989, he
worked for over thirteen years for Teradyne, Inc., also a manufacturer of test
systems for the semiconductor industry, working in engineering and several
different sales and sales management positions. He holds a B.S. Degree in
Electrical Engineering.
Mr. Brezinski joined MCT as Vice President of Engineering in August
1998. Prior to that time, he was employed by General Dynamics Information
Systems, a developer of information system solutions for the defense industry,
for four years where he was the Manager of Systems Engineering. Prior to 1994,
Mr. Brezinski worked for twenty-one years for both defense and commercial
companies including McDonnell Douglas Corporation, Control Data Corporation,
Robert Shaw Controls Corporation, and Martin Marietta Corporation in engineering
and program management positions. He holds a B.S. Degree in Electrical
Engineering from Michigan State University and a Masters Degree in Business
Administration from the University of St. Thomas.
Executive officers serve indefinite terms which expire when their
successors are appointed, or until their prior resignation, removal or
incapacity.
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Executive Compensation
SUMMARY COMPENSATION. The following table contains summary information
concerning the annual compensation paid by MCT for fiscal 1999, 1998 and 1997 to
(a) MCT's Chief Executive Officer, and (b) each of the four other most highly
compensated executive officers who were serving as executive officers at the end
of fiscal 1999 and whose salary and bonus for fiscal 1999 exceeded $100,000:
<TABLE>
<CAPTION>
Annual Compensation
-------------------------------------
Number of Shares
Salary and Other Annual Underlying All Other
Name & Principal Position Year Commission Bonus Compensation Options Granted Compensation(1)
- ------------------------- ---- ---------- ----- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Roger E. Gower 1999 $252,500 $ 0 $12,275(2) 100,000 $1,237
Chairman, President, CEO & 1998 $252,500 $ 0 $45,773(3) 100,000 $1,020
Secretary 1997 $252,500 $ 0 $42,475(3) 0 $ *
Dennis L. Nelson, 1999 $197,297 $ 0 $ 0 110,000 $2,281
Executive Vice President of Sales 1998 $204,332 $ 0 $ 0 0 $1,681
and Marketing 1997 $195,500 $ 0 $ 0 0 $ *
Jeffrey S. Mathiesen, 1999 $113,077 $ 0 $ 0 50,000 $1,590
Vice President and Chief Financial 1998 $106,923 $ 0 $ 0 0 $1,137
Officer (4) 1997 $ 76,154 $ 0 $ 0 75,000 $ *
</TABLE>
* Indicates less than $1,000 of retirement plan contributions.
(1) Includes vested retirement plan contributions made by MCT.
(2) Includes primarily automobile related costs.
(3) Includes costs for local residence, automobile allowance and travel to
Boston.
(4) Mr. Mathiesen joined MCT in September 1996.
STOCK OPTION GRANTS. The following table contains information concerning the
grant of stock options during fiscal 1999 to the executive officers named in the
Summary Compensation Table:
<TABLE>
<CAPTION>
Number of Percent of Potential Realizable Value at
Shares Total Assumed Rate of Stock Price
Underlying Options Appreciation for Option Term
Options Granted to Exercise Expiration ----------------------------
Name Granted Employees Price Date 5% 10%
---- --------- --------- -------- ----- -- ---
<S> <C> <C> <C> <C> <C> <C>
Roger E. Gower 100,000 24% $1.22 2003 $33,706 $74,482
Dennis L. Nelson 60,000 15% $1.00 2003 $16,577 $36,631
50,000 12% $1.22 2003 $16,853 $37,241
Jeffrey S. Mathiesen 50,000 12% $1.22 2003 $16,853 $37,241
</TABLE>
40
<PAGE>
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES. The following table
contains information concerning the aggregated option exercises during fiscal
1999 and the year-end option values for the executive officers named in the
Summary Compensation Table:
<TABLE>
<CAPTION>
Number of Shares Underlying Value of In-the-Money
Shares Unexercised Options at Fiscal Unexercised Options at Fiscal
Acquired Value Year-End Year-End
Name On Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Roger E. Gower 0 $ 0 325,000/175,000 $51,550/$132,650
Dennis L. Nelson 0 $ 0 67,500/132,500 */$112,750
Jeffrey S. Mathiesen 0 $ 0 37,500/87,500 $2,344/$47,594
</TABLE>
*Option exercise price exceeded market price at fiscal year-end.
AGREEMENTS WITH OFFICERS. Effective March 28, 1995, MCT entered into an
employment agreement with Mr. Gower. The current agreement may be terminated by
either party with 60 days prior written notice. The agreement will also
terminate upon the death, disability or breach of the agreement by Mr. Gower. In
the event Mr. Gower's employment is terminated by MCT with 60 days prior written
notice, MCT will continue to pay Mr. Gower his then current base salary for 12
months thereafter.
Mr. Nelson has an Employment Agreement with MCT which provides that in
the event of a change in control of MCT which results in a change in his
position as Executive Vice President, or a substantial diminution in his
responsibilities, he may elect to terminate the agreement and receive his
then-current base salary and insurance benefits for 12 months thereafter. The
same benefits are payable if MCT elects to terminate Mr. Nelson's employment
while a change in control is being negotiated.
Report Of Compensation Committee On Executive Compensation
OVERVIEW AND PHILOSOPHY. The Compensation Committee of the Board of Directors
(the "Committee") operates pursuant to a Charter adopted by the Board of
Directors on July 9, 1997. The Charter includes a mission statement which states
that the Committee's mission is to ensure that MCT's executive officers are
compensated consistent with the following philosophy and objectives: (1) to
support MCT's overall business strategy and objectives; (2) to attract, retain
and motivate the best executives in MCT's industry; (3) to promote MCT's
pay-for-performance philosophy; and (4) to ensure that MCT's compensation
programs and practices are of the highest quality and designed with full
consideration of all accounting, tax, securities law, and other regulatory
requirements.
Pursuant to the Charter, the Committee is appointed by the Board and is
comprised of two or more outside directors. The main duties of the Committee, as
described in the Charter, are as follows: (1) review and approve annual base
salary and incentive compensation levels, employment agreements, and benefits of
the chief executive officer and other key executives; (2) review and assess
performance target goals established for bonus plans and determine if goals were
achieved at the end of the plan year; (3) act as the administrative committee
for the Incentive Stock Option Plan, the Employee Stock Purchase Plan, and any
other incentive or purchase plans established by MCT; (4) consider and approve
grants of incentive stock options, nonqualified stock options, restricted stock
or any combination to any employee; and (5) prepare the Report of the
Compensation Committee for inclusion in the Annual Proxy Statement.
It is the intention of the Committee to utilize a pay-for-performance
compensation strategy that is directly related to achievement of the above
objectives. The primary elements of the executive compensation program are base
salary, annual incentives, and long-term incentives.
BASE SALARY. Base salaries of MCT's executive officers are intended to be
competitive with the median base salaries paid by other corporations similar to
MCT and to serve as a platform for performance-based (incentive) pay. Base
salaries are determined for executive positions using compensation surveys,
taking into account variables such as geography, job comparability, size of MCT
and nature of the business. In addition to base salary, executive officers are
eligible to participate in MCT's employee benefit plans on the same terms as
other employees.
ANNUAL INCENTIVES. The Committee adopts a bonus plan for its executive officers.
Bonus payments are contingent on performance of MCT and no bonuses were paid for
fiscal 1999, 1998 or 1997.
LONG-TERM INCENTIVES. The Incentive Stock Option Plan is the basis of MCT's
long-term incentive plan for executive officers and other key employees. The
objective of the plan is to align executives' long-term interests with those of
the stockholders by creating a direct incentive for executives to increase
stockholder value. The stock option grants allow executives to purchase shares
of Company stock at a price equal to the fair market value of the stock on the
date of grant over a term of ten years. The options generally vest and become
exercisable over a period of four years following the date of grant. The award
of option grants is consistent with MCT's objective to include in total
compensation a long-term equity interest for executive officers, with greater
opportunity for reward if long-term performance is sustained.
MCT also maintains the Employee Stock Purchase Plan, pursuant to which
eligible employees can contribute between two and ten percent of their base pay
to purchase up to 1,000 shares of Common Stock per year. The shares are issued
by MCT at a price per share equal to 85 percent of market value on the first day
of the offering period or the last day of the plan year, whichever is lower.
41
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CHIEF EXECUTIVE OFFICER COMPENSATION. The Committee determines compensation for
the Chief Executive Officer on an annual basis. Mr. Gower's current base salary
was established by the Compensation Committee, and became effective in April
1995. The Committee believes that this base salary is consistent and competitive
with salaries paid to Chief Executive Officers of semiconductor manufacturing
companies similar in size to MCT. Mr. Gower received no bonus for fiscal 1999,
1998 or 1997.
CONCLUSION. The Committee believes that the executive compensation plan
discussed in this Proxy Statement is consistent with the overall corporate
strategy for continued growth in earnings and stockholder value.
D. James Guzy
David M. Sugishita
Donald R. VanLuvanee
Patrick Verderico
Stock Performance Graph
The following graph compares the cumulative total stockholder return on
MCT common stock for the five-year period ending June 26, 1999, with the
cumulative total return on the Nasdaq Total Return Index and the Hambrecht &
Quist Semiconductor Index over the same period (assuming the investment of $100
in MCT's Stock, the Nasdaq Total Return Index and the Hambrecht & Quist
Semiconductor Index on June 25, 1994 and the reinvestment of all dividends).
[INSERT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
PERIOD ENDED JUNE 25, 1994 JUNE 24, 1995 JUNE 29, 1996 JUNE 28, 1997 JUNE 27, 1998 JUNE 26, 1999
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Micro Component Technology, Inc. 100 72.22 83.33 80.56 23.61 47.22
- -----------------------------------------------------------------------------------------------------------------------------
Nasdaq Total Return Index 100 136.72 172.41 212.63 274.51 380.84
- -----------------------------------------------------------------------------------------------------------------------------
H&Q Semiconductor Index 100 200.07 143.39 268.71 217.40 423.87
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
ownership of the common stock as of October 1, 1999, (i) by each person known to
MCT to own beneficially more than five percent of the outstanding shares of
common stock, (ii) by each of MCT's executive officers named in the Summary
Compensation table, (iii) by each of MCT's directors, and (iv) by all of the
executive officers and directors as a group:
42
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Shares Beneficially Owned
-------------------------
Name and Address of Beneficial Owner Number Percent
- ------------------------------------ ------ -------
FIVE PERCENT STOCKHOLDERS
Perkins Capital Management, Inc. (1) 1,499,140 20.05%
730 East Lake Street
Wayzata, MN 55391-1789
Kopp Investment Advisors, Inc. (2) 860,900 11.51%
6600 France Avenue South
Edina, MN 55435
DIRECTORS AND EXECUTIVE OFFICERS
Roger E. Gower (3) 340,000 4.36%
Dennis L. Nelson (3) 92,500 1.22%
Jeffrey S. Mathiesen (3) 63,850 *
D. James Guzy (3) 97,472 1.30%
Donald J. Kramer (3) 25,000 *
David M. Sugishita (3) 25,000 *
Donald R. VanLuvanee (3) 45,000 *
Patrick Verderico (3) 45,000 *
All directors and executive officers as a
group (nine in number) (3) 752,572 9.24%
*Denotes less than 1% of shares outstanding.
(1) Perkins Capital Management, Inc. is a registered investment advisor.
Includes shares held for clients and shares held by Perkins Opportunity
Fund.
(2) Kopp Investment Advisors, Inc. is a registered investment advisor.
Includes 425,000 shares owned by Leroy C. Kopp.
(3) Includes shares deemed beneficially owned by virtue of the right to
acquire them within 60 days pursuant to exercise of MCT's stock options
as follows: Mr. Gower - 325,000; Mr. Nelson - 82,500; Mr. Mathiesen -
56,250; Mr. Guzy - 45,000; Mr. Kramer - 25,000; Mr. Sugishita - 25,000;
Mr. VanLuvanee - 45,000; Mr. Verderico - 45,000; and all directors and
executive officers as a group - 667,500.
Approval of Amendment to Incentive Stock Option Plan
The stockholders will be requested at the meeting to approve an
amendment to the Incentive Stock Option plan which was made by the Board of
Directors on September 27, 1999, to increase the number of shares reserved for
issuance under the plan from 1,250,000 shares to 1,500,000 shares, or, if the
Agreement and plan of Merger with Aseco Corporation is approved, to 2,300,000
shares.
The plan was adopted on April 28, 1993 by the MCT board for the purpose
of attracting, retaining and motivating key employees of MCT and to encourage
them to own stock. A total of 500,000 shares of common stock were originally
reserved for issuance under the plan. That number was increased in 1995 first to
1,000,000 shares and then to 1,250,000 shares. Both tax-qualified and
nonqualified options may be granted under the plan. The maximum number of shares
for which any employee may be granted options under the plan in any calendar
year is 300,000 shares. In addition, the aggregate fair market value of the
shares with respect to which tax-qualified stock options held by an employee may
first become exercisable in any calendar year may not exceed $100,000. The plan
is administered by the Compensation Committee of the board whose members are
ineligible to receive options under the plan. The board has the authority to
amend the plan.
The exercise price for options granted under the plan cannot be less
than the fair market value of the common stock on the date the options are
granted. The purchase price for stock purchased upon the exercise of the options
can be paid in cash, by certified or cashier's check, or in the form of shares
of MCT's common stock with a fair market value equal to the full exercise price.
Options generally are not exercisable until one year after the date of
grant and then become exercisable to the extent of 25 percent of the underlying
shares on each of the first four anniversaries of the date of grant. All options
expire ten years from the date of grant. Prior to an amendment to the plan on
April 29, 1999, the maximum option term was five years.
Officers and other key employees of MCT are eligible to receive awards
under the plan at the discretion of the Compensation Committee. As of October 1,
1999, there were 1,066,000 options outstanding which were held by 49 employees,
which approximates the number of employees potentially eligible to receive stock
options under the plan.
An employee generally will receive no taxable income, and MCT will not
be entitled to any related income tax deduction, at the time an option is
granted under the plan. There is also generally no tax due on the exercise of a
tax-qualified stock option. If certain
43
<PAGE>
statutory employment and holding period conditions are satisfied before the
employee sells shares acquired pursuant to the exercise of such an option, the
employee will realize a capital gain or loss on such sale. MCT will not be
entitled to an income tax deduction with respect to a sale of the shares by an
employee after the expiration of the statutory holding periods.
Upon the exercise of a nonqualified stock option, the employee will be
taxed at ordinary rates on the difference between the exercise price and the
fair market value of the shares on the date of exercise. MCT will be entitled to
an income tax deduction at the same time and in the same amount as the employee
is deemed to have realized compensation income. Generally, any gain realized on
the sale will constitute capital gain or loss.
All of the 1,250,000 shares currently reserved for issuance under the
plan have either been issued pursuant to the exercise of stock options granted
under the plan, or are the subject of stock options currently outstanding. The
amendment to the plan adopted by the directors provides for an increase in the
number of shares reserved for issuance from 1,250,000 shares to 1,500,000
shares. The directors believe that this increase is necessary so that MCT can
continue to grant stock options to attract, retain, and motivate key employees,
which will benefit MCT and the shareholders. However, the amendment also
provides that, if the merger with Aseco is approved by the shareholders, the
number of shares reserved for issuance under the plan will increase to 2,300,000
shares. If the merger is approved, the number of employees of MCT will
approximately double, and additional shares will need to be reserved under the
plan for the grant of options to the new employees.
The directors recommend approval of the amendments to the plan by the
stockholders. In order to be approved, the amendments to the plan must receive
the affirmative vote of a majority of the shares of common stock present and
voting at the meeting.
Section 16 Beneficial Ownership Reporting Compliance
Section 16 of the Securities Exchange Act of 1934 requires directors,
officers and ten-percent stockholders to file initial reports of beneficial
ownership and reports of changes in beneficial ownership with the Securities and
Exchange Commission. Such persons are also required to furnish MCT with copies
of all Section 16 forms they file. Based solely on a review of the copies of
such forms furnished to MCT, and written representations from such persons, MCT
believes that all Section 16 filing requirements applicable to its directors,
officers and ten-percent stockholders were complied with for fiscal 1999.
Other Business
MCT knows of no business that will be presented for consideration at
the Annual Meeting other than that described in this proxy statement. As to
other business, if any, that may properly come before the Annual Meeting, it is
intended that proxies solicited by the MCT board will be voted in accordance
with the judgment of the person or persons voting the proxies, subject to rules
of the Securities and Exchange Commission.
Proposals of Stockholders
Proposals of stockholders of MCT intended to be presented at MCT's next
annual meeting of stockholders must be sent to the Secretary of MCT at the above
address. It is now anticipated that the next annual meeting will be held on
__________, 2000. In order for any stockholder proposals to be considered for
inclusion in MCT's proxy statement and proxy card relating to that meeting, the
proposal must be submitted by ____________________. If the proposal is submitted
after that date but before ________________, it will not be included in MCT's
proxy card but may be referred to in the proxy statement in accordance with
rules of the Securities and Exchange Commission. If the proposal is submitted
after __________________, it will be considered untimely and not included in any
of MCT's proxy materials.
As described in Aseco's proxy statement for its 1999 annual
stockholders meeting, any proposals that Aseco stockholders wish to be
considered for inclusion in the proxy statement for Aseco's 2000 annual
stockholders meeting must be received by Aseco at its principal executive office
no later than __________, 2000. If notice of a stockholder proposal to be raised
at Aseco's 2000 annual stockholders meeting is received at the principal
executive offices of Aseco after ___________, 2000 (45 days before the month and
date in 2000 corresponding to the date on which Aseco mailed its proxy materials
for the 1999 annual meeting), proxy voting on that proposal will be subject to
the discretionary voting authority of the designated proxy holders.
LEGAL MATTERS
The validity of the shares of MCT common stock offered by this
document, and certain tax matters, will be passed upon for MCT by Best &
Flanagan LLP, Minneapolis, Minnesota. Choate, Hall and Stewart, Boston, MA, will
pass upon certain tax matters for Aseco.
EXPERTS
The financial statements of Micro Component Technology, Inc. as of June
26, 1999 and June 27, 1998 and for each of the three years in the period ended
June 26, 1999, incorporated in this joint proxy Statement/Prospectus by
reference from Micro Component Technology, Inc.'s Annual Report on Form 10-K, as
amended, for the year ended June 26, 1999, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such form given upon their authority as experts in accounting and
auditing.
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<PAGE>
Ernst & Young LLP, independent auditors, have audited the Aseco
consolidated financial statements and schedule included in Aseco's annual report
on Form 10-K for the year ended March 28, 1999, as set forth in their report,
which is incorporated by reference in this prospectus/proxy statement and
elsewhere in the registration statement. Aseco's financial statements and
schedule are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
Representatives of Deloitte & Touche L.L.P. are expected to attend the
MCT annual meeting, and representatives of Ernst & Young LLP are expected to
attend the Aseco special meeting. In each case, these representatives will have
the opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions.
WHERE YOU CAN FIND MORE INFORMATION
MCT's annual report on Form 10-K, as amended, for the year ended June
26, 1999 and Aseco's annual report on Form 10-K for the year ended March 28,
1999 accompany this document. MCT's and Aseco's latest quarterly reports on Form
10-Q also accompany this document. We each file annual, quarterly and special
reports, proxy statements and other information with the SEC. You may read and
copy any reports, statements or other information we file at the SEC's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Please call the Commission at 1-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available to the public from
commercial document retrieval services and at the web site maintained by the SEC
at "http:www.sec.gov."
MCT filed a registration statement on Form S-4 to register with the SEC
the MCT common stock to be issued to Aseco stockholders in the merger. This
document is a part of that registration statement and constitutes a prospectus
of MCT in addition to being our proxy statement for the shareholder meetings.
This document does not contain all the information you can find in the
registration statement or the exhibits to the registration statement.
The SEC permits us to "incorporate by reference" information into this
document. This means we can disclose important information to you by referring
you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be a part of this document, except for
any information superseded by information in this document. This document
incorporates by reference the documents set forth below that we have previously
filed with the SEC. These documents contain important information about our
companies and their finances.
MCT Commission Filings Period
- ---------------------- ------
(File No. 0-22384)
Annual Report on Form 10-K, as amended............. Year ended June 26, 1999
Aseco Commission Filings Period
- ------------------------ ------
(File No. 0-21294)
Annual Report on Form 10-K ........................ Year ended March 28, 1999
Quarterly Report on Form 10-Q...................... Quarter ended June 26, 1999
We are also incorporating by reference additional documents that we may
file with the SEC between the date of this document and the dates of the special
meetings.
MCT has supplied all information contained or incorporated by reference
in this document relating to MCT, and Aseco has supplied all information
contained or incorporated by reference in this document relating to Aseco. The
pro forma financial data and financial statements contained in this document
have been prepared by MCT after consultation with Aseco.
If you are a shareholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the SEC.
Documents incorporated by reference are available from us without charge,
excluding all exhibits unless we have specifically incorporated by reference an
exhibit in this document. Shareholders may obtain documents incorporated by
reference in this document by requesting them in writing or by telephone from
the appropriate party at the following addresses:
Micro Component Technology, Inc. Aseco Corporation
Attention: Ms. Diane Nordenstrom Attention: Ms. Mary Barletta
2340 West County Road C 500 Donald Lynch Boulevard
St. Paul, MN 55113-2528 Marlboro, MA 01752
(651) 697-4000 (508) 481-8896
If you would like to request documents from us, please do so by ______,
1999 to receive them before the shareholder meetings.
You should rely only on the information contained or incorporated by
reference in this document to vote on the merger. We have not authorized anyone
to provide you with information that is different from what is contained in this
document. This document is dated _______, 1999. You should not assume that the
information contained in this document is accurate as of any date other than
______, 1999, and neither the mailing of the document to shareholders nor the
issuance of MCT common stock in the merger will create any implication to the
contrary.
45
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 18th day of September,
1999, by and among Micro Component Technology, Inc., a Minnesota corporation
("Parent"), MCT Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), and Aseco Corporation, a Delaware
corporation (the "Company").
WHEREAS, the Board of Directors of the Parent and the Company deem
it advisable and in the best interests of their respective stockholders to
consummate, and have approved, the business combination transaction provided for
herein in which Merger Sub would merge (the "Merger") with and into the Company,
and the Company would become a wholly-owned subsidiary of Parent.
WHEREAS, the parties hereto intend that (i) the issuance of the
Parent Common Stock (as defined below) to the shareholders of the Company in
connection with the Merger shall be on a tax-free basis to the shareholders of
the Company and (ii) this transaction shall qualify for federal income tax
purposes as a reorganization within the meaning of ss. 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Effective Time of the Merger. Subject to the provisions
of this Agreement, articles of merger (the "Articles of Merger") shall be
properly executed and thereafter duly filed with the Secretary of State of
Delaware as provided in the Delaware General Corporation Law (the "Delaware
Law"), as soon as practicable on or after the Closing (as defined in Section
1.2). The Merger shall become effective upon the filing of the Articles of
Merger with the Secretary of State of Delaware or at such other time as the
parties may agree upon in writing pursuant to applicable law (the "Effective
Time").
Section 1.2 Closing. The closing of the Merger (the "Closing") will
take place as set forth in Section 6.4 hereof at the offices of Best & Flanagan
LLP, 4000 U.S. Bank Place, 601 Second Avenue South, Minneapolis, Minnesota, or
at such other place and time as is agreed to in writing by the parties hereto.
Section 1.3 Effects of the Merger.
(a) At the Effective Time (i) Merger Sub shall be merged
with and into the Company which shall be the surviving corporation
(the "Surviving Corporation"; Merger Sub and the Company are
sometimes referred to herein as the "Constituent Corporations") and
the separate existence of Merger Sub shall cease, (ii) the
Certificate of Incorporation of Merger Sub shall be the Certificate
of Incorporation of the Surviving Corporation, and (iii) the Bylaws
of the Merger Sub as in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation.
(b) Upon the effectiveness of the Merger, all of the
estate, property, rights, privileges, powers and franchises of the
Constituent Corporations and all of their property, real, personal
and mixed, and all the debts due on whatever account to either of
them, as well as all stock subscriptions and other choses in action
belonging to either of them shall be transferred to and vested in
the Surviving Corporation; and all claims, demands, property and
other interests shall be the property of the Surviving Corporation,
and the title to all real estate vested in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of
the Merger, but shall be vested in the Surviving Corporation all as
provided in Section 251 and 259 and other applicable provisions of
Delaware Law.
The Merger is intended to constitute a tax-free
reorganization under Section 368(a) of the Code. The parties hereby
adopt this Agreement as a "plan of reorganization" within the
meaning of Section 368(a) of the Code and the regulations
thereunder.
Section 1.4 Directors and Officers of Surviving Corporation.
(a) The directors of Merger Sub at the Effective Time
shall be the initial directors of the Surviving Corporation and
shall hold office from the Effective Time until their respective
successors are duly elected or appointed and qualify in the manner
provided in the Certificate of Incorporation and Bylaws of the
Surviving Corporation, or as otherwise provided by law.
(b) The officers of the Merger Sub at the Effective Time
shall be the initial officers of the Surviving Corporation and shall
hold office from the Effective Time until their respective
successors are duly elected or appointed and qualify in the manner
provided in the Certificate of Incorporation and Bylaws of the
Surviving Corporation, or as otherwise provided by law.
A-1
<PAGE>
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holders
thereof:
(a) Each issued and outstanding share of the Company's
Common Stock, $.01 par value (the "Shares") not owned by Parent,
Merger Sub or any other direct or indirect subsidiary of Parent
(other than those Shares held by stockholders of the Company who
properly exercise any dissenters' rights available under applicable
law) immediately prior to the Effective Time shall be converted into
the right to receive its pro rata share of the Shareholder
Consideration (as defined below).
(b) Each then outstanding Share owned by Parent, Merger
Sub or any other direct or indirect subsidiary of Parent shall be
cancelled.
(c) Each share of the common stock of Merger Sub issued
and outstanding immediately prior to the Effective Time shall be
converted into one share of the common stock of the Surviving
Corporation.
(d) All Shares that are owned by the Company as treasury
stock or by any wholly owned Subsidiary (as hereinafter defined) of
the Company shall be cancelled and retired for no value and shall
cease to exist and no consideration shall be delivered in exchange
therefor. As used in this Agreement, the word "Subsidiary" means,
with respect to any party, any corporation or other organization,
whether incorporated or unincorporated, of which (i) at least a
majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or
controlled by such party or (ii) such party or any other Subsidiary
of such party is a general partner (excluding partnerships, the
general partnership interests of which held by such party or any
Subsidiary of such party do not have a majority of the voting
interest in such partnership).
Section 2.2 Consideration. The total consideration to be paid in
connection with the Merger shall be $16,300,000, subject to any adjustment
pursuant to in Section 6.6 and the effect of the maximum and minimum prices set
forth below (the "Acquisition Consideration"). Except as provided in Section
2.3(b), the Acquisition Consideration, shall be paid solely in shares of the
Parent's Common Stock, $.01 par value per share (the "Parent Common Stock"). The
Shareholder Consideration shall be the aggregate number of shares of Parent
Common Stock, subject to Section 2.3(b), to be issued upon conversion pursuant
to Section 2.1(a), determined as follows:
(a) The Acquisition Consideration, subject to Section
6.6, shall be divided by the average closing sale price per share of
the Parent Common Stock over the last twenty trading days prior to
the day of the Closing, as reported by Nasdaq, provided that if such
average closing price is less than $3.565 per share, the divisor
shall be $3.565, and if such average closing price is more than
$5.563, the divisor shall be $5.563 as so adjusted (the "Parent
Stock Price"). The result shall be the "Total Share Consideration".
(b) The Total Share Consideration shall be divided by
the actual number of Shares outstanding immediately prior to the
Closing (plus 709,152 shares to reflect shares reserved to options
(which was calculated on the treasury stock method as of the
execution of this Agreement)). The result shall be the "Exchange
Ratio".
(c) The number of shares of Parent Common Stock
determined by multiplying the Exchange Ratio by the number of issued
and outstanding shares of Shares immediately prior to the Closing
shall be the "Shareholder Consideration".
Section 2.3 Payment of the Acquisition Consideration.
(a) Exchange Agent. As of the Effective Time, the Parent
shall deposit with Norwest Bank Minnesota, N.A. (the "Exchange
Agent"), the Shareholder Consideration. The Exchange Agent shall
hold such shares in a separate account for exchange pursuant to the
terms of this Agreement (the "Exchange Fund").
Promptly after the Effective Time, the Exchange Agent
shall mail to each holder of record of Shares immediately prior to
the Effective Time (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Shares shall pass, only upon proper delivery of certificates for the
Shares (the "Certificates") to the Exchange Agent and shall be in
customary form) and (ii) instructions for use in effecting the
surrender of the Certificates (or affidavits in lieu thereof) in
exchange for certificates representing shares of Parent Common
Stock. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly
executed, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate shall receive in
exchange therefore a new certificate representing that number of
whole shares of Parent Common Stock determined by multiplying the
number of Shares represented by such Certificate by the Exchange
Ratio, and subtracting any resulting fractional Shares. The holder
shall also receive cash in lieu of any fractional shares, and the
Certificate so surrendered shall forthwith be cancelled.
In the event of a transfer of ownership of Shares which
is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent
Common Stock may be issued to a transferee if the certificate
representing such Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect
A-2
<PAGE>
such transfer and by evidence that any applicable stock transfer
taxes have been paid. Until surrendered as contemplated by this
Section 2.4, each Certificate shall be deemed at any time after the
Effective Time to represent the shares of Parent Common Stock (and
cash in lieu of fractional shares) into which the Shares previously
represented by such Certificate were converted at the Effective
Time. All shares of Parent Common Stock issued upon conversion of
the Shares (including any cash paid in lieu of fractional shares)
shall be deemed to have been issued in full satisfaction of all
rights pertaining to such Shares.
(b) No Fractional Shares. No certificates or scrip
representing fractional shares of Parent Common Stock shall be
issued upon the surrender for exchange of Certificates for the
Shares and the owner of such fractional share interests will not be
entitled to vote or to any rights of a stockholder of the Parent.
Each holder of Certificates who otherwise would be entitled to
receive a fractional share of Parent Common Stock shall receive, in
lieu of such fractional share interest, an amount of cash (without
interest) determined by multiplying (i) the Parent Stock Price, by
(ii) the fractional share interest to which such holder would
otherwise be entitled. The Parent shall transfer to the Exchange
Agent on a timely basis the cash necessary to make payments under
this paragraph (b).
(c) Lost, Stolen or Destroyed Certificates. If any
Certificate has been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person or entity that claims such
Certificate to be lost, stolen or destroyed, Parent will issue in
exchange for such lost, stolen or destroyed Certificate such pro
rata share of the Shareholder Consideration deliverable in respect
thereof as determined in accordance with this Agreement; provided
that Parent may require that the owner of such lost, stolen or
destroyed Certificate deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made
against Parent, the Company or the Exchange Agent with respect to
the Certificates alleged to have been lost, stolen or destroyed.
Section 2.4 Termination of Exchange Fund.
(a) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of Shares
for two years after the Effective Time shall be delivered to the
Parent, upon demand, and any holders of Shares who have not
theretofore complied with this Article II shall thereafter look only
to the Parent for the shares of the Parent Common Stock and any cash
in lieu of fractional shares to which they are entitled.
(b) No Liability. Neither the Parent nor the Company
shall be liable to any holder of Shares for any such shares of the
Parent Common Stock or cash delivered to a public official pursuant
to any abandoned property, escheat or similar Law. For the purposes
of this Agreement, "Law" shall mean any federal, state or local law,
statute, ordinance, rule, regulation, order, judgment or decree.
(c) Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall
be no further registration of transfers of Shares thereafter on the
records of the Company. From and after the Effective Time, the
holders of certificates representing Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided in this
Agreement or by Law. On or after the Effective Time, any
Certificates presented to the Exchange Agent or Parent for any
reason shall be converted into shares of the Parent Common Stock and
any cash in lieu of fractional shares of the Parent Common Stock to
which the holders of the Certificates are entitled pursuant to this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to Parent and Merger Sub as
follows:
Section 3.1 Organization; Subsidiaries. Each of the Company and its
respective Subsidiaries is a corporation or other organization duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation and has all requisite corporate power and corporate
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted, except where the
failure to have such power, authority, and governmental approvals would not have
a Material Adverse Effect (as defined herein) on or of the Company and its
Subsidiaries. In this Agreement, the term "Material Adverse Effect" used in
reference to the Company means any event, change or effect, which either alone
or in the aggregate with all other such events, changes or effects, is, or is
reasonably likely to be, materially adverse to the business, financial
condition, properties, assets, capitalization, stockholders' equity, liabilities
(including contingent liabilities), results of operations, licenses or
franchises of the Company and its Subsidiaries on consolidated basis. Each of
Company and its Subsidiaries is duly qualified or licensed to do business and in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect. Section 3.1 of the disclosure schedule delivered by the Company to
Parent on the date hereof (the "Company Disclosure Schedule") sets forth a
complete and accurate list of all jurisdictions in which Company or its
Subsidiaries is qualified to do business as a foreign corporation and sets forth
a complete and accurate list of all of its Subsidiaries (including jurisdiction
of incorporation or formation and the capitalization of each Subsidiary). All of
the outstanding shares of capital stock of Company's Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and are owned, directly
or indirectly, by the Company. Except as disclosed in Section 3.1 of the Company
Disclosure Schedule, Company does not have any Subsidiaries or, directly or
indirectly, own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
The copies of the Certificate of Incorporation and Bylaws of Company, and of the
comparable organizational documents of each of its
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Subsidiaries, provided to Parent, are true and complete copies of all such
documents, in each case as amended to the date hereof and shall be as of the
Effective Time. Except as disclosed in Section 3.1, neither the Company nor any
of its Subsidiaries is in violation of its Certificate of Incorporation, Bylaws
or comparable organizational documents.
Section 3.2 Capitalization. The authorized capital stock of Company
consists of: 15,000,000 shares of common stock, no par value (the "Company
Common Stock"), of which 3,887,543 shares are issued and outstanding, and
1,000,000 shares of preferred stock, par value $.01 per share, of which none are
issued and outstanding. All of the outstanding shares of Company Common Stock
are, and immediately prior to the Effective Time the outstanding shares of the
Company Common Stock shall be, duly authorized, validly issued, fully paid and
non-assessable and free of any preemptive rights in respect thereto. Except as
set forth on Section 3.2 of the Company Disclosure Schedule, no bonds,
debentures, notes or other indebtedness having the right to vote (or convertible
into securities having the right to vote) ("Voting Debt") of Company are issued
or outstanding. Except as set forth above or in Section 3.2 of the Company
Disclosure Schedule, there are no existing options, warrants, calls,
subscriptions or other rights or other agreements or commitments of any
character relating to the issued or unissued capital stock or Voting Debt of
Company or any of its Subsidiaries or obligating Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of the respective capital stock or Voting Debt or securities
convertible into or exchangeable for such shares or equity interests or
obligating Company or any of its Subsidiaries to grant, extend or enter into any
such option, warrant, call, subscription or other right, agreement or
commitment. Company is not a party to any voting trust or other arrangement or
understanding with respect to the voting of Company Common Stock. There are no
contractual obligations of Company or its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of Company or any of its
Subsidiaries.
Section 3.3 Authority. Company has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Company, and no other corporate proceedings on the part of
Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated hereby (other than, with respect to the Merger, the
adoption of this Agreement by the stockholders of the Company as set forth in
Section 7.1 (d)). The Board of Directors of Company has duly approved this
Agreement, determined that the Merger is fair to, and in the best interest of,
its stockholders and resolved to recommend that such stockholders approve this
Agreement and the Merger, and such resolutions are in full force and effect.
Duly certified, true and correct copies of such resolutions adopted will be
provided to Parent. This Agreement has been duly executed and delivered by
Company, and this Agreement constitutes a valid and binding obligation of
Company, enforceable against Company in accordance with its terms.
Section 3.4 Consents and Approvals; No Violations. Except as
disclosed in the Company's filings pursuant to the Securities Exchange Act of
1934 (the "Exchange Act") or as set forth in Section 3.4 of the Company
Disclosure Schedule, and except for filings, permits, authorizations, consents
and approvals as may be required under, and other applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Exchange Act and Delaware Law, neither the execution, delivery or
performance of this Agreement nor the consummation by Company of the
transactions contemplated hereby nor compliance by Company with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the Articles of Incorporation or Bylaws of Company or of the
comparable organizational documents of any of its Subsidiaries, (ii) require any
filing with, or permit, authorization, consent or approval of, any court,
arbitral tribunal, legislative body, administrative agency or commission or
other governmental or other regulatory authority or agency (a "Governmental
Entity"), (iii) result in a violation or breach of, or constitute (with notice
or lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) or require any authorization, consent
or approval under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation to which Company or any of its Subsidiaries is a party or by which
any of them or any of their properties or assets may be bound or (iv) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Company or any of its Subsidiaries or any of their properties or assets, except
in the case of (ii) or (iii) for violations, breaches or defaults which would
not, and except for failures to obtain such permits, authorizations, consents or
approvals or to make such filings which would not, individually or in the
aggregate, have a Material Adverse Effect.
Section 3.5 SEC Reports. The Company has furnished to Parent a true
and complete copy of each prospectus, definitive proxy statement and report
filed by the Company with the SEC since the date of the Company's year end for
fiscal year 1996 (the "SEC Reports"), including the Company's Annual Report on
Form 10-K, for the fiscal year ended March 28, 1999 (the "Form 10-K"). None of
the SEC Reports (as of their respective filing dates) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements made therein not
misleading. The consolidated balance sheet of the Company, as of March 28, 1999,
included in SEC Reports (including the related notes and schedules), presents
fairly, in all material respects, the consolidated financial position of the
Company as of its date and the related consolidated statements of operations,
cash flows and changes in stockholders' equity included in the SEC Reports
(including any related notes and schedules) present fairly, in all material
respects, the consolidated results of operations and cash flows of the Company
for the periods set forth therein, in each case, in accordance with generally
accepted accounting principles ("GAAP"), except as otherwise specified therein
(including in the related notes).
Section 3.6 Proxy Statement/Prospectus. The combined proxy statement
and Form S-4 registration statement to be prepared jointly by the parties and
filed with the Securities and Exchange Commission for the purpose of soliciting
shareholder votes for the Merger and registering shares of the Parent to be
issued to the Company's shareholders in the Merger, respectively, is referred to
herein as the "Proxy Statement/Prospectus". The information provided by the
Company for inclusion in the Proxy Statement/Prospectus shall be true and
complete, shall not contain any untrue statement of a material fact and shall
not omit to state any material fact required to be stated therein or necessary
in order to make the statements made therein not misleading.
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Section 3.7 Employee Benefits. All employment contracts, all
termination agreements with executive officers and all bonus, deferred
compensation, pension, retirement, profit sharing, severance pay, stock option,
stock purchase and other material employee benefit plans (other than medical and
other similar welfare plans made generally available to all employees of the
Company or a subsidiary of the Company) to which the Company or any of its
subsidiaries is a party are listed, summarized or otherwise described or
incorporated by reference in the SEC Reports or in Section 3.7 of the Company
Disclosure Schedule.
Section 3.8 Absence of Certain Changes or Events. Since March 28,
1999, (i) Company and Company's Subsidiaries have conducted their respective
businesses only in the ordinary and usual course of such businesses and (ii)
there has not been (A) any change, or any development of which management of
Company has knowledge, which has had or is reasonably likely to have a Material
Adverse Effect; (B) any declaration, setting aside or payment of any dividend or
other distribution with respect to the capital stock of Company other than
regular quarterly cash dividends; (C) any material change by Company in
accounting principles, practices or methods; or (D) any increase of more than
$40,000 in aggregate in the compensation payable or which could become payable
by Company and Company's Subsidiaries to their officers or key employees, or any
material amendment of any Company Benefit Plans.
Section 3.9 ERISA Compliance.
(a) Company Disclosure Schedule 3.09(a) attached hereto contains a
list and brief description of all "employee pension benefit plans" (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to herein as "Pension Plans"), all
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA) and all
other bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, stock bonus,
phantom stock, retirement, vacation, severance, disability, death benefit,
welfare, Christmas bonus, hospitalization, medical or other plan, arrangement or
understanding, whether or not legally binding, providing benefits to any current
or former employee, officer or director of Company, or maintained or contributed
to by Company for the benefit of any employee, officer or director of Company
currently or within the last five years (collectively, "Benefit Plans").
(b) On or prior to the date of this Agreement, Company has delivered
to Parent true and complete copies of (i) each Benefit Plan or, in the case of
any unwritten Benefit Plans, descriptions thereof (ii) the most recent annual
report on Form 5500 filed with the IRS with respect to each Benefit Plan, if any
such report was required, (iii) the most recent summary plan description for
each Benefit Plan for which such summary plan description is required, (iv) each
trust agreement and group annuity contract relating to any Benefit Plan, (v) the
most recent actuarial report relating to any Benefit Plan, and (vi) the most
recent IRS determination letter or opinion letter for each Benefit Plan.
(c) Except as disclosed in Company Disclosure Schedule 3.09(c)
attached hereto, all Pension Plans have been the subject of determination
letters from the IRS to the effect that such Pension Plans are qualified and
exempt from federal income taxes, and no such determination letter has been
revoked nor has revocation been threatened, nor has any such Pension Plan been
amended since the date of its most recent determination letter or application
therefor in any respect that could adversely affect its qualification or
increase its costs.
(d) Except as disclosed on Company Disclosure Schedule 3.09(d)
attached hereto, no Pension Plan that Company maintains, or to which Company is
or was previously obligated to contribute, had, as of the respective last annual
valuation date for each Pension Plan, any unfunded "benefit liabilities,"(as
defined in Section 4001(a)(16) of ERISA) based on actuarial assumptions which
have been furnished to Parent. None of the Pension Plans has an "accumulated
funding deficiency," (as defined in Section 412(a) of the Code) whether or not
waived. None of Company, any officer of Company or any of the Benefit Plans
which are subject to ERISA, including, without limitation, the Pension Plans, or
any trusts created thereunder, or, to the best knowledge of the Company, any
trustee or administrator thereof, has engaged in a "prohibited transaction" (as
defined in Section 406 of ERISA in Section 4975(c) of the Code) or any other
breach of fiduciary responsibility that could subject Company or any officer of
Company to a material amount of tax or penalty on prohibited transactions or to
any material liability under ERISA. Except as disclosed on Company Disclosure
Schedule 3.09(d) attached hereto, neither any of such Pension Plans nor any of
such trusts have been terminated, nor has there been any "reportable event" (as
defined in Section 4043(c) of ERISA) with respect to which the 30-day notice
requirement has not been waived and Company is not aware of any other reportable
events with respect thereto during the last five years. Company has never had an
obligation to contribute to a "multi-employer plan" as defined in Section 3(37)
of ERISA. No liability to the Pension Benefit Guaranty Corporation (the "PBGC")
has been or is expected to be incurred with respect to any Benefit Plan by
reason of a Benefit Plan termination. The PBGC has not instituted proceedings to
terminate any Benefit Plan. Except as noted on Company Disclosure Schedule
3.09(d), there is no Benefit Plan to which Title IV of ERISA applies which has
terminated and whose "date of termination" (as defined in Section 4048 of ERISA)
occurred after September 1, 1974 or any such Benefit Plan to which Title IV of
ERISA applies which has partially terminated. No event has occurred, and there
exists no condition or set of circumstance which presents a material risk of the
termination or partial termination of any such Benefit Plan, which could result
in a liability on the part of Company to the PBGC.
(e) With respect to any Benefit Plan that is an employee welfare
benefit plan, except as disclosed in Company Disclosure Schedule 3.09(e)
attached hereto, (i) no such Benefit Plan is a "welfare benefit fund", (as
defined in Section 419(e) of the Code), (ii) each such Benefit Plan that is a
group health plan complies in all material respects with the applicable
requirements of the Code and the Social Security Act and (iii) each such Benefit
Plan, including, without limitation, any such Plan covering retirees or other
former employees, may be amended or terminated without liability to Parent or
Company on or at any time after the Effective Date of the Merger.
(f) Each Benefit Plan and all related trust or other agreements
conform in form and operation to, and comply with, all applicable laws and
regulations, including, without limitation, ERISA and the Code, and all reports
or information relating to each such Benefit Plan required to be filed with any
Governmental Entity or disclosed to participants have been timely filed and
disclosed.
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(g) Company has not announced a plan to create or amend, or noes it
have any legally binding commitment to create or amend, any Benefit Plan or to
create any new arrangement which would be a Benefit Plan.
(h) All insurance premiums with respect to any Benefit Plan,
including, without limitation, premiums to the PBGC, have been paid in full.
Except as disclosed on Company Disclosure Schedule 3.09(h) attached hereto,
there are no retrospective adjustments provided for under any insurance
contracts maintained pursuant to any Benefit Plan with regard to policy years or
other periods ending on or before the Effective Date of the Merger.
(i) No Benefit Plan, or the deduction of any contributions thereto
by Company, has been the subject of audit by the IRS or the Department of Labor,
and no litigation or asserted claims exist against Company or any Benefit Plan
or fiduciary with respect thereto, other than such benefit claims as are made in
the normal operation of a Benefit Plan. There are no known facts which could
give rise to any action, suit, grievance, arbitration or other claim in
connection with any Benefit Plan.
(j) With respect to any Benefit Plan which covers current or former
employees, officers or directors who are not residents of the United States of
America, any references in this Company Disclosure Schedule 3.09(j) to ERISA,
the Code or any other applicable law will be read to mean any applicable law of
similar import for the jurisdiction in which such individuals reside.
Section 3.10 Litigation. Section 3.10 of the Company Disclosure
Schedule sets forth a complete and accurate list and description of all suits,
claims, actions, proceedings and investigations which are pending or threatened
against the Company or any of its Subsidiaries, judicial, administrative or
otherwise.
Section 3.11 Environmental Matters.
(a) As used in this Agreement:
"Environmental Claim" means any claim,
action, cause of action, investigation or notice
(written or oral) by any person or entity alleging
potential liability (including, without limitation,
potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resources
damages, property damages, personal injuries, or
penalties) arising out of, based on or resulting from
(i) the presence, or release into the environment, of
any Materials of Environmental Concern (as hereinafter
defined) at any location, whether or not owned or
operated by Company or its Subsidiaries or (ii)
circumstances forming the basis of any violation, or
alleged violation, of any Environmental Laws (as
hereinafter defined).
"Environmental Laws" means all federal,
state, local and foreign laws and regulations relating
to pollution or protection of human health or the
environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface
strata), including, without limitation, laws and
regulations relating to emissions, discharges, releases
or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of
Environmental Concern.
"Materials of Environmental Concern" means
chemicals, pollutants, contaminants, hazardous wastes,
toxic substances, petroleum and petroleum products.
(b) Except as set forth in Section 3.11 of the Company
Disclosure Schedule, Company and its Subsidiaries for their
respective businesses as previously or now being conducted are in
material compliance with all applicable Environmental Laws, which
compliance includes, but is not limited to, the possession by
Company and its Subsidiaries of all permits and other governmental
authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof. Except as set
forth in Section 3.11(b) of the Company Disclosure Schedule, neither
Company nor its Subsidiaries have received any communication
(written or oral), whether from a governmental authority, citizens
group, employee or otherwise, that alleges that Company or its
Subsidiaries are not in such full compliance and, to Company's best
knowledge, there are no circumstances that may prevent or interfere
with such full compliance in the future. All material permits and
other governmental authorizations currently held by Company and its
Subsidiaries pursuant to the Environmental Laws are identified in
Section 3. 11 of the Company Disclosure Schedule.
(c) Except as set forth in Section 3.11 of the Company
Disclosure Schedule, there is no Environmental Claim pending or
threatened against Company or its Subsidiaries or, to Company's best
knowledge, against any person or entity whose liability for any
Environmental Claim Company or its Subsidiaries have or may have
retained or assumed either contractually or by operation of law.
(d) Except as set forth in Section 3.11 of the Company
Disclosure Schedule, there are no past or present actions,
activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge,
presence or disposal of any Material of Environmental Concern, that
could form the basis of any Environmental Claim against Company or
its Subsidiaries or, to Company's best knowledge, against any person
or entity whose liability for any Environmental Claim Company or its
subsidiaries have or may have retained or assumed either
contractually or by operation of law.
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(e) Without in any way limiting the generality of the
foregoing to the knowledge of the Company, (i) all on-site and
off-site locations where Company or its Subsidiaries have stored,
disposed or arranged for the disposal of Materials of Environmental
Concern are identified in Section 3.11 of the Company Disclosure
Schedule, (ii) to the best knowledge of Company without having made
any inquiries to third parties with respect thereto, all underground
storage tanks, and the capacity and contents of such tanks, located
on property owned or leased by Company or its Subsidiaries are
identified in Section 3.11 of the Company Disclosure Schedule, (iii)
except as set forth in Section 3.11 of the Company Disclosure
Schedule, there is no asbestos contained in or forming part of any
building, building component, structure or office space owned or
leased by Company or its Subsidiaries, and (iv) except as set forth
in Section 3.11 of the Company Disclosure Schedule, to the best
knowledge of Company without having made any inquiries to third
parties with respect thereto, no polychlorinated biphenyls (PCBIs)
are used or stored at any property owned or on or within any
premises leased by Company or its Subsidiaries.
Section 3.12 Absence of Certain Practices. Neither Company nor any
of its Subsidiaries nor, to the best knowledge of Company, any director,
officer, agent, employee, or other person acting on behalf of Company or any of
its Subsidiaries, has used or received any corporate or other funds for unlawful
contributions, payments, gifts, or entertainment, or made any unlawful
expenditures relating to political activity to, or on behalf of, government
officials or others.
Section 3.13 Intellectual Property. Section 3.13 of the Company
Disclosure Schedule contains a complete and accurate list of (i) all patents,
registered trademarks, trade names and copyrights owned by Company, used or
proposed to be used by Company or any of its Subsidiaries and all applications
therefor (indicating whether or not such patent, trademark, trade name, or
copyright is owned by Company) and (ii) all agreements relating to technology,
know-how or processes which Company or any of its Subsidiaries is licensed or
authorized to use by others. Except as set forth in Section 3.13 of the Company
Disclosure Schedule, no claims have been asserted by any person challenging or
questioning the use by Company or any of its Subsidiaries of any such patents,
trademarks, trade names, copyrights, technology, or processes (the "Intellectual
Property"), with respect to Intellectual Property by Company or its
subsidiaries, challenging or questioning said ownership, or the Company's use of
any know-how owned by or used by Company or any of its Subsidiaries or
challenging or questioning the validity or effectiveness of any such license or
agreement and, to the knowledge of Company, there exists no valid basis for any
such claim, except for such claim or claims an adverse determination of which,
individually or in the aggregate, would not have a Material Adverse Effect; and
to the knowledge of the Company, the use of such Intellectual Property by
Company or any of its Subsidiaries does not infringe on the rights of any
person, except for such infringement or infringements which, individually or in
the aggregate, would not have a Material Adverse Effect on Company. For the
purposes of this Agreement, "knowledge of the Company" shall mean the actual
knowledge of any of its directors, officers, employees, investment bankers,
attorneys or accountants, and shall include any information which any of such
persons could have discovered through reasonable investigation in the ordinary
course of their duties. Except as set forth on Section 3.13 of the Company
Disclosure Schedule, the Intellectual Property registrations and patents owned
by Company or any of its Subsidiaries, and any applications therefore, are to
the knowledge of the Company subsisting and enforceable, and none has lapsed,
expired, or been abandoned, and all such registrations, patents and applications
therefore are currently standing in the name of Company or its Subsidiaries,
except where any of the aforementioned defects in such registrations, patents or
applications would not have a Material Adverse Effect. Company and each of its
Subsidiaries owns (free and clear of any lien, encumbrance or other
restriction), or is otherwise licensed or has the right to use, all Intellectual
Property used in or necessary for the conduct of its business, except where any
failure to own, be licensed to use or have the right to use would not,
individually or in the aggregate, have a Material Adverse Effect, and the
consummation of the transactions contemplated by this Agreement will not alter
or impair any such rights.
Section 3.14 Taxes. Except as disclosed in Section 3.14 of the
Company Disclosure Schedule, the Company has filed all federal, state and local
tax returns required to be filed by it and paid all taxes due thereon.
Section 3.15 No Undisclosed Liabilities. Except as and to the extent
set forth in the audited consolidated balance sheets of Company as of March 28,
1999 included in the Company Financial Statements, none of Company or Company's
Subsidiaries had as of that date any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that would be required by GAAP
to be reflected on a consolidated balance sheet of Company and Company's
Subsidiaries (including the notes thereto) which constituted a Material Adverse
Effect. Except as and to the extent set forth in the interim balance sheets,
since March 28, 1999, neither Company, nor any of Company's Subsidiaries has
incurred any liabilities of any nature, whether or not accrued, contingent or
otherwise, which would have, individually or in the aggregate, a Material
Adverse Effect.
Section 3.16 Real Properties. Neither the Company nor its
Subsidiaries own any real property. The Company leases real estate under the
leases listed on Section 3.16 of the Company Disclosure Schedule, all of which
are in full force and there exists no event of default under said leases by any
party thereto.
Section 3.17 Compliance with Applicable Law. Company and Company's
Subsidiaries hold and are in compliance with all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for the
lawful conduct of their respective businesses (the "Company Permits"), except
for failures to hold or comply with such permits, licenses, variances,
exemptions, orders and approvals which do not, individually or in the aggregate,
have a Material Adverse Effect. To the knowledge of the Company, the businesses
of Company and Company's Subsidiaries are not being conducted in violation of
any order, writ, injunction, decree, statute, rule or regulation of any
Governmental Entity applicable to Company or any of Company's Subsidiaries.
Section 3.18 Employee Matters. Section 3.18 of the Company
Disclosure Schedule sets forth a complete and accurate list of the titles and
annual compensation (including any bonuses) of all directors and officers of
Company, and all employees of Company or any of Company's Subsidiaries whose
annual base income exceeds $50,000 (excluding any bonuses). Except as set forth
in Section 3.18 of the Company Disclosure Schedule, none of Company or any of
Company's Subsidiaries is a party to or bound by any
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contract, agreement or arrangement regarding the employment, services,
consulting or severance from or termination of employment, of any director,
officer or employee (past or present) (each an "Employment Agreement").
Company and its Subsidiaries have paid in full to, or accrued on
behalf of, all of their respective employees, wages, salaries, commissions,
bonuses and other direct compensation for all services performed by them to the
date hereof and all amounts required to be reimbursed to such employees except
those which in the aggregate total less than $35,000. Company and its
Subsidiaries are in material compliance with all applicable laws and regulations
respecting employment and employment practices; there is no unfair labor
practice complaint against Company or any of its Subsidiaries pending before any
Government Entity; there is no labor strike, dispute, slowdown or stoppage
pending or, to the knowledge of the Company, threatened against or involving
Company or any of its Subsidiaries; no representation question or to the
knowledge of the Company any pending organization attempt by any collective
bargaining representative exists respecting the employees of Company or any of
its Subsidiaries. There are no collective bargaining agreements or other
employee representation agreements which exist or are currently being negotiated
by Company or any of Company's Subsidiaries.
Section 3.19 Insurance Policies. Section 3.19 of the Company
Disclosure Schedule contains a complete and accurate list of all insurance
policies providing coverage in favor of Company and Company's Subsidiaries, or
relating to real property, whether leased or owned by Company or Company's
Subsidiaries, specifying the insurer, amount of coverage and type of insurance
under each and indicating which of such policies provide for retrospective
premium adjustments. Each such policy is in full force and effect and all
premiums are currently paid or accruals provided for and no notice of
cancellation or termination has been received with respect to any such policy.
Such policies are sufficient for compliance with all material requirements of
law.
Section 3.20 Contracts.
(a) Section 3.20(a)(i) of the Company Disclosure Schedule sets forth
a complete and accurate list of all contracts, agreements and other arrangements
to which Company or any of Company's Subsidiaries is a party or by which
Company, any of Company's Subsidiaries or any of their respective assets are
bound (excluding plans referred to in Sections 3.9 and 6.5 and leases referred
to in Section 3.16) pursuant to which (i) any party thereto is entitled
prospectively to receive in excess of $35,000, (ii) any party thereto has the
right or option prospectively to order products or services the consideration
for which would exceed $35,000, or (iii) payments are based on the profits or
revenues of Company or any of Company's Subsidiaries (hereinafter referred to
collectively as (the "Contracts"). Each of the Contracts is in full force and
effect and enforceable in accordance with its terms. Neither Company nor
Company's Subsidiaries have received any formal or official notice (written or
oral) of cancellation or termination of, or intent to cancel or terminate, any
of the Contracts. With respect to each Contract which by its terms will
terminate within one year of the date hereof (or unless an option to extend such
Contract is exercised), neither Company nor any of Company's Subsidiaries has
received any formal or official notice (written or oral) that any such Contract
will not be so renewed or that any such extension option will not be exercised.
Except as set forth in Section 3.20(a)(ii) of the Company Disclosure Schedule,
there exists no event of default or occurrence, condition or act on the part of
Company or any of Company's Subsidiaries or, to the best knowledge of Company,
on the part of the other parties to such Contracts which constitutes or would
constitute (with notice or lapse of time or both) a breach of or default under
any of the Contracts, or cause or permit acceleration of any obligation of
Company or any of Company's Subsidiaries thereunder, which individually or in
the aggregate would have a Material Adverse Effect. Except as set forth in
Section 3.20(a) of the Company Disclosure Statement, no consent of any other
party to the Contracts is required in connection with the execution, delivery
and performance of this Agreement or in order for the Contracts to remain in
full force and effect following the Merger.
(b) None of Company nor any of Company's Subsidiaries is a party to
any agreement which materially limits the freedom of Company or any of Company's
Subsidiaries to compete in any line of business or with any person.
Section 3.21 Billed Accounts Receivable. All notes and billed
accounts receivable of Company and Company's Subsidiaries, represent sales or
services made or rendered in the ordinary course of business and represent the
legal, valid and binding obligations of the obligors thereon. The Company has
reviewed customer receivables and has established adequate reserves to provide
for doubtful accounts of, any valid counterclaims by, and allowances to, its
customers.
Section 3.22 Disclosure. No representation, warranty or statement
made by Company in this Agreement or the Company Disclosure Schedules contains
or will contain any untrue statement of a material fact, or omits or will omit
to state a material fact required to be stated herein or therein, or necessary
in order to make, in light of the circumstances under which such statements were
made, not misleading.
Section 3.23 Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of the Company Common Stock is the only vote
of the holders of any class or series of the Company's capital stock necessary
to approve this Agreement and the transactions contemplated hereby.
Section 3.24 Banks; Powers of Attorney. Section 3.24 of the Company
Disclosure Schedule sets forth (a) the names and locations of all banks, trust
companies, savings and loan associations and other financial institutions at
which Company or any of Company's Subsidiaries maintain safe deposit boxes or
accounts of any nature and the names of all persons authorized to draw thereon,
make withdrawals therefrom or have access thereto, and (b) the names of all
persons to whom Company or any of Company's Subsidiaries have granted a power of
attorney, together with a description thereof.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to Company as follows:
Section 4.1 Organization: Parent and Subsidiaries. Each of Parent,
Merger Sub and each of the respective Subsidiaries of the Parent, is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and corporate authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as now being conducted
except where the failure to be so organized, existing and in good standing or to
have such power, authority, and governmental approvals would not have a Material
Adverse Effect on or of Parent and its Subsidiaries. In this Agreement, the term
"Material Adverse Effect" used in reference to the Parent means any event,
change or effect, which either alone or in the aggregate with all other such
events, changes or effects, is, or is reasonably likely to be, materially
adverse to the business, financial condition, properties, assets,
capitalization, stockholders' equity, liabilities (including contingent
liabilities), results of operations, licenses or franchises of the Parent and
its Subsidiaries on consolidated basis. Each of Parent and Merger Sub is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing would
not have a Material Adverse Effect.
Section 4.2 Capitalization. The authorized capital stock of Parent
consists of: (i) 20,000,000 shares of Parent Common Stock, of which, as of the
date hereof 7,476,922 shares are issued and outstanding and (ii) 1,000,000
shares of preferred stock, of which, as of the date hereof no shares are issued
and outstanding. As of the date hereof, there are outstanding pursuant to
Parent's incentive and stock option plans, and other rights to purchase shares
other than under its ESPP (the "Parent Stock Plans") to purchase 1,396,000
shares of Parent Common Stock, and warrants to purchase 268,307 shares of Parent
Common Stock. All issued shares of Parent Common Stock are duly authorized,
validly issued, fully paid and non-assessable and free of any preemptive rights
in respect thereto. As of the date hereof, the authorized capital stock of
Merger Sub consists of 1,000 shares of Common Stock, par value $1.00 per share,
all of which are validly issued, fully paid and nonassessable and are owned
directly by Parent.
Section 4.3 Parent Authority. Parent has the requisite corporate
power and authority to execute and deliver this Agreement. The execution,
delivery and performance of this Agreement and the consummation of the Merger
and of the other transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of Parent and no other corporate
proceedings on the part of Parent shall be necessary to authorize this Agreement
or to consummate the transactions so contemplated other than obtaining the
requisite approval of its Shareholders. This Agreement has been duly executed
and delivered by Parent and constitutes a valid and binding obligation of Parent
enforceable against it in accordance with its terms.
Section 4.4 Merger Sub Authority. Merger Sub has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the Merger and of the
other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Merger Sub and no -other corporate
proceedings on the part of Merger Sub are necessary to authorize this Agreement
or to consummate the transactions so contemplated. This Agreement has been duly
executed and delivered by Merger Sub and constitutes a valid and binding
obligation of Merger Sub, enforceable against it in accordance with its terms.
Section 4.5 Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of the Securities Act of 1933, the
Exchange Act, the HSR Act, any applicable "Blue Sky" laws and the Minnesota Law,
neither the execution, delivery or performance of this Agreement by Parent and
Merger Sub nor the consummation by Parent and Merger Sub of the transactions
contemplated hereby nor compliance by Parent and Merger Sub with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the Articles of Incorporation or Bylaws of Parent and Merger Sub,
(ii) require any filing with, or permit, authorization, consent or approval of,
any Governmental Entity, (iii) result in a violation or breach of, or constitute
(with notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) or require any authorization, consent
or approval under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, lease, contract, agreement or other instrument or
obligation to which Parent or any of its Subsidiaries is a party or by which any
of them or any of their properties or assets may be bound or (iv) violate
any-order, writ, injunction, decree, statute, rule or regulation applicable to
Parent, any of its Subsidiaries or any of their properties or assets, except in
the case of (ii) and (iii) for violations, breaches or defaults which would not,
and except for failures to obtain such permits, authorizations, consents or
approvals or to make such filings which would not, individually or in the
aggregate, have a Material Adverse Effect.
Section 4.6 SEC Reports and Financial Statements. Parent has filed
with the SEC, and has heretofore furnished to the Company, true and complete
copies of all forms, reports, schedules, statements and other documents required
to be filed by it and actually filed under the Exchange Act or the Securities
Act of 1933, as amended (the "Securities Act"), (as such documents have been
amended since the time of such filing for the periods since Fiscal Year 1996,
collectively, the "Parent SEC Documents"). The Parent SEC Documents, including
without limitation any financial statements or schedules included therein, at
the time filed, (a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (b) complied in all material respects with
the applicable requirements of the Exchange Act and the Securities Act, as the
case may be, and the applicable rules and regulations of the SEC thereunder. The
financial statements of Parent included in the Parent SEC Documents comply as to
form in all material
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respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by Form 10-Q
of the SEC), and fairly present (subject, in the case of the unaudited
statements, to normal year-end audit adjustments) the consolidated financial
position of Parent and its consolidated subsidiaries as at the dates thereof and
the consolidated results of their operations and cash flows for the periods then
ended.
Section 4.7 Proxy Statement/Prospectus. The information provided by
Parent and Merger Sub for inclusion in the Proxy Statement/Prospectus shall be
true and complete, shall not contain any untrue statement of a material fact and
shall not omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein not misleading.
Section 4.8 Issuance of Shares. Upon issuance of Parent's shares to
the Company's shareholders pursuant to the Merger, such shares shall be duly
authorized, validly issued, fully paid, and nonassessable shares of Parent's
Common Stock.
Section 4.9 Operation of Merger Sub. Merger Sub is a direct,
wholly-owned subsidiary of Parent, was formed solely for the purpose of engaging
in the transactions contemplated hereby and has not engaged in any business
activities or conducted any operations other than in connection with the
transactions contemplated hereby.
Section 4.10 Litigation. There are no suits, claims, actions,
proceedings and investigations which are pending or threatened against the
Parent or any of its Subsidiaries, judicial, administrative or otherwise.
Section 4.11 No Undisclosed Liabilities. Except as and to the extent
set forth in the audited consolidated balance sheets of Parent as of June 28,
1999 included in the Parent Financial Statements, none of Parent or Parent's
Subsidiaries had as of that date any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that would be required by GAAP
to be reflected on a consolidated balance sheet of Parent and Parent's
Subsidiaries (including the notes thereto) which constituted a Material Adverse
Effect. Since June 28, 1999, neither Parent, nor any of Parent's Subsidiaries
has incurred any liabilities of any nature, whether or not accrued, contingent
or otherwise, which would have, individually or in the aggregate, a Material
Adverse Effect.
Section 4.12 Compliance with Applicable Law. Parent and Parent's
Subsidiaries hold and are in compliance with all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for the
lawful conduct of their respective businesses (the "Parent Permits"), except for
failures to hold or comply with such permits, licenses, variances, exemptions,
orders and approvals which do not, individually or in the aggregate, have a
Material Adverse Effect. To the knowledge of the Parent, the businesses of
Parent and Parent's Subsidiaries are not being conducted in violation of any
order, writ, injunction, decree, statute, rule or regulation of any Governmental
Entity applicable to Parent or any of Parent's Subsidiaries.
Section 4.13 Disclosure. No representation, warranty or statement
made by Parent or Merger Sub in this Agreement contains or will contain any
untrue statement of a material fact, or omits or will omit to state a material
fact required to be stated herein or therein, or necessary in order to make, in
light of the circumstances under which such statements were made, not
misleading.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Covenants of Company. Prior to the Effective Time,
except as expressly permitted by this Agreement, or to the extent that Parent in
its sole discretion shall otherwise consent in writing:
(a) Ordinary Course. Company and its Subsidiaries shall
carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore
conducted and use their reasonable best efforts to preserve intact
their present business organizations, preserve their working
capital, keep available the services of their present officers and
employees and preserve their relationships with customers, suppliers
and others having business dealings with them to the end that their
goodwill and ongoing business shall not be impaired in any material
respect following the Merger.
(b) Dividends; Changes in Stock. The Company shall not,
and shall not permit any of its Subsidiaries to, (i) declare, set
aside or pay any dividends on or make other distributions in respect
of any of its capital stock, (ii) split, combine or reclassify any
of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares
of its capital stock or (iii) directly or indirectly repurchase,
redeem or otherwise acquire, any shares of its capital stock or
capital stock of any Subsidiary.
(c) Issuance of Securities. Company shall not, and shall
not permit any of its Subsidiaries to, issue, deliver or sell,
pledge, or authorize or propose the issuance, delivery or sale of,
any shares of its capital stock of any class, any Voting Debt or any
securities convertible into or exchangeable for, or any Stock
Options and rights to acquire, any such shares or Voting Debt other
than:
(i) shares of Company Common Stock issuable
upon the valid exercise of currently outstanding options
(other than new options for not more than 30,000 Shares
in the aggregate for new employees) under the Company's
stock option plans listed on Section 3.9 of the Company
Disclosure Schedule (the "Company Stock Option Plans");
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(ii) shares of Company Common Stock issued
under the Company Employee Stock Purchase Plan (the
"ESPP") on or before September 30, 1999; and
(iii) shares of Company Common Stock
contractually issuable to certain executive officers of
the Company as non-cash compensation prior to the
Effective Date.
(d) Company shall not grant, issue, modify or amend any
options, warrants or other rights to acquire its equity securities
including under its ESPP after September 30, 1999.
(e) Governing Documents. Company shall not, nor shall it
permit any of its Subsidiaries to, amend their respective
Certificates of Incorporation, Bylaws or comparable organizational
documents.
(f) Standstill Agreement. Except as contemplated herein,
for the period from the date hereof through the earlier of the
Closing or the first anniversary of the date of this Agreement, the
Company will not, and will use its best efforts to cause each
affiliate, not to (i) purchase, acquire or own, or offer or agree to
purchase, acquire or own, directly or indirectly, any Voting
Securities (as hereinafter defined) or direct or indirect rights or
options to acquire Voting Securities (or enter into any arrangements
or understandings with any third party to do any of the foregoing),
or (ii) propose to enter into, directly or indirectly, any merger or
business combination involving Parent or any of its subsidiaries, or
in any way seek to control the management, policies or Board of
Directors of Parent provided that nothing contained in this clause
(ii) shall limit the right to vote as a stockholder for any merger
or business combination. For purposes of this Agreement, the term
"Voting Securities" shall mean (i) any securities which are entitled
to vote generally in the election of directors of Parent and (ii)
any securities of Parent convertible into or exchangeable for any
security described in clause (i) above.
(g) No Acquisitions or Dispositions. Company shall not,
and shall not permit any of its Subsidiaries to: (x) acquire or
agree to acquire by merging or consolidating with, or by purchasing
equity interests in or a portion of the assets of, any business or
any corporation, partnership, 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 Company and its Subsidiaries taken as a whole; (y)
other than in the ordinary course of business, sell, assign, lease,
license, pledge, encumber or otherwise dispose of, or agree to sell,
assign, lease, license, encumber or otherwise dispose of, any of its
assets which are material, individually or in the aggregate, to
Company and its Subsidiaries taken as a whole, or any stock in any
Subsidiary.
(h) Indebtedness. Except as required to operate its
business in the ordinary course and after written notice to Parent,
Company shall not, and shall not permit any of its Subsidiaries to,
(i) incur or assume any long-term debt or, except in the ordinary
course of business under lines of credit existing on the date
hereof, incur or assume any short-term debt; (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person
except in the ordinary course of business and consistent with past
practice; or (iii) make any loans, advances (other than advances to
employees for travel and entertainment in the ordinary course of
business) or capital contributions to, or investments in, any other
person.
(i) Benefit Plans and Compensation. Company shall not,
and shall not permit any of its Subsidiaries to, terminate, adopt,
amend or enter into any employment agreements or employee benefit
plans of the type set forth in Sections 3.7 and 3.9, except as may
be required by applicable law or regulation, or pay benefits not
required by any existing plan or arrangement or increase in any
manner the compensation, stock options, or fringe benefits of any
director, officer or employee without the written approval of
Parent;
(j) Other Matters. Other than as provided for herein,
the Company shall not permit any of Company's Subsidiaries to: (x)
pay, discharge, settle or satisfy or agree to pay, discharge, settle
or satisfy, any claims, liabilities or obligations (absolute,
accrued, contingent or otherwise), other than when due in accordance
with their respective terms and other than claims, liabilities, and
obligations in an amount not in excess of $25,000 individually or
$150,000 in the aggregate, or (y) waive, release, grant or transfer
any rights of value or modify or change any existing license, lease,
contract or other agreement or arrangement which modifications or
changes would have, individually or in the aggregate, a Material
Adverse Effect or (z) fail to maintain all property and equipment
useful and necessary in its business in good working order and
condition or fail to continue its maintenance programs consistent
with past practice.
(k) Affiliate Transactions. Company and its Subsidiaries
shall not enter into any contract, loan or other transaction with
any of the following persons, or in which any of the following
persons have a direct or indirect impact interest:
(i) any director or officer of Company or,
any Subsidiary of it;
(ii) any of the spouses, parents, siblings,
children or other close relatives of any person
described in clause (i); and
(iii) any corporation, partnership, trust or
other entity in which any person described in clauses
(i) or (ii) has a beneficial interest.
(l) Capital Expenditures. Except as set forth in Section
5.01(l) of the Company Disclosure Schedule, Company shall not, and
shall not permit any of Company's Subsidiaries to, other than in the
ordinary course of business and
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consistent with past practice and in an amount not in excess of
$50,000 in respect of any individual project or $250,000 in the
aggregate, make any capital expenditures or commitments for capital
expenditures.
(m) Tax Matters; Accounting Policies. Company shall not,
and shall not permit any of Company's Subsidiaries to, make any tax
elections or settle or compromise any income or excise tax liability
or, except as required by law or applicable accounting standards,
change any accounting policies or procedures. Company shall promptly
advise Parent of any tax audit or tax adjustment or proposed or
threatened tax audit or tax adjustment with respect to Company and
shall also notify Parent of any adverse determination by any
Governmental Entity with respect to taxes.
(n) Advice of Changes; Filings. Company shall confer on
a regular and frequent basis with Parent, inform on operational
matters and with respect to any significant new contracts and
promptly advise Parent orally and in writing of any change, event or
effect having, or which, insofar as can reasonably be foreseen,
could have, a Material Adverse Effect on Company and Company's
Subsidiaries taken as a whole. Company shall promptly provide Parent
(or its counsel) copies of all filings made by Company with any
Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
(o) Other Actions. Company shall not, and shall not
permit any of its Subsidiaries to, agree or commit to take any
action that would be prohibited by this Section 5.1. Notwithstanding
the fact that an action might otherwise be permitted pursuant to
this Section 5.1, Company shall not, and shall not permit any of its
Subsidiaries to, take any action that would or is reasonably likely
to result in any of Company's representations and warranties set
forth in this Agreement being untrue in any material respect or in
any of the conditions to the Merger set forth in Article VII not
being satisfied.
Section 5.2 Company's Pre-Closing Conditions. The Company shall
satisfy each of the conditions set forth below at the time specified but in no
case later than the Closing:
(a) ESPP. The Company will not make another offering or
accept contributions under the plan between September 30, 1999 and
the Closing and no further rights to purchase Shares under the ESPP
will accrue between September 30, 1999 and the Closing.
(b) The Company will rescind or modify the stock
issuances and other compensation authorized for executive officers
on May 11, 1999 so that all obligations and liabilities terminated
on or before the Effective Date.
(c) Rights Plan. The Company will amend or terminate its
rights plan and redeem all rights outstanding prior to the Effective
Date to the extent necessary to permit the completion of this
transaction.
(d) All options for non-employee Directors will be
amended to require exercise within six months of the Effective Date.
Section 5.3 Covenants of the Parent and Merger Sub. Prior to the
effective Time, except as expressly permitted by this Agreement, or to the
extent that the Company in its sole discretion shall otherwise consent in
writing.
(a) Ordinary Course. Except as expressly noted herein,
Parent and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course and in a manner
which shall not materially adversely affect the value of the Parent
Common Stock issuable to the Company's stockholders as the
Shareholder Consideration.
(b) Governing Documents. Parent shall not, nor shall it
permit any of its Subsidiaries to, amend their respective
Certificate of Incorporation, Bylaws or comparable organizational
documents.
(c) Dividends, Changes in Stock. Parent shall not, and
shall not permit any of its Subsidiaries to (i) declare, set aside,
or pay any dividends on or make other distributions in respect of
any of its capital stock other than in the form of Parent Common
Stock, (ii) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock or
(iii) directly or indirectly repurchase, redeem or otherwise
acquire, any shares of its capital stock or capital stock of any
Subsidiary.
(d) Directors. Within 30 days following the Effective
Time, Parent shall cause Sebastian J. Sicari and another person (to
be designated by the Company prior to the Effective Date) to be
appointed or elected to the Board of Directors of Parent.
(e) NASDAQ National Market. Parent shall use its
reasonable best efforts to effect the inclusion of all shares of
Parent Common Stock issuable to the Company's shareholders on the
NASDAQ National Market and shall take all actions required under
applicable federal or state securities laws in connection with the
issuance of Parent Common Stock pursuant to this Agreement.
(f) Other Actions. Parent shall not, and shall not
permit any of its Subsidiaries to, agree or commit to take any
action that would be prohibited by this Section 5.3. Notwithstanding
the fact that an action might otherwise be permitted pursuant to
this Section 5.3, Parent shall not, and shall not permit any of its
Subsidiaries to, take any action that would or is reasonably likely
to result in any of Parent's representations and warranties set
forth in this Agreement being untrue in any material respect or in
any of the conditions to the Merger set forth in Article VII not
being satisfied.
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ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Access to Information. Upon reasonable notice and
subject to applicable law, Company shall (and shall cause each of its
Subsidiaries to) afford to the officers, employees, accountants, counsel, and
other representatives of Parent, access, during normal business hours during the
period prior to the Effective Time, to all its properties (including its plants,
offices, warehouses and other facilities), books, contracts, commitments and
records and, during such period, subject to applicable law, the Company shall
(and shall cause each of its Subsidiaries to) furnish promptly to Parent all
information concerning its business (including financial and operating data),
properties and personnel as Parent may reasonably request. The Company will keep
Parent advised of significant developments in Company's business and of any
significant decisions concerning the operation of their business.
Parent and the Company shall each use its best efforts to preserve
the confidentiality of any proprietary, confidential or trade secret information
obtained from the other party during the negotiations of the Merger. In the
event the Merger is not completed for any reason, Parent and the Company shall
each return to the other all of such information of the other party, together
with all copies thereof, and shall not misappropriate or disclose any of such
information to any third parties.
Section 6.2 Proxy Statement/Prospectus. As soon as practicable after
the execution of this Agreement, the parties shall prepare and file with the
Securities and Exchange Commission the Proxy Statement/Prospectus, and shall use
their reasonable efforts to have the Proxy Statement/Prospectus approved as soon
as possible thereafter.
Section 6.3 Shareholders' Meetings.
(a) The Company and Parent, acting through their
respective Boards, shall, in accordance with applicable law:
(i) as promptly as practicable, duly call,
give notice of, convene and hold special meetings of
their shareholders for the purpose of causing their
shareholders to consider and vote upon a proposal to
approve the Merger (the "Special Meetings") ;
(ii) subject to their fiduciary duties under
applicable laws as advised by counsel, include in the
Proxy Statement/Prospectus the recommendation of their
Boards that shareholders of the Company and the Parent,
respectively, vote in favor of the approval of the
Merger; and
(iii) use all reasonable efforts to obtain
and furnish the information required to be included by
them in the Proxy Statement/Prospectus, and, after
consultation with each other, respond promptly to any
comments made by the SEC with respect to the Proxy
Statement/Prospectus and any preliminary version thereof
and to cause the Proxy Statement/Prospectus to be mailed
to shareholders as promptly as practicable.
(b) If at any time prior to the Special Meetings any event
should occur relating to Company, Parent or their officers or directors
which should be described in this Proxy Statement/Prospectus, the
affected party will promptly inform the other party thereof and, if the
parties determine that any such event should be described in an
amendment of or a supplement to the Proxy Statement/Prospectus, will
cooperate with each other in promptly preparing, filing and clearing
with the SEC and mailing such amendment or supplement.
Section 6.4 Closing. Upon the terms and subject to the conditions
hereof, as soon as practicable after shareholder approval of the Merger has been
obtained, Merger Sub and the Company will sign and deliver to the Secretary of
State of Delaware duly signed Certificates of Merger with respect the Merger,
all in the manner and as required by the Delaware Law, and the parties shall
take all other and further actions as may be required by law to make the Merger
effective.
Section 6.5 Stock Option and Employee Stock Purchase Plans.
(a) At the Effective Time, each outstanding option to
purchase shares of Company Common Stock (each a "Company Stock
Option") under the Company Stock Option plans including the
Directors' Option Plan, whether or not exercisable, will be assumed
by Parent. Each Company Stock Option so assumed by Parent under this
Agreement will continue to have, and be subject to, terms and
conditions substantially similar to those set forth in the
applicable Company Stock Option plan immediately prior to the
Effective Time except that (i) each Company Stock Option will be
exercisable (or will become exercisable in accordance with its
terms) for that number of whole shares of Parent Common Stock equal
to the product of the number of shares of Company Common Stock that
were issuable upon exercise of such Company Stock Option immediately
prior to the Effective Time multiplied by the Exchange Ratio and
(ii) the per share exercise price for the shares of Parent Common
Stock issuable upon exercise of such assumed Company Stock Option
will be equal to the quotient determined by dividing the exercise
price per share of Company Common Stock at which said Company Stock
Option was exercisable immediately prior to the Effective Time by
the Exchange Ratio, rounded down to the nearest whole cent. After
the Effective Time, Parent will issue to each holder of an
outstanding Company Stock Option a notice describing the foregoing
assumption of such Company Stock Option by Parent.
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(b) Parent will reserve on and after the Effective Date
sufficient shares of Parent Common Stock for issuance under this
Section 6.5.
Section 6.6 Expenses. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses provided that the Parent shall pay Sixty-five Percent (65%) and Company
shall pay Thirty-five Percent (35%) of all costs and expenses for printing. The
Company will use its best efforts to not pay, incur, or become liable for, any
such expenses including, but not limited to, legal, accounting, investment
banking, the Company's share of printing costs set forth above and proxy
solicitation fees (the "Transactional Expenses") in excess of $650,000 in the
aggregate (with $150,000 payable one year after the Effective Date). If the
Transactional Expenses of the Company exceed $650,000 any excess shall reduce
the Acquisition Consideration set forth in Section 2.2.
Section 6.7 Public Announcements. Parent and the Company will
consult with each other before issuing any press release or otherwise making any
public statements and shall not issue any such press release or make any such
public statement without the consent of the other parties hereto, except as may
be required by law or by obligations pursuant to any listing agreement with
NASDAQ.
Section 6.8 Notification of Certain Matters. Company shall promptly
supplement or amend the Company Disclosure Schedule with respect to any material
matter hereafter arising or discovered which, if existing or known at the date
hereof, would have been required to be disclosed in the Company Disclosure
Schedule; provided, however, that any such supplemental or amended disclosure
shall not be deemed to have been disclosed as of the date hereof.
Section 6.9 Further Assurances; Best Efforts. Subject to the terms
and conditions of this Agreement, each of Company, Parent and Merger Sub agrees
to use their best efforts to take, or cause to be taken, all action and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each of Company, Parent and
Merger Sub shall take all such necessary action.
Section 6.10 Form S-8. Parent agrees to file promptly a registration
statement on Form S-8 or, if possible, an amendment to Parent's then effective
registration statement on Form S-8, for the shares of Parent Common Stock
issuable with respect to the assumed Company Stock Options and shall keep such
registration statement effective for so long as any such options remain
outstanding.
Section 6.11 Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, Parent agrees
that it will indemnify and hold harmless each current director and
officer of Company (when acting in such capacity) (each an
"Indemnified Party" and, collectively, the "Indemnified Parties"),
against any costs or expenses (including, without limitation,
reasonable attorneys' fees, costs of investigation and fees of other
advisers and experts), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, including, without
limitation, claims, actions, suits, proceedings or investigations by
or on behalf of any present or former shareholder of Company,
arising out of matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after
the Effective Time, to the fullest extent that Parent would have
been permitted under Minnesota Law and its Articles of Incorporation
or Bylaws in effect on the date hereof to indemnify such person (and
Parent shall also advance expenses as incurred to the fullest extent
permitted under applicable law; provided the person to whom expenses
are advanced provides a written affirmation of his or her good faith
belief that the standard of conduct necessary for indemnification
has been met, and an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to
indemnification).
(b) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 6.11, upon
learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Parent thereof, but the failure
to so notify shall not relieve Parent of any liability it may have
to such Indemnified Party if such failure does not materially
prejudice the indemnifying party. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) Parent shall have the right to assume
the defense thereof and Parent shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any
other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if Parent elects
not to assume such defense or counsel for the Indemnified Parties
advises that there are issues which raise conflicts of interest
between Parent and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and Parent shall pay all
reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; provided,
however, that Parent shall be obligated pursuant to this paragraph
(b) to pay for only one firm of counsel for all Indemnified Parties
in any jurisdiction unless the use of one counsel for such
Indemnified Parties would present such counsel with a conflict of
interest, (ii) the Indemnified Parties will cooperate in the defense
of any such matter and (iii) Parent shall not be liable for any
settlement effected without its prior written consent; and provided,
further, that Parent shall not have any obligation hereunder to any
Indemnified Party if and when a court of competent jurisdiction
shall ultimately determine, and such determination shall have become
final and non-appealable, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law.
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(c) The Parent shall maintain Company's existing
officers' and directors' liability insurance for a period of three
(3) years after the Effective Time; provided, however, that if the
existing officers' and directors' insurance expires, is terminated
or canceled during such three-year period, the Parent will obtain
officers' and directors' liability insurance for the remainder of
such period of at least $3,000,000 containing terms and conditions
that are not materially less advantageous to the Indemnified Parties
and that is issued by an insurer having a claims-paying rating at
least as good as the rating of the issuer of Company's existing
policy.
(d) The provisions of this Section 6.11 are intended to
be for the benefit of, and shall be enforceable by, each of the
Indemnified Parties, their heirs and their representatives. The
provisions of this Section 6.11 will be effective for a period of
six (6) years after the Effective Date.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions of Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction of the following conditions unless waived in writing by Parent and
Merger Sub:
(a) Approvals. Other than the filing of Articles of
Merger provided for by Section 1.1, all authorizations, consents,
orders or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by any Governmental Entity,
the failure of which to obtain would have a Material Adverse Effect
on Parent and its Subsidiaries or the Surviving Corporation and its
Subsidiaries, in each case taken as a whole, shall have been filed,
occurred or been obtained.
(b) Representations and Warranties. The representations
and warranties of Company set forth in this Agreement shall be true
and correct in all material respects as of the date of this
Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Effective Time as
though made on and as of the Effective Time.
(c) Performance of Obligations of Company. Company shall
have performed in all material respects all obligations required to
be performed by it under this Agreement specifically including those
set forth in Section 5.2 by the earlier of the specific deadline set
forth herein or at or prior to the Effective Time.
(d) Stockholder Approval. The Company shall have
distributed the proxy statement in compliance with SEC requirements.
This Agreement shall have been adopted by the affirmative vote of
the holders of at least a majority of the outstanding shares of the
Company Common Stock and the Parent Common Stock.
(e) Officer's Certificates. Parent shall have received a
certificate signed on behalf of the Company by the chief executive
officer and the chief financial officer of the Company to the effect
that the conditions set forth in Section 7.1 have been satisfied.
(f) Opinion. Parent shall have received an opinion from
counsel to the Company in customary form reasonably acceptable to
Parent.
(g) Other Agreements.
(i) the Severance Agreement with Sebastian
J. Sicari (the "CEO") shall have been modified to effect
the following changes:
A. CEO shall receive (but not
before January 1, 2000) $400,000 worth of
Parent Common Stock, registered pursuant to
the Securities Act of 1933, at the Parent
Stock Price, in lieu of cash. CEO shall sell
such stock on the public market within 15
days after the Effective Time, at Parent's
direction. If the net proceeds from such
sale exceed $400,000, CEO shall pay promptly
such excess to Parent, and if the net
proceeds are less than $400,000, Parent
shall promptly make a payment in cash to CEO
equal to such deficit.
B. CEO shall exercise all stock
options assumed by Parent within 18 months
after the Closing, and such options will be
exercised at the rate of at least 16.66%
thereof each calendar quarter after the
Closing. Notwithstanding the foregoing, if
the closing price of Parent Common Stock is
less than the Parent Stock Price for at
least 75% of the trading days in any
quarter, CEO may elect to defer the portion
of the options otherwise exercisable in such
quarter to the next quarter and, in
addition, may on one occasion elect to defer
for one quarter regardless of price, the
options otherwise exercisable in such
quarter, provided that in no event may the
exercise of any portion of the options be
deferred beyond the 18th month following the
Closing.
(ii) the Severance Agreement with Carl S.
Archer, Jr. (the "Former chairman") shall have been
modified to effect the following changes:
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A. Former Chairman shall receive
(but not before January 1, 2000) Parent
Common Stock, registered pursuant to the
Securities Act of 1933, at the Parent Stock
Price, in lieu of cash, equal to any amounts
payable to him under the Separation
Agreement dated August 11, 1998, less any
amounts previously paid to him by the
Company (the "Severance Payment"). Former
Chairman shall sell such stock on the public
market within 15 days after the Effective
Time, at Parent's direction. If the net
proceeds from such sale exceed Severance
Payment, Former Chairman shall pay promptly
such excess to Parent, and if the net
proceeds are less than Severance payment,
Parent shall promptly make a payment in cash
to Former Chairman equal to such deficit.
B. Former Chairman shall
exercise all stock options assumed by Parent
within six (6) months after the Closing, and
such options must be exercised at the rate
of at least 50% of such options within the
first three (3) months after Closing.
(h) Delivery of Documents. The Company shall have
delivered to Parent (i) control of all of its books and records,
including but not limited to all corporate and other records or it
and any predecessors including the minute books, stock books, stock
register, deeds and title documents; and (ii) such other documents
and certificates as shall be reasonably requested by Parent.
(i) No Restraints. There shall have been no order or
preliminary or permanent injunction entered in any action or
proceeding before any Governmental Entity or other action taken, nor
statute, rule, regulation, legislation, interpretation, judgment or
order enacted, entered, enforced, promulgated, amended, issued or
deemed applicable to Parent, Company or any of their Subsidiaries,
or the Merger or this Agreement by any Governmental Entity and which
shall have remained in effect or any suit, claim, action or
proceeding pending before any Governmental Entity, which, if
adversely decided, would have the effect of: (i) making illegal,
materially delaying or otherwise directly or indirectly restraining
or prohibiting or making materially more costly the Merger or the
consummation of any of the other transactions contemplated by this
Agreement; (ii) prohibiting or materially limiting the ownership or
operation by Parent or Company or any of their Subsidiaries of all
or any material portion of the business or assets of Parent or
Company or any of their Subsidiaries or compelling Parent or any of
its subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of Parent or Company or any of its
Subsidiaries, as a result of the Merger; (iii) imposing or
confirming material limitations on the ability of the Parent or any
Subsidiary of Parent effectively to exercise full rights of
ownership of any Company Common Stock, including, without
limitation, the right to vote such Company Common Stock on all
matters properly presented to the Company's stockholders; or (iv)
requiring divestiture by Parent or any Subsidiary of Parent of any
Company Common Stock.
(j) Form S-4. The Form S-4 filed by the Parent with the
SEC with respect to the Merger shall have been declared effective by
the SEC and no stop order suspending the effectiveness of the Form
S-4 shall have been issued and no proceedings for that purpose shall
have been initiated or threatened by the SEC.
(k) Dissenting Shares. There shall not have been filed
with the Company by the holders of more than 5% of the shares of
Company Common Stock before the vote on this Agreement and the
transactions contemplated hereby at the stockholders' meeting
written objection to the Merger and the intention to demand payment
contemplated by Section 262 of the Delaware Law.
(l) Delaware Anti-Takeover. The Board of Directors of
the Company shall have approved this Agreement, and the merger
contemplated herein, for purposes of Delaware Corporate Law ss. 106.
(m) Parent shall have received from its tax counsel an
opinion that the merger will qualify for federal income tax purposes
as a reorganization within the meaning of ss.368(A) of the Code, in
a form reasonably acceptable to Parent.
(n) Material Adverse Changes. None of the following
changes in the business of the Company shall have occurred prior to
the Effective Time:
(i) The net book value of the Company shall
not have decreased by more than $500,000 from that
reflected in the balance sheet of the Company dated June
28, 1999, excluding the losses for the fiscal quarters
ending in September and December projected in the
forecast provided to Parent by the Company dated June
28, 1999.
(ii) Net losses for the Company for the
fiscal quarters ending in September and December 1999
shall not exceed $600,000 and $262,500, respectively.
(iii) The Company's cash requirements remain
within current working capital financing agreement
limits, and the Line of Credit with its current lender
remains in effect on its current terms until the
Effective Time, and no defaults under such Line of
Credit by the Company have occurred.
(iv) The Company has gross revenue equal to
$4,500,000 and $4,800,000 for the fiscal quarters
respectively ending in September and December, 1999.
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Section 7.2 Conditions of Obligations of Company. The obligation of
Company to effect the Merger is subject to the satisfaction of the following
conditions unless waived by the Company:
(a) Representations and Warranties. The representations
and warranties of Parent set forth in this Agreement shall be true
and correct in all material respects as of the date of this
Agreement and (except to the extent such representations and
warranties speak of an earlier date) as of the Effective Time as
though made on and as of the Effective Time.
(b) Performance of Obligations of Parent and Merger Sub.
Parent and Merger Sub shall have performed in all material respects
all obligations required to be performed by them by the earlier of
the specific deadline set forth herein or prior to Effective Time.
(c) Stockholder Approval. This Agreement shall have been
adopted by the affirmative vote of the holders of at least a
majority of the outstanding shares of each of the Company Common
Stock and the Parent Common Stock respectively.
(d) No Restraints. here shall have been no order or
preliminary or permanent injunction entered in any action or
proceeding before any Governmental Entity or other action taken, nor
statute, rule, regulation, legislation, interpretation, judgment or
order enacted, entered, enforced, promulgated, amended, issued or
deemed applicable to Parent or Company or any of their Subsidiaries
or the Merger or this Agreement, by any Governmental Entity which
shall have remained in effect and which shall have had the effect of
making illegal, materially delaying or otherwise directly or
indirectly restraining or prohibiting the Merger, or the
consummation of any of the other transactions contemplated by this
Agreement.
(e) Form S-4. The Form S-4 filed by the Parent shall
have been declared effective and no stop order suspending the
effectiveness of the Form S-4 shall have been issued and no
proceedings for that purpose shall have been initiated or threatened
by the SEC. Any and all state securities approvals for the issuance
of the Parent Common Stock pursuant to this Agreement shall have
been obtained.
(f) Officer's Certificate. The Company shall have
received a certificate signed on behalf of Parent by the chief
executive officer of Parent to the effect that the conditions set
forth in Section 7.2 have been satisfied.
(g) Opinion. The Company shall have received opinion
from Counsel to Parent in customary form reasonably acceptable to
the Company.
(h) Tax Opinion. Company shall have received an opinion
from its tax counsel that the merger will qualify for federal income
tax purposes as a reorganization within the meaning of ss.368(a) of
the Code, in a form reasonably acceptable to the Company.
(i) NASDAQ Listing. The Parent Common Stock issuable to
the Company's shareholders shall have been authorized for inclusion
on the NASDAQ National Market.
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.1 Termination. This Agreement may be terminated upon
notice at any time prior to the Effective Time, whether before or after adoption
of this Agreement and the Merger by the stockholders of the Company:
(a) by mutual written consent of Parent and Company;
(b) by Parent or Company if there shall have been a
material breach of any representation, warranty, covenant or
agreement on the part of the other party set forth in this Agreement
which breach shall not have been cured, in the case of a
representation or warranty, prior to the Closing or, in the case of
a covenant or agreement, within 5 business days following receipt by
the breaching party of notice of such breach;
(c) by either Parent or Company if any permanent
injunction or other order of a court or other competent authority
preventing the consummation of the Merger shall have become final
and non-appealable;
(d) by either Parent or Company if the Merger shall not
have been consummated on or before February 28, 2000, or if the
Proxy Statement/Prospectus has not been declared effective on or
before January 31, 2000, provided however, that the right to
terminate this Agreement pursuant to this Section 8.1(d) shall not
be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the
failure of the Merger to have occurred on or before the aforesaid
date;
(e) by Parent or Company, if the terminating party is
not otherwise in breach of this Agreement, if, in the exercise of
its good faith judgment as to its fiduciary duties under applicable
corporate law, the Board of Directors of Parent or Company
determines, after consultation with the financial advisors and
counsel, and in reliance upon the written opinion of such counsel,
that such termination is required by such fiduciary duties by reason
of a proposal from a third party that either constitutes a Business
Combination Transaction or may reasonably be expected to lead to a
Business Combination Transaction; provided, that any termination of
this Agreement pursuant to this Section 8.1(g) shall not be
effective until the
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terminating party has made payment of the full termination fee
provided for by Section 8.2(b) hereof. As used herein, the term
"Business Combination Transaction" shall mean any of the following
involving the Company or any Subsidiary or Parent or any Parent
Subsidiary, as applicable: (1) any merger, consolidation, share
exchange, business combination or other similar transaction (other
than the Transactions); (2) any sale, lease, exchange, transfer or
other disposition (other than a pledge or mortgage) of 25% or more
of the assets of the Company and the Subsidiaries or Parent and the
Parent Subsidiaries, as applicable, taken as a whole, in a single
transaction or series of transactions; or (3) the acquisition by a
person or entity or any "group" (as such term is defined under
Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of beneficial ownership of 33% or more of the shares of
Company Common Stock or Parent Common Stock, as applicable, whether
by tender offer, exchange offer or otherwise.
Section 8.2 Effect of Termination. (a) In the event of a termination
of this Agreement by either Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Merger Sub or Company or their respective
officers or directors, except for Sections 5.1(f), the second full paragraph of
6.1, first sentence of 6.6, 8.2(b), 8.5 and 9.2, which shall survive such
termination.
(b) Termination Fee. Upon termination by a party
pursuant to Section 8.1(e) above, that party shall pay to the other
party, if that other party is not otherwise in breach of this
Agreement, $1,000,000 in immediately available funds immediately
upon effectiveness of the termination.
Section 8.3 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of this Agreement by the stockholders of
the Company but, after such approval, no amendment shall be made which by law
requires further approval by such stockholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 8.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party.
Section 8.5 Liquidated Damages. The parties expressly agree that the
damages incurred by a non-breaching party upon breach of this Agreement by
another party would be speculative and difficult to measure. Therefore, upon the
failure of any party to proceed to completion of this transaction at the
Closing, as contemplated by this Agreement, in breach of this Agreement, the
breaching party (but not Merger Sub) shall pay to the non-breaching party (but
not to Merger Sub) $1,000,000 as liquidated damages, to compensate the
non-breaching party for expenses incurred in pursuit of the transactions
contemplated by this Agreement. Payment shall be made immediately upon such
breach. The breaching party shall not be liable to the non-breaching party for
any damages, costs or expenses in connection with such breach other than the
payment required by this Section.
ARTICLE IX
MISCELLANEOUS
Section 9.0 No Solicitations. From the date hereof until the
Closing, the Company will not, and will instruct its officers, directors,
employees, agents and other representatives not to, directly or indirectly,
solicit or initiate any proposals or offers from any person relating to any
acquisition or purchase of all or a material amount of the assets off or any
securities of, or any merger, consolidation or business combination with, the
Company or any of its subsidiaries; provided, however, that the Company may
furnish information to and otherwise cooperate with, and may engage in
discussions or negotiations with, any person with respect to any of the
foregoing and may waive any provision of any confidentiality or standstill
agreement to which it or any of its representatives is a party if counsel
advises the Board that failure to do so could involve the Company's directors in
a breach of their fiduciary duties and, provided, further, that nothing herein
shall prevent the Board from taking, and disclosing to the Company's
shareholders, a position contemplated by Rules 14d-9 or 14e-2 promulgated under
the Exchange Act with respect to any tender offer or making such other
disclosure to the Company's shareholders as, in the judgment of the Board, on
advice of counsel, is required by applicable law. Subject to the fiduciary
duties of the Board, the Company will promptly advise Parent of, and communicate
the principal terms (other than the identity of such person) of, any such
inquiry or proposal the Company may receive.
Section 9.1 Survival of Representations and Warranties. The
representations and warranties of the Parent, Merger Sub and Company shall not
survive the termination of this Agreement or the Effective Time.
Section 9.2 Brokers or Finders. Company represents and warrants to
Parent that no broker, finder or financial advisor is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger or the
transactions contemplated by this Agreement other than Adams, Harkness & Hill,
Inc.
Section 9.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
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(a) if to Parent or Merger Sub, at the address shown in
its most recent SEC filing, with copies to Best & Flanagan LLP, 4000
U.S. Bank Place, 601 Second Avenue South, Minneapolis, MN
55402-4331, Attn: James C. Diracles, Esq., Telecopy No.: (612)
339-5897; and
(b) if to Company: at the address shown in its most
recent SEC filing, with copies to Choate, Hall & Stewart, Exchange
Place, 53 State Street, Boston, MA 02109-2891, Attn: Robert V.
Jahrling, Telecopy No.: (617) 248-4000.
Section 9.4 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.5 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts, including facsimile
signature pages, have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
Section 9.6 Entire Agreement; No Third Party Beneficiaries; Rights
of Ownership. This Agreement (including the documents and the instruments
referred to herein) (a) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof except that the Confidentiality
Agreement between the parties dated July 22, 1999 shall continue in full force
and effect in accordance with its terms, and (b) is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
Section 9.7 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Minnesota without regard
to any applicable conflicts of law.
Section 9.8 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Merger Sub may assign, in its
sole discretion, any or all of its rights, interests and obligations hereunder
to Parent or to any direct or indirect wholly owned Subsidiary of Parent.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
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IN WITNESS WHEREOF, Parent, Merger Sub and Company have caused this
agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
MICRO COMPONENT TECHNOLOGY, INC.
By: /s/ Jeffrey S. Mathiesen
-----------------------------------------------
Name: Jeffrey S. Mathiesen
----------------------------------------------
Title: Vice President and Chief Financial Officer
---------------------------------------------
MCT ACQUISITION, INC.
By: /s/ Jeffrey S. Mathiesen
-----------------------------------------------
Name: Jeffrey S. Mathiesen
----------------------------------------------
Title: Vice President and Chief Financial Officer
---------------------------------------------
ASECO CORPORATION
By: /s/ Sebastian J. Sicari
-----------------------------------------------
Name: Sebastian J. Sicari
----------------------------------------------
Title: President and CEO
---------------------------------------------
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APPENDIX B
FAIRNESS OPINION OF ALLIANT PARTNERS
September 14, 1999
Board of Directors
Micro Component Technology, Inc.
2340 West County Road C
Saint Paul, MN 55113
You have requested our opinion as to the fairness, from a financial
point of view, to the shareholders of Micro Component Technology, Inc. ("MCT" or
"Company") for the proposed consideration to be paid in the acquisition of Aseco
Corporation ("Aseco"). The Company will purchase all the outstanding shares of
Aseco for up to $16,300,000 in MCT stock and options pursuant to the Acquisition
(the "Acquisition") contemplated by the Stock Purchase Agreement (the
"Agreement") dated September 14, 1999, between MCT and Aseco.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements
and other information of the Company and Aseco,
respectively;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning Aseco prepared
by the management of Aseco and their financial advisers;
(iii) analyzed certain financial projections prepared by the
management of Aseco;
(iv) discussed the past and current operations, financial
condition, and the prospects of Aseco with senior
executives of Aseco;
(v) discussed the past and current operations, financial
condition, and the prospects of the Company with senior
executives of the Company;
(vi) discussed with the senior managements of the Company and
Aseco the strategic objectives of the Acquisition and
their estimates of the synergies, cost savings and other
benefits expected to result from the Acquisition;
(vii) reviewed the reported prices and trading activity for
Aseco's and the Company's Common Stock;
(viii) compared the financial performance of Aseco with that of
certain other comparable publicly-traded companies and
the prices paid for securities in those publicly traded
companies;
(ix) reviewed the financial terms, to the extent publicly
available, of certain comparable acquisition and merger
transactions;
(x) participated in discussions among representatives of the
Company and Aseco and their financial and legal
advisors;
(xi) reviewed the Stock Purchase Agreement and certain
related documents; and
(xii) performed such other analyses and considered such other
factors as we have deemed appropriate.
We have assumed and relied upon, without independent verification,
the accuracy and completeness of the information reviewed by us for the purposes
of this opinion. With respect to the financial projections of Aseco and the
Company and the estimates of the synergies, cost savings and other benefits
expected to result from the Acquisition, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the future financial performance of the Company and Aseco. As
you are aware, we have had limited access to internal financial or other
operating data regarding Aseco, and therefore the financial and other
information regarding Aseco reviewed by Alliant Partners in connection with the
rendering of this opinion was limited to information provided by Aseco's
management, Aseco's financial advisers and certain discussions with Aseco's
senior management regarding Aseco's financial condition and prospects and their
strategic objectives of the Acquisition and their estimates of the synergies,
cost savings and other benefits expected to result from the Acquisition. In
addition, we have assumed that the Acquisition will be consummated in accordance
with the terms set forth in the Acquisition Agreement, including, among other
things, that the Acquisition will be accounted for as a "purchase" business
combination in accordance with U.S. General Accepted Accounting Principles and
the Acquisition will be treated as a taxable reorganization and/or exchange,
each pursuant to the Internal Revenue Code. We have not made any independent
valuation or appraisal of the assets or liabilities of the Company, nor have we
been furnished with any such appraisals. Our opinion is necessarily based on
economic, market and other conditions as in effect on, and the information made
available to us as of the date hereof.
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Board of Directors Page 2
Micro Component Technology, Inc. September 14, 1999
We are acting as financial advisor to the Company in connection with
the proposed Acquisition. In addition, we have performed various investment
banking services for the Company from time to time in the past.
Our opinion addresses only the fairness of the transaction, from a
financial point of view to the shareholders of the Company, and we do not
express any views on any other terms of the Acquisition. Specifically, our
opinion does not address the Company's underlying business decision to effect
the transaction contemplated by the Agreement.
It is understood that this letter is for the information of the
Board of Directors of the Company, except that this opinion may be included in
its entirety in any filing made by the Company with the Securities and Exchange
Commission with respect to the Acquisition.
Based upon and subject to the foregoing, and based upon such other
matters as we consider relevant, it is our opinion that, as of the date hereof,
the consideration to be paid by the Company pursuant to the Agreement is fair
from a financial point of view to the shareholders of the Company.
Very truly yours,
/s/ Alliant Partners
Alliant Partners
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APPENDIX C
FAIRNESS OPINION OF ADAMS, HARKNESS & HILL, INC.
September 19, 1999
Board of Directors
Aseco Corporation
500 Donald Lynch Boulevard
Marlboro, MA 01752
Members of the Board:
You have requested our opinion (the "Fairness Opinion"), as
investment bankers, as to the fairness, from a financial point of view, to the
shareholders of Aseco Corporation (the "Company") of the consideration to be
received by the Company's shareholders in connection with the proposed merger
(the "Merger") of the Company with and into a wholly owned subsidiary (the
"Merger Sub") of Micro Component Technology, Inc. ("Purchaser"), pursuant to an
Agreement and Plan of Merger dated as of September 18, 1999 (the "Merger
Agreement"), by and among the Company, the Merger Sub and Purchaser. Adams,
Harkness & Hill, Inc. ("AH&H"), as part of its investment banking activities, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes.
In the Merger, subject to Company shareholder approval, Purchaser
shall pay $16,300,000 (the "Acquisition Consideration") for all shares of the
Company's common stock, par value $.01 per share (the "Common Shares"), that are
issued and outstanding immediately prior to the close of the transaction, plus
709,152 shares to reflect shares reserved for options as calculated using the
treasury stock method. The Acquisition Consideration shall be paid in shares of
the Purchaser's Common Stock, par value $.01 per share. The number of shares of
Purchaser's Common Stock to be issued to the holders of the Common Shares and
for the shares issuable upon the exercise of stock options shall be determined
by dividing the Acquisition Consideration by the average closing sale price of
the Purchaser's Common Stock on the last twenty (20) trading days prior to the
Closing (the "20-day Trading Average"), as reported by NASDAQ. The 20-day
Trading Average will be subject to a minimum price of $3.565 and a maximum price
of $5.563.
In developing our Fairness Opinion, we have, among other activities:
(i) reviewed the Company's Annual Reports, Reports on Form 10-K and related
financial information for the three fiscal years ended March 31, 1999, and the
Company's Report on Form 10-Q and the related financial information for the
three month period ending June 30, 1999; (ii) reviewed Purchaser's Annual
Reports, Reports on Form 10-K and related financial information for the three
fiscal years ended June 30, 1999; (iii) analyzed certain internal financial
statements and other financial and operating data concerning the Company
prepared by the management of the Company and Purchaser; (iv) conducted due
diligence discussions with members of senior management of the Company and
Purchaser, and discussed with members of senior management of the Company and
Purchaser their views regarding future business, financial and operating
benefits arising from the Merger; (v) reviewed the historical market prices and
trading activity for the Common Shares and compared them with that of certain
publicly traded companies we deemed to be relevant and comparable to the Company
and Purchaser; (vi) compared the results of operations of the Company and
Purchaser with that of certain companies we deemed to be relevant and comparable
to the Company and Purchaser; (vii) compared the financial terms of the Merger
with the financial terms of certain other mergers and acquisitions we deemed to
be relevant and comparable to the Merger; (viii) participated in certain
discussions among representatives of the Company and Purchaser and their
respective advisors; (ix) reviewed the Merger Agreement; and (x) reviewed such
other financial studies and analyses and performed such other investigations and
took into account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.
Our Fairness Opinion as expressed herein is limited to the fairness,
from a financial point of view, of the proposed consideration and does not
address the Company's underlying business decision to engage in the Merger. Our
Fairness Opinion does not constitute a recommendation to any shareholder of the
Company as to how such shareholder should vote on the Merger. We are expressing
no opinion as to the value of Common Shares at the time of our analysis or at
any time prior to and including the effective date of the Merger. In connection
with our review and in arriving at our Fairness Opinion, we have not
independently verified any information received from the Company, have relied on
such information, and have assumed that all such information is complete and
accurate in all material respects. With respect to any internal forecasts
reviewed relating to the prospects of the Company, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the Company's management as to the future financial
performance and cash requirements of the Company. Our Fairness Opinion is
rendered on the basis of securities market conditions prevailing as of the date
hereof and on the conditions and prospects, financial and otherwise, of the
Company as known to us on the date hereof. We have not conducted, nor have we
received copies of, any independent valuation or appraisal of any of the assets
of the Company. In addition, we have assumed, with your consent, that the terms
set forth in the executed Merger Agreement will not differ materially from the
proposed terms provided to us in the September 17, 1999, draft Merger Agreement.
It is understood that this letter is for the information of the
Board of Directors of the Company and may not be used for any other purpose
without our prior written consent, except that this opinion may be included in
its entirety in any filing made by the Company with the Securities and Exchange
Commission with respect to the transactions contemplated by the Merger
Agreement.
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Board of Directors
Aseco Corporation
September 19, 1999
Page 2 of 2
Based upon and subject to the foregoing, it is our opinion, as of
the date hereof, that the consideration is fair, from a financial point of view,
to the Company's shareholders.
Sincerely,
ADAMS, HARKNESS & HILL, INC.
By: /s/Timothy J. McMahon, Managing Director
-----------------------------------------
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APPENDIX D
MICRO COMPONENT TECHNOLOGY, INC.
INCENTIVE STOCK OPTION PLAN
(as amended through September 27, 1999)
ARTICLE I.
PURPOSE
The purpose of this Plan is to provide a means whereby Micro
Component Technology, Inc. (the "Company") may be able, by granting options to
purchase stock in the Company, to attract and retain persons of ability as key
employees of the Company or of any parent or subsidiary corporation of the
Company (the "Related Corporations"), and to motivate such employees through an
increased personal interest in the Company and the Related Corporations to exert
their best efforts on behalf of the Company and the Related Corporation, and
thus to advance the interest of such corporations and benefit their
stockholders. Both options which qualify for favorable tax treatment under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
options which do not so qualify, may be granted under the Plan.
ARTICLE II.
RESERVATION OF SHARES
A total of 1,500,000 shares (or 2,300,000 shares if the Agreement
and Plan of Merger with Aseco Corporation is approved), of the authorized but
unissued Common Stock of the Company, is reserved for issue upon the exercise of
options granted under this Plan. If any option expires or terminates for any
reason without having been exercised in full, the unpurchased shares covered
thereby shall become available for additional options which may be issued to
persons eligible under the Plan so long as it remains in effect. Shares reserved
for issue as provided herein shall cease to be reserved upon termination of the
Plan.
ARTICLE III.
ADMINISTRATION
(a) The Plan shall be administered by the Compensation Committee of
the Board of Directors of the Company (the "Committee") which shall be appointed
by the directors and which shall consist of two or more disinterested directors.
A disinterested director is one who is ineligible to receive options under the
Plan, and who has been ineligible to receive options under the Plan during the
preceding 12 months. Vacancies in the Committee shall be filled by the Board.
(b) The Committee shall have full power to construe and interpret
the plan and to establish and amend rules and regulations for its
administration, subject to the express provisions of the Plan.
(c) The Committee shall determine which employees of the Company or
of any Related Corporations shall be granted options hereunder, the number of
shares for which each option shall be granted, and any limitations on the
exercise of the option in addition to those imposed by this Plan. In determining
the employees to whom options shall be granted and the number of shares to be
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covered by each option, the Committee shall apply such criteria as it determines
appropriate from time to time. The maximum number of shares for which any
employee may be granted options under the Plan in any calendar year shall be
limited to 300,000 shares.
ARTICLE IV.
ELIGIBILITY
An option may be granted to any officer or other key employee
provided that any person to whom an option is granted shall be an employee of
the Company or of a Related Corporation at the time an option is granted to him
or her.
ARTICLE V.
PRICE
The option price per share of stock, to be determined from time to
time by the Committee, shall not be less than the fair market value of the stock
on the date an option to purchase the same is granted. The fair market value of
the stock as of any date in any month shall be the closing market price for the
stock on the 15th day of such month, or on the trading day closest to the 15th
if the stock does not trade on the 15th. If there is no closing market price for
the stock, the Committee shall use such other information deemed appropriate by
the Committee. No options shall be granted to any employee who at the time
directly or indirectly owns more than ten percent of the combined voting power
of all classes of stock of the Company or of a Related Corporation, unless the
exercise price is not less than 110 percent of the fair market value of such
stock on the date of grant, and unless the option is not exercisable more than
five years after the date of grant.
ARTICLE VI.
CHANGES IN PRESENT STOCK
In the event of a recapitalization, merger, consolidation,
reorganization, stock dividend, stock split or other change in capitalization
affecting the Company's present capital stock, appropriate adjustment may be
made by the Committee in the number and kind of shares and the option price of
shares which are or may become subject to options granted or to be granted
hereunder.
ARTICLE VII.
EXERCISE OF OPTIONS
An optionee shall exercise an option by delivery of a signed,
written notice to the Company, specifying the number of shares to be purchased,
together with payment of the full purchase price for the shares. The Company may
accept payment from a broker on behalf of the optionee and may, upon receipt of
signed, written instructions from the optionee, deliver the shares directly to
the broker. The date of receipt by the Company of the final item required under
this paragraph shall be the date of exercise of the option.
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ARTICLE VIII.
OPTION PROVISIONS
Each option granted under the Plan shall be evidenced by a Stock
Option Agreement executed by the Company and the optionee, and shall be subject
to the following terms and conditions, and such other terms and conditions as
may be prescribed by the Committee:
(a) Dollar Limitation. Each option grant shall constitute an
incentive stock option eligible for favorable tax treatment under Section 422 of
the Code, provided that no more than $100,000 of such options (based upon the
fair market value of the underlying shares as of the date of grant) can first
become exercisable for any employee in any calendar year. To the extent any
option grant exceeds the $100,000 dollar limitation, it shall constitute a
nonqualified stock option. Each stock option agreement shall specify the extent
to which it is an incentive and/or a nonqualified stock option. For purposes of
applying the $100,000 limitation, options granted under this Plan and under all
other plans of the Company and the Related Corporations which are qualified
under Section 422 of the Code shall be included.
(b) Payment. The full purchase price of the shares acquired upon
exercise of any option shall be paid in cash, by certified or cashier's check,
or in the form of shares of the Company's Common Stock with a fair market value
equal to the full purchase price and free and clear of all liens and
encumbrances.
(c) Exercise Period. The period within which an option must be
exercised shall be determined by the Compensation Committee at the time of
grant. The exercise period shall be subject to a maximum of ten years, or five
years for an employee who directly or indirectly owns more than ten percent of
the combined voting power of all classes of stock of the Company or a Related
Corporation. An option may not be exercised during the first year after the date
of grant. The option shall become exercisable to the extent of 50 percent of the
shares on the first anniversary of the date of grant and 100 percent of the
shares on the second anniversary of the date of grant. To the extent
exercisable, an option may be exercised in whole or in part. The Committee may
impose different or additional conditions with respect to length of service
which must be satisfied prior to exercise of all or any part of an option. For
options granted on or after November 4, 1998, the Committee, in its discretion,
may accelerate the vesting of any of such options while they remain outstanding.
Outstanding options shall become immediately exercisable in full in
the event that the Company is acquired by merger, purchase of all or
substantially all of the Company's assets, or purchase of a majority of the
outstanding stock by a single party or a group acting in concert.
(d) Rights of Optionee Before Exercise. The holder of an option
shall not have the rights of a stockholder with respect to the shares covered by
his or her option until such shares have been issued to him or her upon exercise
of an option.
(e) No Right to Continued Employment. Nothing herein shall be
construed to confer upon any optionee any right to continue in the employ of the
Company or of any Related Corporation or to interfere in any way with the right
of the Company or of any Related Corporation as employer to terminate his or her
employment at any time, nor to derogate from the terms of any written employment
agreement between such corporation and the optionee.
(f) Termination of Employment. If the optionee's employment is
terminated other than by death or for conduct which is contrary to the best
interests of the Company, the optionee may, within one month of such
termination, or within 90 days of
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such termination for options granted on or after June 8, 1994, exercise any
unexercised portion of his or her option to the extent he or she was entitled to
do so at the time of such termination.
If termination of employment is effected by death of the optionee,
the option, or any portion thereof, may be exercised to the extent the optionee
was entitled to do so at the time of his or her death, by his or her executor or
administrator or other person entitled by law to the optionee's rights under the
option, at any time within six months subsequent to the date of death.
If an optionee's employment is terminated by the Company for conduct
which is contrary to the best interests of the Company, as determined by the
Company in its sole discretion, the unexercised portion of the optionee's option
shall expire automatically on the date of termination of his or her employment.
Notwithstanding the foregoing, no option shall be exercisable
subsequent to the date of expiration of the option term and no option shall be
exercisable subsequent to the termination of the optionee's employment except as
specifically provided in this paragraph (f).
(g) Special Rule for California. Notwithstanding paragraph (f), if a
California optionee's employment is terminated, the optionee may, within six
months of such termination for death or disability, or within 90 days for any
other termination, exercise any unexercised portion of his or her option to the
extent he or she was entitled to do so at the time of such termination. This
provision shall apply only to options granted when the Common Stock is not
exempt from registration in California pursuant to a NASDAQ/NMS exemption or
otherwise.
(h) Non-transferability of Option. No option shall be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution, and each option shall be exercisable during the optionee's
lifetime only by optionee.
(i) Date of Grant. The date on which the Committee approves the
granting of an option shall be considered the date on which such option is
granted.
ARTICLE IX.
RESTRICTIONS ON TRANSFER
During any period in which the offering of the shares under the Plan
is not registered under federal and state securities laws, the optionees shall
agree in the Stock Option Agreement that they are acquiring shares under the
Plan for investment purposes, and not for resale, and that the shares cannot be
resold or otherwise transferred except pursuant to registration or unless, in
the opinion of counsel for the Company, registration is not required.
Any restriction upon shares acquired upon exercise of an option
pursuant to the Plan and the Stock Option Agreement shall be binding upon the
optionee and his or her heirs, executors, and administrators. Any stock
certificate issued under the Plan which is subject to restrictions shall be
endorsed so as to refer to the restrictions on transfer imposed by the Plan and
by applicable securities laws.
ARTICLE X.
EFFECTIVE DATE OF PLAN
The effective date of the Plan shall be April 28, 1993, the date of
its original adoption by the Board of Directors of the Company.
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ARTICLE XI.
TERMINATION OF THE PLAN
The Plan shall terminate April 27, 2003, which is ten years after
the date of its approval by the Board of Directors, unless sooner terminated by
issuance of all shares reserved for issuance hereunder. No option shall be
granted under the Plan after such termination date.
ARTICLE XII.
AMENDMENT OF THE PLAN
The Board of Directors of the Company may at any time terminate the
Plan, or make such modifications of the Plan as it shall deem advisable. No
termination or amendment of the Plan may, without the consent of the optionees
to whom any options shall theretofore have been granted, adversely affect the
rights of such optionees under such options.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Officers and Directors
Article VII of the registrant's Bylaws requires indemnification of
current or former directors of the registrant to the fullest extent prohibited
by the Minnesota Business Corporation Act. The act permits or requires
indemnification of directors and officers in certain circumstances. The effects
of the Bylaws and the Minnesota Business Corporation Act (the "Indemnification
Provisions") are summarized as follows:
a. The Indemnification Provisions grant a right of indemnification
in respect of any proceeding (other than an action by or in the right of the
registrant), if the person concerned acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of the
registrant, was not adjudged liable on the basis of receipt of an improper
personal benefit and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the conduct was unlawful. The termination of a
proceeding by judgment, order, settlement, conviction or plea of nolo
contendere, or its equivalent, is not, of itself, determinative that the person
did not meet the required standards of conduct.
b. The Indemnification Provisions grant a right of indemnification
in respect of any proceeding by or in the right of the registrant against the
expenses (including attorney fees) actually and reasonably incurred if the
person concerned acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the registrant, except
that no right of indemnification will be granted if the person is adjudged to be
liable to the registrant.
c. Every person who has been wholly successful, on the merits or
otherwise, in the defense of any proceeding to which the person was a party
because of the person's status as a director or officer of a controversy
described in (a) or (b) above is entitled to indemnification as a matter of
right.
d. The registrant may advance to a director or officer the expenses
incurred in defending any proceeding in advance of its final disposition if the
director or officer affirms in writing in good faith that he or she has met the
standard of conduct to be entitled to indemnification as described in (a) or (b)
above and undertakes to repay any amount advanced if it is determined that the
person did not meet the required standard of conduct.
MCT has purchased officers' and directors' liability insurance. The
policy provides that the insurer will pay, on behalf of MCT, 100% of any amount
MCT is required or permitted to pay to indemnify directors and certain officers
due to a claim against such director of officer for errors, omissions,
misstatements, misleading statements, negligence, or breach of duty while acting
in their official capacities, or asserted against them solely by reason of their
office, with certain exclusions. The insurer will pay a maximum of $3.0 million
pursuant to this policy, and will only make payment to the extent such damages
exceed $$50,000 or $150,000, depending upon the nature of the claims.
The rights of indemnification described above are not exclusive of
any other rights of indemnification to which the persons indemnified may be
entitled under any bylaw, agreement, vote of shareholders or directors or
otherwise.
Item 21. Exhibits and Financial Statement Schedules
2.1 Agreement and Plan of Merger, dated as of September 18, 1999, among
Micro Component Technology, Inc., MCT Acquisition, Inc. and Aseco
Corporation (included in the Joint Proxy Statement/Prospectus as
Appendix A).
3A. Bylaws of MCT. (9)
3B. Articles of Incorporation of MCT. (9)
4. Specimen Certificate of Common stock. (1)
5.1 Opinion of Best & Flanagan LLP. (to be filed by amendment)
8.1 Tax Opinion of Best & Flanagan LLP. (to be filed by amendment)
8.2 Tax Opinion of Choate, Hall & Stewart. (to be filed by amendment)
10A. Agreements between MCT and Hambrecht & Quist Guaranty Finance.
10A.i. Warrant Purchase Agreement dated July 22, 1992. (1)
10A.ii. Second Common stock Warrant Purchase Agreement dated
August 10, 1993. (1)
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10A.iii. First Amendment to Restated Financing Agreement dated
August 24, 1994, with attached Amendment to Warrant
Purchase Agreement and Warrants. (2)
10A.iv. Warrant Amendment Agreement dated October 31, 1995. (5)
10B. Form of Non-Competition Agreement between MCT and certain senior
executive officers. (1)
10C. Stock Purchase Agreement and Commission Agreement entered into
between MCT and Cardine & Levy, dated September 25, 1995. (4)
10D. Employment Agreement with Roger E. Gower dated March 28, 1995. (3)
10E. Employment Agreement with Dennis L. Nelson dated May 30, 1996. (7)
10F. Employee Stock Purchase Plan. (6)
10G. Stock Option Plan for Outside Directors as amended through April 29,
1999. (14)
10H. Lease for MCT's corporate headquarters dated October 16, 1996. (8)
10I. Credit and Security Agreement, dated February 17, 1998 between
Norwest Business Credit, Inc. and Micro Component Technology, Inc.
(10)
10J. Credit and Security Agreement, dated February 17, 1998 between
Norwest Bank Minnesota, N.A. and Micro Component Technology, Inc.
(10)
10K. First Amendment to Credit and Security Agreement, dated October 22,
1998 between Norwest Business Credit, Inc. and Micro Component
Technology, Inc. (11)
10L. First Amendment to Credit and Security Agreement, dated October 22,
1998 between Norwest Bank Minnesota, N.A. and Micro Component
Technology, Inc. (11)
10M. Second Amendment to Credit and Security Agreement (Eximbank
Guaranteed Loan), dated February 16, 1999 between Norwest Bank
Minnesota N.A and Micro Component Technology, Inc. (13)
10N. Second Amendment to Credit and Security Agreement , dated May 6,
1999 between Wells Fargo Business Credit, Inc. and Micro Component
Technology, Inc. (13)
10Q. Incentive Stock Option Plan as amended through April 29, 1999. (14)
21. Revised Listing of Subsidiaries of MCT. (7)
23.1 Consent of Deloitte & Touche LLP. (filed herewith)
23.2 Consent of Ernst & Young LLP (filed herewith)
23.3 Consent of Best & Flanagan LLP (included in Exhibits 5.1 and 8.1).
23.4 Consent of Choate, Hall & Stewart (included in Exhibit 8.2).
24. Powers of Attorney (included on Page II-5 of the Registration
Statement).
27. Financial Data Schedule (14).
99.1 Consent of Alliant Partners (included in Appendix B to the Joint
Proxy Statement/Prospectus).
99.2 Consent of Adams, Harkness & Hill, Inc. (included in Appendix C to
the Joint Proxy Statement/Prospectus).
99.3 Form of Proxy of Micro Component Technology, Inc. (filed herewith)
99.4 Form of Proxy of Aseco Corporation. (filed herewith)
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(1) Incorporated by reference to the exhibits to the registration
statement on Form S-1 filed by MCT on August 24, 1993, as amended,
SEC File Number 33-67846.
(2) Incorporated by reference to the exhibits to the report on Form 10-K
filed by MCT for the fiscal year ended June 25, 1994, file number
0-22384.
(3) Incorporated by reference to the report on Form 10-Q filed by MCT
for the quarter ended March 25, 1995, file number 0-22384.
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(4) Incorporated by reference to the report on Form 10-Q filed by MCT
for the quarter ended September 30, 1995, file number 0-22384.
(5) Incorporated by reference to the exhibits to the Registration
Statement on Form S-1 filed by MCT on November 2, 1995, as amended,
SEC File Number 33-98940.
(6) Incorporated by reference to the exhibits to the Registration
Statement on Form S-8 filed by MCT on October 31, 1994, as amended,
SEC File Number 33-85766.
(7) Incorporated by reference to the exhibits to the report on Form 10-K
filed by MCT for the fiscal year ended June 29, 1996, file number
0-22384.
(8) Incorporated by reference to the report on Form 10-Q filed by MCT
for the quarter ended September 28, 1996, file number 0-22384.
(9) Incorporated by reference to the exhibits to the post-effective
amendment #1 to the Registration Statement on Form S-1 filed by MCT
on November 18, 1996, file number 33-98940.
(10) Incorporated by reference to the report on Form 10-Q filed by MCT
for the quarter ended March 28, 1998, file number 0-22384.
(11) Incorporated by reference to the report on Form 10-Q filed by MCT
for the quarter ended September 26, 1998, file number 0-22384.
(12) Incorporated by reference to the report on Form 10-Q filed by MCT
for the quarter ended December 26, 1998, file number 0-22384.
(13) Incorporated by reference to the report on Form 10-Q filed by MCT
for the quarter ended March 27, 1999, file number 0-22384.
(14) Incorporated by reference to the report on Form 10-K filed by MCT
for the quarter ended March 27, 1999, file number 0-22384.
Item 22. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933, as
amended (the "Securities Act");
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar
value of securities offered would not exceed that which
was registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a
20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information
with respect to the plan of distribution not previously
disclosed in the registration statement or any material
change to such information in the registration
statement;
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a transaction, and MCT
being acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
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(e) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in St. Paul, Minnesota, on
October 26, 1999.
MICRO COMPONENT TECHNOLOGY, INC.
By: /s/ Roger E. Gower
---------------------------------------
Roger E. Gower
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on
October 26, 1999 in the capacities indicated.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Roger E. Gower and Jeffrey S.
Mathiesen his true and lawful attorneys-in-fact and agents, each with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any amendments (whether pre-effective or
post-effective) to this Registration Statement and any registration statement
for the same offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, and to file the same with all exhibits
thereto and other documents in connection therewith with the Securities and
Exchange Commission, granting unto each of said attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that each of said attorneys-in-fact and agents, or their
substitute or substitutes, may do or cause to be done by virtue hereof.
Signature Title
/s/ Roger E. Gower Chairman of the Board, Director, Chief Executive
- --------------------------- Officer President and Secretary
Roger E. Gower (Principal Executive Officer)
/s/ Jeffrey S. Mathiesen Vice President of Finance/Administration, Chief
- --------------------------- Financial Officer, Treasurer
Jeffrey S. Mathiesen (Principal Financial Officer and Principal
Accounting Officer)
/s/ D. James Guzy Director
- ---------------------------
D. James Guzy
/s/ Donald J. Kramer Director
- ---------------------------
Donald J. Kramer
/s/ David M. Sugishita Director
- ---------------------------
David M. Sugishita
/s/ Patrick Verderico Director
- ---------------------------
Patrick Verderico
/s/ Donald R. Vanluvanee Director
- ---------------------------
Donald R. Vanluvanee
II-5
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
23.1 Consent of Deloitte & Touche LLP. (filed herewith)
23.2 Consent of Ernst & Young LLP (filed herewith)
24. Powers of Attorney (included on Page II-5 of the Registration
Statement).
99.1 Consent of Alliant Partners (included in Appendix B to the Joint
Proxy Statement/Prospectus).
99.2 Consent of Adams, Harkness & Hill, Inc. (included in Appendix C to
the Joint Proxy Statement/Prospectus).
99.3 Form of Proxy of Micro Component Technology, Inc. (filed herewith)
99.4 Form of Proxy of Aseco Corporation. (filed herewith)
II-6
EXHIBIT 23.1
CONSENT OF DELOITTE & TOUCHE LLP
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Micro Component Technology, Inc. on Form S-4 of our report dated
August 17, 1999 (September 18, 1999, as to the second paragraph of Note 11)
appearing in the Annual Report on Form 10-K, as amended, of Micro Component
Technology, Inc. for the year ended June 26, 1999 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
October 20, 1999
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts"
in the Registration Statement (Form S-4) and related Prospectus/Proxy Statement
of Micro Component Technology, Inc. and Aseco Corporation for the registration
of shares of Micro Component Technology, Inc. common stock and to the
incorporation by reference therein of our report dated May 10, 1999, except for
Note O as to which the date is July 9, 1999, with respect to the consolidated
financial statements and schedule of Aseco Corporation included in its Annual
Report (Form 10-K) for the year ended March 28, 1999, filed with the Securities
and Exchange Commission.
/S/ ERNST & YOUNG LLP
Boston, Massachusetts
October 22, 1999
EXHIBIT 99.3
MICRO COMPONENT TECHNOLOGY, INC.
PROXY
ANNUAL STOCKHOLDERS' MEETING
__________________, ______
The undersigned stockholder of Micro Component Technology, Inc.
("MCT"), does hereby constitute and appoint Roger Gower, President and Chief
Executive Officer, and Jeffrey Mathiesen, Vice President and Chief Financial
Officer, as his or her proxy, with full power of substitution, to attend the
Annual Meeting of the Stockholders of MCT to be held at 9:00 a.m. on __________,
______________, at the Marquette Hotel, Minnesota River Room, 710 Marquette
Avenue, Minneapolis, Minnesota, or any continuation or adjournment thereof, with
full power to vote and act for the undersigned, in his or her name, and to vote
all stock of MCT held by him or her, to the same extent and with the same effect
as the undersigned, in the manner specified below. The undersigned hereby
revokes any other proxy previously given by him or her.
1. ELECTION OF DIRECTORS: FOR all nominees listed below (except as
specified to the contrary below).
AGAINST all nominees listed below.
Roger E. Gower, D. James Guzy, Donald J. Kramer, David M. Sugishita,
Donald R. VanLuvanee, Patrick Verderico.
To withhold authority to vote for any individual nominee, write that
nominee's name here:
_________________________________________________________.
2. To consider and vote on a proposal to approve and adopt the merger
agreement among Aseco Corporation, Micro Component Technology, Inc. and
MCT Acquisition, Inc., a wholly owned subsidiary of MCT. Under the
terms of the merger, Aseco will become a subsidiary of MCT.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve an amendment to the Incentive Stock Option Plan to increase
the number of shares reserved for issuance under the Plan from
1,250,000 shares to 1,500,000 shares, or, if the merger is approved, to
increase the number to 2,300,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion on any other matter that may properly come before
the meeting or any adjournment or adjournments thereof.
Date: _________________, _____.
Please date and sign above exactly
as name appears at the left,
indicating, where appropriate,
official capacity. If stock is held
in joint tenancy, each joint owner
must sign.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL. THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS.
Please Note: Any shares of stock of MCT held in the name of fiduciaries,
custodians or brokerage houses for the benefit of their clients may only be
voted by the fiduciary, custodian or brokerage house itself--the beneficial
owner may not directly vote or appoint a proxy to vote the shares and must
instruct the person or entity in whose name the shares are held how to vote the
shares held for the beneficial owner. Therefore, if any shares of stock of MCT
are held in "street name" by a brokerage house, only the brokerage house, at the
instructions of its client, may vote or appoint a proxy to vote the shares.
EXHIBIT 99.4
FORM OF PROXY OF ASECO COMPANY
ASECO CORPORATION
Dear Stockholder:
Please take note of the important information enclosed with this proxy
card. There are a number of issues related to the management and operation of
your Company that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your
right to vote your shares.
Please mark the boxes on the proxy card to indicate how your shares
shall be voted. Then sign the card, detach it and return your proxy card in the
enclosed postage paid envelope.
Your card must be received prior to the Meeting of Stockholders on
________ 1999.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Aseco Corporation
[ARROW] Please Detach and Mail in the Envelope Provided [ARROW]
- --------------------------------------------------------------------------------
[X] Please mark your votes
as in this example.
FOR AGAINST ABSTAIN
1. To adopt the merger agreement among Aseco [ ] [ ] [ ]
Corporation, Micro Component Technology,
Inc., and MCT Acquisition, Inc., a wholly
owned subsidiary of MCI.
Mark box at right if comments or address change [ ]
have been noted on the reverse side of this card.
Stockholder sign here ____________ Co-owner sign here ____________ Date ________
Note: Please be sure to sign and date this proxy.
<PAGE>
PROXY PROXY
ASECO CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
MEETING OF STOCKHOLDERS - _________, 1999
The undersigned hereby acknowledge(s) receipt of the Notice and
accompanying Proxy Statement revoke(s) any prior proxies, and appoint(s)
Sebastian J. Sicari, Mary R. Barletta and Robert V. Jahrling, III, and each of
them, with power of substitution in each, attorneys for the undersigned to act
for and vote, as specified on the reverse, all shares of stock which the
undersigned may be entitled to vote at the Annual Meeting of the Stockholders of
Aseco Corporation, to be held on _________, 1999 at Choate, Hall & Stewart, 36th
Floor, Exchange Place, Boston, Massachusetts at 10:00 a.m., local time, and at
any adjourned sessions thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. ALL PROPOSALS SET FORTH ON THE REVERSE OF THIS
PROXY CARD HAVE BEEN PROPOSED BY THE BOARD OF DIRECTORS. IF NO DIRECTION IS
GIVEN, THIS PROXY CARD WILL BE VOTED "FOR" THE NOMINEES FOR DIRECTOR AND "FOR"
ALL OTHER PROPOSALS. THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE HOLDER'S
BEST JUDGMENT AS TO ANY OTHER MATTER.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
Please sign this proxy exactly as your name appears on the books of Aseco. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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