UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event
reported) March 5, 1997 (February 21, 1997)
FEI COMPANY
Oregon 0-22780 93-0621989
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(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation or
organization)
7451 NW Evergreen Parkway, Hillsboro, OR 97124-5830
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(Address of principal executive offices) (Zip Code)
(503) 640-7500
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(Registrant's telephone number, including area code)
No Change
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(Former name, former address and former fiscal year,
if changed since last report)
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Item 1. Changes in Control of Registrant
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On February 21, 1997 FEI Company (the "Registrant") completed the
transactions contemplated by the Combination Agreement dated November 15, 1996,
as amended (the "Combination Agreement"), between the Registrant and Philips
Industrial Electronics International B.V., a Netherlands corporation ("PIE") and
wholly owned subsidiary of Philips Electronics N.V., a Netherlands corporation
("Philips"), including the issuance of shares of the Registrant's Common Stock
to PIE pursuant to the terms and conditions of the Combination Agreement (the
"Combination"). Summarized below are the principal terms of the Combination
Agreement. The summary of principal terms of the Combination Agreement is
qualified in its entirety by the text of the Combination Agreement and the
Letter Agreements dated November 22, 1996 and February 21, 1997 between the
Registrant and PIE that amended the Combination Agreement, all of which are
incorporated herein by reference to Exhibits 2.1, 2.2 and 2.3 hereto.
Pursuant to the Combination Agreement, PIE consolidated substantially all
of the assets and liabilities of the Philips electron optics business, other
than the excluded assets and liabilities described below, (the "PEO Operations")
into two newly formed, wholly owned subsidiaries of PIE: Philips Electron Optics
International B.V., a Netherlands corporation, ("PEO Holdings") and Philips
Electron Optics, Inc., a Delaware corporation ("PEO-US"). PIE then transferred
all of the outstanding shares of PEO Holdings and all of the outstanding shares
of PEO-US to the Registrant. As a result of these transfers, PEO Holdings and
PEO-US became wholly owned subsidiaries of the Registrant.
Pursuant to the Combination Agreement, the Registrant transferred to PIE
9,728,807 newly issued shares of the Registrant's Common Stock, which
constituted, when issued, 55% of the shares of Common Stock of the Registrant
then outstanding and represented aggregate consideration of approximately
$94,856,000, based on the closing price of $9.75 per share on February 20, 1997,
the day immediately prior to the date of closing of the Combination ("Closing").
Subsequent to Closing, the Registrant will also issue to PIE, from time to time,
that number of additional shares of the Registrant's Common Stock (the
"Additional Shares") necessary to maintain PIE's ownership percentage (without
regard to other possible share transactions) at 55% after exercise of options
and warrants to purchase the Registrant's Common Stock, if those options and
warrants were outstanding or issuable without further action by the Registrant's
Board of Directors on the date of Closing. Prior to Closing, no person or group
of affiliated persons possessed voting control of the Registrant.
The assets and liabilities which were excluded from the PEO Operations and
therefore not transferred to the Registrant are (i) the sales and service
organizations related to the Philips electron optics business in countries other
than the U. S., Canada, Germany, France, Italy, Japan, The Netherlands and the
United Kingdom, (ii) the principal manufacturing and administrative facility
used by the PEO Operations in Eindhoven (Acht), The Netherlands, which will be
leased to the Registrant by Philips for a term of ten years and (iii) certain
other assets and liabilities not pertaining directly to the ongoing conduct of
the PEO Operations.
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Following Closing, Mr. William A. Whitward, the general manager of the PEO
Operations, was appointed Chief Executive Officer of the Registrant and Mr.
William G. Langley was appointed Chief Financial Officer of the Registrant. Dr.
Lynwood W. Swanson, the former Chairman of the Board and Chief Executive Officer
of the Registrant, was appointed Chairman of the Board of the Registrant
following the Closing. Other members of the Board of Directors are Messrs.
Langley, Lloyd R. Swenson and Donald R. VanLuvanee, all members of the Board
prior to the Combination, and Messrs. Whitward, Alfred B. Bok, Theo J.H.J.
Sonnemans, William Curran and Karel van der Mast, each of whom is an employee of
Philips or one of its affiliates.
Pursuant to the Combination Agreement, PIE has agreed to vote its shares so
as to cause the Registrant to have two independent directors, in accordance
with, and as defined in, Rule 4460(c) of the Rules of the Nasdaq National
Market, for a period ending two years after the date of Closing and to vote its
shares at the Registrant's first annual meeting following Closing to cause two
persons who are not present or former employees of any affiliate of Philips
(other than the Registrant) to be elected directors of the Registrants. In
addition, for one year following the date of Closing, PIE has agreed not to own,
together with Philips and its affiliates, more than 70% of the outstanding
Common Stock of the Registrant, subject to certain conditions.
As long as Philips owns, directly or indirectly through PIE or any other of
its affiliates, 40% or more of the outstanding voting securities of the
Registrant, PIE has the right to buy, at the then-market price, additional
voting securities of the Registrant at the time of issuances to third parties
and in amounts needed for Philips to maintain its proportionate ownership of up
to 55% of the Registrant's voting securities, as reduced by the net percentage
of voting securities of the Registrant sold by PIE at any time.
The PEO Operations develops, manufactures, sells and services electron
optics-based instruments, principally electron microscopes. The principal
business offices of the PEO Operations are located in Eindhoven, The
Netherlands. The PEO Operations has manufacturing facilities located in The
Netherlands, the Czech Republic and Massachusetts. The sales and service
activities of the PEO Operations that have been transferred to the Registrant
are conducted through subsidiaries in Canada, France, Germany, Italy, Japan, The
Netherlands, the United Kingdom and the United States.
Item 2. Acquisition of Assets
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The Combination may be deemed an indirect acquisition of the assets
represented by the securities of PEO Holdings and PEO-US acquired by the
Registrant upon completion of the Combination. The Registrant considered a
number of factors to determine the amount of consideration to be given for such
securities representing such assets, including the range of values for the PEO
Operations as presented by Needham & Company, Inc., who acted as financial
advisor to the Registrant in connection with the Combination, the Registrant's
potential to improve research and development, marketing, breadth of product
lines, sales
3
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volume and distribution through the synergies of combined management and
operations with the PEO Operations; the financial condition and results of
operations of the PEO Operations and the Registrant on both historical and
prospective bases, including the recent operating performance of the PEO
Operations and the Registrant and of the combined entity on a pro forma combined
basis; and the relationship of the range of values of the PEO Operations to the
market prices of the Registrant's Common Stock.
The PEO Operations develops, manufactures, sells and services electron
optics-based instruments, principally electron microscopes. The Registrant
intends to cause the assets of the PEO Operations acquired in the Combination to
continue to be used for such purposes.
For additional information concerning the acquisition of substantially all
of the assets of the PEO Operations, see Item 1 above.
Item 5. Other Events
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On February 21, 1997, in connection with the Closing, the Registrant and
PIE entered into a Letter Agreement, dated February 21, 1997 (the "Second Letter
Agreement"), amending the Combination Agreement. A copy of the Second Letter
Agreement is attached as Exhibit 2.3 hereto and is incorporated herein by
reference. On February 24, 1997, the Registrant issued a press release
announcing the Closing. A copy of the press release is attached as Exhibit 99.1
hereto and is incorporated herein by reference.
4
<PAGE>
Item 7. Exhibits
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(a) Financial Statements of Business Acquired
The Registrant has determined that it is impracticable to provide the
financial statements of the acquired business at the time this Current Report on
Form 8-K is filed with the Securities and Exchange Commission (the
"Commission"). Such financial statements will be filed with the Commission by an
amendment of this report no later than 60 days after the date on which this
report must be filed with the Commission.
(b) Pro Forma Financial Information
The Registrant has determined that it is impracticable to provide pro forma
financial information at the time this Current Report on Form 8-K is filed with
the Commission. Such information will be filed with the Commission by an
amendment of this report no later than 60 days after the date on which this
report must be filed with the Commission.
(c) Exhibits
* 2.1 Combination Agreement, dated as of November 15, 1996, between FEI
Company and Philips Industrial Electronics International B.V.
** 2.2 Letter Agreement, dated November 22, 1996, between FEI Company and
Philips Industrial Electronics International B.V.
2.3 Letter Agreement, dated February 21, 1997, between FEI
Company and Philips Industrial Electronics International B.V.
*** 2.4 List of omitted schedules to Combination Agreement
99.1 Press release dated February 24, 1997
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* Incorporated by reference to Exhibit 2.1 to Registrant's Current Report
on Form 8-K dated November 22, 1996.
** Incorporated by reference to Exhibit 2.2 to Registrant's Current Report
on Form 8-K dated November 22, 1996.
*** Incorporated by reference to Exhibit 2.3 to Registrant's Current Report
on Form 8-K dated November 22, 1996.
5
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March 5, 1997
FEI COMPANY
By WILLIAM G. LANGLEY
--------------------------------------
William G. Langley
Chief Financial Officer
(Principal Financial and Accounting
Officer)
6
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EXHIBIT INDEX
Sequential Page
Exhibit No. Description No.
- ----------- ----------- ---------------
*2.1 Combination Agreement, dated as of November 15,
1996, between FEI Company and Philips Industrial
Electronics International B.V.
**2.2 Letter Agreement, dated November 22, 1996,
between FEI Company and Philips Industrial
Electronics International B.V.
2.3 Letter Agreement, dated February 21, 1997, between
FEI Company and Philips Industrial Electronics
International B.V.
***2.4 List of omitted schedules to Combination Agreement
99.1 Press release dated February 24, 1997
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* Incorporated by reference to Exhibit 2.1 to Registrant's Current Report
on Form 8-K dated November 22, 1996.
** Incorporated by reference to Exhibit 2.2 to Registrant's Current Report
on Form 8-K dated November 22, 1996.
*** Incorporated by reference to Exhibit 2.3 to Registrant's Current Report
on Form 8-K dated November 22, 1996.
EXHIBIT 2.3
LETTER AGREEMENT
February 21, 1997
FEI Company,
7451 N.W. Evergreen Parkway,
Hillsboro, Oregon 97124
Ladies and Gentlemen:
This is with the reference to, and in connection with the Closing under,
the Combination Agreement, dated as of November 15, 1996 (the "Agreement"),
between Philips Industrial Electronics International B.V. ("PIE") and FEI
Company ("FEI"), including the Disclosure Schedule thereto (the "Disclosure
Schedule") as amended by a Letter Agreement dated November 22, 1996, between PIE
and FEI.
Capitalized terms used, but not defined, herein shall have the respective
meanings ascribed thereto in the Agreement.
1. PIE Loan. Section 1.1 of the Agreement is hereby amended by replacing
the words "as of January 1, 1997" at the end of the definition of the "PIE Loan"
with the words "as of the Closing Date".
2. FEI Expenses. PIE and FEI hereby agree that subsequent to Closing FEI
will be able to allocate a portion of the $8,000,000 in cash included as part of
the PEO Assets pursuant to Section 6.3(f) of the Agreement in payment of all
costs and expenses of FEI and its subsidiaries referenced in Section 9.8 of the
Agreement in an amount not to exceed $2,500,000 and in such manner that such
costs and expenses shall not be reflected in the FEI's profit and loss account.
3. Employee Agreements. As an inducement to FEI to proceed with the Closing
as scheduled on February 21, 1997 or as soon thereafter as practicable, FEI and
PIE agree that if one or more of the employment agreements referred to in
Section 6.3(e) of the Agreement shall not have been entered into before Closing
and FEI elects to waive the condition of Section 6.3(e) to the extend, PIE will
not, directly or indirectly, object to or prevent that employment agreement or
those employment agreements from being entered into by FEI after the Closing
with effect as of the Closing Date in substantially the form attached as Annex
6.3(e) to the Agreement and reflecting compensation amounts and vacation time
consistent with such employee's most recent compensation amounts and vacation
accrual.
<PAGE>
4. Service Agreements. Section 5.13 of the Agreement is hereby amended by
inserting the words "or as soon as practicable thereafter" immediately after the
words "prior to Closing" in the last sentence of subsection 5.13(d) thereof.
5. Intellectual Property. Section 5.16 of the Agreement is hereby amended
by replacing the words "shall grant" in subsection 5.16(a)(i) thereof with the
words "hereby grants at Closing" and by replacing the words "at Closing" in the
penultimate sentence of subsection 5.16(b)(i) thereof with the words "as soon as
practicable following Closing". FEI and PIE further agree that pending the
execution of definitive license agreements with respect to trademarks to be
entered into as soon as practicable following Closing, FEI shall have the right
to use Intellectual Property of Philips in a manner contemplated by, and not
inconsistent with, Section 5.16(b)(i) of the Agreement, as amended hereby.
6. Reimbursement of Funds. FEI and PIE hereby agree that any cash included
in the PEO Assets as Closing pursuant to Section 6.3(e) of the Agreement which
is in excess of $8,000,000 shall promptly be reimbursed to PIE. FEI shall cause
PEO Holdings or its subsidiaries as appropriate to reimburse such amounts to PIE
on the first business day following Closing.
7. Distribution Agreements. Section 5.13(a) of the Disclosure Schedule is
hereby amended by deleting the following countries: India, Russia and South
Korea.
8. Acht Lease. Section 5.15(a) of the Agreement is hereby amended by
replacing the words "Prior to Closing" in the first sentence thereof with the
words "as soon as practicable after the Closing". Moreover, PIE and FEI hereby
agree that the annual rent for Year 2 to Year 10 of the lease for the Acht
Property shall reflect the fair market value of the Acht Property as determined
by agreement of PIE and FEI upon consultation of their respective advisors,
Jones Lang Wooton and Zadelhoff; provided that such annual rent shall be no less
than NLG 2,100,000 and no greater than NLG 2,650,000, increased annually to
reflect increases in the Consumer Price Index as published annually by the
Central Bureau of Statistics in the Netherlands.
This letter agreement shall be governed by the laws of the State of New
York, without giving effect to the principles of conflicts of laws thereof.
<PAGE>
This letter agreement may be executed by the parties on separate
counterparts which, when taken together with counterparts signed by the other
party, shall constitute a single fully executed amendment to the Agreement which
shall be as fully binding and effective as if each party had executed the same
copy.
Sincerely,
PHILIPS INDUSTRIAL ELECTRONICS
INTERNATIONAL B.V.
By: PAUL B. VOORN
-------------------------------------
Name: Paul B. Voorn
Title: Attorney-in-fact pursuant to power
of attorney
For purpose of Section 5 only:
PHILIPS ELECTRONICS N.V.
By: PAUL B. VOORN
-------------------------------------
Name: Paul B. Voorn
Title: Attorney-in-fact pursuant to power
of attorney
Agreed to and accepted this 21st day of February, 1997:
FEI COMPANY
By: WILLIAM G. LANGLEY
-----------------------------------
Name: William G. Langley
Title: President and Chief Finanical Officer
EXHIBIT 99.1
FEI COMPANY AND PHILIPS ELECTRON OPTICS
ANNOUNCE CLOSING OF COMBINATION
Portland, OR, February 21, 1997. FEI Company (FEIC-NASDAQ) and Philips Electron
Optics ("PEO"), an operating company of Philips Industrial Electronics
International B.V. ("PIE") (Eindhoven, The Netherlands) today announced the
closing of the combination of FEI and PEO on February 21, 1997. As a result of
the combination, the PEO business is now operated through new wholly owned
subsidiaries of FEI and PIE has been issued common stock of FEI representing 55%
of the total shares of FEI. The combined company will operate under the name FEI
Company and will maintain its world headquarters near Portland, Oregon.
"We are very pleased to announce that we have received FEI shareholder approval
and have closed the combination transaction," said Lynwood Swanson, Chairman of
FEI Company. "This combination unites our abilities in both the ion and electron
disciplines of focused charged particle beam technology at a time when this
technology is in increasing demand."
"We look forward to a very promising future for the combined business," stated
Bill Whitward, General Manager of PEO and the new Chief Executive Officer of FEI
Company. "We have had the benefit of many strengths to work with in laying a
foundation for integration of our businesses into a new, highly competitive
enterprise."
The combined company will have manufacturing operations in Hillsboro, Oregon;
Eindhoven, The Netherlands; Wilmington, Massachusetts; and Brno, Czech Republic.
Sales and service operations will be conducted in ten countries and the U.S.
through a combination of existing FEI subsidiaries and new PEO subsidiaries.
Electron optics products of the combined operations will be sold through
distribution agreements with affiliates of Philips Electronics N.V. located in
approximately 20 additional countries.
Except for the historical statements contained herein, the matters discussed in
this news release, including market, resource allocation and integration
expectations, are forward looking statements that involve risks and
uncertainties. Factors that could cause actual results to differ materially
include, but are not limited to: difficulties encountered in the integration of
the operations of FEI Company and PEO business conditions and growth in the
electronics, life sciences and material science industries and the general
economy, both domestic and international; lower than expected customer orders;
competitive factors, including pricing pressures, technological developments and
products offered by competitors; technological difficulties and resource
constraints encountered in developing new products; and the timely introduction
and sale of competitive new products and market acceptance of those products.
