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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
----------------
AG ASSOCIATES, INC.
----------------
(Name of Subject Company)
STEAG ELECTRONIC SYSTEMS GMBH
AND
MIG ACQUISITION CORPORATION
----------------
(Bidders)
Common Stock, without par value
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(Title of Class of Securities)
001073 10 5
----------------
(CUSIP Number of Class of Securities)
Dr. Peter Lockowandt
STEAG Electronic Systems GmbH
Ruttenscheider Stra^e 1-3
45128 Essen, Germany
011-49-201-801-2510
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Bidder)
----------------
Copy to:
John W. Campbell III, Esq.
Morrison & Foerster LLP
425 Market Street
San Francisco, California 94105
(415) 268-7000
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CALCULATION OF FILING FEE
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Transaction Valuation* Amount of Filing Fee**
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$34,116,461.50 $6,823.29
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* For the purpose of calculating the fee only, this amount assumes the
purchase of 6,202,993 shares of Common Stock of AG Associates, Inc.
("Shares") at $5.50 per Share.
** 1/50 of 1% of the Transaction Valuation.
[_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Filing Party:
Form or Registration No.: Date Filed:
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TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by MIG Acquisition Corporation, a Delaware corporation ("Purchaser")
and wholly owned subsidiary of STEAG Electronic Systems GmbH, a corporation
organized under the laws of the Federal Republic of Germany ("Parent"), to
purchase all outstanding shares of common stock, without par value (the
"Shares"), of AG Associates, Inc., a California corporation, at a price of
$5.50 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in Purchaser's Offer to Purchase dated
January 22, 1999 (the "Offer to Purchase") and in the related Letter of
Transmittal (which, together with the Offer to Purchase and any amendments or
supplements thereto, constitute the "Offer"), copies of which are attached
hereto as Exhibits (a)(1) and (a)(2), respectively. Parent is a wholly owned
subsidiary of STEAG Aktiengesellschaft, a corporation organized under the laws
of the Federal Republic of Germany ("STEAG").
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is AG Associates, Inc., a California
corporation (the "Company"), which has its principal executive offices at 4425
Fortran Drive, San Jose, California 95134-2300.
(b) The class of equity securities being sought is all the outstanding
Shares. The information set forth in the Introduction and Section 1 ("Terms of
the Offer; Proration in Certain Circumstances; Expiration Date") of the Offer
to Purchase is incorporated herein by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market set forth in Section 6 ("Price Range of Shares; Dividends") of the
Offer to Purchase are incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by Purchaser and Parent. The
information concerning the name, state or other place of organization,
principal business and address of the principal office of each of Purchaser,
Parent and STEAG, and the information concerning the name, business address,
present principal occupation or employment and the name, principal business
and address of any corporation or other organization in which such employment
or occupation is conducted, material occupations, positions, offices or
employments during the last five years and citizenship of each of the
executive officers and directors of Purchaser and STEAG are set forth in the
Introduction, Section 8 ("Certain Information Concerning Purchaser, Parent and
STEAG") and Schedule I of the Offer to Purchase and are incorporated herein by
reference.
(e) and (f) During the last five years, none of Purchaser, Parent or STEAG
and, to the best knowledge of Purchaser and Parent, none of the persons listed
in Schedule I of the Offer to Purchase has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 7 ("Certain Information Concerning
the Company"), Section 8 ("Certain Information Concerning Purchaser, Parent
and STEAG"), Section 10 ("Background of the Offer; Contacts with the Company;
the Merger Agreement; the Stock Option Agreement; and the Voting Agreements")
of the Offer to Purchase is incorporated herein by reference.
(b) The information set forth in the Introduction, Section 7 ("Certain
Information Concerning the Company"), Section 8 ("Certain Information
Concerning Purchaser, Parent and STEAG"), Section 10 ("Background of the
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Offer; Contacts with the Company; the Merger Agreement; the Stock Option
Agreement; and the Voting Agreements") and Section 11 ("Purpose of the Offer;
Plans for the Company after the Offer and the Merger") of the Offer to
Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 9 ("Financing of the Offer and
the Merger") of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company; the Merger Agreement;
the Stock Option Agreement; and the Voting Agreements"), Section 11 ("Purpose
of the Offer; Plans for the Company after the Offer and the Merger") and
Section 12 ("Dividends and Distributions") of the Offer to Purchase is
incorporated herein by reference.
(f) and (g) The information set forth in the Introduction, Section 11
("Purpose of the Offer; Plans for the Company after the Offer and the Merger")
and Section 13 ("Effect of the Offer on the Market for the Shares, Exchange
Act Registration and Margin Regulations") of the Offer to Purchase is
incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 8 ("Certain Information
Concerning Purchaser, Parent and STEAG") and Section 10 ("Background of the
Offer; Contacts with the Company; the Merger Agreement; the Stock Option
Agreement; and the Voting Agreements") of the Offer to Purchase and Schedule I
of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser, Parent and STEAG"), Section 10 ("Background
of the Offer; Contacts with the Company; the Merger Agreement; the Stock
Option Agreement; and the Voting Agreements") and Section 11 ("Purpose of the
Offer; Plans for the Company after the Offer and the Merger") of the Offer to
Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning
Purchaser, Parent and STEAG") of the Offer to Purchase is incorporated herein
by reference. The incorporation by reference of the above-mentioned financial
information does not constitute an admission that such information is material
to a decision by a security holder of the Company as to whether to sell,
tender or hold Shares being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 11 ("Purpose of the Offer; Plans
for the Company after the Offer and the Merger") of the Offer to Purchase is
incorporated herein by reference.
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(b) and (c) The information set forth in Section 15 ("Certain Legal Matters
and Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 13 ("Effect of the Offer on the
Market for the Shares, Exchange Act Registration and Margin Regulations") of
the Offer to Purchase is incorporated herein by reference.
(e) The information set forth in Section 15 ("Certain Legal Matters and
Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(f) The information set forth in the Offer to Purchase, Letter of
Transmittal and the Agreement and Plan of Merger, dated as of January 22,
1999, among Parent, Purchaser and the Company, copies of which are attached
hereto as Exhibits (a)(1), (a)(2) and (c)(1), is incorporated herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
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(a)(1) Form of Offer to Purchase dated January 22, 1999.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to Clients.
(a)(6) Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Summary Advertisement as published in The New York Times on January
22, 1999.
(a)(8) Joint Press Release issued by Parent and the Company on January 19,
1999.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of January 18, 1999, among
Parent, Purchaser and the Company.
(c)(2) Stock Option Agreement, dated as of January 18, 1999, among Parent,
Purchaser and the Company.
(c)(3) Voting Agreements, dated as of January 18, 1999, January 14, 1999 and
December 16, 1998, among Parent, Purchaser and certain shareholders
of the Company.
(c)(4) Common Stock Option, dated as of January 18, 1999, by the Company.
(c)(5) Option, dated as of January 14, 1999, among Parent, Company and
Morrison & Foerster LLP.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, correct and complete.
Date: January 22, 1999
STEAG Electronic Systems GMBH
By:/s/ Hans-Georg Betz
----------------------------------
Name:Dr. Hans-Georg Betz
Title:President and CEO
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, correct and complete.
Date: January 22, 1999
MIG Acquisition Corporation
By:/s/ Hans-Georg Betz
----------------------------------
Name:Dr. Hans-Georg Betz
Title:Chairman of the Board and
President
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EXHIBIT LIST
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Exhibit
Number
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(a)(1) Form of Offer to Purchase dated January 22, 1999.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to Clients.
(a)(6) Form of Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(a)(7) Summary Advertisement as published in The New York Times on January
22, 1999.
(a)(8) Joint Press Release issued by Parent and the Company on January 19,
1999.
(c)(1) Agreement and Plan of Merger, dated as of January 18, 1999, among
Parent, Purchaser and the Company.
(c)(2) Stock Option Agreement, dated as of January 18, 1999, among Parent,
Purchaser and the Company.
(c)(3) Voting Agreements, dated as of January 18, 1999, January 14, 1999 and
December 16, 1998, among Parent, Purchaser and certain shareholders
of the Company.
(c)(4) Common Stock Option, dated as of January 18, 1999, by the Company.
(c)(5) Option, dated as of January 14, 1999, among Parent, Company and
Morrison & Foerster LLP.
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EXHIBIT (A)(1)
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Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
AG Associates, Inc.
at
$5.50 Net Per Share
by
MIG Acquisition Corporation
a wholly owned subsidiary of
STEAG Electronic Systems GmbH
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 19, 1999, UNLESS THE OFFER
IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER
OF SHARES (AS DEFINED BELOW) WHICH WOULD CONSTITUTE NOT LESS THAN 90% OF THE
SHARES THEN OUTSTANDING (THE "MINIMUM CONDITION") OF AG ASSOCIATES, INC.
(THE "COMPANY"); AND (ii) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE
WAITING PERIODS UNDER THE HSR ACT (AS DEFINED). SEE "CERTAIN CONDITIONS OF
THE OFFER" IN SECTION 14. IN THE EVENT THAT MORE THAN 50% OF THE SHARES
THEN OUTSTANDING ARE TENDERED PURSUANT TO THE OFFER AND NOT WITHDRAWN,
BUT LESS THAN 90% OF THE SHARES THEN OUTSTANDING ARE ACQUIRED BY
PURCHASER PURSUANT TO THE OFFER AND THE STOCK OPTION DESCRIBED BELOW,
PURCHASER WILL WAIVE THE MINIMUM CONDITION AND AMEND THE OFFER TO
REDUCE THE NUMBER OF SHARES SUBJECT TO THE OFFER TO 3,095,294 SHARES
OR SUCH GREATER OR LESSER NUMBER OF SHARES AS EQUALS 49.9% OF THE
SHARES THEN OUTSTANDING (THE "REVISED MINIMUM NUMBER") AND, IF A
GREATER NUMBER OF SHARES IS TENDERED INTO THE OFFER AND NOT
WITHDRAWN, PURCHASE, ON A PRO RATA BASIS, THE REVISED MINIMUM
NUMBER OF SHARES (IT BEING UNDERSTOOD THAT PURCHASER SHALL NOT IN
ANY EVENT BE REQUIRED TO ACCEPT FOR PAYMENT, OR PAY FOR, ANY
SHARES IF LESS THAN THE REVISED MINIMUM NUMBER OF SHARES ARE
TENDERED PURSUANT TO THE OFFER AND NOT WITHDRAWN AT THE
EXPIRATION OF THE OFFER).
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT REFERRED TO HEREIN AND THE TRANSACTIONS CONTEMPLATED THEREBY
(INCLUDING THE OFFER AND THE MERGER), HAS DETERMINED THAT THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY (INCLUDING THE
OFFER AND THE MERGER) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY AND THE SHAREHOLDERS OF THE COMPANY, AND RECOMMENDS THAT
SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
TO THE OFFER.
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IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
shares of common stock, without par value, of the Company (the "Shares")
should either (1) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
mail or deliver it together with the certificate(s) evidencing tendered
Shares, and any other required documents, to the Depositary, or tender such
Shares pursuant to the procedure for book-entry transfer set forth in Section
3, or (2) request such shareholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such shareholder. Any
shareholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if such shareholder
desires to tender such Shares.
A shareholder who desires to tender Shares and whose certificates evidencing
such Shares are not immediately available, or who cannot comply with the
procedure for book-entry transfer on a timely basis, may tender such Shares by
following the procedure for guaranteed delivery set forth in Section 3.
Questions or requests for assistance may be directed to the Information
Agent at the address and telephone number set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may also be obtained from
the Information Agent or from brokers, dealers, commercial banks or trust
companies.
January 22, 1999
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TABLE OF CONTENTS
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Page
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INTRODUCTION............................................................ 1
1. Terms of the Offer; Proration in Certain Circumstances; Expiration
Date............................................................... 4
2. Acceptance for Payment and Payment for Shares...................... 5
3. Procedures for Accepting the Offer and Tendering Shares............ 7
4. Withdrawal Rights.................................................. 9
5. Certain Federal Income Tax Consequences............................ 10
6. Price Range of Shares; Dividends................................... 10
7. Certain Information Concerning the Company......................... 11
8. Certain Information Concerning Purchaser, Parent and STEAG......... 13
9. Financing of the Offer and the Merger.............................. 15
10. Background of the Offer; Contacts with the Company; the Merger
Agreement; the Stock Option Agreement; and the Voting Agreements... 15
11. Purpose of the Offer; Plans for the Company after the Offer and the
Merger............................................................. 28
12. Dividends and Distributions........................................ 31
13. Effect of the Offer on the Market for the Shares, Exchange Act
Registration and Margin Regulations................................ 31
14. Certain Conditions of the Offer.................................... 32
15. Certain Legal Matters and Regulatory Approvals..................... 34
16. Fees and Expenses.................................................. 36
17. Miscellaneous...................................................... 36
Schedule I. Directors and Executive Officers of STEAG and Purchaser..... I-1
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TO THE HOLDERS OF COMMON STOCK OF
AG ASSOCIATES, INC.:
INTRODUCTION
MIG Acquisition Corporation, a Delaware corporation ("Purchaser") and a
wholly owned subsidiary of STEAG Electronic Systems GmbH, a corporation
organized under the laws of the Federal Republic of Germany ("Parent"), hereby
offers to purchase all outstanding shares of common stock, without par value
(the "Shares"), of AG Associates, Inc., a California corporation (the
"Company"), at a price of $5.50 per Share (such amount or any greater amount
per Share paid pursuant to the Offer (as defined below), being hereinafter
referred to as the "Offer Price"), net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in this Offer
to Purchase and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together with this Offer to Purchase,
constitute the "Offer"). Parent is a wholly owned subsidiary of STEAG
Aktiengesellschaft, a corporation organized under the laws of the Federal
Republic of Germany ("STEAG").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer. Purchaser will pay all charges and expenses
of BankBoston, N.A. (the "Depositary") and Corporate Investor Communications,
Inc. (the "Information Agent") incurred in connection with the Offer. See
Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY APPROVED
THE MERGER AGREEMENT (AS HEREINAFTER DEFINED) AND THE TRANSACTIONS
CONTEMPLATED THEREBY (INCLUDING THE OFFER AND THE MERGER), HAS DETERMINED THAT
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY (INCLUDING THE
OFFER AND THE MERGER) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY
AND THE SHAREHOLDERS OF THE COMPANY, AND RECOMMENDS THAT SHAREHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF
SHARES WHICH WOULD CONSTITUTE NOT LESS THAN 90% OF THE SHARES THEN OUTSTANDING
(THE "MINIMUM CONDITION"); AND (ii) THE EXPIRATION OR TERMINATION OF ANY
APPLICABLE WAITING PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS
ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR ACT").
IN THE EVENT THAT MORE THAN 50% OF THE SHARES THEN OUTSTANDING ARE TENDERED
PURSUANT TO THE OFFER AND NOT WITHDRAWN, BUT LESS THAN 90% OF THE SHARES THEN
OUTSTANDING ARE ACQUIRED BY PURCHASER PURSUANT TO THE OFFER AND THE STOCK
OPTION DESCRIBED BELOW, PURCHASER WILL WAIVE THE MINIMUM CONDITION AND AMEND
THE OFFER TO REDUCE THE NUMBER OF SHARES SUBJECT TO THE OFFER TO 3,095,294
SHARES OR SUCH GREATER OR LESSER NUMBER OF SHARES AS EQUALS 49.9% OF THE
SHARES THEN OUTSTANDING (THE "REVISED MINIMUM NUMBER") AND, IF A GREATER
NUMBER OF SHARES IS TENDERED INTO THE OFFER AND NOT WITHDRAWN, PURCHASE, ON A
PRO RATA BASIS, THE REVISED MINIMUM NUMBER OF SHARES (IT BEING UNDERSTOOD THAT
PURCHASER SHALL NOT IN ANY EVENT BE REQUIRED TO ACCEPT FOR PAYMENT, OR PAY
FOR, ANY SHARES IF LESS THAN THE REVISED MINIMUM NUMBER OF SHARES ARE TENDERED
PURSUANT TO THE OFFER AND NOT WITHDRAWN AT THE EXPIRATION OF THE OFFER).
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SoundView Technology Group, Inc. ("SoundView"), the Company's financial
advisor, has delivered to the Board its opinion (the "Fairness Opinion") that,
as of the date of the Fairness Opinion, the consideration to be received by
the holders of the Shares pursuant to the Merger Agreement is fair, from a
financial point of view, to such holders. A copy of the Fairness Opinion is
attached as Appendix A to the Company's Solicitation/ Recommendation Statement
on Schedule 14D-9, which is being mailed to the Company's shareholders
herewith. Shareholders are urged to read the Fairness Opinion in its entirety.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of January 18, 1999 (the "Merger Agreement") among Parent, Purchaser and the
Company. The Merger Agreement provides that, among other things, upon the
terms and subject to the conditions set forth in the Merger Agreement, and in
accordance with the California General Corporation Law (the "CGCL") and
Delaware General Corporation Law (the "DGCL"), following completion of the
Offer, Purchaser will be merged with and into the Company (the "Merger").
Following consummation of the Merger, the separate corporate existence of
Purchaser will cease and the Company will continue as the surviving
corporation (the "Surviving Corporation") and will become a wholly owned
subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), (i) each share of common stock, $1.00 par value, of Purchaser issued
and outstanding will be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation, and (ii)
each Share issued and outstanding immediately prior to the Effective Time
(other than (a) Shares held by any subsidiary of the Company, (b) each Share
that is owned by Parent or Purchaser, including Shares purchased by Purchaser
pursuant to the Offer, and (c) Shares held by shareholders who have demanded
and perfected, and have not withdrawn or otherwise lost, dissenters' rights,
if any, under the CGCL) will be cancelled and converted automatically into the
right to receive $5.50 in cash, or any higher price that may be paid per Share
in the Offer, without interest (the "Merger Consideration"). The Merger
Agreement is more fully described in Section 10.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval of the Merger and adoption of the
provisions relating to the Merger in the Merger Agreement by the requisite
vote, if any, of the shareholders of the Company. See Section 11. Under the
CGCL, if pursuant to the Offer, the Stock Option (as defined below) or
otherwise, Purchaser acquires at least 90% of the Shares then outstanding,
Purchaser will be able to approve the Merger and adopt the provisions relating
to the Merger in the Merger Agreement without a vote of the Company's
shareholders, pursuant to the short-form merger provisions under the CGCL. In
such event, Parent, Purchaser and the Company have agreed to take all
necessary and appropriate action to cause the Merger to become effective as
soon as practicable after such acquisition, without a meeting of the Company's
shareholders.
If Purchaser does not acquire at least 90% of the Shares then outstanding
pursuant to the Offer, the Stock Option or otherwise and if Purchaser waives
the Minimum Condition and amends the Offer to reduce the number of Shares
subject to the Offer to 49.9% of the Shares then outstanding, Purchaser would
own upon consummation of the Offer 49.9% of the Shares then outstanding and
would thereafter solicit the approval of the Merger and adoption of the
provisions relating to the Merger in the Merger Agreement by a vote of the
shareholders of the Company. Under such circumstances, a significantly longer
period of time will be required to effect the Merger. See Section 11.
Under the CGCL, the Merger may not be accomplished for cash paid to the
Company's shareholders if Purchaser or Parent owns directly or indirectly more
than 50% but less than 90% of the Shares then outstanding unless either (i)
all the shareholders consent, or (ii) the Commissioner of Corporations of the
State of California approves, after a hearing, the terms and conditions of the
Merger and the fairness thereof. Accordingly, simultaneously with entering
into the Merger Agreement, and as an inducement to Parent and Purchaser to
enter into the Merger Agreement, the Company entered into a Stock Option
Agreement with Parent and Purchaser, dated as of January 18, 1999 (the "Stock
Option Agreement"). Pursuant to the Stock Option Agreement, the Company
granted to Purchaser an irrevocable option (the "Stock Option") to purchase up
to the number of Shares (the "Option Shares") that, when added to the number
of Shares owned by Purchaser and its affiliates following the consummation of
the Offer, would constitute 90% of the Shares then outstanding
2
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(assuming the issuance of the Option Shares) at a cash purchase price per
Option Share equal to $5.50 (the "Purchase Price"), subject to the terms and
conditions set forth in the Stock Option Agreement, including, without
limitation, (i) that the Stock Option will be exercisable if and when at least
80% of the Shares then outstanding have been tendered to Purchaser in the
Offer, and (ii) that the number of Option Shares to be issued thereunder shall
not exceed the number of authorized shares available for issuance.
If the Stock Option is exercised by Purchaser (resulting in Purchaser
acquiring 90% or more of the outstanding Shares), Parent will be able to
effect a short-form merger under the CGCL, subject to the terms and conditions
of the Merger Agreement. Purchaser currently intends to effect a short-form
merger if it is able to do so.
The Merger Agreement provides that, effective upon the purchase by Purchaser
of Shares pursuant to the Offer, Purchaser will be entitled to designate up to
such number of directors, rounded up to the next whole number, on the Board
for the period following such purchase as will give Purchaser representation
on the Board equal to the product of (i) the total number of directors on the
Board (giving effect to the election of any additional directors and/or
resignation of existing directors pursuant to the Merger Agreement), and (ii)
the percentage that the aggregate number of Shares beneficially owned by
Purchaser (including Shares accepted for payment) and Parent bears to the
total number of Shares then issued and outstanding. In the Merger Agreement,
the Company has agreed to take all actions necessary to cause Purchaser's
designees to be so appointed or elected to the Board, to each committee of the
Board (other than any committee established to take action under the Merger
Agreement), to each board of directors of each Subsidiary (as defined in the
Merger Agreement) and to each committee of each such board. In addition, the
Company has agreed that, until the Effective Time, the Board shall have at
least two directors who are directors on the date of the Merger Agreement and
who are not employees of the Company or any of the Company's Subsidiaries, or
affiliates of Purchaser or Parent.
The Company has advised Purchaser that, as of January 15, 1999, 6,202,993
Shares were issued and outstanding and 1,009,900 Shares were reserved for
issuance pursuant to issued and outstanding stock options granted by the
Company to employees and directors under the Company's 1993 Employee Stock
Option Plan and 1994 Directors Stock Option Plan. As provided in the written
agreements to be entered into by the Company, certain employees of the Company
and all officers of the Company prior to the Effective Time, all outstanding
options as of the Effective Time held by such employees and officers under the
1993 Employee Stock Option Plan (the "Existing Stock Options") will be
terminated and cancelled in exchange for a cash bonus which will be payable on
the date which is twelve months after the Effective Time, provided that such
employees continue to be employed by the Company on such date; provided,
however, that the aggregate amount the Company or the Surviving Corporation
agrees to pay as of the Effective Time will not exceed $2,040,000. See Section
10--The Merger Agreement.
As of January 15, 1999, the Minimum Condition would be satisfied if
Purchaser acquired 5,582,694 Shares. 3,101,497 Shares would constitute 50% of
the Shares issued and outstanding on such date (assuming no Existing Stock
Options are exercised on or prior to such date). Certain shareholders of the
Company, holding in the aggregate approximately 45% of the Shares as of
January 15, 1999, have each entered into a Voting Agreement (as defined below)
with Parent pursuant to which each such shareholder has agreed to tender its
Shares pursuant to the Offer, and to vote, and has granted irrevocable proxies
to vote, its Shares in favor of the Merger. See Section 10--The Voting
Agreements.
Concurrently with the execution of the Merger Agreement, the Company granted
to Parent an option (subject to certain restrictions on vesting) to purchase
an aggregate of 600,000 Shares at an exercise price of $2.00 per Share (the
"Common Stock Option"). Additionally, subject to the occurrence of certain
events, the Company and Parent agreed to an option whereby either (a) Parent
will be entitled to purchase from the Company, and the Company will be
obligated to sell to the Parent, all of the ordinary shares of AG Associates
(Israel), Ltd., an entity formed under the laws of Israel and a subsidiary of
the Company (the "Israeli Affiliate"), held by the Company for the aggregate
purchase price of $5,404,770 or (b) the Company will have the right to sell to
Parent, and Parent will be obligated to purchase from the Company, such shares
of the Israeli Affiliate for the same aggregate purchase price. See Section
11--Company Stock Option and AGI Option.
3
<PAGE>
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. Terms of the Offer; Proration in Certain Circumstances; Expiration Date.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date (as defined below) and not withdrawn as
permitted by Section 4. The term "Expiration Date" means 12:00 midnight, New
York City time, on Friday, February 19, 1999, unless and until Parent or
Purchaser, in its sole discretion (but subject to the terms and conditions of
the Merger Agreement), shall have extended the period during which the Offer
is open, in which event the term "Expiration Date" shall mean the latest time
and date at which the Offer, as so extended by Parent or Purchaser, shall
expire.
In the event Purchaser amends the Offer as described above such that
Purchaser offers to purchase the Revised Minimum Number of Shares, such
decrease in the number of Shares being sought will be applicable to all
shareholders whose Shares are accepted for payment pursuant to the Offer. If
at the time the notice of any such decrease in the number of Shares being
sought is first published, sent or given to holders of such Shares, the Offer
is scheduled to expire at any time earlier than the period ending on the tenth
business day from and including the date that such notice is first so
published, sent or given, the Offer will be extended at least until the
expiration of such ten business day period. Upon the terms and subject to the
conditions of such amended Offer, if more than the Revised Minimum Number of
Shares shall be validly tendered and not withdrawn prior to the Expiration
Date, the Shares so tendered shall be purchased as provided in Section 2 on a
pro rata basis (adjusted to avoid the purchase of fractional shares). Because
of the difficulty of determining the precise number of Shares properly
tendered, Purchaser does not expect to be able to announce the final proration
factor until approximately five trading days after the Expiration Date.
Preliminary results of proration will be announced by press release as
promptly as practicable after the Expiration Date. Shareholders can obtain
such information from their brokers. Purchaser will not pay for any Shares
accepted for payment pursuant to the Offer until the final proration factor is
known. For purposes of this Offer to Purchase, "trading day" shall mean any
day on which the Nasdaq National Market ("NASDAQ") is open for business.
Purchaser and Parent expressly reserve the right, in their discretion (but
subject to the terms and conditions of the Merger Agreement), at any time and
from time to time, to extend for any reason the period of time during which
the Offer is open, including the occurrence of any of the conditions specified
in Section 14, by giving oral or written notice of such extension to the
Depositary. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer, subject to the rights of a
tendering shareholder to withdraw his or her Shares. See Section 4.
Subject to the applicable regulations of the Securities and Exchange
Commission (the "Commission"), Purchaser also expressly reserves the right, in
its sole discretion (but subject to the terms and conditions of the Merger
Agreement), at any time and from time to time, (i) to delay acceptance for
payment of, or, regardless of whether such Shares were theretofore accepted
for payment, payment for, any Shares pending receipt of any regulatory
approval specified in Section 15, (ii) to terminate the Offer and not accept
for payment any Shares upon the occurrence of any of the conditions specified
in Section 14 prior to the Expiration Date, and (iii) to delay, terminate or
waive the Minimum Condition or any other condition or otherwise amend the
Offer including extending the Expiration Date in any respect, by giving oral
or written notice of such delay, termination, waiver or amendment to the
Depositary and by making a public announcement thereof. The Merger Agreement
provides that Purchaser will not (i) impose conditions in addition to those
set forth in Section 14, (ii) reduce the Offer Price or the amount of Shares
sought in the Offer, or (iii) change the form of consideration payable in the
Offer.
Purchaser acknowledges that (i) Rule 14e-1(c) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), requires Purchaser either to pay
the consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer, and (ii) Purchaser may not delay
acceptance for
4
<PAGE>
payment of, or payment for (except as provided in clause (i) of the preceding
paragraph), any Shares upon the occurrence of any of the conditions specified
in Section 14 without extending the period of time during which the Offer is
open.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, such announcement
in the case of an extension to be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, which require that material changes be promptly disseminated to
shareholders in a manner reasonably designed to inform them of such changes)
and without limiting the manner in which Purchaser may choose to make any
public announcement, Purchaser shall have no obligation to publish, advertise
or otherwise communicate any such public announcement other than by issuing a
press release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will disseminate additional tender offer materials and extend
the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under
the Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or the information
concerning the Offer, other than a change in price or a change in percentage
of securities sought, will depend upon the facts and circumstances, including
the relative materiality of the terms or information changes. With respect to
a change in price or a change in percentage of securities sought, a minimum
ten business day period is generally required to allow for adequate
dissemination to shareholders and investor response.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to decrease the number of Shares being sought or
to increase or decrease the consideration being offered in the Offer, such
decrease in the number of Shares being sought or such increase or decrease in
the consideration being offered will be applicable to all shareholders whose
Shares are accepted for payment pursuant to the Offer and, if at the time
notice of any such decrease in the number of Shares being sought or such
increase or decrease in the consideration being offered is first published,
sent or given to holders of such Shares, the Offer is scheduled to expire at
any time earlier than the period ending on the tenth business day from and
including the date that such notice is first so published, sent or given, the
Offer will be extended at least until the expiration of such ten business day
period. For purposes of the Offer, except as otherwise provided herein, a
"business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 midnight, New
York City time.
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares whose names appear on
the Company's shareholder list and will be furnished, for subsequent
transmittal to beneficial owners of Shares, to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the shareholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
2. Acceptance for Payment and Payment for Shares.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment, and will pay for, all Shares
validly tendered prior to the Expiration Date and not properly withdrawn
promptly after the latest to occur of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions to the Offer set forth in Section 14.
Notwithstanding the immediately preceding sentence and subject to applicable
rules of the Commission and the terms of the Merger Agreement, Purchaser
expressly reserves the right to delay acceptance for payment of, or payment
for, Shares pending receipt of any regulatory approvals specified in Section
15 or in order to comply in whole or in part with any other applicable law.
5
<PAGE>
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
the certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depositary Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3, (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees or an
Agent's Message (as defined in Section 3) in connection with a book-entry
transfer, and (iii) any other documents required under the Letter of
Transmittal.
On January 21, 1999, Parent filed, and on January 22, 1999, the Company
filed, with the Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "Antitrust Division") a Premerger
Notification and Report Form under the HSR Act with respect to the Offer. It
is anticipated that the waiting period under the HSR Act applicable to the
Offer will expire at 11:59 p.m., New York City time, on February 4, 1999. If
Purchaser acquires 50% or more of the Shares then outstanding in the Offer, no
separate waiting period will apply to the subsequent purchase of Shares
pursuant to the Stock Option Agreement. Prior to the expiration or termination
of any such waiting period, the FTC or the Antitrust Division may extend any
such waiting period by requesting additional information from Parent or the
Company with respect to the Offer or the Stock Option Agreement. If such a
request is made with respect to the purchase of Shares in the Offer, the
waiting period will expire at 11:59 p.m., New York City time, on the tenth
calendar day after substantial compliance by Parent or the Company with such a
request. Thereafter, the FTC or Antitrust Division must obtain a court order
to prevent Purchaser from consummating the acquisition of Shares pursuant to
the Offer. The waiting period under the HSR Act may be terminated prior to its
expiration by the FTC and the Antitrust Division. Parent and the Company have
requested early termination of the waiting period, although there can be no
assurance that this request will be granted. See Section 15 for additional
information regarding the HSR Act.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit
of the purchase price therefor with the Depositary, which will act as agent
for tendering shareholders for the purpose of receiving payments from
Purchaser and transmitting such payments to tendering shareholders whose
Shares have been accepted for payment. Under no circumstances will interest on
the purchase price for Shares be paid, regardless of any delay in making such
payment.
Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering shareholders, Purchaser's obligation to make such
payment shall be satisfied, and tendering shareholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer. If, for any reason
whatsoever, acceptance for payment of any Shares tendered pursuant to the
Offer is delayed, or Purchaser is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to Purchaser's rights under
Section 1, the Depositary may, nevertheless, on behalf of Purchaser, retain
tendered Shares, and, subject to compliance with the applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act,
such Shares may not be withdrawn, except to the extent that the tendering
shareholders are entitled to withdrawal rights as described in Section 4.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are
submitted evidencing more Shares than are tendered or accepted for purchase as
provided in this Section 2, Share Certificates evidencing unpurchased Shares
will be returned, without expense to the tendering shareholder (or, in the
case of Shares tendered by book-entry transfer into the Depositary's account
at the Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 3, such Shares will be credited to an account maintained at the Book-
Entry Transfer Facility), as promptly as practicable following the expiration
or termination of the Offer.
If, prior to the Expiration Date, Purchaser increases the price being paid
for Shares accepted for payment pursuant to the Offer, such increased
consideration will be paid to all shareholders whose Shares are purchased
pursuant to the Offer.
6
<PAGE>
Purchaser reserves the right to transfer or assign, in whole or, from time
to time, in part, to one or more of its affiliates, the right to purchase all
or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve Purchaser of its obligations under the
Offer and will in no way prejudice the rights of tendering shareholders to
receive payment for Shares validly tendered and accepted for payment pursuant
to the Offer.
3. Procedures for Accepting the Offer and Tendering Shares.
Valid Tender. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), together with any required signature guarantees, or in the case of a
book-entry transfer, an Agent's Message, and any other documents required by
the Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and either (i)
the Share Certificates evidencing tendered Shares must be received by the
Depositary at such address or such Shares must be tendered pursuant to the
procedure for book-entry transfer described below and a Book-Entry
Confirmation must be received by the Depositary, in each case prior to the
Expiration Date, or (ii) the tendering shareholder must comply with the
guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the system of the Book-Entry
Transfer Facility may make a book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery
of Shares may be effected through book-entry transfer at the Book-Entry
Transfer Facility, the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer,
and any other required documents, must, in any case, be received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Date, or the tendering shareholder must
comply with the guaranteed delivery procedure described below. DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-
ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Medallion Signature Guarantee
Program, or by any other "eligible guarantor institution", as such term is
defined in Rule 17Ad-5 promulgated under the Exchange Act (each of the
foregoing being referred to as an "Eligible Institution"), except in cases
where Shares are tendered (i) by a registered holder of Shares who has not
completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal, or (ii)
for the account of an Eligible Institution. If a Share Certificate is
registered in the name of a person other than the signer of the Letter of
Transmittal, if payment is to be made, or if a Share Certificate not accepted
for payment or not tendered is to be returned, to a person other than the
7
<PAGE>
registered holder(s), then the Share Certificate must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Share Certificate, with the
signature(s) on such Share Certificate or stock powers guaranteed by an
Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates evidencing such Shares are
not immediately available or such shareholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such shareholder cannot complete the procedure for
delivery by book-entry transfer on a timely basis, such Shares may
nevertheless be tendered, provided that all the following conditions are
satisfied:
(i)such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, is received
prior to the Expiration Date by the Depositary as provided below; and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing all
tendered Shares, in proper form for transfer, in each case together
with a properly completed and duly executed Letter of Transmittal (or
a facsimile thereof) with any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer, and any
other documents required by the Letter of Transmittal are received by
the Depositary within three trading days after the date of execution
of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, mail or
transmitted by telegram or facsimile transmission to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
form of Notice of Guaranteed Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) with any required signature guarantees,
or an Agent's Message in connection with a book-entry transfer, and any other
documents required by the Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by the Depositary on behalf of Purchaser,
which determination shall be final and binding on all parties. Purchaser
reserves the absolute right to reject any and all tenders determined by it not
to be in proper form or the acceptance for payment of which may, in the
opinion of its counsel, be unlawful. Purchaser also reserves the absolute
right to waive any condition of the Offer or any defect or irregularity in the
tender of any Shares of any particular shareholder, whether or not similar
defects or irregularities are waived in the case of other shareholders. No
tender of Shares will be deemed to have been validly made until all defects
and irregularities have been cured or waived. None of Purchaser, Parent, the
Depositary, the Information Agent nor any other person will be under any duty
to give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter
of Transmittal and the instructions thereto) will be final and binding.
Other Requirements. By executing the Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
shareholder irrevocably appoints designees of Purchaser as such shareholder's
proxies, each with full power of substitution, in the manner set forth in the
Letter of Transmittal, to the full extent of such shareholder's rights with
respect to the Shares tendered by such shareholder and accepted for payment by
Purchaser (and with respect to any and all other Shares or other securities
issued or issuable in respect of such Shares on or after January 18, 1999).
All such proxies shall be considered coupled with an interest in the tendered
Shares. Such appointment will be effective when, and only to the extent that,
Purchaser accepts such Shares for payment. Upon such acceptance for payment,
all prior powers of attorney, proxies and consents given by such shareholder
with respect to such Shares (and such other Shares and securities) will be
revoked without further
8
<PAGE>
action, and no subsequent powers of attorney, proxies and consents may be
given nor any subsequent written consent executed by such shareholder (and, if
given or executed, will not be deemed to be effective) with respect thereto.
The designees of Purchaser will, with respect to the Shares for which the
appointment is effective, be empowered to exercise all voting and other rights
of such shareholder as they in their sole discretion may deem proper at any
annual or special meeting of the Company's shareholders or any adjournment or
postponement thereof, by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares.
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering shareholder and Purchaser upon the terms and subject to the
conditions of the Offer.
Backup Withholding. To prevent backup Federal income tax withholding with
respect to payment to certain shareholders of the purchase price of shares
purchased pursuant to the Offer, each such shareholder must provide the
Depositary with such shareholder's correct taxpayer identification number and
certify that such shareholder is not subject to backup Federal income tax
withholding by completing the Substitute Form W-9 in the Letter of
Transmittal. See Section 5 of this Offer to Purchase. If the shareholder is a
nonresident alien or foreign entity not subject to back-up withholding, the
shareholder must give the Depositary a completed Form W-8 Certificate of
Foreign Status prior to receipt of any payments.
4. Withdrawal Rights.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the Offer,
may also be withdrawn at any time after March 22, 1999. If Purchaser extends
the Offer, is delayed in its acceptance for payment of Shares or is unable to
accept Shares for payment pursuant to the Offer for any reason, then, without
prejudice to Purchaser's rights under the Offer, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except to the extent that tendering shareholders are
entitled to withdrawal rights as described in this Section 4. Any such delay
will be by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person
who tendered the Shares to be withdrawn, the number of Shares to be withdrawn
and the name of the registered holder of such Shares, if different from that
of the person who tendered such Shares. If Share Certificates evidencing
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such Share Certificates,
the serial numbers shown on such Share Certificates must be submitted to the
Depositary and the signature(s) on the notice of withdrawal must be guaranteed
by an Eligible Institution, unless such Shares have been tendered for the
account of an Eligible Institution. If Shares have been tendered pursuant to
the procedure for book-entry transfer as set forth in Section 3, any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3.
9
<PAGE>
5. Certain Federal Income Tax Consequences.
The receipt of cash for Shares pursuant to the Offer or in the Merger will
be a taxable transaction for Federal income tax purposes and may also be a
taxable transaction under applicable state, local or foreign tax laws. In
general, a shareholder will recognize gain or loss for Federal income tax
purposes equal to the difference between the amount of cash received in
exchange for the Shares sold and such shareholder's adjusted tax basis in such
Shares. For Federal income tax purposes, such gain or loss will be a capital
gain or loss if the Shares are a capital asset in the hands of the
shareholder, and a long-term capital gain or loss if the shareholder's holding
period is more than one year as of the date Purchaser accepts such Shares for
payment pursuant to the Offer or the Effective Time, as the case may be.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
SHAREHOLDERS, INCLUDING FINANCIAL INSTITUTIONS, BROKER-DEALERS, SHAREHOLDERS
WHO ACQUIRED SHARES PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR
OTHERWISE AS COMPENSATION, INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF
THE UNITED STATES AND FOREIGN CORPORATIONS.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. BECAUSE INDIVIDUAL
CIRCUMSTANCES MAY DIFFER, SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS
WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO
THEM, INCLUDING THE APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND
STATE, LOCAL AND FOREIGN TAX LAWS.
6. Price Range of Shares; Dividends.
The Shares are traded on NASDAQ under the symbol "AGAI." The following table
sets forth, based upon public sources, for the fiscal quarters indicated, the
high and low bid prices per Share:
<TABLE>
<CAPTION>
High/Ask Low/Bid
-------- -------
<S> <C> <C>
Fiscal 1997:
First Quarter............................................ $7.13 $4.75
Second Quarter........................................... 7.00 4.88
Third Quarter............................................ 5.98 4.38
Fourth Quarter........................................... 7.94 5.75
Fiscal 1998:
First Quarter............................................ $7.13 $4.13
Second Quarter........................................... 4.88 3.75
Third Quarter............................................ 3.94 1.63
Fourth Quarter........................................... 3.56 2.13
Fiscal 1999:
First Quarter............................................ $5.00 $2.00
</TABLE>
On January 15, 1999, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer, the closing bid price per Share as reported on NASDAQ was $4.38. On
January 21, 1999, the last full trading day prior to the commencement of the
Offer, the closing bid price per Share as reported on NASDAQ was $5.28.
The Company has never paid dividends on the Shares and its present policy is
to retain earnings to finance its future operations.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
10
<PAGE>
7. Certain Information Concerning the Company.
Except as otherwise set forth herein, the information concerning the Company
contained in this Offer to Purchase, including financial information, has been
furnished by the Company or has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. Neither Purchaser nor Parent assumes any responsibility for the
accuracy or completeness of the information concerning the Company furnished
by the Company or contained in such documents and records or for any failure
by the Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Purchaser or Parent.
General. The Company is a California corporation with its principal
executive offices located at 4425 Fortran Drive, San Jose, California 95134-
2300. According to the Company's annual report on Form 10-K for the fiscal
year ended September 30, 1998 (the "1998 Form 10-K"), the Company designs,
manufactures, markets and supports advanced single-wafer rapid thermal
processing equipment used in manufacturing integrated circuits.
Historical Financial Information. Set forth below is certain selected
consolidated financial data relating to the Company and its Subsidiaries. The
selected consolidated financial data as of and for the years ended September
30, 1995 to 1998 have been excerpted or derived from the audited financial
statements contained in the 1998 Form 10-K and the Company's Form 10-K for the
fiscal year ended September 30, 1997. The selected consolidated financial data
as of and for the three months ended December 31, 1997 and 1998 have been
derived from unaudited financial statements that have been prepared on the
same basis as the audited financial statements and, in the opinion of the
Company, include all adjustments necessary for a fair statement of the results
for the unaudited periods. Operating results for the three months ended
December 31, 1998 are not necessarily indicative of the results that may be
expected for the entire year ending September 30, 1999. More comprehensive
financial information is included in the Form 10-K and other documents filed
by the Company with the Commission. The financial data that follow are
qualified in their entirety by reference to such reports and other documents,
including the financial statements and related notes contained therein. Such
reports and other documents may be examined and copies may be obtained from
the offices of the Commission in the manner set forth below.
AG ASSOCIATES, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
For the Fiscal
Quarter Ended For the Fiscal
December 31, Years Ended September 30,
---------------- -----------------------------------
1998 1997 1998 1997 1996 1995
------- ------- -------- -------- ------- -------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statement of
Operations Data:
Net sales.............. $14,328 $16,433 $ 45,957 $ 49,604 $71,089 $62,725
Gross profit........... 5,141 6,248 12,962 16,907 31,724 29,028
Research and
development........... 3,129 3,948 15,908 14,329 16,653 8,893
Selling, general and
administrative........ 2,294 2,361 9,573 9,247 10,204 10,562
Income (loss) from
operations............ (282) (61) (12,519) (6,669) 4,867 9,573
Income (loss) before
income taxes.......... (369) 15 (12,494) (6,237) 4,487 9,221
Net income (loss)...... $ (369) $ 9 $(14,000) $ (4,687) $ 2,743 $ 9,753
Net income (loss) per
share--basic.......... $ (0.06) -- $ (2.29) $ (0.78) $ 0.47 $ 2.22
Shares used in per
share calculation--
basic................. 6,203 6,066 6,102 5,981 5,582 4,305
Net income (loss) per
share--diluted........ $ (0.06) -- $ (2.29) $ (0.78) $ 0.45 $ 2.05
Shares used in per
share calculation--
diluted............... 6,203 6,132 6,102 5,981 6,140 4,770
Consolidated Balance
Sheet Data:
Cash, cash equivalents
and short-term
investments........... $ 2,616 $ 6,406 $ 1,332 $ 4,157 $11,985 $18,858
Working capital
(deficiency).......... $ 7,350 $22,338 $ 8,306 $ 22,867 $26,851 $28,649
Total assets........... $36,357 $43,025 $ 30,770 $ 42,947 $45,852 $48,825
Long-term obligations.. -- $ 234 -- $ 275 $ 11 $ 193
Convertible
subordinated
debentures............ -- -- -- -- -- --
Minority interest in
subsidiary............ -- -- -- -- -- --
Shareholders' equity
(deficiency).......... $17,535 $31,547 $ 17,902 $ 31,522 $35,694 $32,300
</TABLE>
11
<PAGE>
Projected Financial Information. In connection with Parent's review of the
Company and in the course of the negotiations between the Company and Parent
described in Section 10, the Company provided Parent with certain business and
financial information which Parent and Purchaser believe is not publicly
available, including the following projections of future financial
performance:
<TABLE>
<CAPTION>
Fiscal Year September 30,
------------------------------------
1997 1998 1999
------- -------- -----------
(U.S. dollars in
thousands) (actual) (estimated)
<S> <C> <C> <C> <C>
Net Sales................ $49,604 $ 45,957 $63,432
% Growth................ -- (7)% 38%
Gross Profit............. $16,907 $ 12,962 $24,731
as a % of sales......... 34 % 28 % 39%
Income from operations... $(6,669) $(12,519) $ 5,354
as a % of sales......... (13)% (27)% 8%
Net income............... $(4,687) $(14,000) $ 4,894
as a % of sales......... (9)% (30)% 8%
</TABLE>
THE FISCAL 1999 PROJECTED INFORMATION IS BASED ON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND
MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE PROJECTED RESULTS WILL BE REALIZED OR THAT ACTUAL RESULTS
WILL NOT BE SIGNIFICANTLY HIGHER OR LOWER THAN THOSE SET FORTH ABOVE. IN
ADDITION, THESE PROJECTIONS DO NOT GIVE EFFECT TO THE OFFER OR THE MERGER,
WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE
PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND
FORECASTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE SUCH
INFORMATION WAS MADE AVAILABLE TO PARENT BY THE COMPANY. MOREOVER, NEITHER
PURCHASER NOR PARENT OR ANY OF THEIR RESPECTIVE AFFILIATES RELIED UPON THE
FOREGOING PROJECTIONS PREPARED BY THE COMPANY IN ANY WAY IN FORMULATING THE
OFFER. NONE OF PARENT, PURCHASER, THE COMPANY OR ANY OTHER PARTY ASSUMES ANY
RESPONSIBILITY FOR THE ACCURACY OR VALIDITY OF THE FOREGOING PROJECTIONS. THE
INCLUSION OF THE FOREGOING PROJECTIONS SHOULD NOT BE REGARDED AS AN INDICATION
THAT PARENT, PURCHASER, THE COMPANY OR ANY OTHER PERSON WHO RECEIVED SUCH
INFORMATION CONSIDERS IT AN ACCURATE PREDICTION OF FUTURE EVENTS. NONE OF
PARENT, PURCHASER OR THE COMPANY INTENDS TO UPDATE, REVISE OR CORRECT SUCH
PROJECTIONS IF THEY BECOME INACCURATE (EVEN IN THE SHORT TERM).
The management of the Company has advised Parent that it is difficult to
assess the accuracy of the Company's projections for the second half of its
fiscal year ending September 30, 1999 due to current conditions in the
semiconductor manufacturing industry.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons
in transactions with the Company is required to be disclosed in proxy
statements distributed to the Company's shareholders and filed with the
Commission. Such reports, proxy statements and other information are available
for inspection at the public reference facilities maintained by the Commission
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and also are
available for inspection at the Commission's regional offices located at Seven
World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The Commission
also maintains an Internet site on the World Wide Web at http://www.sec.gov
that
12
<PAGE>
contains reports, proxy statements and other information. Copies of such
materials may also be obtained by mail, upon payment of the Commission's
customary fees, by writing to its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The information also is available for inspection at
the offices of The Nasdaq Stock Market at 1735 K Street, N.W., Washington,
D.C. 20006.
8. Certain Information Concerning Purchaser, Parent and STEAG.
Purchaser is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger and has not carried on any activities
other than in connection with the Offer and the Merger. The principal offices
of Purchaser are located at c/o Morrison & Foerster LLP, 425 Market Street,
San Francisco, California 94105. Purchaser is a wholly owned subsidiary of
Parent.
Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding
Purchaser is available.
Parent is a corporation organized under the laws of the Federal Republic of
Germany. Its principal offices are located at Ruttenscheider Stra^e 1-3, 45128
Essen, Germany. Parent is a worldwide leading supplier of machines for the
production of semiconductors, compact discs and photomasks. STEAG has
organized its electronic systems division (see below) within Parent, a holding
company for STEAG AST Elektronik GmbH ("AST"), STEAG MicroTech GmbH and STEAG
HamaTech GmbH and their foreign sales and service affiliate companies. Parent
is a wholly owned subsidiary of STEAG.
STEAG has been in the business of power generation since 1937 and has
focused its activities on reliable, efficient and ecologically safe generation
of electrical and thermal energy. In addition to its core business of power
generation, STEAG also is extending its range of business to become an
international operator in the independent power producer field and in
electronic systems/process technology. STEAG is organized into three separate
business divisions: power generation, independent power production and
electronic systems/process technology.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the executive officers, and
members of the supervisory board and management board of Purchaser and STEAG,
respectively, and certain other information are set forth in Schedule I
hereto.
STEAG is not subject to the informational reporting requirements of the
Exchange Act, and, accordingly, does not file reports or other information
with the Commission relating to its business, financial condition and other
matters.
13
<PAGE>
Set forth below is certain selected consolidated financial information
relating to STEAG and its subsidiaries for STEAG's last two fiscal years. The
selected consolidated financial information has been prepared in Deutsche Mark
in accordance with generally accepted accounting principles in the Federal
Republic of Germany ("German GAAP"). German GAAP differs in certain
significant respects from generally accepted accounting principles in the
United States ("U.S. GAAP"). A summary of the significant differences between
U.S. GAAP and German GAAP is set forth below. Parent, however, believes that
the differences are not material to a decision by a holder of Shares of
whether to sell, tender or hold any Shares because any such differences would
not affect the ability of Purchaser to obtain sufficient funds to pay for
Shares to be acquired pursuant to the Offer. The amounts in the table set
forth below are in Deutsche Mark unless otherwise indicated.
STEAG AG
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in Deutsche Mark ("DM"), except where otherwise indicated
in United States dollars ("$"))
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1997(1) 1997 1996
------- -------- --------
(in millions)
<S> <C> <C> <C>
Income Statement Data:
Amounts in accordance with German GAAP:
Sales............................................... $1,503 DM 2,700 DM 2,514
Net income.......................................... 49 88 83
Net income available for distribution............... 22 40 35
Balance Sheet Data:
Amounts in accordance with German GAAP:
Liquid funds........................................ $ 504 DM 906 DM 588
Current assets...................................... 257 462 415
Total assets........................................ 2,309 4,147 3,622
Long-term financial liabilities..................... 648 1,164 639
Shareholders' equity................................ 523 939 870
</TABLE>
- --------
(1) Amounts in this column are unaudited and have been translated solely for
the convenience of the reader at an exchange rate of DM 1,7961 = $1.00,
the Noon Buying Rate on December 30, 1997. No representation is made that
the Deutsche Mark has been, could have been or could be, converted into
U.S. dollars at that or any other rate.
The following represents, in the opinion of management of STEAG, the
significant differences between U.S. GAAP and German GAAP that would affect
the determination of consolidated net income and shareholders' equity of STEAG
for the periods for which the selected consolidated financial information has
been presented herein.
Fixed Assets. German GAAP permits, but does not require, the capitalization
of interest as a part of the historical cost of acquisition of assets that are
constructed or produced for an enterprise's own use. The capitalization of
such interest costs is required by U.S. GAAP.
Long-Term Construction Contracts. Under U.S. GAAP, accounting for work in
process and finished goods under the percentage-of-completion method is the
preferred method when estimates of costs to complete and extent of progress
toward completion of long-term contracts are reasonably dependable. Under
German GAAP, accounting for work in process and finished goods is determined
using the completed contract method.
Accruals. Under German GAAP, the valuation of accruals is characterized by
the prudency principle. This, as a general rule, would lead to higher accruals
than would be acceptable under U.S. GAAP. Accruals for certain expenses that
are incurred in the current year but that will only lead to cash outflow in
future years are acceptable under German GAAP without an underlying liability
towards third parties. These accruals are not acceptable under U.S. GAAP.
14
<PAGE>
Pension Plans. U.S. GAAP requires pension costs to be recognized and
computed as stipulated by the Statement of Financial Accounting Standard No.
87. Under German GAAP, the unfunded accumulated benefit obligation, accounted
by STEAG, did not reflect forecasted increase of wages and salaries and is
discounted with a steady interest rate of 6%.
Except as described in this Offer to Purchase, (i) none of Purchaser,
Parent, STEAG or, to the knowledge of Purchaser and Parent, any of the persons
listed in Schedule I to this Offer to Purchase or any associate or majority-
owned subsidiary of Purchaser, Parent, STEAG or any of the persons so listed
beneficially owns or has any right to acquire, directly or indirectly, any
Shares, and (ii) none of Purchaser, Parent, STEAG or, to the knowledge of
Purchaser and Parent any of the persons or entities referred to above nor any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement, the Common Stock Option and the
Stock Option Agreement and as otherwise described in this Offer to Purchase,
none of Purchaser, Parent, STEAG or, to the knowledge of Purchaser and Parent,
any of the persons listed in Schedule I to this Offer to Purchase, has any
contract, arrangement, understanding or relationship with any other person
with respect to any securities of the Company, including, but not limited to,
any contract, arrangement, understanding or relationship concerning the
transfer or voting of such securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or
the giving or withholding of proxies. Except as set forth in this Offer to
Purchase, since October 1, 1995, none of Purchaser, Parent, STEAG or, to the
best knowledge of Purchaser and Parent, any of the persons listed on Schedule
I hereto, has had any business relationship or transaction with the Company or
any of its executive officers, directors or affiliates that is required to be
reported under the rules and regulations of the Commission applicable to the
Offer. Except as set forth in this Offer to Purchase, since October 1, 1995,
there have been no contacts, negotiations or transactions between any of
Purchaser, Parent, STEAG, or any of their respective subsidiaries or, to the
best knowledge of Purchaser and Parent, any of the persons listed in Schedule
I to this Offer to Purchase, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
9. Financing of the Offer and the Merger.
The total amount of funds required by Purchaser to consummate the Offer and
the Merger and to pay related fees and expenses is estimated to be
approximately $35,279,784. Purchaser will obtain all of such funds from
Parent. Parent will obtain all of such funds from STEAG. STEAG will supply
such funds from working capital and other cash on hand.
10. Background of the Offer; Contacts with the Company; the Merger Agreement;
the Stock Option Agreement; and the Voting Agreements.
BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
In connection with the conduct of its business, Parent regularly receives
information concerning potential acquisition candidates in the field of
electronic systems and process technology.
On July 15, 1998, during the SEMICON/West conference in San Francisco,
California, Dr. Arnon Gat, the Chief Executive Officer of the Company,
approached Dr. Hans-Georg Betz, the Chief Executive Officer of Parent, and
inquired whether Parent would be interested in exploring a potential business
combination with the Company. Dr. Betz expressed an interest in discussing
such a combination.
On July 17, 1998, SoundView provided to Parent a confidential memorandum
relating to the Company, its business and its financial results and prospects.
On July 22, 1998, SoundView sent a letter to Dr. Betz describing certain
structures for a business combination between Parent and the Company.
15
<PAGE>
On July 31, 1998 and August 3, 1998, Mr. Hans-Joachim Wolf, Chief Financial
Officer of Parent, contacted Mr. Kirk Johnson, Vice President, Finance and
Chief Financial Officer of the Company, to schedule preliminary due diligence
of the Company.
On August 6, 1998, Parent and Company entered into a mutual non-disclosure
agreement. On August 6 and 7, 1998, Parent, together with its advisors and
auditors, met and conducted preliminary due diligence at the Company, which
included presentations by management of the Company and a tour of the
Company's plant in San Jose. Representatives of SoundView also were present at
such meeting.
From August 8 to September 8, 1998, Dr. Gat and representatives of SoundView
continued to respond to, and engage in meetings with respect to, technical,
legal and financial due diligence requests from Parent.
On September 8 and 9, 1998, Mr. Julio L. Guardado, President of the Company,
and Mr. Johnson met with Dr. Rolf Thaler and Dr. Berthold Lutke-Daldrup,
representatives of Parent, and a representative of Harris Roja Corporation
("Harris Roja"), an investment banking firm engaged by Parent to advise it in
connection with the proposed business combination with the Company, to discuss
business issues and possible transaction structures. Representatives of
SoundView also participated in such meetings. At such meetings, actual and
forecast data of AST, a wholly owned subsidiary of Parent which designs,
manufactures and distributes RTP systems, and the Company were presented and
discussed.
From September 12 to October 19, 1998, representatives of the Company,
SoundView, Parent and Harris Roja continued to discuss possible transaction
structures, including a cash tender offer and a merger whereby Parent would
hold a majority of the then outstanding Shares and the remaining Shares would
continue to be held by the Company's public shareholders.
On October 8 and 9, 1998, Dr. Gat and Messrs. Johnson and Guardado visited
AST in Dornstadt, Germany. Management of AST gave a presentation which
included actual and projected financials of AST. The visit also included a
tour of the AST plant.
On October 12, 1998, members of the management of Parent and a
representative of Harris Roja met with representatives of the Company and
SoundView in Essen, Germany. At the meeting the parties discussed alternative
transaction structures and the range of valuation ratios between the Company
and AST.
On October 13, 1998, Dr. Gat and Mendy Erad, Chief Executive Officer of Clal
Electronics, met in Essen, Germany with representatives of STEAG to discuss
issues relating to the existing contractual relationship between the Company
and the Israeli Affiliate. Clal Electronics is a shareholder of the Israeli
Affiliate.
STEAG held a management board meeting on October 16, 1998. After that
meeting, Dr. Betz discussed with Dr. Gat the range of valuation ratios between
the Company and AST that might be acceptable to Parent. Dr. Betz stated that
STEAG would consider proposing a cash tender offer of $5.50 per Share, subject
to a satisfactory resolution of certain due diligence issues.
On October 23, 1998, Dr. Gat discussed the proposed transaction with Dr.
Betz. On November 3, 1998, Parent's U.S. legal counsel, delivered a draft term
sheet to the Company's legal counsel. The draft term sheet proposed that
Parent acquire the Company for cash consideration of $5.50 per Share subject
to the resolution of a number of diligence and business issues. From October
24 to November 19, 1998, representatives of the Company, Parent and their
respective investment bankers and legal counsel had numerous conversations and
meetings regarding due diligence and business issues with respect to the
proposed business combination, including the structure of the transaction and
the Company's agreements and arrangements with the Israeli Affiliate. Although
no letter of intent was signed, substantially all of the business issues
(other than the structure of the transaction and conditions to completing the
acquisition) were resolved at a meeting held on November 19, 1998, among
Drs. Gat and Betz, representatives of the Company's and Parent's respective
legal counsel and a representative of SoundView.
16
<PAGE>
On November 11 and 12, 1998, representatives of Parent visited the Israeli
Affiliate where management of the Israeli Affiliate gave a presentation and
conducted a plant visit.
From November 16 to 20, 1998, representatives of Parent and its accountants,
legal counsel and investment bankers engaged in comprehensive due diligence at
the Company's offices in San Jose.
On November 21, 1998, Parent's U.S. legal counsel distributed a first draft
of a merger agreement to the Company, Parent and their respective investment
bankers and legal counsel which draft agreement provided for the acquisition
of the Company by Parent by way of a merger. On December 3, 1998, Parent's
U.S. legal counsel distributed another draft of the Merger Agreement to the
Company, Parent and their respective investment bankers and legal counsel,
which provided for the Offer, the Merger and other Transactions. The terms of
the Merger Agreement and related agreements, including the transaction
structure and conditions to completing the acquisition, were negotiated during
the period from November 21, 1998 to January 14, 1999.
On November 25, 1998, to address market rumors and with the consent of
Parent, the Company issued a press release indicating that it was in
discussions with Parent concerning a possible cash acquisition of the Company.
At the time, the structure of the transaction and the conditions to completing
the acquisition had not been fully determined. On the same day, Dr. Gat, Dr.
Betz, a representative of Clal Electronics, representatives of the Israeli
Affiliate, and an investor in the Israeli Affiliate met in Essen, Germany. At
the meeting, Parent and the Israeli Affiliate agreed in principle to an
arrangement pursuant to which, concurrently with or immediately following the
Merger, Parent would acquire all of the outstanding capital stock of the
Israeli Affiliate not owned by the Company.
On December 3, 1998, the Supervisory Board of STEAG met and approved the
general terms of the Merger Agreement and the Transactions, including the
Offer and the Merger.
On January 18, 1999, the Company, Parent and Purchaser entered into the
Merger Agreement.
17
<PAGE>
THE MERGER AGREEMENT
The following summary of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, a copy of which is filed as Exhibit
(c)(1) to the Schedule 14D-1 and is incorporated by reference in this Offer to
Purchase. For purposes of the Merger Agreement, "Subsidiary" is defined as any
corporation, partnership, joint venture or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at
the time owned by the Company and/or one or more other direct or indirect
Subsidiaries, and "Material Adverse Effect" is defined as an effect on the
business, assets, condition (financial or other), operating results or
prospects of the Company that is material and adverse to the value of the
Company and its Subsidiaries, taken as a whole, other than the direct effects
of (i) the announcement of the Transactions (as defined in the Merger
Agreement), (ii) general economic conditions, or (iii) conditions that are
generally applicable to the business segments in which the Company or its
Subsidiaries conducts business, excluding the effect on the Company of general
business declines or reverses, such as lower than forecast revenues or
bookings (whether as a result of economic conditions, actions of competitors
or business interruptions), reductions in gross margins or technical problems
with product development, introduction or evaluation or increases in operating
expenses attributable to changes in product shipment volumes or changes in
supplier pricing.
The Offer. Purchaser is making the Offer to purchase the Shares, as required
by Article I of the Merger Agreement. The Merger Agreement provides that
Parent will cause Purchaser to commence the Offer as promptly as reasonably
practicable, but in no event later than five business days, after the date of
the public announcement of the terms of the Merger Agreement. The obligation
of Purchaser and Parent to accept for payment, and pay for, the Shares
tendered pursuant to the Offer is subject to the satisfaction of (i) the
Minimum Condition or Revised Minimum Number of Shares prior to the expiration
of the Offer, and (ii) certain other conditions described in Section 14.
Subject to the terms and conditions of the Merger Agreement and the applicable
regulations of the Commission, Purchaser and Parent also expressly reserve the
right, at any time and from time to time, (i) to delay acceptance for payment
of, or, regardless of whether such Shares were accepted for payment, payment
for, any Shares pending receipt of any regulatory approval specified in
Section 15, (ii) to terminate the Offer and not accept for payment any Shares
upon the occurrence of any of the conditions specified in Section 14 prior to
the Expiration Date, and (iii) to delay, terminate or waive the Minimum
Condition or any other condition or otherwise amend the Offer including
extending the Expiration Date in any respect. Furthermore, Purchaser will not
(i) impose conditions in addition to those set forth in Section 14, (ii)
reduce the Offer Price or the number of Shares sought in the Offer, or (iii)
change the form of consideration payable in the Offer.
Notwithstanding any other provision contained in the Merger Agreement, in
the event the Minimum Condition is not satisfied on any scheduled Expiration
Date, Purchaser will either extend the Expiration Date or amend the Offer to
provide that, in the event (i) the Minimum Condition is not satisfied at the
next scheduled Expiration Date (after giving effect to the issuance of any
Shares issued under the Stock Option Agreement), and (ii) the number of Shares
tendered pursuant to the Offer and not withdrawn as of such next scheduled
Expiration Date is more than 50% of the Shares then outstanding, Purchaser
will waive the Minimum Condition, reduce the number of Shares subject to the
Offer to the Revised Minimum Number of Shares and, if a greater number of
Shares is tendered in the Offer and not withdrawn, purchase, on a pro rata
basis, the Revised Minimum Number of Shares (it being understood that
Purchaser shall not in any event be required to accept for payment, or pay
for, any Shares if less than the Revised Minimum Number of Shares are tendered
pursuant to the Offer and not withdrawn at the Expiration Date).
The Merger. Following completion of the Offer, Purchaser will own either (i)
more than 90% of the Shares or (ii) 49.9% of the Shares. Purchaser then will
be merged with and into the Company, either pursuant to a short-form merger
under the provisions of the CGCL or a vote of the Company's shareholders at a
meeting. See "Shareholders Meeting" below. At the Effective Time, the separate
corporate existence of Purchaser will cease and the Company will continue as
the Surviving Corporation and will become a wholly owned subsidiary of Parent.
In the Merger: (i) each share of common stock, $1.00 par value, of Purchaser
issued and outstanding will
18
<PAGE>
be converted into and become one fully paid and nonassessable share of common
stock of the Surviving Corporation; and (ii) each Share issued and outstanding
(other than (a) Shares held by any subsidiary of the Company, (b) each share
owned by Parent or Purchaser (including Shares purchased by Purchaser in the
Offer), and (c) Shares held by shareholders who have demanded and perfected,
and have not withdrawn or otherwise lost, dissenters' rights, if any, under
the CGCL) will be cancelled and converted automatically into the right to
receive, upon surrender of the certificate formerly representing such Share,
an amount in cash, without interest, equal to $5.50 or any higher price that
may be paid per Share in the Offer (the "Merger Consideration"). Shares as to
which dissenters' rights have been validly exercised pursuant to the CGCL will
not be converted into the right to receive the Merger Consideration, but will
be entitled to payment of the fair market value of such Shares in accordance
with the provisions of Chapter 13 of the CGCL.
Board Representation. Following completion of the Offer, Purchaser will have
the right to appoint new directors of the Company. The Merger Agreement
provides that upon the purchase by Purchaser of such number of Shares
satisfying the Minimum Condition or the Revised Minimum Number of Shares
pursuant to the Offer, Purchaser will be entitled, at its option, to designate
such number of directors, rounded up to the next whole number, on the Board as
will give Purchaser representation on the Board equal to the product of (i)
the total number of directors on the Board (giving effect to any increase or
decrease in the number of directors pursuant to the Merger Agreement), and
(ii) the percentage that the aggregate number of Shares beneficially owned by
Purchaser (including Shares accepted for payment) and Parent bears to the
total number of Shares issued and outstanding. The Company will, at such time,
use its best efforts to cause Purchaser's designees to be appointed or elected
to the Board, and to constitute the same percentage as such individuals
represent on the Board of (a) each committee of the Board (other than any
committee of the Board established to take action under the Merger Agreement),
(b) each board of directors of each Subsidiary, and (c) each committee of each
such board. Notwithstanding the foregoing, until the Effective Time, such
Board will include at least two directors who are directors on the date of the
Merger Agreement and who are not employees of the Company or any of its
Subsidiaries or affiliates of Parent or Purchaser.
Parent or Purchaser will supply to the Company any information with respect
to itself and such nominees, officers, directors and affiliates required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. Upon
any request by Purchaser, the Company will file with the Commission and
transmit to the record shareholders of the Company such information with
respect to the Company and its officers and directors and Purchaser's
designees as is necessary to enable Purchaser's designees to be elected to the
Board.
From and after the Effective Time, the directors and officers of Purchaser
at the Effective Time will become the directors and officers of the Surviving
Corporation.
Charter Documents. The Merger Agreement provides that, at the Effective
Time, the Certificate of Incorporation of Purchaser, as in effect at the
Effective Time, will be the Articles of Incorporation of the Surviving
Corporation until thereafter amended in accordance with its provisions and as
provided by the CGCL. The Merger Agreement also provides that the Bylaws of
Purchaser, as in effect at the Effective Time, will be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with its
provisions, the provisions of the Articles of Incorporation and as provided by
the CGCL.
Shareholders Meeting. If Purchaser does not hold at least 90% of the Shares
following completion of the Offer, under the CGCL, the Merger cannot be
effected without a vote of the Company's shareholders. The Company will as
promptly as practicable following the acceptance for payment and purchase of
Shares by Purchaser pursuant to the Offer, duly call, give notice of, convene
and hold a meeting of its shareholders (the "Special Meeting") for the purpose
of approving the Merger and adopting the provisions relating to the Merger in
the Merger Agreement. The Company will use its best efforts to solicit from
its shareholders proxies in favor of the approval of the Merger, and will take
all other action necessary or advisable to secure the vote or consent of its
shareholders required by the CGCL, its Articles of Incorporation and Bylaws,
and to obtain such approvals, subject to applicable fiduciary duties of the
Board.
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Under the CGCL, if Purchaser or Parent acquire at least 90% of the Shares,
Purchaser will be able to approve the Merger without a vote of the Company's
shareholders. In the event Purchaser or Parent acquires at least 90% of the
Shares, and provided that the other conditions set forth in the Merger
Agreement have been satisfied or waived, Purchaser, Parent and, at the request
of Parent, the Company will take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after expiration or
termination of the Offer without a meeting of the Company's shareholders in
accordance with the CGCL.
Proxy Statement. If approval of the Merger and adoption of the Merger
Agreement by the Company's shareholders is required by applicable law, the
Company will prepare and file a proxy statement (the "Proxy Statement") with
the Commission and the Company and Parent will cooperate in responding to any
comments of the Staff of the Commission and the Company will cause the Proxy
Statement to be mailed to its shareholders after responding to all such
comments to the satisfaction of the staff of the Commission. The Proxy
Statement will, subject to the Board's fiduciary duties, include a
recommendation of the Board to vote in favor of the approval of the Merger and
the adoption of the provisions relating to the Merger in the Merger Agreement.
Employee Benefits. Parent has agreed that for a period of twelve months from
the Effective Time, it will cause the Surviving Corporation to provide active
employees of the Company and its Subsidiaries with benefits (including,
without limitation, welfare benefits) that are reasonably comparable to the
benefits provided under the Company's benefit plans (other than equity-based
plans) as in effect immediately prior to the Effective Time. Additionally,
Parent will cause the Surviving Corporation to provide a two-month paid
sabbatical to certain employees as identified by the Company. Parent will
provide such sabbatical if the Surviving Corporation is merged with, or
transfers all of its assets to, Parent or an affiliate of Parent.
Existing Stock Options. The options granted pursuant to the Company's 1994
Directors Stock Option Plan will vest automatically prior to the Effective
Time and, if not exercised by the Effective Time, will terminate. Prior to the
Effective Time, the Company, certain employees identified by the Company in
the Merger Agreement and all officers of the Company (each, a "Holder") will
enter into a written agreement in form reasonably satisfactory to Parent and
the Company pursuant to which each Holder will agree to terminate and cancel
all outstanding options issued pursuant to the Company's 1993 Employee Stock
Option Plan (the "Existing Option Plan") as of the closing of the Merger. In
consideration for such surrender and cancellation of options, on the date
which is twelve months after the Effective Time (the "Payment Date"), each
Holder employed by the Company on the Payment Date, or who was terminated
without cause prior to such Payment Date, will receive a cash bonus equal to
the product of (i) the number of vested options (using monthly vesting) to
purchase the Company's common stock held by such Holder pursuant to the
Existing Option Plans as of the Effective Time, and (ii) the difference
between $10.00 per share and the exercise price per share of such options;
provided, however, that the aggregate amount the Company or the Surviving
Corporation agrees to pay as of the Effective Time will not exceed $2,040,000.
If the aggregate amount payable by the Company or the Surviving Corporation
exceeds $2,040,000, any such cash bonus payable to a Holder will be reduced
pro rata to the extent of any such excess. Any consideration payable hereunder
will be subject to all tax withholdings as required by applicable law, and
deducted from the amount of the consideration payable to Holder. The Board
will take all other actions it deems appropriate to cause all outstanding
options to be terminated and canceled as of or prior to the Effective Time.
Conduct of Business. Pursuant to the Merger Agreement, the Company has
covenanted and agreed that, prior to the Effective Time, unless Parent
otherwise consents in writing or as otherwise expressly contemplated by the
Merger Agreement, the business of the Company will be conducted only in the
ordinary course. Subject to the foregoing limitations, the Company has also
covenanted and agreed that:
Governing Documents; Stock Splits; Redemptions; Issuances of Securities.
The Company will not, directly or indirectly: (i) amend or propose to amend
its Articles of Incorporation or Bylaws or reincorporate in any
jurisdiction; (ii) split, combine or reclassify any issued and outstanding
shares of its capital stock, or declare, set aside or pay any dividend or
other distribution (payable in cash, stock, property or otherwise) with
respect to such shares; (iii) redeem, purchase, acquire or offer to acquire
(or permit any Subsidiary to
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redeem, purchase, acquire or offer to acquire) any shares of its capital
stock; or (iv) issue, sell, pledge, accelerate, modify the terms of or
dispose of, or agree to issue, sell, pledge, accelerate, modify the terms
of or dispose of, any additional shares of, or securities convertible or
exchangeable for, or any options, warrants, calls, commitments or rights of
any kind to acquire any shares of, its capital stock of any class or other
property or assets, provided, that the Company (a) may issue Shares upon
the exercise of options outstanding as of the date of the Merger Agreement,
(b) may grant options under its 1993 Employee Stock Option Plan to any new
employee in amounts consistent with past practices, and (c) may enter into
certain agreements or arrangements contemplated by the Merger Agreement.
Dispositions; Acquisitions; Discharge of Liabilities; Settlement of
Litigation. The Company will not (i) transfer, lease, license, sell,
mortgage, pledge, dispose of or encumber any material assets, except in the
ordinary course of business consistent with past practice, (ii) acquire (by
merger, consolidation or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof or any
material assets, (iii) enter into or modify any material contract, lease,
agreement or commitment, except in the ordinary course of business
consistent with past practice, (iv) terminate, modify, assign, waive,
release or relinquish any material rights or claims or amend any material
rights or claims not in the ordinary course of business consistent with
past practice, (v) pay, discharge or satisfy any material claims,
liabilities or obligations, other than the payment, discharge or
satisfaction of any such claims, liabilities or obligations, in the
ordinary course of business, reflected or reserved against in, or
contemplated by, the consolidated financial statements of the Company
included in reports and registration statements filed with the Commission
(the "SEC Reports"), or (vi) settle or compromise any material claim,
action, suit or proceeding pending or threatened against it, or, if the
Company may be liable or obligated to provide indemnification, against its
directors or officers, before any court, governmental agency or arbitrator.
Indebtedness. Except as provided in the Merger Agreement, the Company
will not (i) incur or adversely modify any material indebtedness or other
liability; provided, however, that the Company will be permitted to draw
upon its existing credit lines as it may deem appropriate, (ii) assume,
guarantee, endorse or otherwise become liable or responsible (directly or
indirectly, contingent or otherwise) for the obligations of any other
person, or (iii) make any loans, advances or capital contributions to, or
investments in, any other person (other than to wholly owned Subsidiaries
or customary loans or advances to employees in the ordinary course of
business consistent with past practice).
Employee Compensation. The Company will not grant any increase in the
salary or other compensation of its employees, or grant any bonus to any
employee or enter into any employment agreement or make any loan to or
enter into any material transaction of any other nature with any employee
of the Company or any Subsidiary, except in the ordinary course of business
consistent with past practices, or as contemplated by the Merger Agreement.
Company Options. The Company will not, except as contemplated by the
Merger Agreement or as may be required by applicable law or regulation or,
in the case of employees who are not executive officers of the Company, in
the ordinary course of business consistent with past practices (i) adopt,
increase, accelerate the vesting of or payment of any amounts in respect
of, or otherwise amend, in any respect, any collective bargaining, bonus,
profit sharing, incentive or other compensation, stock option, stock
purchase or restricted stock, insurance, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust,
fund, plan or arrangement for the benefit or welfare of any directors,
officers or employees, or (ii) enter into any employment or severance
agreement with, or grant any severance or termination pay, to any officer
or director of the Company.
Accounting Methods. The Company will not change any of its accounting
methods without providing advance notice to Parent in writing.
Tax Elections. The Company will not make any tax election (other than in
the ordinary course of preparing and filing its tax returns) or settle or
compromise any tax liability or investigation.
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Company Relationships with Suppliers and Customers; Participation in
Meetings. The Company will use its reasonable efforts, to the extent not
prohibited by the Merger Agreement, to maintain its relationships with its
suppliers, customers and employees, and, if and as requested by Parent or
Purchaser, (i) to the extent permitted by applicable law, the Company will
use its reasonable best efforts to make reasonable arrangements for
representatives of Parent or Purchaser to meet with customers and suppliers
of the Company or any Subsidiary, and (ii) the Company will schedule, and
the management of the Company will participate to the extent requested in,
meetings of representatives of Parent or Purchaser with employees of the
Company or any Subsidiary.
Access to Information. Subject to the requirements of any binding
confidentiality agreements with customers and subject to any applicable
limitations imposed by law, the Company will, prior to the Effective Time,
afford Parent reasonable access during regular business hours to its officers,
employees, agents, properties, books, records and work papers, and will
furnish Parent all financial, operating and other information and data as
Parent may reasonably request, provided, that in the event such access or the
furnishing of such information is prohibited or limited due to binding
customer agreements or applicable law, the Company will inform Parent and use
its reasonable best efforts to obtain any necessary consent to allow such
access or to provide such information. Additionally, Parent, Purchaser and the
Company agree that the confidentiality provisions agreed to in the Mutual Non-
Disclosure Agreement, dated as of August 6, 1998, as amended (the "Mutual Non-
Disclosure Agreement"), will remain binding and in full force and effect in
accordance with the terms of such agreement.
Consents and Approvals. Each of the Company, Parent and Purchaser will take
all reasonable actions necessary to comply with all legal requirements which
may be imposed on it with respect to the Merger Agreement, the Stock Option
Agreement, the Common Stock Option and the Transactions and will cooperate
with and furnish information to each other in connection with any such
requirements imposed on any of them or their respective subsidiaries. Subject
to the terms and conditions of the Merger Agreement, the Company, Parent and
Purchaser will use all commercially reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
Transactions, including, without limitation, using all commercially reasonable
efforts to obtain all necessary waivers, consents and approvals. Nothing in
the Merger Agreement will require Parent or Purchaser to agree to make, or to
permit the Company to make, any divestiture of or grant any rights to a
significant asset in order to obtain any waiver, consent or approval.
Shareholder Litigation. The Company will give Parent the opportunity to
participate in the defense and settlement of any shareholder litigation
against the Company or its directors or officers relating to any of the
Transactions and will not enter into any such settlement without Parent's
consent, which consent may not be unreasonably withheld.
Non-Solicitation. Neither the Company nor its officers, directors or
representatives, or any of their respective affiliates will initiate, solicit
or encourage, directly or indirectly, or take any action to facilitate
inquiries or the making of any proposal with respect to or participation in
negotiations concerning any proposal with respect to or participation in
negotiations concerning any merger, consolidation, acquisition of more than
two percent of the capital stock of the Company, a business combination
involving the Company or the purchase of all or a significant portion of the
assets of the Company (an "Alternative Transaction"), except that the Board
may provide information to any third person making a bona fide, written and
unsolicited inquiry concerning an Alternative Transaction that would result in
the payment to the Company shareholders of a higher price per share in cash
than the Offer Price (a "Superior Proposal"), provided that counsel to the
Company has advised the Board in writing that its fiduciary duties require it
to consider the Superior Proposal.
The Merger Agreement provides that the Company will immediately notify
Parent if any proposal, offer, inquiry or other contact is received by, any
information is requested from, or any discussions or negotiations are sought
to be initiated or continued with, the Company by or from any person,
corporation, entity or "group" (as defined in Section 13(d) of the Exchange
Act) other than Parent and its affiliates, representatives and agents (each, a
"Third Party") in connection with any Alternative Transaction, and will, in
any such notice to Parent,
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indicate the identity of the Third Party and the terms and conditions of any
proposals or offers or the nature of any inquiries or contacts, and thereafter
will keep Parent informed, on a current basis, of the status and terms of any
such proposals or offers and the status of any such discussions or
negotiations. The Company will provide Parent with not less than two Business
Days' (defined as a weekday other than a public holiday in the U.S. or
Germany) notice prior to executing any definitive agreement with respect to
any Alternative Transaction or any public announcement relating to any
Alternative Transaction. Prior to furnishing any non-public information to, or
entering into negotiations with, any Third Party, the Company will obtain an
executed confidentiality agreement from such Third Party on terms
substantially the same as, or no less favorable to the Company in any material
respect than, those contained in the Mutual Non-Disclosure Agreement. The
Company will not release any Third Party from, or waive any provision of, any
such confidentiality agreement or any other confidentiality or standstill
agreement to which the Company is a party.
Loan from Parent to Company. Subject to the limitations set forth in the
Merger Agreement, in the event that the Merger is not consummated on or before
March 5, 1999, Parent will make available a loan to the Company in the
aggregate principal amount of $3,000,000 (the "Loan"). Interest on the
principal amount will accrue at a floating rate per annum equal to the
internal rate of interest assessed by Parent or its affiliates on
intercorporate loans made to or among subsidiaries of Parent. The principal
amount and accrued interest thereon will be due and payable two years from the
date the Loan is made. See Section 11.
Option to Purchase Shares. Concurrent with the execution of the Merger
Agreement, the Company granted to Parent the Common Stock Option to purchase
an aggregate of 600,000 Shares at an exercise price of $2.00 per Share.
Options to purchase 100,000 Shares will become immediately exercisable if and
when the Loan is made by Parent to the Company. The Common Stock Option will
become exercisable as to the remaining 500,000 Shares if and when a default
occurs under the Loan. The Common Stock Option will expire (i) on March 5,
1999, if the Loan is not made, or (ii) on the first anniversary of the
scheduled maturity date of the Loan. See Section 11.
Indemnification. The Merger Agreement provides that, subject to certain
limitations set forth therein, and subject to applicable law, for a period of
not less than four years from and after the Effective Time, the Surviving
Corporation (or any successor) will indemnify, defend and hold harmless the
present and former directors, officers, employees and agents of the Company
and its Subsidiaries against all losses, claims, damages, liabilities, fees,
costs and expenses (including reasonable fees and disbursements of counsel
approved by the Surviving Corporation in advance of disposition of judgments,
fines, losses, claims, liabilities and amounts paid in settlement (provided
that any such settlement is effected with the written consent of Parent or the
Surviving Corporation)) based in whole or in part on the fact that such person
is or was such a director, officer, employee or agent and arising out of
actions or omissions occurring at or prior to the Effective Time to the full
extent provided under the Company's Articles of Incorporation, Bylaws and
indemnification agreements as in effect on the date of the Merger Agreement
(including provisions relating to the advancement of expenses incurred in the
defense of any action or suit).
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company as to its corporate organization and
qualification, its Subsidiaries, charter documents, capitalization, authority,
conflicts, consents, filings with the Commission and other governmental
authorities, compliance with applicable laws, required permits, SEC Reports,
financial statements, the absence of certain changes or events concerning its
business, absence of undisclosed liabilities, absence of litigation, employee
benefit matters, employment agreements, labor matters, truth of information
supplied by the Company, title to real property, taxes, environmental matters,
brokers involved in the Transactions, the receipt of the Fairness Opinion from
SoundView, intellectual property, transactions with certain interested
persons, insurance, and the required vote of its shareholders to approve the
Merger Agreement and the Merger.
Parent and Purchaser also have made certain representations and warranties
with respect to corporate organization and qualification, authority relative
to the Merger Agreement and the Transactions, non-contravention, governmental
approvals, brokers, financing, and information supplied to the Company.
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Conditions to the Merger. Pursuant to the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the following
conditions: (i) if required by the CGCL, the Merger and the provisions
relating to the Merger in the Merger Agreement will have been approved and
adopted by the requisite vote of the shareholders of the Company; and (ii) no
foreign or domestic, federal, state or local, statute, law, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction, directive,
permit, judgment, decree or other requirement of any governmental entity will
prohibit consummation of the Merger.
The Merger Agreement provides that the obligation of Parent and Purchaser to
effect the Merger is subject to the following conditions: (i)(a) any waiting
period under the HSR Act applicable to the purchase of Shares pursuant to the
Merger shall have expired or been terminated; (b) all requirements of any
applicable foreign competition and antitrust statutes and regulations to the
consummation of the Merger shall have been satisfied, including approval by
the German Federal Cartel Office (the "FCO") pursuant to the German Law
Against Restraints of Competition (the "AARC"); (ii) no preliminary or
permanent injunction or other order, decree or ruling issued by any court of
competent jurisdiction nor any statute, rule, regulation or order entered,
promulgated or enacted by any governmental, regulatory or administrative
agency or authority is in effect that would restrain the effective operation
of the business of the Company and its Subsidiaries from and after the
Effective Time, and no proceeding challenging the Merger Agreement, the Common
Stock Option, the Stock Option Agreement or the Transactions or seeking to
prohibit, alter, prevent or materially delay the Merger will be pending before
as Governmental Authority; (iii) the Company will not have breached or failed
to perform in any material respect any of it covenants or agreements under the
Merger Agreement; (iv) Purchaser will have paid for the Shares pursuant to the
Offer; (v) Purchaser and Parent will have received an opinion from counsel to
the Company in a form reasonably satisfactory to Parent; and (vi) all
consents, waivers or notices required to be obtained or made by the Company,
for the authorization, execution, delivery and performance of the Merger
Agreement and the consummation of the Transactions, will be obtained and made
by the Company.
Termination and Abandonment. The Merger Agreement, the Common Stock Option,
the Stock Option Agreement and the Voting Agreements may be terminated and the
Merger abandoned at any time prior to the Effective Time: (i) by mutual
written consent of Parent and the Company; (ii) by either Parent or the
Company, if (a) any Governmental Authority will have issued an order, decree
or ruling or taken any other action, in each case permanently restraining,
enjoining or otherwise prohibiting all or any material part of the
Transactions and such order, decree, ruling or other action will have become
final and non-appealable, or (b) the Merger will not have been completed by
June 30, 1999; (iii) by Parent, if (a) the Offer is terminated or expires
without the purchase of any Shares, unless such termination or expiration has
been caused by the failure of Parent or Purchaser to perform in any material
respect its obligations under the Merger Agreement, (b) due to an occurrence
that, if occurring after the commencement of the Offer, could reasonably be
expected to result in a failure to satisfy any of the conditions set forth in
Section 14, (c) Parent and Purchaser will have failed to commence the Offer on
or prior to the fifth business day following the date of the initial public
announcement of the Offer, (d) the Board will have resolved to enter into a
letter of intent, agreement in principle or similar agreement, including any
definitive written agreement, with respect to an Alternative Transaction with
a Third Party, (e) a Third Party has commenced a tender offer, proxy
solicitation or exchange offer for any shares of capital stock of the Company,
(f) the Board will have withdrawn, or modified or amended in a manner adverse
to Parent or Purchaser, its approval or recommendation of the Offer and the
Merger, or approved, recommended or endorsed any proposal for an Alternative
Transaction, (g) SoundView will have withdrawn its Fairness Opinion, or (h)
the required approval of the shareholders of the Company will not have been
obtained by reason of a failure to obtain the required vote at a duly held
meeting of shareholders or at any adjournment thereof; (iv) by either Parent
or Purchaser, on the one hand, or the Company, on the other hand, if the other
party will have failed to comply in any material respect with any covenant or
obligation contained in the Merger Agreement to be complied with or performed
by such Party at or prior to such date of termination; (v) by the Company, if,
prior to acceptance for payment of Shares by Purchaser under the Offer, the
Company will have done each of the following: (a) entered into a definitive
written agreement with respect to an Alternative Transaction with a Third
Party; (b) determined, after receipt of written advice from legal counsel to
the Board, that the failure to take such action as described in the preceding
clause (v)(a) would cause the Board to violate its fiduciary duties
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to the Company's shareholders under applicable law; and (c) given notice to
Parent and Purchaser of its intent to terminate the Merger Agreement and of
the terms and conditions of the Alternative Transaction, such notice to be
given at least five Business Days prior to the date of termination of the
Merger Agreement.
In the event of the termination of the Merger Agreement, the Common Stock
Option, the Stock Option Agreement or the Voting Agreements and the
abandonment of the Merger all strictly pursuant to the preceding paragraph,
such agreements will thereafter become void and have no effect, and no party
will have any liability to any other party or its shareholders or directors or
officers in respect thereof, except that nothing in the Merger Agreement will
relieve any party from liability for any willful breach of the Merger
Agreement. If Parent terminates the Merger Agreement, the Stock Option
Agreement or the Voting Agreements pursuant to the previous paragraph, or if
the Company terminates the Merger Agreement pursuant to the previous
paragraph, then the Company will pay to Parent, on the second business day
following any such termination, an amount equal to $1,023,000.
Costs and Expenses. All costs and expenses incurred in connection with the
Merger Agreement and the Transactions will be paid by the party incurring such
costs and expenses, except that Parent and the Company will each pay one half
of the costs incurred in printing and distributing the Proxy Statement, if
any.
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THE STOCK OPTION AGREEMENT
The following summary of the Stock Option Agreement is qualified in its
entirety by reference to the Stock Option Agreement, a copy of which is filed
as Exhibit (c)(2) to the Schedule 14D-1 and is incorporated by reference in
this Offer to Purchase. The Company has granted Purchaser the right to
purchase the Option Shares so that in the event at least 80%, but less than
90%, of the Shares are tendered to Purchaser in the Offer, Purchaser will be
able to buy additional shares so that following such purchase Purchaser will
hold 90% of the Shares then outstanding. Purchaser then will be able to effect
the Merger without the Special Meeting.
Grant of Stock Option. Pursuant to the Stock Option Agreement, the Company
granted to Purchaser the Stock Option to purchase the Option Shares at $5.50
per Share, subject to the terms and conditions set forth in the Stock Option
Agreement; provided, however, that the Stock Option will not be exercisable if
(i) less than 80% of the Shares then outstanding has been tendered upon the
Expiration Date, and (ii) the number of Shares subject thereto exceeds the
number of authorized Shares available for issuance.
Exercise of Stock Option. The Stock Option Agreement provides that, subject
to the conditions set forth in the Stock Option Agreement and to any
additional requirements of law, the Stock Option may be exercised by
Purchaser, in whole but not in part, at any time or from time to time after
the occurrence of an Exercise Event (as defined below) and prior to the
Termination Date (as defined below). For the purpose of the Stock Option
Agreement, an "Exercise Event" would occur if at least 80% of the Shares then
outstanding have been tendered upon the Expiration Date, and the "Termination
Date" would occur upon the first to occur of any of the following: (i) the
Effective Time; (ii) the date which is 10 business days after the occurrence
of an Exercise Event (unless prior thereto the Stock Option has been
exercised); or (iii) the termination of the Merger Agreement.
Conditions to Closing. The Stock Option Agreement provides that the
obligation of the Company to deliver Option Shares upon any exercise of the
Stock Option is subject to the following conditions: (i) such delivery would
not in any material respect violate, or otherwise cause the material violation
of, Rule 4460(i)(1) of the National Association of Securities Dealers Manual
("Rule 4460") or any material applicable law, including, without limitation,
the HSR Act, applicable thereto; (ii) no preliminary or permanent injunction
or other final, nonappealable judgment by a court of competent jurisdiction
preventing or prohibiting such exercise of such Stock Option or the delivery
of the Option Shares; and (iii) the Company has available from its authorized
Shares such number of Shares as is sufficient to issue the Option Shares;
provided, however, that the Company will have fully complied with its
obligations under Rule 4460.
Representations and Warranties. The Stock Option Agreement contains various
representations and warranties of the parties thereto, including
representations by the Company as to the Company's corporate organization and
authority relative to the Stock Option Agreement, the Company's authority to
issue the Option Shares and the absence of any conflicts and the obtaining of
all applicable filings and consents.
Termination. The Stock Option Agreement, other than certain obligations of
the parties specified in the Stock Option Agreement, will terminate on the
Termination Date.
THE VOTING AGREEMENTS
The following summary of the Voting Agreements (as defined below) is
qualified in its entirety by reference to the Voting Agreements, the text of
each of which is filed as Exhibit (c)(3) to the Schedule 14D-1 and is
incorporated by reference in this Offer to Purchase.
Agreement to Tender Shares and Grant of Irrevocable Proxy.
Voting Agreements with Specified Shareholders. Concurrently with or prior to
the execution of the Merger Agreement, Dr. Gat, Chairman of the Board and
Chief Executive Officer of the Company, Anita Gat, Dr. Gat's spouse and Vice
President of Administration, Director of Corporate Communications and
Secretary of the
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Company, Nippon Typewriter Company Ltd., Clal Electronics and Canon Sales Co.,
Inc. (collectively, the "Specified Shareholders"), which collectively then
held approximately 2,293,071 Shares or 37% of the Shares outstanding as of
January 15, 1999, each entered into a voting agreement (the "Specified Voting
Agreements") with Parent pursuant to which each such shareholder has agreed to
tender pursuant to the Offer the Shares held by such shareholder, and granted
an irrevocable proxy to Parent to vote at any meeting of the shareholders of
the Company all Shares owned by such shareholder (i) in favor of the Merger,
and (ii) against any action or agreement which would impede, interfere with or
prevent the Merger, including any other extraordinary corporate transaction,
such as a merger, reorganization or liquidation involving the Company and a
third party or any other proposal of a third party to acquire the Company.
Transfer of Shares. Pursuant to the Specified Voting Agreements, the
Specified Shareholders agreed not to (i) transfer, or consent to any transfer
of, any or all of the Shares or any interest therein held by them, (ii) enter
into any contract, option or other agreement or understanding with respect to
any transfer of any or all of the Shares or any interest therein held by them,
(iii) grant any proxy, power-of-attorney or other authorization or consent in
or with respect to the Shares held by them, or (iv) take any other action that
would in any way restrict, limit or interfere with the performance of their
obligations under the Specified Voting Agreements. Additionally, in the event
of any stock split, stock dividend, merger, reorganization, recapitalization
or other change in the capital structure of the Company affecting the
outstanding Shares, or the acquisition of additional Shares or other
securities or rights of the Company by any Specified Shareholder, the number
of Shares subject to the Specified Voting Agreements will be adjusted
appropriately, and the Specified Voting Agreements and the obligations
thereunder will attach to any additional Shares or other securities or rights
of the Company issued to or acquired by the Specified Shareholders.
Representations and Warranties. The Specified Voting Agreements contain
various representations and warranties of the parties thereto, including
representations by each Specified Shareholder as to each Specified
Shareholder's record and beneficial ownership of the Shares held by such
shareholder, due corporate organization and authority (to the extent the
Specified Shareholder is a corporate entity) to enter into the Specified
Voting Agreements, due authorization to enter into and the enforceability of
the Specified Voting Agreements, and the absence of conflicts and encumbrances
on the Shares held by them.
Covenants. The Specified Voting Agreements provide that (i) from and after
the date of the Specified Voting Agreements to the Effective Time, each
Specified Shareholder will not, and will not permit the Company to, make any
elections, or change any existing elections, with respect to taxes, without
the prior written consent of Parent, and (ii) from and after the date that
Purchaser will have purchased and paid for all of the Shares of such Specified
Shareholder, such Specified Shareholder will make available to Parent any and
all records and other materials in such Specified Shareholder's possession or
control that relate to any of the Company's filings or returns relating to
taxes affecting the Company, or any other records relating to taxes of the
Company or for which the Company may be responsible.
Termination. The Specified Voting Agreements, and all rights and obligations
of the parties thereunder, will terminate immediately upon the earlier of (i)
the date upon which the Merger Agreement is terminated in accordance with its
terms, or (ii) the date that Purchaser will have purchased and paid for all of
the Shares of such Specified Shareholder; provided, however, that the
covenants set forth in the Specified Voting Agreements will survive without
limitation. Additionally, the irrevocable proxy given pursuant to each
Specified Voting Agreement will be automatically revoked and be of no further
force or effect, without further action on the part of any party hereto,
immediately upon the termination of such Specified Voting Agreement.
Voting Agreement with Poalim.
Immediately prior to the execution of the Merger Agreement, Poalim
Investments Ltd. ("Poalim"), which then held approximately 559,228 Shares,
delivered a letter to Parent (together with the Specified Voting Agreements,
the "Voting Agreements") pursuant to which Poalim agreed to tender 520,000 of
its Shares in the Offer or 8% of the Shares outstanding as of January 15,
1999. Additionally, Poalim has represented to Parent the number of Shares
Poalim beneficially owns and holds of record and has agreed that it will not,
at any time prior
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to June 30, 1999, transfer or consent to transfer any of such Shares to any
person, enter into any contract, option or agreement with respect to such
Shares it owns or take any action that would in any way restrict, limit or
interfere with the tendering of such Shares into the Offer. Poalim also has
granted its proxy (which is irrevocable prior to June 30, 1999) to Dr. Gat to
vote 520,000 of Poalim's Shares in favor of the Merger and against any action
or agreement which would impede, interfere with or prevent the Merger.
11. Purpose of the Offer; Plans for the Company after the Offer and the
Merger.
Purpose of the Offer. The purpose of the Offer and the Merger is for Parent
to acquire control of, and the entire equity interest in, the Company. Upon
consummation of the Merger, the Company will become a direct wholly owned
subsidiary of Parent. The Offer is being made pursuant to the Merger
Agreement.
Plans for Merger Consummation. Under the CGCL, the approval of the Board and
the affirmative vote of the holders of a majority of the outstanding Shares is
required to approve the Merger Agreement. The Board has unanimously approved
the Merger Agreement, and, unless the Merger is consummated pursuant to the
short-form merger provisions under the CGCL described below, the only
remaining required corporate action of the Company is the approval of the
Merger Agreement by the affirmative vote of the holders of a majority of the
Shares. Accordingly, if the Minimum Condition is satisfied, Purchaser will
have sufficient voting power to cause the approval of the Merger and adoption
of the Merger Agreement without the affirmative vote of any other shareholder
of the Company. Certain shareholders of the Company, holding in the aggregate
approximately 45% of the Shares as of January 15, 1999, have each entered into
a voting agreement with Parent pursuant to which each has agreed to tender
their Shares pursuant to the Offer, and to vote, and has granted irrevocable
proxies to Parent or Dr. Gat (in the case of one such shareholder) to vote,
all Shares owned by such shareholder in favor of the Merger.
In the Merger Agreement, the Company has agreed to take all action necessary
to convene a meeting of its shareholders as soon as practicable after the
consummation of the Offer for the purpose of considering and taking action on
the Merger Agreement and the transactions contemplated thereby, if such action
is required by the CGCL. Parent and Purchaser have agreed that all Shares
owned by them and their subsidiaries will be voted in favor of the Merger
Agreement and the transactions contemplated thereby.
If Purchaser accepts for payment such number of Shares as shall satisfy the
Minimum Condition or the Revised Minimum Number, Purchaser will be entitled to
designate representatives to serve on the Board in proportion to Purchaser's
ownership of Shares following such purchase. See Section 10. In the event the
Minimum Condition is satisfied, Purchaser expects that such representation
would permit Purchaser to exert substantial influence over the Company's
conduct of its business operations.
Under the CGCL, if Purchaser acquires, pursuant to the Offer, the Stock
Option or otherwise, at least 90% of the Shares then outstanding, Purchaser
will be able to effect the Merger without a vote of the Company's
shareholders. In such event, Parent, Purchaser and the Company have agreed in
the Merger Agreement to take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after such acquisition,
without a meeting of the Company's shareholders pursuant to the short-form
merger provisions under the CGCL.
In the event that more than 50% of the Shares then outstanding are tendered
pursuant to the Offer and not withdrawn, but less than 90% of the Shares then
outstanding are acquired by Purchaser pursuant to the Offer and the Stock
Option, Purchaser will waive the Minimum Condition and amend the Offer to
reduce the number of Shares subject to the Offer to the Revised Minimum Number
of Shares and, if a greater number of Shares are tendered into the Offer and
not withdrawn, purchase, on a pro rata basis, the Revised Minimum Number of
Shares (it being understood that Purchaser shall not in any event be required
to accept for payment, or pay for, any Shares if less than the Revised Minimum
Number of Shares are tendered pursuant to the Offer and not withdrawn at the
expiration of the Offer).
Loan to the Company. Subject to the limitations set forth in the Merger
Agreement, in the event that the Merger is not consummated on or before March
5, 1999, Parent will make the Loan to the Company in the aggregate principal
sum of $3,000,000 (the "Principal"). Interest on the Principal will accrue at
a floating rate
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per annum equal to the internal rate of interest assessed by Parent or its
affiliates on intercorporate loans made to or among subsidiaries of Parent
(the "Interest"). All Principal and accrued Interest will become due and
payable two years from the date the Loan is made (the "Maturity Date"). Parent
will not, however, be obligated to make the Loan if (i) the Offer has not
expired by its terms or, if the Offer has expired, the Shares tendered in the
Offer are insufficient to satisfy the Minimum Condition or the Revised Minimum
Number, (ii) any shareholder of the Company defaults under the Voting
Agreements, (iii) the Merger Agreement is terminated by Parent because the
Company has failed to comply in any material respect with any covenant or
obligation of the Merger Agreement, (iv) if any representation or warranty
made by the Company under the Merger Agreement, the Common Stock Option or the
Stock Option Agreement is untrue at the time such representation or warranty
was made or is untrue on the date the Loan is made and such breach is caused
by an event that would constitute a Material Adverse Effect under the Merger
Agreement, (v) there is any preliminary or permanent injunction or other
order, decree or ruling issued by any court of competent jurisdiction or any
statute, rule, regulation or order entered, promulgated or enacted by any
governmental, regulatory or administrative agency or authority in effect that
would impact the effective operation of the business of the Company resulting
in a Material Adverse Effect from and after the Effective Time, (vi) any
waiting period under the HSR Act applicable to the purchase of Shares pursuant
to the Offer has not expired or terminated and the satisfaction of any
applicable foreign competition and antitrust statutes and regulations
(including approval by the FCO pursuant to the AARC) has not been obtained,
(vii) there is pending any proceeding or litigation, initiated prior to or
after the date of the Merger Agreement, challenging the Merger or seeking to
prohibit, alter, prevent or materially delay the Merger, (viii) there is
pending or threatened against the Company any claim, action, suit, proceeding
or investigation which would or could reasonably be expected to have a
Material Adverse Effect, or (ix) the Company has terminated the Merger
Agreement prior to acceptance for payment of the Shares by Purchaser under the
Offer, and the Company has done each of the following: (a) entered into a
definitive written agreement with respect to an Alternative Transaction with a
third party; (b) determined, after receipt of written advice from legal
counsel to the Board that the failure to take such action as described in the
preceding clause (a) would cause the Board to violate its fiduciary duties to
the Company's shareholders under applicable law; and (c) given a notice to
Parent and Purchaser of its intent to terminate the Merger Agreement and of
the terms and conditions of the Alternative Transaction, and such notice was
given at least five Business Days prior to the date of termination of the
Merger Agreement.
Company Stock Option
The Company granted to Parent options (the "Options") to purchase an
aggregate of 600,000 Shares at an exercise price of $2.00 per share evidenced
by a Common Stock Option, a form of which is filed as Exhibit (c)(4) to the
Schedule 14D-1 and is incorporated by reference in this Offer to Purchase.
Options to purchase 100,000 Shares will be immediately exercisable if and when
the Loan is made by Parent to the Company. The remaining Options will become
exercisable if and when a default occurs under the Loan. All the Options
expire (i) on March 5, 1999, if the Loan is not made, or (ii) on the first
anniversary of the Maturity Date. The Company will adjust the number of Shares
subject to the Options to maintain the percentage of Shares subject to the
Options at the date of the Merger Agreement if the Company causes or effects
(i) a subdivision or combination on its capital stock, (ii) a stock
distribution or dividend on its capital stock, or (iii) a recapitalization or
reclassification of its capital stock.
AGI Option
Concurrent with the signing of the Merger Agreement, the Company and Parent
agreed to an option (the "AGI Option"). If (a) Parent shall purchase all of
the ordinary and preferred shares of the Israeli Affiliate that are not owned
by the Company, (b) the closing of the Merger does not occur and (c) the
Merger Agreement is terminated (the date on which (a), (b) and (c) will occur,
the "Effective Date of the AGI Option"), Parent will have the right to
purchase, and the Company will be required to sell, all but not less than all
of the ordinary shares (as such number of shares may be increased or decreased
as described below) of the Israeli Affiliate held by the Company (the "AGI
Shares") for the aggregate purchase price of $5,404,770 (the "AGI Purchase
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Price"), and the Company will have the right to sell to Parent, and Parent
will be required to purchase, all but not less than all of the AGI Shares at
the AGI Purchase Price (in either case, the "Sale"), on the terms and subject
to the conditions set forth therein. If the Israeli Affiliate causes the AGI
Shares to be subdivided or combined into a greater or smaller number of
shares, then the term "AGI Shares" herein shall refer to such subdivided or
combined shares and the AGI Purchase Price shall remain the same.
If either Parent or the Company elects to effect a Sale, written notice must
be sent to a trustee on or prior to the date which is 30 days following the
Effective Date of the AGI Option (the "Expiration Date of the AGI Option").
Additionally, the Company will not sell, pledge or otherwise transfer any of
the AGI Shares to any person other than Parent or one of Parent's affiliates
prior to the Expiration Date of the AGI Option, unless Parent shall have given
its prior written consent.
The AGI Option contains various representations and warranties of the
Company, including representations by the Company as to the due authorization
and valid issuance of the ordinary shares of the Israeli Affiliate, the
absence of liens and encumbrances on the AGI Shares, the Company's authority
to issue the AGI Option, the enforceability of the AGI Option and the absence
of any conflicts with the Company's corporate charter documents, laws or other
agreements.
Dissenters' Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, in connection with the Merger, holders of
Shares, by complying with the provisions of Chapter 13 of the CGCL, may have
certain rights to dissent and to require the Company to purchase their Shares
for cash at fair market value. In general, holders of Shares will be entitled
to exercise "dissenters' rights" under the CGCL only if the holders of five
percent or more of the outstanding Shares properly file demands for payment or
if the Shares held by such holders are subject to any restriction on transfer
imposed by the Company or any law or regulation ("Restricted Shares").
Accordingly, any holder of Restricted Shares and, if the holders of five
percent or more of the Shares properly file demands for payment, all other
such holders who fully comply with all other applicable provisions of Chapter
13 of the CGCL will be entitled to require the Company to purchase their
Shares for cash at their fair market value if the Merger is consummated. In
addition, if immediately prior to the Effective Time, the Shares are not
listed on a national securities exchange or on the list of OTC margin stocks
issued by the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), holders of Shares may likewise exercise their dissenters'
rights as to any or all of their Shares entitled to such rights. If the
statutory procedures under the CGCL relating to dissenters' rights were
complied with, such rights could lead to a judicial determination of the fair
market value of the Shares. The "fair market value" would be determined as of
the day before the first announcement of the terms of the proposed Merger,
excluding any appreciation or depreciation in consequence of the Merger. The
value so determined could be more or less than the Merger Consideration.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act,
which is applicable to certain "going private" transactions and which may
under certain circumstances be applicable to the Merger, or another business
combination following the purchase of Shares pursuant to the Offer, in which
Purchaser seeks to acquire the remaining Shares not held by it.
Purchaser believes, however, that Rule 13e-3 will not be applicable to the
Merger. Rule 13e-3 would require, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
shareholders in such transaction be filed with the Commission and disclosed to
shareholders prior to consummation of the transaction.
Plans for the Company. It is expected that, initially following the Merger,
the business and operations of the Company will, except as set forth in this
Offer to Purchase, be continued by the Company substantially as they are
currently being conducted. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will take such actions as it
deems appropriate under the circumstances then existing. Parent intends to
seek additional information about the Company during this period. Thereafter,
Parent intends to review such information as part
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of a comprehensive review of the Company's business, operations,
capitalization and management with a view to optimizing the Company's
potential in conjunction with Parent's businesses. It is expected that the
business and operations of the Company will form an important part of Parent's
future business plans.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its Subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its Subsidiaries or any
material change in the Company's capitalization or dividend policy or any
other material changes in the Company's corporate structure or business, or
the composition of the Board or the Company's management.
12. Dividends and Distributions.
The Merger Agreement provides that between the date of the Merger Agreement
and the Effective Time, the Company will not, without the prior written
consent of Parent, (i) split, combine or reclassify any issued and outstanding
shares of its capital stock, or declare, set aside or pay any dividend or
other distribution (payable in cash, stock, property or otherwise) with
respect to such shares, (ii) redeem, purchase, acquire or offer to acquire (or
permit any Subsidiary to redeem, purchase, acquire or offer to acquire) any
shares of its capital stock or (iii) issue, sell, pledge, accelerate, modify
the terms of or dispose of, or agree to issue, sell, pledge, accelerate,
modify the terms of or dispose of, any additional shares of, or securities
convertible or exchangeable for, or any options, warrants, calls, commitments
or rights of any kind to acquire any shares of, its capital stock of any class
or other property or assets, provided, that the Company (a) may issue Shares
upon the exercise of options outstanding on the date of the Merger Agreement,
(b) may grant options under the Company's 1993 Employee Stock Option Plan to
any new employee in amounts consistent with past practices and (c) may enter
into certain agreements or arrangements contemplated by the Merger Agreement.
See Section 10--The Merger Agreement.
13. Effect of the Offer on the Market for the Shares, Exchange Act
Registration and Margin Regulations.
Market for Shares. The purchase of the Shares by Purchaser pursuant to the
Offer will reduce the number of the Shares that might otherwise trade publicly
and will reduce the number of holders of the Shares, which could adversely
affect the liquidity and market value of the remaining Shares held by the
public.
Depending upon the number of the Shares purchased pursuant to the Offer and
the Stock Option, the Shares may no longer meet the requirements of NASDAQ for
continued listing and may be delisted from NASDAQ. Parent intends to seek
delisting of the Shares with NASDAQ following consummation of the Merger.
Stock Quotation. According to published guidelines of NASDAQ, the Shares
would no longer be quoted on NASDAQ if, among other things, the number of
publicly held Shares (excluding the Shares held directly or indirectly by
officers, directors and any person who is a beneficial owner of more than 10%
of the Shares) were less than 200,000, the aggregate market value of publicly
held Shares were less than $1,000,000 or there were fewer than 400 holders of
the Shares or 300 holders in round lots. If these standards were not met,
quotations might continue to be published in the over-the-counter "additional
list" or one of the "local lists" unless, as set forth in published guidelines
of NASDAQ, the number of publicly held Shares was less than 100,000 or there
were fewer than 300 holders in total. According to information furnished to
Purchaser by the Company, as of the close of business on January 15, 1999,
there were 172 holders of record of the Shares not including beneficial
holders of the Shares held in street name, and there were 6,202,993 Shares
outstanding.
If the Shares were to cease to be quoted on NASDAQ, the market for the
Shares could therefor be adversely affected. It is possible that the Shares
would be traded or quoted on other securities exchanges or in the over-the-
counter market, and that price quotations would be reported by such exchanges,
or other sources. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon the number of
shareholders and/or the aggregate market value of the Shares remaining at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors.
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Margin Regulations. The Shares are presently "margin securities," as such
term is defined under the regulations of the Federal Reserve Board, which has
the effect, among other things, of allowing brokers to extend credit on the
collateral of such securities. Depending upon factors similar to those
described above regarding listing and market quotations, following the Offer
it is possible that the Shares might no longer constitute "margin securities"
for the purposes of the Federal Reserve Board's margin regulations in which
event the Shares would be ineligible as collateral for margin loans made by
brokers.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated by the Company upon
application to the Commission if the Shares are not listed on a national
securities exchange and if there are fewer than 300 record holders.
Termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company
to its shareholders and to the Commission and would make certain provisions of
the Exchange Act, such as the short-swing profit recovery provisions of
Section 16(b) and the requirement of furnishing a proxy statement in
connection with shareholders' meetings pursuant to Section 14(a) and the
related requirement of furnishing an annual report to shareholders, no longer
applicable with respect to the Shares. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 under the
Securities Act of 1933, as amended, may be impaired or eliminated. If
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer be eligible for quotation on NASDAQ or for continued inclusion
on the Federal Reserve Board's list of "margin securities." Purchaser intends
to seek to cause the Company to apply for termination of registration of the
Shares as soon as possible after consummation of the Merger if the
requirements for termination of registration are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of
the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
14. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer, and in addition to (and
not in limitation of Purchaser's rights to extend and amend the Offer at any
time in its sole discretion, and subject to the provisions of the Merger
Agreement, Purchaser will not be required to accept for payment or pay for any
of the Shares, and may delay the acceptance for payment of or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act, the payment for, any of the tendered Shares, and may
terminate or amend the Offer as to any of the Shares not then paid for, if:
(1) at or prior to the expiration date of the Offer, the number of the
Shares validly tendered and not withdrawn, together with any of the Shares
then owned by Parent or Purchaser, shall not satisfy the Minimum Condition
or the Revised Minimum Number; or
(2) at or prior to the expiration date of the Offer, (i) any waiting
period under the HSR Act applicable to the purchase of the Shares pursuant
to the Offer shall not have expired or been terminated or (ii) all
requirements of any applicable foreign competition and antitrust statutes
and regulations to the consummation of the Offer shall not have been
satisfied, including approval by the FCO pursuant to the AARC; or
(3) immediately prior to the expiration date of the Offer, the
Transaction Expenses (as defined in the Merger Agreement) shall be in
excess of $250,000, as calculated by a schedule delivered by the Company to
Purchaser (i) identifying and disclosing any and all actual Transaction
Expenses as of the date of such schedule and (ii) identifying and providing
reasonable estimates of any and all other Transaction Expenses following
the date of such schedule; or
(4) at any time prior to acceptance for payment of or payment for the
Shares, any of the following events or conditions occurs or exists:
(a) any action or proceeding by any Governmental Authority, whether
or not having the force of law is instituted or is pending: (i)
challenging or seeking to make illegal, to delay or otherwise directly
or indirectly to restrain or prohibit the making of the Offer, the
acceptance for payment of or payment
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for some of or all the Shares by Purchaser, Parent or any affiliate of
Parent or the consummation by Purchaser or Parent of any other
Transaction, or seeking to obtain damages in connection with any
Transaction; (ii) seeking to restrain or prohibit Parent's or
Purchaser's full rights of ownership or operation (or that of Parent's
subsidiaries or affiliates) of any material portion of the business or
assets of the Company, or to compel Parent or any of its subsidiaries
or affiliates to dispose of or hold separate all or any portion of the
business or assets of the Company or of Parent or any of its
subsidiaries; (iii) seeking to impose material limitations on the
ability of Parent or any of its subsidiaries or affiliates effectively
to exercise full rights of ownership of the Shares, including, without
limitation, the right to vote any of the Shares acquired or owned by
Parent or any of its subsidiaries or affiliates on all matters properly
presented to the Company's shareholders; (iv) seeking to require
divestiture by Parent or any of its subsidiaries of any Shares; or (v)
that otherwise, in the judgment of Parent or Purchaser may materially
adversely affect the Company, any of the Subsidiaries, or Parent or any
of its subsidiaries; or
(b) any action is taken or any statute, rule, regulation, judgment,
administrative interpretation, injunction, order or decree is proposed,
enacted, enforced, promulgated, issued or deemed applicable to Parent
or Purchaser or any subsidiary or affiliate of Parent, the Company or
any of its Subsidiaries or the Offer, the acceptance for payment of or
payment for any of the Shares, the Merger or any other Transactions by
any Governmental Authority (other than the application of the routine
waiting period provisions of the HSR Act), that directly or indirectly,
result, or is reasonable likely to, directly or indirectly, result in
any of the consequences referred to in paragraph (a) above; or
(c) any event that has had or could reasonably be expected to have a
Material Adverse Effect; or
(d) (i) any general suspension of trading in securities on the New
York Stock Exchange or NASDAQ, (ii) the declaration of any banking
moratorium or any suspension of payments in respect of banks or any
limitation (whether or not mandatory) which is material to the
Transactions on the extension of credit by lending institutions in the
United States or the Federal Republic of Germany, (iii) a commencement
of a war, armed hostilities or other national or international crisis
directly involving the United States or the Federal Republic of Germany
or otherwise having a significant adverse effect on the functioning of
the financial markets in the United States or the Federal Republic of
Germany, (iv) any significant change in the United States or German
currency exchange rates or suspension of the markets therefor (whether
or not mandatory) or the imposition of, or any significant change in,
any currency or exchange control laws in the United States or the
Federal Republic of Germany which change or suspension is material to
the Transactions, or (v) any limitation by any Governmental Authority
that is likely to materially and adversely affect the financing of the
Offer or the Merger; or
(e) any Third Party enters into a definitive agreement or an
agreement in principle with respect to an Alternative Transaction; or
(f) the Board (i) withdraws, or modifies or changes in a manner
adverse to Parent or Purchaser (including by amendment of the Schedule
14D-9) its approval or recommendation of the Offer, the Merger
Agreement or the Merger, (ii) recommends an Alternative Transaction, or
(iii) upon request of the Parent or Purchaser, fails to reaffirm such
approval or recommendation or resolves to do any of the foregoing; or
(g) the Company breaches or fails to perform in any material respect
any of its covenants or agreements under the Merger Agreement, or any
of its representations and warranties set forth in the Merger
Agreement, the Common Stock Option, or the Stock Option Agreement is
not true in any respect when made or at the Effective Time as if made
at and as of such time (other than representations and warranties which
by their terms address matters only as of a certain date, which are
true as of such date), and in either case the effect thereof is
reasonably expected to have a Material Adverse Effect on the Company;
or
(h) the Merger Agreement is terminated in accordance with its terms
or amended in accordance with its terms to provide for such termination
or amendment of the Offer.
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The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted or waived by Purchaser and Parent, regardless of the
circumstances giving rise to any such condition, in whole or in part at any
time and from time to time in their sole discretion. The failure by Parent or
Purchaser at any time to exercise any of the foregoing rights will not be
deemed a waiver of any such right and each such right will be deemed an
ongoing right that may be asserted at any time and from time to time.
15. Certain Legal Matters and Regulatory Approvals.
General. Based upon its examination of publicly available information with
respect to the Company and the review of certain information furnished by the
Company to Parent and discussions of representatives of Parent with
representatives of the Company during Parent's investigation of the Company
(see Section 10), neither Purchaser nor Parent is aware of any license or
other regulatory permit that appears to be material to the business of the
Company and its Subsidiaries, taken as a whole, which might be adversely
affected by the acquisition of the Shares by Purchaser pursuant to the Offer
or, except as set forth below, of any approval or other action by any domestic
(federal or state) or foreign governmental, administrative or regulatory
authority or agency which would be required prior to the acquisition of the
Shares by Purchaser pursuant to the Offer. Should any such approval or other
action be required, it is Purchaser's present intention to seek such approval
or action. Purchaser does not currently intend, however, to delay the purchase
of the Shares tendered pursuant to the Offer pending the outcome of any such
action or the receipt of any such approval (subject to Purchaser's right to
decline to purchase the Shares if any of the conditions in Section 14 shall
have occurred). There can be no assurance that any such approval or other
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to the business of the Company,
Purchaser or Parent or that certain parts of the businesses of the Company,
Purchaser or Parent might not have to be disposed of or held separate or other
substantial conditions complied with in order to obtain such approval or other
action or in the event that such approval was not obtained or such other
action was not taken. Purchaser's obligation under the Offer to accept for
payment and pay for the Shares is subject to certain conditions, including
conditions relating to the legal matters discussed in this Section 15. See
Section 14.
State Takeover Laws. The Company's principal executive offices are located
in, and the Company is incorporated under the laws of, the State of
California, which currently has no takeover statute that would apply to the
Offer or to the Merger. However, there can be no assurances that California
will not, prior to the completion of the Offer, adopt such a statute. Under
the CGCL, the Merger may not be accomplished for cash paid to the Company's
shareholders if Purchaser or Parent owns directly or indirectly more than 50%
but less than 90% of the Shares then outstanding unless either all the
shareholders consent or the Commissioner of Corporations of the State of
California approves, after a hearing, the terms and conditions of the Merger
and the fairness thereof. The purpose of the Offer is to obtain 90% or more of
the Shares (on a fully diluted basis) and to enable Parent and Purchaser to
acquire control of the Company.
In the event that more than 50% of the Shares then outstanding are tendered
pursuant to the Offer and not withdrawn, but less than 90% of the Shares then
outstanding are acquired by Purchaser pursuant to the Offer and the Stock
Option Agreement, Purchaser will waive the Minimum Condition and amend the
Offer to reduce the number of Shares subject to the Offer to the Revised
Minimum Number of the Shares and, if a greater number of the Shares is
tendered into the Offer and not withdrawn, purchase, on a pro rata basis, the
Revised Minimum Number of Shares (it being understood that Purchaser shall not
in any event be required to accept for payment, or pay for, any of the Shares
if less than the Revised Minimum Number of Shares are tendered pursuant to the
Offer and not withdrawn at the expiration of the Offer). In the event that
Purchaser acquires the Revised Minimum Number of Shares, it may have, as a
practical matter the ability to ensure approval of the Merger by the Company's
shareholders.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, shareholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers
of corporations
34
<PAGE>
meeting certain requirements more difficult. However, in 1987, in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court held that the State of Indiana
may, as a matter of corporate law and, in particular, with respect to those
aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining shareholders. The
state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of shareholders in the state and
were incorporated there.
The Company, directly or through Subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. Purchaser does not know whether any of these laws will, by their terms,
apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, Purchaser will take
such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court
proceedings. In the event it is asserted that one or more state takeover laws
are applicable to the Offer or the Merger, and an appropriate court does not
determine that it is inapplicable or invalid as applied to the Offer,
Purchaser might be required to file certain information with, or receive
approvals from, the relevant state authorities. In addition, if enjoined,
Purchaser might be unable to accept for payment any of the Shares tendered
pursuant to the Offer, or be delayed in continuing or consummating the Offer,
and the Merger. In such case, Purchaser may not be obligated to accept for
payment any of the Shares tendered. See Section 14.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and
the FTC and certain waiting period requirements have been satisfied. The
acquisition of the Shares by Purchaser pursuant to the Offer and the Stock
Option Agreement are subject to such requirements. See Section 2.
Pursuant to the HSR Act, Parent and the Company each have filed a Premerger
Notification and Report Form in connection with the purchase of the Shares
pursuant to the Offer and the Stock Option Agreement with the Antitrust
Division and the FTC. Under the provisions of the HSR Act applicable to the
Offer, the purchase of the Shares pursuant to the Offer may not be consummated
until the expiration of a 15-calendar day waiting period following the filing
by Parent. The waiting period under the HSR Act applicable to the purchase of
the Shares pursuant to the Offer will expire at 11:59 p.m., New York City
time, on February 4, 1999, unless such waiting period is terminated earlier by
the FTC and the Antitrust Division or extended by a request from the FTC or
the Antitrust Division for additional information or documentary material
prior to the expiration of the waiting period. If Purchaser acquires 50% or
more of the Shares in the Offer, then no separate waiting period would apply
to the subsequent purchase of the Shares pursuant to the Stock Option.
Pursuant to the HSR Act, Parent and the Company have requested early
termination of the waiting period applicable to the Offer. There can be no
assurance, however, that the 15-day HSR Act waiting period will be terminated
early. If either the FTC or the Antitrust Division were to request additional
information or documentary material from Parent or the Company with respect to
the Offer or the Stock Option Agreement, the waiting period with respect to
the Offer would expire at 11:59 p.m., New York City time, on the tenth
calendar day after the date of substantial compliance by Parent or the Company
with such request. Thereafter, the FTC or the Antitrust Division must obtain a
court order to prevent Purchaser from consummating the acquisition of the
Shares pursuant to the Offer. If the acquisition of the Shares is delayed
pursuant to a request by the FTC or the Antitrust Division for additional
information or documentary material pursuant to the HSR Act, the Offer may,
but need not, be extended and, in any event, the purchase of and payment for
the Shares will be deferred until 10 days after the request is substantially
complied with, unless the extended period expires on or before the date when
the initial 15-day period would otherwise have expired, or unless the waiting
period is sooner terminated by the FTC and the Antitrust Division. Only one
extension of such waiting period pursuant to a request for additional
information is authorized by the HSR Act and the rules promulgated thereunder,
except by court order. Any such extension of the waiting period will not give
rise to any withdrawal rights not otherwise provided for by applicable law.
See Section 4. It is a condition to the Offer that the waiting period
applicable under the HSR Act to the Offer expire or be terminated. See Section
2 and Section 14.
35
<PAGE>
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of the
Shares by Purchaser pursuant to the Offer or the Stock Option Agreement. At
any time before or after the purchase of the Shares pursuant to the Offer or
the Stock Option Agreement by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
the Shares pursuant to the Offer or the Stock Option Agreement or seeking the
divestiture of the Shares purchased by Purchaser or the divestiture of
substantial assets of Parent, the Company or their respective subsidiaries.
Private parties and state attorney generals may also bring legal action under
federal or state antitrust laws under certain circumstances. Based upon an
examination of information available to Parent relating to the businesses in
which Parent, the Company and their respective subsidiaries are engaged,
Parent and Purchaser believe that neither the Offer nor the Stock Option
Agreement will violate the antitrust laws. Nevertheless, there can be no
assurance that a challenge to the Offer or the Stock Option Agreement on
antitrust grounds will not be made or, if such a challenge is made, what the
result would be. See Section 14 for certain conditions to the Offer, including
conditions with respect to litigation.
Foreign Laws. According to publicly available information, the Company also
owns property and conducts business in a number of other countries and
jurisdictions. In connection with the acquisition of the Shares pursuant to
the Offer, the laws of certain foreign countries and jurisdictions may require
the filing of information with, or the obtaining of the approval of,
governmental authorities in such countries and jurisdictions. In addition, the
waiting period prior to consummation of the Offer associated with such filings
or approvals may extend beyond the scheduled Expiration Date.
The governments in such countries and jurisdictions might attempt to impose
additional conditions on the Company's operations conducted in such countries
and jurisdictions as a result of the acquisition of the Shares pursuant to the
Offer or the Merger. There can be no assurance that Purchaser will be able to
cause the Company or its Subsidiaries to satisfy or comply with such laws or
that compliance or noncompliance will not have adverse consequences for the
Company or any Subsidiary after purchase of the Shares pursuant to the Offer
or the Merger.
16. Fees and Expenses.
Except as set forth below, Purchaser will not pay any fees or commissions to
any broker, dealer or other person for soliciting tenders of the Shares
pursuant to the Offer.
Purchaser and Parent have not appointed any dealer manager to represent it
in connection with the Offer.
Purchaser and Parent have retained Corporate Investor Communications, Inc.
to act as the Information Agent, BankBoston, N.A. to act as the Depositary,
and Harris Roja to provide certain financial advisory services in connection
with the Offer. The Information Agent may contact holders of the Shares by
mail, telephone, telecopy, telegraph and personal interview and may request
banks, brokers, dealers and other nominee shareholders to forward materials
relating to the Offer to beneficial owners.
The Information Agent, the Depositary and Harris Roja each will receive
reasonable and customary compensation for their services in connection with
the Offer and will also be reimbursed for certain out-of-pocket expenses and
may be indemnified against certain liabilities and expenses in connection with
the Offer, including certain liabilities under the Federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
Purchaser for customary handling and mailing expenses incurred by them in
forwarding material to their customers.
17. Miscellaneous.
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid
state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, Purchaser will make a good
36
<PAGE>
faith effort to comply with any such state statute. If, after such good faith
effort, Purchaser cannot comply with any such state statute, the Offer will
not be made to (nor will tenders be accepted from or on behalf of) the holders
of the Shares in such state. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of Purchaser by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER, PARENT OR THE COMPANY NOT CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
14D-1, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same
places and in the same manner as set forth in Section 7 (except that they will
not be available at the regional offices of the Commission).
January 22, 1999
37
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
STEAG AND PURCHASER
1. Directors and Executive Officers of STEAG. The following table sets forth
the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years of each
director and executive officer of STEAG. Unless otherwise indicated, the
current business address of each person is STEAG, Ruttenscheider Stra^e 1-3,
45128 Essen, Germany. Unless otherwise indicated, each such person is a
citizen of the Federal Republic of Germany and has held his or her present
position as set forth below for the past five years, and each such person does
not beneficially own Shares. Unless otherwise indicated, each occupation set
forth opposite an individual's name refers to employment with STEAG.
<TABLE>
<CAPTION>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
---------------- -------------------------------------------
<C> <S>
SUPERVISORY BOARD
Prof. Dr. Gerhard Neipp.............. Chairman of the Supervisory Board (since January 1995)
RAG Aktiengesellschaft Chairman of the Management Board, RAG AG (since
Rellinghauser Stra^e 1-11 January 1995)
45128 Essen, Germany Deputy Chairman of the Management Board, Fried-Krupp
AG Hoesch Krupp (December 1992-December 1994)
Fritz Kollorz*....................... Vice-Chairman of the Supervisory Board (since 1989)
Industriegewerkschaft Member of the Executive Board, Industriegewerkschaft
Bergbau, Chemie, Energie Bergbau, Chemie, Energie (since October 1997)
Konigsworther Platz 6 Vice President of Industriegewerkschaft
30167 Hannover, Germany Bergbau und Energie (1991-1997)
Wilhelm Hans Beermann................ Member of the Supervisory Board (since November 1990)
RAG Aktiengesellschaft Deputy Chairman of the Management Board, RAG AG
Rellinghauser Stra^e 1-11 (since January 1997)
45128 Essen, Germany Chairman of the Management Board, Deutsche Steinkohle AG
(since October 1998)
Member of the Management Board, RAG AG (1990-1996)
Gerd Bode*........................... Member of the Supervisory Board (since April 1998)
Powerplant Herne Chairman of the Works Council, Herne Powerplant
Hertener Stra^e 16 (since March 1998)
44693 Herne, Germany Acting Chairman of the Works Council, Herne
Powerplant (since 1987)
Johannes Dreckmann*.................. Member of the Supervisory Board (since February 1996)
Powerplant Walsum Deputy Chairman of the Works Council, Walsum Powerplant
Dr.-Wilhelm-Roelen-Stra^e 129 (since January 1996)
47179 Duisburg, Germany Powerplant foreman (since 1985)
Dr. Hermann Farwick*................. Member of the Supervisory Board (since June 1997)
Powerplants Voerde Director of Voerde Powerplants (since January 1988)
Frankfurter Stra^e 430
46562 Voerde, Germany
Ursel Gelhorn*....................... Member of the Supervisory Board (since May 1992)
ETC, Decentral Heating and Chairman of the Works Council Essen, ETC, Decentral
Administration Heating and Administration (since July 1992)
Ruttenscheider Stra^e 1-3
45128 Essen, Germany
</TABLE>
- --------
* representative of employees
I-1
<PAGE>
<TABLE>
<CAPTION>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
---------------- ------------------------------------------
<C> <S>
Prof. Dr. Harald B. Giesel........... Member of the Supervisory Board (since January 1995)
RAG Vertrieb und Handel AG Chairman of the Management Board, RAG Vertrieb und
Rellinghauser Stra^e 1-11 Handel AG (since January 1997)
45128 Essen, Germany Member of the Management Board, Ruhrkohle AG
(January 1993-December 1996)
Dr. Reiner Hagemann.................. Member of the Supervisory Board (since June 1997)
Allianz Versicherungs-AG Member of the Management Board,
Koniginstra^e 28 Allianz-AG Munich (since 1995)
80802 Munchen, Germany Head of Sales, Allianz Versicherungs-AG, Munich and
Allianz Lebensversicherungs AG, Stuttgart (1991-1994)
Kurt Hay*............................ Member of the Supervisory Board (since August 1995)
Industriegewerkschaft Head of Department Tariff Policy II,
Bergbau, Chemie, Energie Industriegewerkschaft Bergbau, Chemie, Energie
Konigsworther Platz 6 (since October 1997)
30167 Hannover, Germany Head of Department Tariff Policy, Industriegewerkschaft Bergbau
und Energie (1996-September 1997)
Deputy Head of Department Tariff Policy,
Industriegewerkschaft Bergbau und Energie (1993-1995)
Prof. Dr. Werner Hlubek.............. Member of the Supervisory Board (since December 1998)
RWE Energie AG Member of the Management Board, RWE Energie AG
Kruppstra^e 5 (since 1990)
45128 Essen, Germany Member of the Management Board, RWE AG (1990-1997)
Hermann Huef*........................ Member of the Supervisory Board (since November 1997)
Powerplant Lunen Chairman of the Works Council, Lunen Powerplant
Moltkestra ^e 215 (since September 1997)
44536 Lunen, Germany Storeroom worker, Lunen Powerplant (1990-August 1997)
Hans-Diether Imhoff.................. Member of the Supervisory Board (since June 1998)
VEW Energie AG Chairman of the Management Board, VEW Energie AG
Rheinlanddamm 24 (since March 1995)
44139 Dortmund, Germany Deputy Chairman of the Management Board, VEW AG
(since January 1993)
Helmut Mamsch........................ Member of the Supervisory Board (since June 1998)
VEBA AG Member of the Management Board, VEBA AG (since April 1998)
Bennigsenplatz 1 Chairman of the Management Board, Stinnes AG
40474 Dusseldorf, Germany (July 1996-March 1998)
Chairman of the Management Board, Raab Karcher AG
(February 1991-June 1996)
Dr. Johannes Ringel.................. Member of the Supervisory Board (since June 1998)
Westdeutsche Landesbank Member of the Management Board, Westdeutsche Landesbank
Girozentrale Dusseldorf Munster Girozentrale Dusseldorf Munster (since March 1987)
Herzogstra^e 15
40217 Dusseldorf, Germany
</TABLE>
- --------
* representative of employees
I-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
---------------- ------------------------------------------
<C> <S>
Peter Schwarz*...................... Member of the Supervisory Board (since January 1995)
Chairman of the Central Works Council (since March 1998)
Chairman of the Works Council, Voerde Powerplants
(since December 1994)
Member of the Works Council, Voerde Powerplants
(since 1988)
Attorney Friedrich Spath............ Member of the Supervisory Board (since June 1997)
Ruhrgas AG Chairman of the Executive Board, Ruhrgas AG (since 1996)
Huttropstra^e 60 Member of the Executive Board, Ruhrgas AG (through 1996)
45138 Essen, Germany
Hermann Springer*................... Member of the Supervisory Board (since April 1998)
Powerplant Bergkamen Chairman of the Works Council,
Westenhellweg 110 Bergkamen Powerplant (since March 1998)
59192 Bergkamen, Germany Powerplant electrician (1980-March 1998)
Dr. Klaus Trutzschler............... Member of the Supervisory Board (since June 1997)
RAG Aktiengesellschaft Member of the Management Board, RAG AG
Rellinghauser Stra^e 1-11 (since January 1997)
45128 Essen, Germany Head of Corporate Development Department, Ruhrkohle AG
(July 1995-December 1996)
Member of the Management Board, Rutgerswerke AG
(May 1994-June 1995)
Vice-Member of the Board of Management, Rutgerswerke AG
(September 1993-April 1994)
Executive Manager, Rutgerswerke AG (July 1992-August 1993)
Dr. Franz-Josef Wodopia*............ Member of the Supervisory Board (since August 1997)
Industriegewerkschaft Head of Department Energy/Mining, Industriegewerkschaft
Bergbau, Chemie, Energie Bergbau, Chemie, Energie (since October 1997)
Konigsworther Platz 6 Head of Unit Europe/Environment, Industriegewerkschaft
30167 Hannover, Germany Bergbau und Energie (1991-1997)
MANAGEMENT BOARD
Dr. Jochen Melchior................. Chairman of the Management Board (since November 1995)
Member of the Management Board (until October 1995)
Dr. Hans-Georg Betz................. Member of the Management Board (since January 1997)
Member of the Management Board of STEAG Ind. AG
(since October 1992)
Dr. Friedhelm Grubener.............. Member of the Management Board (since November 1994)
General Manager, Finance/Accounting of VEBA Kraftwerke
Ruhr AG (April 1972-October 1994)
Dr. Klaus Rumpff.................... Member of the Management Board (since 1975)
Dr. Heinz Scholtholt................ Member of the Management Board (since October 1991)
</TABLE>
- --------
* representative of employees
I-3
<PAGE>
2. Directors and Executive Officers of Purchaser. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment and employment history for the past five years for
each of the directors and executive officers of Purchaser. Unless otherwise
indicated, the current business address of each person is c/o Purchaser,
Ruttenscheider Stra^e 1-3, 45128 Essen, Germany. Unless otherwise indicated,
each such person has held his or her present position as set forth below for
the past five years, and each such person does not beneficially own Shares.
Each such person is a citizen of the Federal Republic of Germany.
<TABLE>
<C> <S>
EXECUTIVE OFFICERS
Dr. Hans-Georg Betz, President Member of the Management Board of STEAG
(since January 1997)
Member of the Management Board of STEAG
Industrie AG (since October 1992)
Dr. Berthold Lutke-Daldrup, Head of Strategic Planning of STEAG
Chief Financial Officer Industrie AG (since July 1992)
Dr. Peter Lockowandt, Secretary Counsel of STEAG AG (since 1993)
</TABLE>
I-4
<PAGE>
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates evidencing the Shares and any other required
documents should be sent or delivered by each shareholder or his broker,
dealer, commercial bank, trust company or other nominee to the Depositary at
one of its addresses set forth below.
The Depositary for the Offer is:
BANKBOSTON, N.A.
By Overnight, Certified
By First Class Mail: By Hand: or Express Mail
Delivery:
BankBoston, N.A. Securities Transfer
Corporate Reorganization & Reporting BankBoston, N.A.
P.O. Box 9573 Services, Inc. Corporate
Boston, Massachusetts c/o Boston EquiServe L.P. Reorganization
02205-8686 100 William Street, Galleria 40 Campanelli Drive
New York, New York Braintree, Massachusetts
10038 02184
By Facsimile for Confirmation of Facsimile
Eligible Institutions by Telephone:
Only:
(781) 794-6352 (781) 794-6380
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent. A shareholder may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
The Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, New Jersey 07072-2586
Banks and Brokers call (800) 346-7885
All others call toll free (888) 206-3388
1404-LT-99
<PAGE>
EXHIBIT (A)(2)
Letter of Transmittal
To Tender Shares of Common Stock
of
AG Associates, Inc.
Pursuant to the Offer to Purchase dated January 22, 1999
by
MIG Acquisition Corporation
a wholly owned subsidiary of
STEAG Electronic Systems GmbH
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 19, 1999,
UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
BANKBOSTON, N.A.
<TABLE>
<S> <C> <C>
By Overnight, Certified or
By First Class Mail: Express Mail Delivery: By Hand:
BankBoston, N.A. BankBoston, N.A. Securities Transfer & Reporting Services Inc.
Corporate Reorganization Corporate Reorganization c/o Boston EquiServe L.P.
P.O. Box 9573 40 Campanelli Drive 100 William Street, Galleria
Boston, Massachusetts 02205-8686 Braintree, Massachusetts 02184 New York, New York 10038
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM
W-9 PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OR TRANSMITTAL IS COMPLETED.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s)
(if space below is blank, please fill in
exactly as name(s) appear(s) on Certificate(s))
Share Certificate(s) and Share(s) Tendered
(Attach additional list, if necessary)
- ----------------------------------------------------------------------------------------------------------------------------
Number of Shares
Share Certificate Evidenced by Number of Shares
Number(s)* Share Certificate(s)* Tendered**
<S> <C> <C> <C>
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Total Shares
- ----------------------------------------------------------------------------------------------------------------------------
* Need not be completed by shareholders delivering Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented by each Share Certificate (as defined below)
delivered to the Depositary are being tendered hereby. See Instruction 4.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
This Letter of Transmittal is to be completed by shareholders of AG
Associates, Inc., a California corporation (the "Company"), either if (i)
certificates ("Share Certificates") evidencing Shares (as defined below) are
to be forwarded herewith or (ii) unless an Agent's Message (as defined in
Instruction 2 below) is utilized, if delivery of Shares is to be made by book-
entry transfer to an account maintained by the Depositary at the Book-Entry
Transfer Facility (as defined and pursuant to the book-entry transfer
procedure described in "Section 3. Procedures for Accepting the Offer and
Tendering Shares" of the Offer to Purchase (as defined below)). DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
Shareholders whose Share Certificates are not immediately available or who
cannot deliver their Share Certificates for, or a Book-Entry Confirmation (as
defined in Section 2 of the Offer to Purchase) with respect to, their Shares
and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in "Section 1. Terms of the Offer; Proration in
Certain Circumstances; Expiration Date" of the Offer to Purchase) and who wish
to tender their Shares must do so pursuant to the guaranteed delivery
procedure described in "Section 3. Procedures for Accepting the Offer and
Tendering Shares" of the Offer to Purchase. See Instruction 2.
[_]CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE
FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
[_]CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): ___________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution that Guaranteed Delivery: ______________________________
If delivered by Book-Entry Transfer, check box: [_]
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to MIG Acquisition Corporation, a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of STEAG Electronic
Systems GmbH, a corporation organized under the laws of the Federal Republic
of Germany ("Parent"), shares of common stock, without par value (the
"Shares"), of AG Associates, Inc., a California corporation (the "Company"),
pursuant to Purchaser's offer to purchase all of the outstanding Shares, at a
purchase price of $5.50 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated
January 22, 1999 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which, together with the
Offer to Purchase and any amendments or supplements thereto or hereto,
constitute the "Offer"). The undersigned understands that Purchaser reserves
the right to transfer or assign, in whole or from time to time in part, to one
or more of its affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer. Parent is a wholly owned subsidiary of
STEAG Aktiengesellschaft, a corporation organized under the laws of the
Federal Republic of Germany.
Subject to and effective upon acceptance for payment of the Shares tendered
herewith, in accordance with the terms of the Offer, the undersigned hereby
sells, assigns and transfers to or upon the order of Purchaser all right,
title and interest in and to all the Shares that are being tendered hereby and
all dividends, distributions (including, without limitation, distributions of
additional Shares or other securities) and rights declared, paid or
distributed in respect of such Shares on or after January 18, 1999
(collectively, "Distributions") and irrevocably appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver Share Certificates evidencing such Shares and all
Distributions, or transfer ownership of such Shares and all Distributions on
the account books maintained by the Book-Entry Transfer Facility, together, in
any such case, with all accompanying evidences of transfer and authenticity,
to or upon the order of Purchaser, (ii) present such Shares and all
Distributions for transfer on the books of the Company and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares and all Distributions, all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints designees of Purchaser, as the
attorneys and proxies of the undersigned, each with full power of
substitution, to vote in such manner as each such attorney and proxy or his
substitute shall, in his sole discretion, deem proper and otherwise act (by
written consent or otherwise) with respect to all the Shares tendered hereby
which have been accepted for payment by Purchaser prior to the time of such
vote or other action and any Shares and other securities issued in
Distributions in respect of such Shares, which the undersigned is entitled to
vote at any meeting of shareholders of the Company (whether annual or special
and whether or not an adjourned or postponed meeting) or consent in lieu of
any such meeting or otherwise. This proxy and power of attorney is coupled
with an interest in the Shares tendered hereby, is irrevocable and is granted
in consideration of, and is effective upon, the acceptance for payment of such
Shares by Purchaser in accordance with other terms of the Offer. Such
acceptance for payment shall revoke all other proxies and powers of attorney
granted by the undersigned at any time with respect to such Shares (and all
Shares and other securities issued in Distributions in respect of such
Shares), and no subsequent proxy or power of attorney shall be given or
written consent executed (and if given or executed, shall not be effective) by
the undersigned with respect thereto. The undersigned understands that, in
order for Shares to be deemed validly tendered, immediately upon Purchaser's
acceptance of such Shares for payment, Purchaser must be able to exercise full
voting and other rights of a record and beneficial owner with respect to such
Shares, including, without limitation, voting at any meeting of the Company's
shareholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that when such Shares are accepted for payment
by Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto and to all
3
<PAGE>
Distributions, free and clear of all liens, restrictions, charges and
encumbrances, and that none of such Shares and Distributions will be subject
to any adverse claims. The undersigned will, upon request, execute and deliver
any additional documents deemed by the Depositary or Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the Shares
tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and pending such remittance and
transfer or appropriate assurance thereof, Purchaser shall be entitled to all
rights and privileges as owner of each such Distribution and may withhold the
entire purchase price of the Shares tendered hereby, or deduct from such
purchase price, the amount or value of such Distribution as determined by
Purchaser in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in "Section 3. Procedures for Accepting the Offer and
Tendering Shares" of the Offer to Purchase and in the instructions hereto will
constitute the undersigned's acceptance of the terms and conditions of the
Offer. Purchaser's acceptance of such Shares for payment will constitute a
binding agreement between the undersigned and Purchaser upon the terms and
subject to the conditions of the Offer, including, without limitation, the
undersigned's representation and warranty that the undersigned owns the Shares
being tendered.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return any Share Certificates evidencing any Shares not
purchased or not tendered in the name(s) of the registered holder(s) appearing
above under "Description of Shares Tendered." Similarly, unless otherwise
indicated in the box entitled "Special Delivery Instructions," please mail the
check for the purchase price of any Shares purchased and any Share
Certificates evidencing Shares not tendered or not purchased (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing above under "Description of Shares Tendered." In the event that the
boxes entitled "Special Payment Instructions" and "Special Delivery
Instructions" are both completed, please issue the check for the purchase
price of any Shares purchased and return any Share Certificates evidencing
Shares not purchased or not tendered in the name(s) of, and mail such check
and Share Certificates to, the person(s) so indicated. Unless otherwise
indicated herein in the box entitled "Special Payment Instructions," please
credit any Shares tendered hereby and delivered by book-entry transfer, but
which are not purchased, by crediting the account at the Book-Entry Transfer
Facility. The undersigned recognizes that Purchaser has no obligation,
pursuant to the "Special Payment Instructions," to transfer any Shares from
the name of the registered holder(s) thereof if Purchaser does not purchase
any of the Shares tendered hereby.
4
<PAGE>
[_]CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 8.
Number of Shares represented by lost, destroyed or stolen certificates: _______
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7)
To be completed ONLY if the To be completed ONLY if the
check for the purchase price of Shares check for the purchase price of Shares
purchased or the Share Certificates purchased or the Share Certificates
evidencing Shares not tendered or not evidencing Shares not tendered or not
purchased are to be issued in the purchased are to be mailed to someone
name of someone other than the other than the undersigned, or to the
undersigned, or if Shares tendered undersigned at an address other than
hereby and delivered by book-entry that shown under "Description of
transfer which are not purchased are Shares Tendered."
to be returned by credit to an
account at the Book-Entry Transfer
Facility other than that designated
above.
Mail: [_] check
[_] share certificate(s) to:
Issue: [_] check
[_] share certificate(s) to: Name: ____________________________________________
(Please Print: First, Middle and Last Name)
Name: ____________________________________________ Address: _________________________________________
(Please Print: First, Middle and Last Name)
Address: _________________________________________ __________________________________________________
(Zip Code)
__________________________________________________ __________________________________________________
(Zip Code) Taxpayer Identification or Social Security Number
(Substitute Form W-9 must also be completed by
__________________________________________________ person named above.)
Taxpayer Identification or Social Security Number
(Substitute Form W-9 must also be completed by
person named above.)
[_] Credit Shares delivered by
book-entry transfer and not
purchased to the Book-Entry
Transfer Facility account.
Account Number: __________________________________
</TABLE>
5
<PAGE>
IMPORTANT
SHAREHOLDERS SIGN HERE
(Please Also Complete Substitute Form W-9 on Page 11)
________________________________________
________________________________________
Signature(s) of Shareholder(s)
Dated:_________________, 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share Certificates or on a security position listing or by a person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please
provide the following information and see Instruction 5.)
Name(s): ___________________________________________________________________
(Please Print)
Capacity (full title): _____________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(Include Zip Code)
Area Code and Telephone No.: _______________________________________________
Taxpayer Identification or Social Security No.: ____________________________
(See Substitute Form W-9 on page 11)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
FINANCIAL INSTITUTIONS: PLACE MEDALLION GUARANTEE IN SPACE BELOW.
Authorized Signature: ______________________________________________________
Name: ______________________________________________________________________
(Please Print)
Title: _____________________________________________________________________
Name of Firm: ______________________________________________________________
Address: ___________________________________________________________________
(Include Zip Code)
Area Code and Telephone No.: _______________________________________________
Date: ______________________________________________________________________
6
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. All signatures on this Letter of Transmittal
must be guaranteed by a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
or by any other bank, broker, dealer, credit union, savings association or
other entity which is an "eligible guarantor institution," as such term is
defined in Rule 17Ad-5 under the Securities Exchange Act of 1934, as amended
(each of the foregoing being referred to as an "Eligible Institution"), unless
(i) this Letter of Transmittal is signed by the registered holder(s) (which
term, for purposes of this document, shall include any participant in a Book-
Entry Transfer Facility whose name appears on a security position listing as
the owner of Shares) of the Shares tendered hereby and such holder(s) has
(have) not completed the box entitled "Special Payment Instructions" or the
box entitled "Special Delivery Instructions" herein or (ii) such Shares are
tendered for the account of an Eligible Institution. If a Share Certificate is
registered in the name of a person or persons other than the person signing
this Letter of Transmittal, or if payment is to be made or delivered to, or
certificates evidencing Shares not tendered or purchased are to be issued or
returned to, a person other than the registered holder(s), then the tendered
certificates must be endorsed or accompanied by duly executed stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear
on the Share Certificates, with the signatures on the Share Certificates or
stock powers guaranteed by an Eligible Institution as described above. See
Instruction 5.
2. Delivery of Letter of Transmittal and Share Certificates. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or if Shares are to be delivered by book-entry transfer pursuant to
the procedure set forth in Section 3 of the Offer to Purchase. Share
Certificates evidencing all physically tendered Shares, or a confirmation of a
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility of all Shares delivered by book-entry transfer, as well as a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof),
with any required signature guarantees, or an Agent's Message (as defined in
Section 3 of the Offer to Purchase) in the case of book-entry transfer, and
any other documents required by this Letter of Transmittal, must be received
by the Depositary at one of its addresses set forth on the front page of this
Letter of Transmittal by the Expiration Date (as defined in Section 1 of the
Offer to Purchase). If Share Certificates are forwarded to the Depositary in
multiple deliveries, a properly completed and duly executed Letter of
Transmittal must accompany each such delivery. Shareholders whose Share
Certificates are not immediately available, who cannot deliver their Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date or who cannot complete the procedure for delivery by book-
entry transfer on a timely basis may tender their Shares pursuant to the
guaranteed delivery procedure described in "Section 3. Procedures for
Accepting the Offer and Tendering Shares" of the Offer to Purchase. Pursuant
to such procedure: (i) such tender must be made by or through an Eligible
Institution; (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, must be
received by the Depositary prior to the Expiration Date; and (iii) the Share
Certificates evidencing all physically delivered Shares in proper form for
transfer by delivery, or a confirmation of a book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof),
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message), and any other documents required by this Letter
of Transmittal, must be received by the Depositary within three Nasdaq
National Market ("NASDAQ") trading days after the date of execution of such
Notice of Guaranteed Delivery, all as described in "Section 3. Procedures for
Accepting the Offer and Tendering Shares" of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
7
<PAGE>
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of
Transmittal (or a facsimile thereof), all tendering shareholders waive any
right to receive any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares represented by such Share Certificates and the number of Shares
tendered should be listed on a separate schedule and attached hereto.
4. Partial Tenders (not applicable to shareholders who tender by book-entry
transfer). If fewer than all the Shares represented by any Share Certificate
delivered to the Depositary herewith are to be tendered, fill in the number of
Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such case, new Share Certificate(s) for the remainder of the
Shares that were represented by the Share Certificates delivered to the
Depositary will be sent to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled "Special Delivery Instructions"
as soon as practicable after the expiration or termination of the Offer. All
Shares represented by Share Certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the Share Certificates for such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate
stock powers are required, unless payment of the purchase price is to be made
to, or Share Certificates for Shares not tendered or not purchased are to be
issued in the name of or returned in the name of, any person other than the
registered holder(s), in which case the Share Certificate(s) for the Shares
tendered hereby must be endorsed or accompanied by appropriate stock powers,
in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on such Share Certificate(s). Signatures on such Share
Certificate(s) and stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on any
such Share Certificate(s) or stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of such person's authority to act in
such capacity must be submitted.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6,
Purchaser will pay any stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If,
8
<PAGE>
however, payment of the purchase price of any Shares purchased is to be made
to, or Share Certificate(s) for Shares not tendered or not purchased are to be
returned in the name of, any person other than the registered holder(s), then
the amount of any stock transfer taxes (whether imposed on the registered
holder(s), such other person or otherwise) payable on account of the transfer
to such other person will be deducted from the purchase price of such Shares
purchased, unless evidence satisfactory to Purchaser of the payment of such
taxes, or exemption therefrom, is submitted. Except as provided in this
Instruction 6, it will not be necessary for transfer tax stamps to be affixed
to the Share Certificates for the Shares tendered hereby.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or any Share
Certificate(s) for Shares not tendered or not purchased are to be issued or
returned, in the name of a person other than the person(s) signing this Letter
of Transmittal or if such check or any such Share Certificate(s) are to be
sent to someone other than the person(s) signing this Letter of Transmittal or
to the person(s) signing this Letter of Transmittal but at an address other
than that shown in the box entitled "Description of Shares Tendered" herein,
the appropriate boxes on this Letter of Transmittal must be completed.
Shareholders delivering Shares tendered hereby by book-entry transfer may
request that Shares not purchased be credited to the Depositary's account at
the Book-Entry Transfer Facility as such shareholder may designate in the box
entitled "Special Payment Instructions." If no such instructions are given,
any such Shares not purchased will be returned by crediting the same account
at the Book-Entry Transfer Facility designated herein as the account from
which such Shares were delivered.
8. Lost, Destroyed or Stolen Share Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the shareholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The shareholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
9. Questions and Requests for Assistance or Additional Copies. Questions and
requests for assistance may be directed to the Information Agent at its
address or telephone number set forth below. Additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
IMPORTANT TAX INFORMATION
Under the Federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such shareholder's correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which is provided below, and to certify, under penalty of
perjury, that such number is correct and that such shareholder is not subject
to backup withholding of Federal income tax. If such shareholder is an
individual, the TIN is such shareholder's social security number. The holder
of Shares must also state that (i) such holder has not been notified by the
IRS that such holder is subject to backup withholding as a result of a failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified such holder that such holder is no longer subject to backup
withholding. If the Depositary is not provided with the correct TIN, the
holder of Shares may be subject to penalties imposed by the IRS and payments
made to such holder may be subject to backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a Form W-8, signed under penalties of
perjury, attesting to such individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions. A shareholder should consult his or her tax advisor as to such
shareholder's qualification for an exemption from backup withholding and the
procedure for obtaining such an exemption.
9
<PAGE>
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax withheld pursuant to backup withholding rules will be
available as a credit against such holder's tax liabilities. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the
name of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance
on which number to report. If the tendering shareholder has not been issued a
TIN and has applied for a number or intends to apply for a number in the near
future, the shareholder should write "Applied For" in the space provided for
the TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For"
is written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% of all payments of the purchase price
to such shareholder until a TIN is provided to the Depositary.
10
<PAGE>
PAYER'S NAME: BANKBOSTON, N.A.
- --------------------------------------------------------------------------------
SUBSTITUTE Part 1--Taxpayer Identification Number--For all
Form W-9 accounts, enter your taxpayer identification
Department of number below. (For most individuals, this is
the Treasury your social security number. If you do not
Internal have a number, see Obtaining a Number in the
Revenue enclosed Guidelines.) Certify by signing and
Service dating below. Note: If the account is in more
than one name, see the chart in the enclosed
Guidelines to determine which number to give
the payer.
Payer's Request for
Taxpayer Identification
Number (TIN)
--------------------------------------
Social Security Number
OR
--------------------------------------
Employer Identification Number
(If awaiting TIN write "Applied For")
--------------------------------------------------------
Part 2--For Payees Exempt From Backup Withholding,
see the enclosed Guidelines and complete as
instructed therein.
- --------------------------------------------------------------------------------
Certifications--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am
subject to backup withholding as a result of failure to report all
interest or dividends, or the IRS has notified me that I am no longer
subject to backup withholding.
Certificate Instructions--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding, you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
- --------------------------------------------------------------------------------
SIGNATURE _____________________________________ DATE ____________________, 1999
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATION IF YOU ARE AWAITING
(OR WILL SOON APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER.
- --------------------------------------------------------------------------------
CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number
has not been issued to me, and either (i) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(ii) I intend to mail or deliver an application in the near future. I
understand that because I have not provided a taxpayer identification
number, 31% of all reportable payments made to me pursuant to the Offer may
be withheld until I provide a number.
_______________________________________________ _____________________
Signature Date
- --------------------------------------------------------------------------------
11
<PAGE>
Facsimiles of the Letter of Transmittal, properly completed and duly signed,
will be accepted. The Letter of Transmittal, certificates evidencing Shares
and any other required documents should be sent or delivered by each
shareholder or such shareholder's broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below.
The Depositary for the Offer is:
BANKBOSTON, N.A.
<TABLE>
<S> <C>
By First Class Mail: By Overnight, Certified or Express Mail Delivery:
BankBoston, N.A. BankBoston, N.A.
Corporate Reorganization Corporate Reorganization
P.O. Box 9573 40 Campanelli Drive
Boston, Massachusetts 02205-8686 Braintree, Massachusetts 02184
</TABLE>
By Hand:
Securities Transfer & Reporting Services Inc.
c/o Boston EquiServe L.P.
100 William Street, Galleria
New York, New York 10038
<TABLE>
<S> <C>
By Facsimile for Eligible Institutions Only: Confirmation of Facsimile by Telephone:
(781) 794-6352 (781) 794-6380
</TABLE>
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of
the Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent. A shareholder may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
The Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, New Jersey 07072-2586
Banks and Brokers call (800) 346-7885
All others call toll free (888) 206-3388
1404-LT-99
<PAGE>
EXHIBIT (A)(3)
Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
of
AG Associates, Inc.
to
MIG Acquisition Corporation
a wholly owned subsidiary of
STEAG Electronic Systems GmbH
(Not to be Used for Signature Guarantees)
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 19, 1999, UNLESS THE OFFER
IS EXTENDED.
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) if (i) certificates
("Share Certificates") evidencing shares of common stock, without par value
(the "Shares"), of AG Associates, Inc., a California corporation (the
"Company"), are not immediately available, (ii) Shares Certificates and all
other required documents cannot be delivered to BankBoston, N.A. as Depositary
(the "Depositary"), prior to the Expiration Date (as defined in "Section 1.
Terms of the Offer; Proration in Certain Circumstances; Expiration Date" of
the Offer to Purchase, dated January 22, 1999 (the "Offer to Purchase"), or
(iii) the procedure for delivery by book-entry transfer cannot be completed on
a timely basis. This Notice of Guaranteed Delivery may be delivered by hand or
mail or transmitted by telegram or facsimile transmission to the Depositary.
See "Section 3. Procedures for Accepting the Offer and Tendering Shares" of
the Offer to Purchase.
The Depositary for the Offer is:
BANKBOSTON, N.A.
<TABLE>
<S> <C>
By Overnight, Certified or
By First Class Mail: Express Mail Delivery:
BankBoston, N.A. BankBoston, N.A.
Corporate Reorganization Corporate Reorganization
P.O. Box 9573 40 Campanelli Drive
Boston, Massachusetts 02205-8686 Braintree, Massachusetts 02184
</TABLE>
By Hand:
Securities Transfer & Reporting Services, Inc.
c/o Boston EquiServe L.P.
100 William Street, Galleria
New York, New York 10038
<TABLE>
<S> <C>
By Facsimile for Eligible Institutions Only: Confirmation of Facsimile by Telephone:
(781) 794-6352 (718) 794-6380
</TABLE>
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via facsimile transmission
other than as set forth above will not constitute a valid delivery.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
(as defined in the Offer to Purchase) under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to MIG Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of STEAG Electronic
Systems GmbH, a corporation organized under the laws of the Federal
Republic of Germany, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated January 22, 1999 (the "Offer to
Purchase"), and the related Letter of Transmittal (which, together, as
amended or supplemented from time to time, with the Offer to Purchase,
constitute the "Offer"), receipt of which are hereby acknowledged, the
number of Shares specified below pursuant to the guaranteed delivery
procedure described in "Section 3. Procedures for Accepting the Offer and
Tendering Shares" of the Offer to Purchase.
Number of Shares: _________________________________________________________
Certificate Numbers (if available): _______________________________________
___________________________________________________________________________
Check box if Shares will be delivered by book-entry transfer. [_]
Account Number: ___________________________________________________________
Signature(s) of Record Holder(s) __________________________________________
___________________________________________________________________________
Dated: ____________, 1999
Name(s) of Holder(s): _____________________________________________________
___________________________________________________________________________
(Please Type or Print)
___________________________________________________________________________
Address ___________________________________________________________________
Zip Code
Area Code and Telephone No. _______________________________________________
2
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion
Program, or a bank, broker, dealer, credit union, savings association or
other entity which is an "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended (each, an "Eligible Institution"), guarantees to deliver to the
Depositary, at one of its addresses set forth above, either Share
Certificates evidencing the Shares tendered hereby, in proper form for
transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in
the Offer to Purchase) with delivery of a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), any required
signature guarantees or a Book-Entry Confirmation (as defined in the Offer
to Purchase) in the case of a book-entry delivery, and any other required
documents, all within three days, on which the Nasdaq National Market is
open for business, of the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
Share Certificates to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm ______________________________________________________________
___________________________________________________________________________
Authorized Signature
Address __________________________________________________________________
Zip Code
Area Code and Telephone No. _______________________________________________
Name ______________________________________________________________________
(Please Type or Print)
Title _____________________________________________________________________
Date ______________, 1999
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
1404-LT-99
<PAGE>
EXHIBIT (A)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
AG Associates, Inc.
at
$5.50 Net Per Share
by
MIG Acquisition Corporation
a wholly owned subsidiary of
STEAG Electronic Systems GmbH
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 19, 1999, UNLESS THE OFFER
IS EXTENDED.
January 22, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by MIG Acquisition Corporation, a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of STEAG Electronic
Systems GmbH, a corporation organized under the laws of the Federal Republic
of Germany ("Parent"), to act as Information Agent in connection with
Purchaser's offer to purchase all outstanding shares of common stock, without
par value (the "Shares"), of AG Associates, Inc., a California corporation
(the "Company"), at a price of $5.50 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in
Purchaser's Offer to Purchase, dated January 22, 1999 (the "Offer to
Purchase"), and the related Letter of Transmittal (which, as amended or
supplemented from time to time, together with the Offer to Purchase,
constitute the "Offer") enclosed herewith. Please furnish copies of the
enclosed materials to those of your clients for whose accounts you hold Shares
registered in your name or in the name of your nominee.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer such number of
Shares which would constitute not less than 90% of the Shares then outstanding
(the "Minimum Condition"), and (ii) the expiration or termination of any
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended. The Offer also is subject to the other terms and
conditions described in the Offer to Purchase.
In the event that more than 50% of the Shares then outstanding are tendered
pursuant to the Offer and not withdrawn, but less than 90% of the Shares then
outstanding are acquired by Purchaser pursuant to the Offer and the Stock
Option described in the Offer to Purchase, Purchaser will waive the Minimum
Condition and amend the Offer to reduce the number of Shares subject to the
Offer to 3,095,294 Shares or such greater or lesser number of Shares as equals
49.9% of the Shares then outstanding (the "Revised Minimum Number") and, if a
greater number of Shares is tendered into the Offer and not withdrawn,
purchase, on a pro rata basis, the Revised Minimum Number of Shares (it being
understood that Purchaser shall not in any event be required to accept for
payment, or pay for, any shares if less than the Revised Minimum Number of
Shares are tendered pursuant to the Offer and not withdrawn at the expiration
of the Offer).
<PAGE>
Enclosed for your information and for forwarding to your clients for whom
you hold Shares registered in your name or in the name of your nominee, or who
hold Shares registered in their own names, are copies of the following
documents:
1. Offer to Purchase, dated January 22, 1999;
2. Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or time will not
permit all required documents to reach BankBoston, N.A. (the "Depositary")
by the Expiration Date (as defined in the Offer to Purchase) or if the
procedure for book-entry transfer cannot be completed by the Expiration
Date;
4. A letter to shareholders of the Company from Dr. Arnon Gat, Chief
Executive Officer and Chairman of the Company, together with the
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the Offer;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, FEBRUARY 19, 1999, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
the certificates evidencing the tendered Shares (or a confirmation of a book-
entry transfer of such Shares into the Depositary's account at the Book-Entry
Transfer Facility (as defined in the Offer to Purchase)), (ii) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees or, in the case of a book-entry transfer, an
Agent's Message (as defined in the Offer to Purchase) and (iii) any other
documents required by the Letter of Transmittal.
If holders of Shares wish to tender, but cannot deliver their certificates
or other required documents or cannot comply with the procedures for book-
entry transfer prior to the expiration of the Offer, a tender may be effected
by following the guaranteed delivery procedures described in "Section 3.
Procedures for Accepting the Offer and Tendering Shares" of the Offer to
Purchase.
Neither Purchaser nor Parent will pay any fees or commissions to any broker,
dealer or other person (other than the Depositary and the Information Agent,
as described in the Offer) in connection with the solicitation of tenders of
Shares pursuant to the Offer. However, Purchaser will, upon request, reimburse
you for customary mailing and handling expenses incurred by you in forwarding
any of the enclosed materials to your clients. Purchaser will pay or cause to
be paid any stock transfer taxes payable with respect to the transfer of
Shares to it, except as otherwise provided in Instruction 6 of the Letter of
Transmittal. Backup tax withholding at a rate of 31% may be required, however,
unless the required tax identification information is provided. See "Important
Tax Information" contained in the Letter of Transmittal.
2
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed material may be obtained by contacting
the undersigned at the address and telephone number set forth on the back
cover page of the Offer to Purchase.
Very truly yours,
Corporate Investor Communications,
Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE INFORMATION
AGENT OR THE DEPOSITARY, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY
OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
3
<PAGE>
1404-LT-99
<PAGE>
EXHIBIT (A)(5)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
AG Associates, Inc.
at
$5.50 Net Per Share
by
MIG Acquisition Corporation
a wholly owned subsidiary of
STEAG Electronic Systems GmbH
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 19, 1999, UNLESS THE OFFER IS
EXTENDED.
To Our Clients:
Enclosed for your consideration are an Offer to Purchase, dated January 22,
1999 (the "Offer to Purchase"), and a related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer")
relating to the offer by MIG Acquisition Corporation, a Delaware corporation
("Purchaser") and a wholly owned subsidiary of STEAG Electronic Systems GmbH,
a corporation organized under the laws of the Federal Republic of Germany, to
purchase all outstanding shares of common stock, without par value (the
"Shares"), of AG Associates, Inc., a California corporation (the "Company"),
at a price of $5.50 per Share, net to the seller in cash, without interest,
upon the terms and subject to the conditions set forth in the Offer. Parent is
a wholly owned subsidiary of STEAG Aktiengesellschaft, a corporation organized
under the laws of the Federal Republic of Germany. Also enclosed is the letter
to shareholders of the Company from Dr. Arnon Gat, Chief Executive Officer and
Chairman of the Company, together with a Solicitation/Recommendation Statement
on Schedule 14D-9 filed with the Securities and Exchange Commission by the
Company. We are (or our nominee is) the holder of record of Shares held by us
for your account. A tender of such Shares can be made only by us as the holder
of record and pursuant to your instructions. The Letter of Transmittal is
furnished to you for your information only and cannot be used by you to tender
Shares held by us for your account.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms
and subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $5.50 per Share, net to the seller in cash,
without interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Merger Agreement and the transactions contemplated thereby, has determined
that each of the Merger Agreement and the transactions contemplated thereby
are fair to, and in the best interests of, the Company and the Company's
shareholders, and recommends that the Company's shareholders accept the
Offer and tender their Shares to Purchaser.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, February 19, 1999, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer
such number of Shares which would constitute not less than 90% of the
Shares then outstanding (the "Minimum Condition"), and (ii) the expiration
or termination of
<PAGE>
any applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended. The Offer also is subject to the
other terms and conditions described in the Offer to Purchase.
6. In the event that more than 50% of the Shares then outstanding are
tendered pursuant to the Offer and not withdrawn, but less than 90% of the
Shares then outstanding are acquired by Purchaser pursuant to the Offer and
the Stock Option described in the Offer to Purchase, Purchaser will waive
the Minimum Condition and amend the Offer to reduce the number of Shares
subject to the Offer to 3,095,294 Shares or such greater or lesser number
of Shares as equals 49.9% of the Shares then outstanding (the "Revised
Minimum Number") and, if a greater number of Shares is tendered into the
Offer and not withdrawn, purchase, on a pro rata basis, the Revised Minimum
Number of Shares (it being understood that Purchaser shall not in any event
be required to accept for payment, or pay for, any Shares if less than the
Revised Minimum Number of Shares are tendered pursuant to the Offer and not
withdrawn at the expiration of the Offer).
7. Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares held by us for your
account, please so instruct us by completing, executing and returning to us
the instruction form contained in this letter. An envelope to return your
instructions to us is enclosed. If you authorize the tender of your Shares,
all such Shares will be tendered unless otherwise specified in your
instructions. Your instructions should be forwarded to us as soon as possible
so that we will have ample time to tender your Shares on your behalf prior to
the expiration of the Offer.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by BankBoston, N.A. (the
"Depositary") of (i) the certificates evidencing the tendered Shares (the
"Share Certificates"), or a timely Book-Entry Confirmation (as defined in the
Offer to Purchase) with respect to such Shares, (ii) a Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any
required signature guarantees, or, in the case of a book-entry transfer
effected pursuant to the procedure set forth in the Offer to Purchase, and
(iii) any other documents required under the Letter of Transmittal.
The Offer is made to all holders of Shares solely by the Offer to Purchase
and the related Letter of Transmittal and any supplements or amendments
thereto. Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser
will make a good faith effort to comply with such state statute. If, after
such good faith effort, Purchaser cannot comply with such state statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Shares in such state. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of Purchaser by one or
more registered brokers or dealers licensed under the laws of such
jurisdiction.
2
<PAGE>
Instructions With Respect to the
Offer to Purchase for Cash All Outstanding Shares of Common Stock
of
AG Associates, Inc.
by
MIG Acquisition Corporation
a wholly owned subsidiary of
STEAG Electronic Systems GmbH
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated January 22, 1999, and the related Letter of Transmittal
(which, as amended or supplemented from time to time, together constitute the
"Offer") in connection with the offer by MIG Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of STEAG Electronic Systems
GmbH, a corporation organized under the laws of the Federal Republic of
Germany, to purchase all outstanding shares of common stock, without par value
(the "Shares"), of AG Associates, Inc., a California corporation.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
NUMBER OF SHARES TO BE SIGN HERE
TENDERED:* -------------------------------------
-------------------------------------
SHARES: _______________________
Signature(s) of Holder(s)
Dated: __________________, 1999 Name(s) of Holder(s):
-------------------------------------
-------------------------------------
Please Type or Print
-------------------------------------
Address
-------------------------------------
Zip Code
-------------------------------------
Area Code and Telephone Number
-------------------------------------
Tax Identification or Social
Security Number
- --------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
1404-LT-99
<PAGE>
EXHIBIT (A)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer.
Social security numbers have nine digits separated by two hyphens: i.e. 000-
00-0000. Employer identification numbers have nine digits separated by one
hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
- ----------------------------------------------
<CAPTION>
Give the
For this type of account: SOCIAL SECURITY
number of--
- ----------------------------------------------
<S> <C>
1. An individual's The individual
account
2. Two or more The actual owner
individuals (joint of the account
account) or, if combined
funds, the first
individual on
the account(1)
3. Husband/wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of The minor(2)
a minor (Uniform Gift
to Minors Act)
5. Adult and minor The adult or, if
(joint account) the minor is the
only
contributor, the
minor(1)
6. Account in the name The ward, minor
of guardian or or incompetent
committee for a person(3)
designated ward,
minor or incompetent
person
7. a. A revocable The grantor-
savings trust account trustee(1)
(in which grantor is
also trustee)
b. Any "trust" account The actual owner(1)
that is not a legal or
valid trust under
State law
<CAPTION>
- ----------------------------------------------
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of--
- ----------------------------------------------
<S> <C>
8. Sole proprietorship The owner(4)
account
9. A valid trust, estate The legal entity
or pension trust (do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of
the business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments.
- ----------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate or pension
trust.
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL
BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
resident individuals), Form SS-4, Application for Employer Identification
Number (for businesses and all other entities), Form W-7 for International
Taxpayer Identification Number (for alien individuals required to file U.S.
tax returns), at an office of the Social Security Administration or the
Internal Revenue Service.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification
number in Part I, sign and date the Form, and give it to the requester.
Generally, you will then have 60 days to obtain a taxpayer identification
number and furnish it to the requester. If the requester does not receive your
taxpayer identification number within 60 days, backup withholding, if
applicable, will begin and will continue until you furnish your taxpayer
identification number to the requester.
Payees Exempt from Backup Withholding Penalties
Payees specifically exempted from backup withholding on ALL payments include
the following:*
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.
. A foreign government or a political subdivision, agency or instrumentality
thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1).
. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
- -------
* Unless otherwise noted herein, all references below to section numbers or
to regulations are references to the Internal Revenue Code and the
regulations promulgated thereunder.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if (i) this interest is $600 or more, (ii)
the interest is paid in the course of the payer's trade or business and
(iii) you have not provided your correct taxpayer identification number to
the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file a Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice.--Section 6109 requires most recipients of dividends,
interest or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to
file tax returns. Payers must generally withhold 31% of taxable interest,
dividends, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your correct taxpayer identification number to a payer, you
are subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.
(2) Civil Penalty for False Statements with Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--If you falsify
certifications or affirmations, you are subject to criminal penalties
including fines and/or imprisonment.
(4) Failure to Report Certain Dividend and Interest Payments.--If you fail to
include any portion of an includible payment for interest, dividends or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of any underpayment attributable to
the failure.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
1404-LT-99
<PAGE>
EXHIBIT (A)(7)
SUMMARY ADVERTISEMENT
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
January 22, 1999 and the related Letter of Transmittal, and is being made to
all holders of Shares. Purchaser is not aware of any state where the making of
the Offer is prohibited by administrative or judicial action pursuant to any
valid state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, Purchaser will make a good faith effort to comply with such state
statute. If, after such good faith effort, Purchaser cannot comply with such
state statute, the Offer will not be made to (nor will tenders be accepted
from or on behalf of) the holders of Shares in such state. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
AG Associates, Inc.
at
$5.50 Net Per Share
by
MIG Acquisition Corporation
a wholly owned subsidiary of
STEAG Electronic Systems GmbH
MIG Acquisition Corporation, a Delaware corporation ("Purchaser") and a
wholly owned subsidiary of STEAG Electronic Systems GmbH, a corporation
organized under the laws of the Federal Republic of Germany ("Parent"), is
offering to purchase all outstanding shares of common stock, without par value
(the "Shares"), of AG Associates, Inc., a California corporation (the
"Company"), at a price of $5.50 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
Purchaser's Offer to Purchase, dated January 22, 1999 (the "Offer to
Purchase"), and the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"). Following
the Offer, Purchaser intends to effect the Merger described below. Parent is a
wholly owned subsidiary of STEAG Aktiengesellschaft, a corporation organized
under the laws of the Federal Republic of Germany.
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 19, 1999, UNLESS THE OFFER IS
EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer such number of
Shares which would constitute not less than 90% of the Shares then outstanding
(the "Minimum Condition"), and (ii) the expiration or termination of any
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended. The Offer also is subject to the other terms and
conditions described in the Offer to Purchase.
In the event that more than 50% of the Shares then outstanding are tendered
pursuant to the Offer and not withdrawn, but less than 90% of the Shares then
outstanding are acquired by Purchaser pursuant to the Offer and the Stock
Option described below, Purchaser will waive the Minimum Condition and amend
the Offer to reduce the number of Shares subject to the Offer to 3,095,294
Shares or such greater or lesser number of Shares as equals 49.9% of the
Shares then outstanding (the "Revised Minimum Number") and, if a greater
number of Shares is tendered and not withdrawn, purchase, on a pro rata basis,
the Revised Minimum Number of Shares (it being understood that Purchaser shall
not in any event be required to accept for payment, or pay for, any Shares if
less than the Revised Minimum Number of Shares are tendered and not withdrawn
by the Expiration Date (as defined below)).
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of January 18, 1999 (the "Merger Agreement") among Parent, Purchaser and the
Company. The Merger Agreement provides that, among other things, subject to
the terms and conditions in the Merger Agreement, and in accordance with the
Delaware General Corporation Law and California General Corporation Law (the
"CGCL"), Purchaser will be merged with and into the Company (the "Merger").
Following consummation of the Merger, the Company will continue as the
surviving corporation and will become a wholly owned subsidiary of Parent. At
the effective time of the Merger (the "Effective Time"), each issued and
outstanding Share immediately prior to the Effective Time (other than (a)
Shares held by any subsidiary of the Company, (b) each Share owned by Parent
or Purchaser, including Shares purchased by Purchaser pursuant to the Offer,
and (c) Shares held by shareholders who have demanded and perfected, and have
not withdrawn or otherwise lost, dissenters' rights, if any, under the CGCL)
will be cancelled and converted automatically into the right to receive $5.50
in cash, or any higher price that may be paid per Share in the Offer, without
interest.
<PAGE>
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY (INCLUDING THE OFFER AND
THE MERGER), HAS DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY (INCLUDING THE OFFER AND THE MERGER) ARE FAIR TO, AND IN
THE BEST INTERESTS OF, THE COMPANY AND THE SHAREHOLDERS OF THE COMPANY, AND
RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
TO THE OFFER.
Simultaneously with entering into the Merger Agreement, and as an inducement
to Parent and Purchaser to enter into the Merger Agreement, the Company
entered into a Stock Option Agreement with Parent and Purchaser, dated as of
January 18, 1999 (the "Stock Option Agreement"). Pursuant to the Stock Option
Agreement, the Company granted to Purchaser an irrevocable option (the "Stock
Option") to purchase up to the number of Shares (the "Option Shares") that,
when added to the number of Shares owned by Purchaser and its affiliates
following the consummation of the Offer, would constitute 90% of the Shares
then outstanding (assuming the issuance of the Option Shares), at a cash
purchase price per Option Share equal to $5.50, subject to the terms and
conditions in the Stock Option Agreement, including, without limitation, (i)
that not less than 80% of the Shares then outstanding have been tendered upon
the Expiration Date, and (ii) that the number of Shares to be issued
thereunder shall not exceed the number of authorized Shares available for
issuance.
If the Stock Option is exercised by Purchaser (resulting in Purchaser
acquiring 90% or more of the Shares then outstanding) or Purchaser otherwise
acquires 90% of the Shares then outstanding, Parent will be able to effect a
short-form merger without a vote of the Company's shareholders under the CGCL,
subject to the terms and conditions of the Merger Agreement. Purchaser
currently intends to effect a short-form merger if it is able to do so.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to
BankBoston, N.A. (the "Depositary") of Purchaser's acceptance for payment of
such Shares pursuant to the Offer. Upon the terms and subject to the
conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering shareholders for the purpose
of receiving payments from Purchaser and transmitting such payments to
tendering shareholders whose Shares have been accepted for payment. Under no
circumstances will interest on the purchase price for Shares be paid,
regardless of any extension of the Offer or delay in making such payment. In
all cases, payment for Shares tendered and accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in the Offer to
Purchase) pursuant to the procedures set forth in Section 3 of the Offer to
Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in
the case of a book-entry transfer, an Agent's Message (as defined in the Offer
to Purchase), and (iii) any other documents required under the Letter of
Transmittal.
Purchaser expressly reserves the right, in its sole discretion (subject to
the terms and conditions of the Merger Agreement), at any time and from time
to time, to extend for any reason the period of time during which the Offer is
open, including the occurrence of any condition specified in Section 14 of the
Offer to Purchase, by giving oral or written notice of such extension to the
Depositary. Any such extension will be followed as promptly as practicable by
public announcement thereof, such announcement to be made no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date of the Offer. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer and to
the rights of tendering shareholders to withdraw their Shares.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, February 19, 1999, unless and until Purchaser shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by Purchaser, will expire.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the Offer,
may also be withdrawn at any time after Monday, March 22, 1999. For the
withdrawal to be effective, a written, telegraphic or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover page of the Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in Section 3 of the Offer to Purchase), unless such
Shares have been tendered for the account of an Eligible Institution. If
Shares have been tendered pursuant to the procedure for book-entry transfer as
set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares and must otherwise comply with such
Book-Entry Transfer Facility's procedures. All questions as to the form and
validity (including the time of receipt) of any notice of withdrawal will be
determined by Purchaser, in its sole discretion, whose determination will be
final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
<PAGE>
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares whose names appear on the Company's
shareholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose
nominees, appear on the shareholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance or for additional copies of the Offer
to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent as set forth below, and
copies will be furnished promptly at Purchaser's expense. Neither Purchaser
nor Parent nor any officer, director, stockholder, agent or other
representative will pay any fees or commissions to brokers, dealers or other
persons (other than the Depositary and the Information Agent, as described in
the Offer to Purchase) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[LOGO OF CIC] CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road - Carlstadt, New Jersey 07072-2586
Banks and Brokers call collect (800) 346-7885
All others call toll free (888) 206-3388
January 22, 1999
<PAGE>
EXHIBIT (A)(8)
Contact: Agency:
Kirk Johnson Dori Jones
VP of Finance, CFO Account Manager
AG Associates MCA, Inc.
Phone: 408/935-2004 Phone: 650/968-8900
Fax: 408/935-2701 Fax: 650/968-8900
STEAG ELECTRONIC SYSTEMS TO ACQUIRE AG ASSOCIATES
FOR $5.50 PER SHARE IN CASH
ESSEN, Germany and SAN JOSE, California--Jan. 19, 1999--STEAG Electronic Systems
GmbH and AG Associates, Inc. today jointly announced that they have entered into
a definitive agreement for STEAG to acquire all of the outstanding shares of AG
Associates for $5.50 per share in cash, which represents an approximate 26
percent premium over the closing price of the AG Associates common stock on
Friday, Jan. 15, 1999.
According to the agreement, a wholly owned subsidiary of STEAG will commence a
cash tender offer for the outstanding shares of AG Associates common stock no
later than Jan. 26, 1999. Following the completion of the tender offer, STEAG
intends to merge the existing subsidiary with and into AG Associates. AG
Associates will then become a wholly owned subsidiary of STEAG.
Commenting on the acquisition, AG Associates Chairman and Chief Executive
Officer Dr. Arnon Gat noted, "When we sat down with STEAG and looked at our
respective companies, we found that we had very little customer overlap and
shared a common vision. Looking forward, we knew that in order to remain
competitive, AG would have to find the right partner. I am happy to say that
STEAG is that partner."
STEAG Chief Executive Officer Dr. Hans Betz commented, "By acquiring AG
Associates and combining it with our existing RTP operation, STEAG AST
Elektronik, we feel that significant synergies and critical mass will be
achieved on a global scale. In addition, we believe that both companies bring
unique strengths that will benefit our respective customers."
-MORE-
<PAGE>
STEAG ELECTRONIC SYSTEMS TO ACQUIRE AS ASSOCIATES..............PAGE 2 OF 2
AG Associates' Board of Directors has unanimously approved the acquisition and
has resolved to recommend to the shareholders that they accept STEAG's tender
offer and tender their shares. SoundView Technology Group has served as AG
Associates' financial advisor in connection with this transaction and has
delivered to the directors of AG Associates its opinion that, as of Jan. 5,
1999, the consideration to be received by AG Associates' shareholders in the
transaction is fair, from a financial point of view, to such persons.
Consummation of the acquisition is subject to customary conditions, including
expiration or termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. STEAG's obligation to purchase any shares
of AG Associates common stock in the tender offer is subject to the valid tender
of a number of shares which, when added to the shares owned by STEAG, represent
at least 90 percent of the AG Associates common stock then outstanding. If more
than 50 percent but less than 90 percent of the outstanding shares of AG
Associates common stock are tendered to STEAG's subsidiary in the tender offer,
then STEAG may reduce the number of shares subject to the tender offer to 49.9
percent of the outstanding shares of AG Associates common stock. AG Associates
then would call a special meeting of shareholders to vote on the merger of
STEAG's subsidiary with and into AG Associates. When the merger is effected,
each share of AG Associates common stock not tendered in the tender offer will
be converted into the right to receive $5.50 in cash, subject to any dissenters'
rights.
AG Associates is a leading supplier of rapid thermal processing (RTP) equipment
to the worldwide semiconductor industry. Founded in 1981, AG Associates is
headquartered in San Jose, and maintains customer service and support centers in
the United States, Europe and Far East to support its global customer base. The
company's common stock trades on the Nasdaq Stock Market under the symbol AGAI.
STEAG Electronic Systems GmbH, through its subsidiaries STEAG AST Elektronik and
STEAG MicroTech, is a leading supplier of RTP and wet processing systems for
semiconductor and silicon wafer production. STEAG has over 12 years' experience
in the RTP industry, with well over 400 RTP systems now in production worldwide.
###
<PAGE>
EXHIBIT (C)(1)
===============================================================
AGREEMENT AND PLAN OF MERGER
AMONG
STEAG ELECTRONIC SYSTEMS GMBH,
MIG ACQUISITION CORPORATION
AND
AG ASSOCIATES, INC.
DATED AS OF JANUARY 18, 1999
================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I. THE OFFER...................................................... 2
SECTION 1.1. The Offer.................................................... 2
SECTION 1.2. Company Action............................................... 3
SECTION 1.3. SEC Actions.................................................. 3
SECTION 1.4. Directors.................................................... 5
ARTICLE II. THE MERGER..................................................... 6
SECTION 2.1. The Merger................................................... 6
SECTION 2.2. Effect of the Merger......................................... 6
SECTION 2.3. Consummation of the Merger................................... 6
SECTION 2.4. Articles of Incorporation; Bylaws; Directors and Officers.... 6
SECTION 2.5. Effect on Securities......................................... 7
SECTION 2.6. Company Stock Plans.......................................... 7
SECTION 2.7. Payment for Shares........................................... 8
SECTION 2.8. Dissenting Shares............................................ 10
SECTION 2.9. Shareholders' Meeting........................................ 10
SECTION 2.10. Subsequent Actions........................................... 12
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................. 12
SECTION 3.1. Organization and Qualification; Subsidiaries................. 12
SECTION 3.2. Charter Documents............................................ 13
SECTION 3.3. Capitalization............................................... 13
SECTION 3.4. Authority.................................................... 14
SECTION 3.5. No Conflict; Required Filings and Consents................... 14
SECTION 3.6. Compliance; Permits.......................................... 16
SECTION 3.7. SEC Reports; Financial Statements............................ 16
SECTION 3.8. Absence of Certain Changes or Events......................... 17
SECTION 3.9. No Undisclosed Liabilities................................... 17
SECTION 3.10. Absence of Litigation........................................ 17
SECTION 3.11. Employee Benefit Plans; Employment Agreements............... 17
SECTION 3.12. Employment Matters........................................... 19
SECTION 3.13. Information Supplied......................................... 19
SECTION 3.14. Title to Property............................................ 20
SECTION 3.15. Taxes........................................................ 20
SECTION 3.16. Environmental Matters........................................ 21
SECTION 3.17. Brokers...................................................... 21
SECTION 3.18. Full Disclosure.............................................. 22
SECTION 3.19. Opinion of Financial Advisor................................. 22
SECTION 3.20. Intellectual Property........................................ 22
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
SECTION 3.21. Interested Party Transactions................................ 23
SECTION 3.22. Insurance.................................................... 23
SECTION 3.23. Vote Required................................................ 23
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO............ 24
SECTION 4.1. Organization and Qualification............................... 24
SECTION 4.2. Authority.................................................... 24
SECTION 4.3. Non-Contravention............................................ 25
SECTION 4.4. Governmental Approvals....................................... 25
SECTION 4.5. Brokers...................................................... 25
SECTION 4.6. Financing.................................................... 25
SECTION 4.7. Information Supplied......................................... 26
ARTICLE V. CERTAIN COVENANTS............................................. 26
SECTION 5.1. Conduct of the Company's Business............................ 26
SECTION 5.2. Access to Information........................................ 28
SECTION 5.3. Consents and Approvals; Further Assurances................... 29
SECTION 5.4. Inquiries and Negotiations................................... 30
SECTION 5.5. Notification of Certain Matters.............................. 31
SECTION 5.6. FIRPTA Certificate........................................... 31
SECTION 5.7. Employee Benefits............................................ 31
ARTICLE VI. ADDITIONAL AGREEMENTS......................................... 31
SECTION 6.1. Loan......................................................... 31
SECTION 6.2. Options...................................................... 32
SECTION 6.3. Proxy Statement.............................................. 33
SECTION 6.4. Company Shareholders' Meeting................................ 33
SECTION 6.5. Consents; Approvals.......................................... 33
SECTION 6.6. Indemnification.............................................. 33
ARTICLE VII. CONDITIONS TO THE MERGER...................................... 34
SECTION 7.1. Conditions to Each Party's Obligation to Effect the Merger... 34
SECTION 7.2. Conditions to Parent's and Newco's Obligation to Effect
the Merger................................................. 34
ARTICLE VIII. TERMINATION AND ABANDONMENT................................... 35
SECTION 8.1. Termination and Abandonment.................................. 35
SECTION 8.2. Effect of Termination........................................ 36
ARTICLE IX. MISCELLANEOUS................................................. 37
SECTION 9.1. Nonsurvival of Representations and Warranties................ 37
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SECTION 9.2. Expenses, Etc............................................. 37
SECTION 9.3. Publicity................................................. 37
SECTION 9.4. Execution in Counterparts................................. 37
SECTION 9.5. Notices................................................... 37
SECTION 9.6. Waivers................................................... 38
SECTION 9.7. Entire Agreement.......................................... 39
SECTION 9.8. Applicable Law............................................ 39
SECTION 9.9. Specific Performance...................................... 39
SECTION 9.10. Binding Effect, Benefits.................................. 39
SECTION 9.11. Assignability............................................. 40
SECTION 9.12. Amendments................................................ 40
SECTION 9.13. Headings.................................................. 40
SECTION 9.14. Mutual Drafting........................................... 40
ANNEX I Defined Terms
ANNEX II Conditions to the Offer
EXHIBIT A Form of Voting Agreements
EXHIBIT B Form of Stock Option Agreement
EXHIBIT C Form of Common Stock Option
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
---------
January 18, 1999, is entered into by and among STEAG Electronic Systems GmbH, a
German business entity ("Parent"), MIG Acquisition Corporation, a Delaware
------
corporation and a wholly-owned subsidiary of Parent ("Newco"), and AG
-----
Associates, Inc., a California corporation (the "Company" and, collectively with
-------
Parent and Newco, the "Parties"). The Company and Newco are hereinafter
-------
sometimes referred to as the "Constituent Corporations." Certain capitalized
------------------------
terms used herein are defined in Annex I hereto.
WHEREAS, Parent, Newco and the Company have each approved, upon the
terms and subject to the conditions hereinafter provided (including approval by
the FCO pursuant to the AARC), the acquisition of the Company by Newco pursuant
to a tender offer (the "Offer") by Newco for all the issued and outstanding
-----
shares (the "Shares") of Common Stock, no par value ("Company Common Stock"), of
------ --------------------
the Company, followed by a merger (the "Merger") of Newco with and into the
------
Company, with the Company as the surviving corporation, and all other
transactions contemplated by this Agreement (such acquisition, Offer, Merger and
other transactions, collectively the "Transactions");
------------
WHEREAS, concurrently herewith Parent has entered into voting
agreements, a form of which is attached hereto as Exhibit A ( the "Voting
------
Agreements"), with the following holders of capital stock of the Company: the
- ----------
Company's Chief Executive Officer, his spouse, Bank Poalim Investments Ltd.,
Canon Sales Co., Inc. ("Canon") and Clal Electronics Industries Ltd., pursuant
-----
to which such holders have, among other things, agreed to tender their Company
Common Stock pursuant to the Offer and, if required, vote their shares of
Company capital stock in favor of the Merger and have granted Parent irrevocable
proxies to vote such shares in such manner;
WHEREAS, as an inducement to Parent to enter into this Agreement,
Parent, Newco and the Company have entered into a Stock Option Agreement (the
"Stock Option Agreement"), a form of which is attached hereto as Exhibit B,
----------------------
pursuant to which the Company has granted to Newco an option to purchase newly
issued shares of Company Common Stock under certain circumstances; and
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Merger and the mode of carrying the
same into effect, the Parties hereby agree as follows:
1
<PAGE>
ARTICLE I.
THE OFFER
SECTION 1.1. THE OFFER.
(a) Offer. Parent shall cause Newco, as promptly as reasonably practicable
-----
after the date hereof, but in no event later than five (5) U.S. Business Days
following the public announcement of the terms of this Agreement, to commence
(within the meaning of Rule 14d-2 under the Exchange Act) the Offer to purchase
any and all of the issued and outstanding shares (the "Shares") of Company
------
Common Stock (other than those Shares currently owned by Newco or Parent) at a
price of $5.50 per Share, net to the seller in cash, without interest, (or at
such higher price as Newco elects to offer) (the "Offer Price"), but subject to
-----------
any withholding required by law, provided, that Newco shall not be required to
--------
commence the Offer if an event shall have occurred that, had the Offer already
been commenced, would give rise to a right to terminate the Offer under any of
the conditions set forth in Annex II hereto. The Offer shall have a scheduled
expiration date not less than twenty (20) U.S. Business Days following the
commencement thereof. The obligation of Parent and Newco to accept and pay for
Shares tendered shall be subject to the condition that there shall be validly
tendered prior to the expiration date of the Offer and not withdrawn a number of
Shares which, when added to the Shares owned by Parent, represent at least 90%
of the Shares issued and outstanding on a fully diluted basis (the "Minimum
-------
Condition") and to the other conditions set forth in Annex II. Parent and Newco
- ---------
expressly reserve the right to waive the Minimum Condition or any of the other
conditions to the Offer, to increase the price per Share payable in the Offer
and to make any other change or changes in the terms or conditions of the Offer,
including without limitation extending the expiration date, provided, that no
--------
change may be made that changes the form of consideration to be paid or
decreases the price per Share or the number of Shares sought in the Offer or
which imposes conditions to the Offer in addition to those set forth in Annex
II.
(b) Waiver of Minimum Condition. Notwithstanding any other provision
---------------------------
contained herein, including, without limitation, Section 1.1(a), in the event
the Minimum Condition is not satisfied on any scheduled expiration date of the
Offer, Newco may either (x) extend the Offer pursuant to Section 1.1(a) or (y)
amend the Offer to provide that, in the event (i) the Minimum Condition is not
satisfied at the next scheduled expiration date of the Offer (after giving
effect to the issuance of any shares of Company Common Stock theretofore issued
under the Stock Option Agreement) and (ii) the number of shares of Company
Common Stock tendered pursuant to the Offer and not withdrawn as of such next
scheduled expiration date is more than 50% of the then outstanding shares of
Company Common Stock, Newco must waive the Minimum Condition and amend the Offer
to reduce the number of shares of Company Common Stock subject to the Offer to
49.9% of the shares of Company Common Stock then outstanding (the "Revised
-------
Minimum Number") and, if a greater number of shares is tendered into the Offer
- --------------
and not withdrawn, purchase, on a pro rata basis, the Revised Minimum Number of
shares (it being understood that Newco shall not in any event be required to
accept for payment, or pay for, any shares of Company Common Stock if less than
the Revised Minimum Number of shares are tendered pursuant to the Offer and not
withdrawn at the expiration date).
2
<PAGE>
(c) Acceptance and Payment. Newco shall, on the terms and subject to the
----------------------
prior satisfaction or waiver of the conditions of the Offer, accept for payment
Shares validly tendered within five (5) Business Days after such satisfaction or
waiver of all conditions of the Offer, and pay for accepted Shares as promptly
thereafter as reasonably practicable.
SECTION 1.2. COMPANY ACTION.
(a) Board of Directors. The Company hereby approves and consents to the
------------------
Offer and represents that its Board of Directors, at a meeting duly called and
held (the "Company Board"), has (i) determined that this Agreement, the Common
-------------
Stock Option, the Stock Option Agreement and the Transactions, including the
Offer and the Merger, are fair to and in the best interest of the Company's
shareholders, (ii) approved this Agreement, the Common Stock Option, the Stock
Option Agreement and the Transactions, including the Offer and the Merger, which
approval satisfies in full the requirements of the California General
Corporation Law (the "CGCL") including, without limitation, Section 1101
----
thereof, and (iii) resolved to recommend acceptance of the Offer and approval
and adoption of the Merger and the provisions relating to the Merger in this
Agreement by its shareholders. The Company represents that it has been advised
that all of the directors on the Company Board and all of the executive officers
intend to tender their Shares pursuant to the Offer.
(b) Stockholder Lists; Other Assistance. The Company will promptly, and in
-----------------------------------
any event within three (3) Business Days after the execution of this Agreement,
furnish, or cause its transfer agent to furnish, Newco with a list of its
shareholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of Shares and lists of
securities positions of Shares held in stock depositories, in each case which,
to the Company's best knowledge, are true and correct as of a recent date, and
will provide, or cause its transfer agent to provide, to Newco such additional
information (including, without limitation, updated lists of shareholders,
mailing labels and lists of securities positions) and such other assistance as
Parent or Newco or any of their respective agents may reasonably request in
connection with the Offer and Merger.
SECTION 1.3. SEC ACTIONS.
(a) Schedule 14D-1. On the date of commencement of the Offer, Parent and
--------------
Newco shall file with the Securities and Exchange Commission ("SEC") a Tender
---
Offer Statement on Schedule 14D-1 with respect to the Offer (including all
supplements and amendments thereto, the "Schedule 14D-1"), which shall contain
--------------
an offer to purchase, a related letter of transmittal and summary advertisement
(such Schedule 14D-1 and all other documents required to be filed by Parent and
Newco with the SEC in connection with the Transactions, are collectively
referred to as the "Offer Documents").
---------------
(b) Schedule 14D-9. Concurrently with the filing of the Schedule 14D-1, the
--------------
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (including all supplements and amendments thereto, the "Schedule
--------
14D-9"), which shall reflect the recommendations of the Company Board referred
- -----
to in Section 1.2(a).
3
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(c) Action by Parties.
-----------------
(i) Parent and Newco will take all steps necessary to ensure that the
Offer Documents, and the Company will take all steps necessary to ensure that
the Schedule 14D-9 and all other documents required to be filed by the Company
with the SEC in connection with the Transactions (collectively, the "Company
-------
Disclosure Documents"), comply or complies in all material respects with the
- --------------------
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any 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, provided, that Parent and Newco make no
--------
representation with respect to information furnished by the Company for
inclusion in the Offer Documents and that the Company makes no representation
with respect to information furnished by Parent or Newco for inclusion in the
Company Disclosure Documents.
(ii) The Company represents and warrants to Parent and Newco that the
information with respect to the Company or any Subsidiary that (A) the Company
or any Subsidiary furnishes to Parent in writing specifically for inclusion in
the Offer Documents, (B) is incorporated in the Offer Documents by reference to
any of the SEC Reports or (C) is set forth in the Company Disclosure Documents
(other than any information set forth in the Company Disclosure Documents that
is furnished by Parent or Newco for inclusion therein), will not, at the time of
the filing of the Offer Documents, at the time of any distribution thereof and
at the time of the consummation of the Offer, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Parent and Newco jointly and severally represent to the Company
that the information with respect to Parent and Newco that (X) Parent or Newco
furnishes to the Company in writing specifically for inclusion in the Company
Disclosure Documents, (Y) is incorporated in the Company Disclosure Documents by
reference to any of the Offer Documents (other than any information set forth in
any of the Offer Documents that is furnished by the Company or any Subsidiary
for inclusion therein), or (Z) is set forth in the Schedule 14D-1 (other than
any information set forth in the Schedule 14D-1 that is furnished by the Company
or any Subsidiary for inclusion therein), will not, at the time of the filing of
the Offer Documents, at the time of any distribution thereof and at the time of
the consummation of the Offer, contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each of
Parent and Newco, on the one hand, and the Company, on the other hand, will
promptly correct any information provided by it for use in the Offer Documents
and the Company Disclosure Documents, as the case may be, if and to the extent
that it shall have become false and misleading in any material respect.
(iii) Each of Parent and Newco will take all steps necessary to cause
the Offer Documents, and the Company will take all steps necessary to cause the
Company Disclosure Documents, in each case including all amendments thereto, to
be filed with the SEC and to be disseminated to holders of the Shares as and to
the extent required by applicable federal securities laws.
4
<PAGE>
(iv) Each of the Company, on the one hand, and Parent and Newco on the
other hand, will give the other, and their respective counsel, the opportunity
to review and provide comments with respect to the Company Disclosure Documents
and the Offer Documents, as the case may be, before they are filed with the SEC,
in each case including all amendments thereto. In addition, each Party will
provide the other Parties and their counsel with any comments, whether written
or oral, which it may receive from time to time from the SEC or its staff with
respect to the Company Disclosure Documents or the Offer Documents promptly
after the receipt of such comments.
SECTION 1.4. DIRECTORS.
(a) Entitlement. Effective upon the purchase by Newco of such number of
-----------
Shares as shall constitute satisfaction of the Minimum Condition or the Revised
Minimum Number, as the case may be, Newco shall be entitled, at its option, to
designate the number of directors, rounded up to the next whole number, on the
Company Board for the period following such purchase (the "Post-Acceptance
---------------
Board") that equals the product of (i) the total number of directors on the
- -----
Post-Acceptance Board (giving effect to the election of any additional directors
and/or the resignation of any existing directors pursuant to this Section) and
(ii) the percentage that the number of Shares owned by Newco (including Shares
accepted for payment) and Parent bears to the total number of Shares issued and
outstanding, and the Company shall take all action necessary to cause Newco's
designees to be elected or appointed to the Post-Acceptance Board, including,
without limitation, increasing the number of directors and seeking and accepting
resignations of incumbent directors. The Company will use its best efforts to
cause individuals designated by Newco as provided in the previous sentence to
constitute the same percentage as such individuals represent on the Post-
Acceptance Board of (A) each committee of such Board (other than any committee
of such Board established to take action under this Agreement), (B) each board
of directors of each Subsidiary and (C) each committee of each such board.
Notwithstanding the foregoing, at all times prior to the Effective Time the
Post-Acceptance Board shall include at least two (2) directors in office as of
the date hereof who are not employees of the Company or any of its Subsidiaries
or affiliates of Parent or Newco (any such director remaining in office being a
"Continuing Director"). The provisions of this Section 1.4(a) are in addition to
-------------------
and shall not limit any rights which Parent or Newco or any of their affiliates
may have as a holder or beneficial owner of Shares as a matter of law with
respect to the election of directors or otherwise.
(b) Company Actions. Upon any request by Newco following the purchase by
---------------
Newco of such number of Shares as shall constitute satisfaction of the Minimum
Condition or the Revised Minimum Number, as the case may be, the Company shall
promptly take all actions required in order to fulfill its obligations under
this Section, including without limitation, in the case of satisfaction of the
Minimum Condition, all actions required pursuant to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, which shall include without
limitation filing with the Commission and transmitting to the record
shareholders of the Company such information with respect to the Company and its
officers and directors and Newco's designees as is necessary to enable Newco's
designees to be elected to the Post-Acceptance Board. Parent or Newco will
supply to the Company any information with respect to itself and such nominees,
5
<PAGE>
officers, directors and affiliates required by such Section 14(f) and Rule 14f-
1, and Parent and Newco jointly and severally represent to the Company that such
information will not, at the time of the filing with the SEC of any document
required to be filed pursuant to this Section 1.4(b), contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order that the statements made therein, in light
of the circumstances under which they were made, are not misleading.
ARTICLE II.
THE MERGER
SECTION 2.1. THE MERGER.
As promptly as reasonably practicable after consummation of the Offer,
subject to the terms and conditions of this Agreement, at the Effective Time, as
defined below, in accordance with this Agreement, CGCL and the Delaware General
Corporation Law (the "DGCL"), Newco shall, pursuant to the Merger be merged with
----
and into the Company, the separate existence of Newco (except as it may be
continued by operation of law) shall cease, and the Company shall continue as
the surviving corporation (the "Surviving Corporation").
---------------------
SECTION 2.2. EFFECT OF THE MERGER.
Upon the effectiveness of the Merger, the Surviving Corporation shall
succeed to and assume all the rights and obligations of the Company and Newco in
accordance with the CGCL, and the Merger shall otherwise have the effects set
forth in Section 1107 of the CGCL and Section 252 of the DGCL.
SECTION 2.3. CONSUMMATION OF THE MERGER.
The closing of the Merger (the "Closing") will take place as soon as
-------
practicable after the satisfaction or waiver of the conditions to the
obligations of the parties to effect the Merger set forth herein, provided that
--------
this Agreement has not been terminated previously, at the offices of Morrison &
Foerster LLP, San Francisco, California, or such other location as the Parties
may agree. On the date of the Closing, the Parties will cause the Merger to be
consummated by filing (i) with the Secretary of State of the State of California
a properly executed agreement of merger in accordance with the CGCL and (ii)
with the Secretary of State of the State of Delaware a properly executed
certificate of merger in accordance with the DGCL, each of which shall be
effective upon filing or on such later date as may be specified therein (the
time of such effectiveness being the "Effective Time").
--------------
SECTION 2.4. ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS.
The Certificate of Incorporation of Newco in effect at the Effective
Time shall be the Articles of Incorporation of the Surviving Corporation, until
thereafter amended in accordance with the provisions thereof and as provided by
the CGCL. The Bylaws of Newco in effect at the
6
<PAGE>
Effective Time shall be the Bylaws of the Surviving Corporation, until
thereafter amended in accordance with the provisions thereof and the Articles of
Incorporation of the Surviving Corporation and as provided by the CGCL. From and
after the Effective Time and until their respective successors are duly elected
or appointed and qualified, (a) the directors of Newco at the Effective Time
shall be the directors of the Surviving Corporation and (b) the officers of
Newco at the Effective Time shall be the officers of the Surviving Corporation.
SECTION 2.5. EFFECT ON SECURITIES.
By virtue of the Merger and without any action on the part of either
Constituent Corporation or any holder of the capital stock thereof, at the
Effective Time:
(a) Each share of common stock, $1.00 par value per share, of Newco issued
and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of
common stock of the Surviving Corporation;
(b) Each Share that is held in the treasury of the Company or by any
Subsidiary immediately prior to the Effective Time shall be canceled
and retired, and no consideration shall be paid or delivered in
exchange therefor;
(c) Each Share issued and outstanding immediately prior to the Effective
Time and registered in the name of Parent or Newco shall not be
converted but shall be canceled and retired, and no consideration shall
be paid or delivered in exchange therefor; and
(d) Each Share issued and outstanding immediately prior to the Effective
Time (other than Shares referred to in Section 2.5(b) or 2.5(c) above
and Dissenting Shares (which are to be treated in accordance with
Section 2.8)) shall be converted into the right to receive, upon
surrender of the certificate formerly representing such Share, in the
manner provided below, an amount in cash, without interest, equal to
the Offer Price or any higher price paid for each Share in the Offer
(the "Merger Consideration"). As of the Effective Time, each such
--------------------
remaining Share shall no longer be issued and outstanding and shall
automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such Share shall cease to
have any rights with respect thereto, except the right to receive the
Merger Consideration, without interest.
SECTION 2.6. COMPANY STOCK PLANS.
The options granted pursuant to the Company's 1994 Directors Stock
Option Plan shall vest automatically at the Effective Time and, if not exercised
at such time, will terminate thereupon. Prior to the Effective Time, the Company
and each employee identified on Schedule 2.6 (each, a "Holder") shall enter into
------
a written agreement in form reasonably satisfactory to Parent and Company
pursuant to which each Holder shall agree to terminate and cancel all
outstanding options issued pursuant to the Company's 1993 Employee Stock Option
Plan (the "Existing Option Plan") as of the Closing Date. In consideration of
--------------------
such surrender and
7
<PAGE>
cancellation of options by Holders, on the date which is twelve months following
the Effective Time (the "Payment Date"), each Holder employed by the Company on
------------
the Payment Date shall receive a cash bonus equal to the product of (i) the
number of vested options (using monthly vesting) to purchase Company Common
Stock held by Holder pursuant to the Existing Option Plan as of the Effective
Time times (ii) the difference between $10.00 per share of Company Common Stock
and the exercise price per share to purchase Company Common Stock of such
options; provided, however, that the aggregate amount the Company or the
-------- -------
Surviving Corporation agrees to pay as of the Effective Time shall not exceed
$2,040,000. If the aggregate amount payable by the Company or the Surviving
Corporation exceeds $2,040,000, any such cash bonus payable to a Holder shall be
reduced pro rata to the extent of any such excess. Any consideration payable
hereunder shall be subject to all tax withholdings as required by Applicable
Law, which shall be deducted from the amount of the consideration payable to
Holder. The Company shall take all other actions it deems appropriate to cause
all outstanding options to be terminated and canceled as of or prior to the
Effective Time.
SECTION 2.7. PAYMENT FOR SHARES.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate a
------------
bank or trust company to act as paying agent (the "Paying Agent") for the
------------
purpose of exchanging certificates representing issued and outstanding Shares
(each, a "Certificate") for the Merger Consideration. Parent or Newco shall,
-----------
from time to time, make available or cause to be made available to the Paying
Agent funds in such amounts and at times necessary for the payment of the Merger
Consideration in the manner provided herein. The Paying Agent shall invest
portions of the Merger Consideration as Parent directs (it being understood that
any and all interest earned on funds made available to the Paying Agent pursuant
to this Agreement shall be the property of, and shall be turned over to,
Parent), provided that such investments shall be in obligations of or guaranteed
by the United States of America or of any agency thereof and backed by the full
faith and credit of the United States of America, in commercial paper
obligations rated A-1 or P-1 or better by Moody's Investors Services, Inc. or
Standard & Poor's Corporation, respectively, or in deposit accounts,
certificates of deposit or banker's acceptances of, repurchase or reverse
repurchase agreements with, or Eurodollar time deposits purchased from,
commercial banks with capital, surplus and undivided profits aggregating in
excess of US$100 million (based on the most recent financial statements of such
bank which are then publicly available at the SEC or otherwise).
(b) Letter of Transmittal. Promptly after the Effective Time, the Surviving
---------------------
Corporation shall instruct the Paying Agent to mail to each holder of record of
one or more Shares, (i) a letter of transmittal, which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Paying Agent, and
which shall have such other provisions as Parent shall specify, and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration.
(c) Entitlement of Shares. Upon surrender of a Certificate for cancellation
---------------------
to the Paying Agent, together with such letter of transmittal, duly executed and
completed in
8
<PAGE>
accordance with the instructions thereto, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate shall
be entitled to receive in exchange therefor the Merger Consideration payable in
respect of Shares previously represented by such Certificates, after giving
effect to any withholding tax required by Applicable Law, and the Certificates
so surrendered shall forthwith be canceled. Until surrendered as contemplated by
this Section 2.7, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger Consideration.
No interest will be paid or accrued on the Merger Consideration.
(d) Payments to Other Persons. If Merger Consideration is to be paid to any
-------------------------
person other than the person in whose name the Certificates for Shares
surrendered for conversion are registered, it shall be a condition of the
payment that such Certificates be properly endorsed and the signatures thereon
properly guaranteed and otherwise in proper form for transfer and that the
person requesting such payment shall have paid to the Paying Agent any transfer
or other taxes required by reason of the delivery of Merger Consideration to a
person other than the registered holder of such Certificate, or shall have
established to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable.
(e) Termination. Any portion of the exchange funds held by the Paying Agent
-----------
for delivery pursuant to this Section 2.7 and unclaimed at the end of six months
after the Effective Time shall be paid or delivered to the Surviving
Corporation, upon demand, and any holders of Certificates who have not
theretofore complied with this Section 2.7 shall, subject to Applicable Law,
thereafter look only to the Surviving Corporation for payment of the Merger
Consideration in respect of Shares. Notwithstanding the foregoing, none of
Parent, the Surviving Corporation or the Paying Agent shall be liable to any
holder of Shares for any amount paid to any Governmental Authority pursuant to
any applicable abandoned property, escheat or similar law. Any amounts unclaimed
by holders of Shares two years after the Effective Time (or such earlier date
immediately prior to such time as such amounts would otherwise escheat to or
become the property of any Governmental Authority) shall, to the extent
permitted by Applicable Law, become the property of the Surviving Corporation
free and clear of any claims or interest of any person previously entitled
thereto.
(f) Stock Transfer Books; No Further Ownership Rights. At and after the
-------------------------------------------------
Effective Time, the stock transfer books of the Company shall be closed, and
there shall be no further registrations of transfers of Shares thereafter on the
records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares issued and outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares, except as otherwise provided for herein or by Applicable
Law. If, after the Effective Time, Certificates are presented to the Surviving
Corporation, Parent or the Paying Agent for any reason, they shall be canceled
and exchanged for the Merger Consideration as provided in this Section 2.7.
9
<PAGE>
SECTION 2.8. DISSENTING SHARES.
(a) Notwithstanding any provisions of this Agreement to the contrary, any
shares of Company Common Stock held by a holder who has exercised such holder's
dissenters' rights in accordance with the CGCL and who, as of the Effective
Time, has not effectively withdrawn or lost such dissenters' rights ("Dissenting
----------
Shares"), shall not be converted into or represent a right to receive the Merger
- ------
Consideration, but the holder of the Dissenting Shares shall only be entitled to
such rights as are granted by the CGCL.
(b) Notwithstanding the provisions of subsection (a) above, if any holder
of shares of Company Common Stock who demands dissenters' rights with respect to
such shares shall effectively withdraw or lose (through the failure to perfect
or otherwise) such holder's dissenters' rights under the CGCL, then, as of the
Effective Time or the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive the
Merger Consideration upon surrender of the applicable Certificate(s) as provided
herein.
(c) The Company shall give Parent (i) prompt written notice of any written
demands for payment with respect to any shares of Company Common Stock pursuant
to dissenters' rights, and any withdrawals of such demands or losses of such
rights, and any other instruments served pursuant to the CGCL, and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
demands for dissenters' rights. The Company shall not, except with the prior
written consent of Parent, voluntarily make any payment with respect to demands
for dissenters' rights or offer to settle or settle any such demands.
(d) If Parent is not required under the CGCL to obtain the approval of the
other shareholders of the Company in order to effect the Merger and effects the
Merger without holding a meeting of the shareholders, then, prior to
consummating the Merger, Parent will provide notice, as required by the CGCL,
that the Merger will become effective on or after a specified date and that
shareholders are entitled to exercise their dissenters' rights.
SECTION 2.9. SHAREHOLDERS' MEETING.
(a) Special Meeting and Proxy Statement. If required by Applicable Law in
-----------------------------------
order to consummate the Merger, the Company, acting through the Post-Acceptance
Board, shall, in accordance with Applicable Law:
(i) duly call, give notice of, convene and hold a special meeting of
its shareholders (the "Special Meeting"), as promptly as practicable following
---------------
the acceptance for payment and purchase of Shares by Newco pursuant to the
Offer, for the purpose of considering and taking action upon the approval of the
Merger and this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement, and use its best efforts
(x) to obtain and furnish the information required to be included by the SEC in
the Proxy Statement (as hereinafter defined) and, after consultation with
Parent, to respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement, (y) to cause a definitive proxy or
10
<PAGE>
information statement, including any amendment or supplement thereto (the "Proxy
-----
Statement"), to be mailed to its shareholders, provided, that the Company (1)
- --------- --------
will promptly notify Parent of its receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff for amendments or supplements
of the Proxy Statement or for additional information; (2) will promptly provide
Parent with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the Merger and (3) will not amend or
supplement the Proxy Statement without first consulting with and obtaining the
approval of Parent and its counsel, and (z) to obtain the necessary approvals of
the Merger and this Agreement by its shareholders to the extent required by the
CGCL;
(iii) prepare and revise the Proxy Statement so that, at the date
mailed to Company shareholders and at the time of the Special Meeting, the Proxy
Statement will (x) not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
that the statements made therein, in light of the circumstances under which they
are made, are not misleading (except that the Company shall not be responsible
under this clause (iii) with respect to statements made therein based on
information supplied by Parent or Newco expressly for inclusion in the Proxy
Statement), and (y) comply in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder;
(iv) subject to the fiduciary obligations of the Company Board under
Applicable Law as advised in writing by counsel to the Company Board, include in
the Proxy Statement the recommendation of such Board that shareholders of the
Company vote in favor of the approval of the Merger and the adoption of this
Agreement; and
(v) without limiting the generality of the foregoing, the Company
agrees that its obligations pursuant to Section 2.9(a)(i) shall not be affected
by (1) the commencement, public proposal, public disclosure or communication to
the Company of any Alternative Transaction (as hereinafter defined) or (2) any
withdrawal or modification by the Company Board of its approval or
recommendation of the Merger or this Agreement.
(b) Parent Information. Parent shall furnish to the Company such
------------------
information concerning itself and Newco, for inclusion in the Proxy Statement,
as may be requested by the Company and required to be included in the Proxy
Statement. Parent and Newco jointly and severally represent to the Company that
such information provided in writing expressly for inclusion in the Proxy
Statement will not, at the date the Proxy Statement is mailed to Company
shareholders and (including any corrections or modifications made by Parent or
Newco to such information) at the time of the Special Meeting, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order that the statements made therein, in
light of the circumstances under which they were made, are not misleading.
(c) Merger Without Meeting of Shareholders. Notwithstanding the
--------------------------------------
foregoing, in the event that Parent or Newco shall acquire at least 90% of the
issued and outstanding Shares, the Parties agree, at the request of Parent, to
take all appropriate and necessary action to cause the Merger to become
effective as soon as practicable after the expiration or termination of the
Offer,
11
<PAGE>
without a meeting of shareholders of the Company, in accordance with
Section 1110 of the CGCL.
SECTION 2.10. SUBSEQUENT ACTIONS.
If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties or assets of either of
the Constituent Corporations acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement and the Stock Option Agreement, the officers and
directors of the Surviving Corporation are hereby authorized to execute and
deliver, in the name and on behalf of each of the Constituent Corporations or
otherwise, all such deeds, bills of sale, assignments and assurances and to take
and do, in the name and on behalf of each of the Constituent Corporations or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Newco that, except as
set forth in the written Company Disclosure Schedule previously delivered by the
Company to Parent:
SECTION 3.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California and has the requisite
corporate power and authority and is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
and orders ("Approvals") necessary to own, lease and operate the properties it
---------
purports to own and to carry on its business as it is now being conducted,
except where the failure to have any such power, authority or Approvals
individually or in the aggregate, is not reasonably expected to have a Material
Adverse Effect. The Company is duly qualified as a foreign corporation to do
business and is in good standing in each jurisdiction in which the character of
the properties owned, leased or operated by it or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or in good standing, individually or in the aggregate, is not reasonably
expected to have a Material Adverse Effect. Set forth in Section 3.1 of the
Company Disclosure Schedule are the number of shares of capital stock of the
Israeli Affiliate owned by the Company and the percentage such shares represent
of the total number of outstanding shares of the Israeli Affiliate.
(b) Rapro Technology, Inc., a Delaware Corporation ("Rapro"), and A.G.
-----
Associates Foreign Sales Corporation, a Barbados corporation ("FSC"), are the
---
Company's only
12
<PAGE>
Subsidiaries. Each of the Subsidiaries is wholly-owned by the Company and is a
duly organized and validly existing corporation under the laws of the
jurisdiction in which it was organized. To the knowledge of the Company, the
Israeli Affiliate is duly organized and validly existing under the laws of the
jurisdiction in which it was organized. Rapro is not a party to any executory
contracts and FSC is not a party to any contracts other than organizational
sales agreements with the Company.
SECTION 3.2. CHARTER DOCUMENTS.
The Company has heretofore furnished to Parent a complete and correct
copy of the Company's Articles of Incorporation and Bylaws, Rapro's Certificate
of Incorporation and Bylaws and FSC's charter documents as in effect on the date
hereof. Each such charter document is in full force and effect. None of the
Company, Rapro or FSC is in material violation of its respective charter
documents.
SECTION 3.1. CAPITALIZATION.
The authorized capital stock of the Company consists of 25,000,000
shares of Company Common Stock and 5,000,000 shares of preferred stock, no par
value per share ("Company Preferred Stock"). As of November 30, 1998, (i)
-----------------------
6,202,743 shares of Company Common Stock were issued and outstanding, all of
which are validly issued, fully paid and nonassessable, (ii) no shares of
Company Common Stock were held in the Company's treasury or by any Subsidiary,
(iii) no shares of Company Preferred Stock were issued and outstanding and (iv)
1,009,900 shares of Company Common Stock were reserved for future issuance
pursuant to outstanding options granted pursuant to the Company's 1993 Employee
Stock Option Plan and 1994 Directors Stock Option Plan (the "Company Option
--------------
Plans"). Except as set forth in Section 3.3 of the Company Disclosure Schedule,
- -----
no shares of Company Common Stock have been issued between November 30, 1998 and
the date hereof, except pursuant to options outstanding as of such date. Except
as set forth in Section 3.3 or Section 3.11 of the Company Disclosure Schedule,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character granted by the Company relating to unissued shares
of the Company or of any Subsidiary or obligating the Company or any Subsidiary
to issue or sell any shares of, or other equity interests in, the Company or any
Subsidiary. All shares of Company Common Stock subject to issuance under the
Company Option Plans, as aforesaid, upon issuance on the terms and conditions
specified in the applicable plan, shall be duly authorized, validly issued,
fully paid and nonassessable. There are no obligations, contingent or otherwise,
of the Company or of any Subsidiary to repurchase, redeem or otherwise acquire
any shares of Company Common Stock or the shares of any Subsidiary or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any Subsidiary or any other entity. None of the options, warrants,
rights, agreements, arrangements or commitments identified in Section 3.3 or
3.11 of the Company Disclosure Schedule provide that, absent action by the
Company Board or a committee thereof, upon exercise or conversion the holder
thereof shall receive cash, and no such action of the Company Board or a
committee thereof has been taken. Except as set forth in Section 3.3 of the
Company Disclosure Schedule, all of the outstanding shares of each Subsidiary
(and all shares to be issued prior to the Effective Time)
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and all of the shares of the Israeli Affiliate held by the Company are duly
authorized, validly issued, fully paid and nonassessable, and all such shares
are owned by the Company free and clear of all security interests, liens,
claims, pledges, agreements, limitations in the Company's voting rights, charges
or other encumbrances of any nature whatsoever (collectively, "Liens").
-----
SECTION 3.4. AUTHORITY.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement, the Stock Option Agreement and such other agreements
and documents as may be contemplated by this Agreement and subject to obtaining
any necessary shareholder approval of this Agreement (to the extent required
under the CGCL), to perform its obligations hereunder and to consummate the
Transactions. This Agreement, the Common Stock Option and the Stock Option
Agreement have been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent and Newco,
constitute a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with their terms, except as such
enforceability may be subject to or limited by bankruptcy, insolvency,
reorganization, or other similar laws, now or hereafter in effect, affecting the
enforcement of creditors' rights generally, and except that the availability of
equitable remedies, including specific performance, may be subject to the
discretion of the court before which any proceeding therefor may be brought.
(b) The Company Board has determined that it is advisable and in the best
interest of the Company's shareholders for the Company to enter into the
Transactions with Parent and Newco upon the terms and subject to the conditions
of this Agreement.
SECTION 3.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Section 3.5(a) of the Company Disclosure Schedule includes a list of
all of the material agreements and instruments to which the Company currently is
party or by which the Company currently is bound that either (i) have been or
were required to be filed as an exhibit to the Company's periodic reports under
the Exchange Act as "material contracts" or "instruments defining the rights of
security holders," (ii) were entered into by the Company after the date of the
periodic report most recently filed by the Company under the Exchange Act or
(iii) relate to any joint ventures or joint development projects involving the
Company, non-competition agreements, distribution agreements, the Israeli
Affiliate or employment or termination of employment of any executive officers
of the Company (collectively, the "Material Contracts"). The Company has made
------------------
available to Parent true, correct and complete copies in all material respects
of each Material Contract. There are no material agreements to which Rapro or
FSC currently is a party or by which Rapro or FSC currently is bound which has
been or is required to be filed as an exhibit to the Company's periodic reports
under the Exchange Act.
(b) Except as set forth in Section 3.5(b) of the Company Disclosure
Schedule, (i) the Company has not breached, is not in default under and has not
received written notice of any breach of or default under any Material Contract,
except for any such breach or default which is not reasonably expected to have a
Material Adverse Effect, (ii) to the best knowledge of the Company, no other
party to any of the Material Contracts has breached or is in default of any of
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<PAGE>
its obligations thereunder, except for any such breach or default which is not
reasonably expected to have a Material Adverse Effect and (iii) to the knowledge
of the Company, each of the Material Contracts is in full force and effect.
(c) Except as set forth in Section 3.5(c) of the Company Disclosure
Schedule, the execution and delivery of this Agreement, the Common Stock Option
and the Stock Option Agreement by the Company does not, and the performance of
this Agreement, the Common Stock Option and the Stock Option Agreement by the
Company will not, and the consummation of the Transactions will not, (i)
conflict with or violate the Articles of Incorporation or Bylaws of the Company,
(ii) conflict with or violate any Applicable Law relating to the Company, or by
which any of its properties are bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or impair the Company's rights or alter the
rights or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of any Material Contract,
or result in the creation of a lien or encumbrance on any of the properties or
assets of the Company or, to the best knowledge of the Company, the Israeli
Affiliate and the pursuant to any Material Contract, except for any conflicts,
violations, breaches, defaults or other occurrences described in clauses (ii) or
(iii) of this paragraph (c) that are not reasonably expected, individually or in
the aggregate, to have a Material Adverse Effect.
(d) The execution and delivery of this Agreement, the Common Stock Option
and the Stock Option Agreement by the Company does not, and the performance of
this Agreement, the Common Stock Option and the Stock Option Agreement by the
Company will not, require the Company to obtain any consent, approval,
authorization or permit of, or to make any filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, the
rules of the National Association of Securities Dealers ("NASD"), and state
----
securities laws ("Blue Sky Laws"), (ii) the pre-merger notification requirements
-------------
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and the expiration or termination of the waiting period thereunder,
-------
(iii) the rules and regulations thereunder, and the filing and recordation of
appropriate documents relating to the Merger as required by the CGCL, (iv) the
Schedule 14D-9, (v) a Proxy Statement relating to any required approval by the
Company's shareholders of this Agreement, (vi) shareholder approval of the
Merger, if required by the CGCL, and the filing of the appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business, (vii) the filing of reports with the U.S. Department of Commerce
regarding foreign direct investment in the United States, (viii) notification
under the German Law Against Restraints of Competition (the "AARC") and the
----
approval of the German Federal Cartel Office (the "FCO") thereunder and any
---
filings or notifications under other similar laws throughout the world and (ix)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent or delay the Company from
performing its obligations under this Agreement, the Common Stock Option or the
Stock Option Agreement and is not reasonably expected to have a Material Adverse
Effect.
15
<PAGE>
SECTION 3.6. COMPLIANCE; PERMITS.
(a) Except as set forth in Section 3.6 of the Company Disclosure Schedule,
the Company, Rapro, FSC and, to the best knowledge of the Company, the Israeli
Affiliate holds all permits, licenses, franchises, easements, variances,
exemptions, consents, certificates, orders and approvals from governmental
authorities which are material to the operation of the business of the Company
and its Subsidiaries taken as a whole or the Israeli Affiliate, as the case may
be, as it is now being conducted, except where failure to obtain any of the
aforementioned is not reasonably expected to have a Material Adverse Effect on
such entity (collectively, the "Company Permits"). The Company, Rapro, FSC and,
---------------
to the best knowledge of the Company, the Israeli Affiliate are in compliance
with the terms of the Company Permits.
(b) Except as set forth in Section 3.6 of the Company Disclosure Schedule,
the Company, Rapro, FSC and, to the best knowledge of the Company, the Israeli
Affiliate are not in conflict with, or in default or violation of any Applicable
Law relating to the Company, Rapro, FSC or the Israeli Affiliate, as the case
may be, or by which their properties are bound or affected other than any such
conflict, default or violation which is not reasonably expected to have a
Material Adverse Effect on such entity.
SECTION 3.7. SEC REPORTS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents required to be
filed with the SEC since its initial public offering on May 16, 1995 and has
made available to Parent (i) its quarterly report on Form 10-Q for the period
ended June 30, 1998 and its annual report on Form 10-K for the fiscal years
ended September 30, 1995, 1996 and 1997, respectively, (ii) all proxy statements
relating to the Company's meetings of shareholders (whether annual or special)
held since its initial public offering, (iii) all other reports or registration
statements filed by the Company with the SEC since May 16, 1995, and (iv) all
amendments and supplements to all such reports and registration statements filed
by the Company with the SEC (collectively, the "SEC Reports"). The Company has
-----------
also made available to Parent the most recent draft of its annual report on Form
10-K for the fiscal year ended September 30, 1998. The SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) 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 the light of the circumstances under
which they were made, not misleading. No Subsidiary is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the SEC Reports was prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
----
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto) and each fairly presented the consolidated financial position
of the Company and its Subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows and shareholder equity for
the periods
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<PAGE>
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount.
SECTION 3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since September 30, 1998, except as set forth in Section 3.8 of the
Company Disclosure Schedule or the SEC Reports, the Company has conducted its
business in the ordinary course and there has not occurred: (a) any Material
Adverse Effect; (b) any amendments or changes in the Articles of Incorporation
or Bylaws of the Company; (c) any damage to, destruction or loss of any asset of
the Company (whether or not covered by insurance) which damages, destruction or
loss is reasonably expected to have a Material Adverse Effect; (d) any change by
the Company in its accounting methods, principles or practices; (e) any
revaluation of any of the Company's assets, including, without limitation,
writing down the value of inventory or writing off notes or accounts receivable;
(f) any other action or event that would have required the consent of Parent
pursuant to Section 5.1 had such action or event occurred after the date of this
Agreement; or (g) any sale, pledge, disposition of or encumbrance upon a
material amount of property of the Company, except in the ordinary course of
business and consistent with past practice.
SECTION 3.9. NO UNDISCLOSED LIABILITIES.
Except as is disclosed in Section 3.9 of the Company Disclosure
Schedule or the SEC Reports, neither the Company nor any Subsidiary has any
liabilities (absolute, accrued, contingent or otherwise) which are, in the
aggregate, material to the business, operations or financial condition of the
Company and its Subsidiaries taken as a whole, except liabilities (a) adequately
provided for in the Company's unaudited balance sheet (including any related
notes thereto) for the fiscal year ended September 30, 1998 (the "1998 Company
------------
Balance Sheet"); or (b) incurred in the ordinary course of business and not
- -------------
required under GAAP to be reflected on the 1998 Company Balance Sheet and
liabilities incurred in connection with this Agreement.
SECTION 3.10. ABSENCE OF LITIGATION.
Except as set forth in Section 3.10 of the Company Disclosure Schedule
or the SEC Reports, (a) there are no claims, actions, suits, proceedings or
investigations pending or, to the best knowledge of the Company, threatened
against the Company or the Israeli Affiliate, or any properties or rights of the
Company or the Israeli Affiliate, as the case may be, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign and (b) there is no judgment, decree, injunction, rule or
order of any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, outstanding against the Company, Rapro,
FSC or, to the best knowledge of the Company, the Israeli Affiliate.
SECTION 3.11. EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS.
(a) Section 3.11 of the Company Disclosure Schedule lists all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as
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amended ("ERISA")) and all bonus, stock option, stock purchase, incentive,
-----
deferred compensation, supplemental retirement superannuated, severance and
other similar fringe or employee benefit plans, programs or arrangements, and
any employment or executive compensation or severance agreements for the benefit
of or relating to any employee of the Company, any trade or business (whether or
not incorporated) which is a member of a controlled group including the Company
or which is under common control with the Company (a "Company ERISA Affiliate"),
-----------------------
as well as each plan with respect to which the Company or a Company ERISA
Affiliate could incur liability under applicable law (if such plan has been or
were terminated) (together, the "Company Employee Plans"), excluding agreements
----------------------
under which the Company has no remaining monetary obligations. A copy of each
such written Company Employee Plan has been made available to Parent.
(b) Except as set forth in Section 3.11(b) of the Company Disclosure
Schedule, (i) none of the Company Employee Plans promises or provides retiree
medical or other retiree welfare or superannuated benefits to any person; (ii)
there has been no "prohibited transaction" (as such term is defined in Section
406 of ERISA and Section 4975 of the Code) with respect to any Company Employee
Plan, which could result in any material liability of the Company or of any
subsidiary; (iii) all Company Employee Plans are in compliance in all material
respects with the requirements prescribed by any and all statutes, orders, or
governmental rules and regulations currently in effect with respect thereto
(including all applicable requirements for notification to participants or the
Department of Labor, Pension Benefit Guaranty Corporation, U.S. Internal Revenue
Service (the "IRS") or Secretary of the Treasury), and the Company and each
---
subsidiary have performed all material obligations required to be performed by
them under, are not in any material respect in default under or violation of,
and have no knowledge of any default or violation by any other party of, any of
the Company Employee Plans; (iv) each Company Employee Plan intended to qualify
under Section 401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code is the subject of a favorable determination letter
from the IRS, and nothing has occurred which may reasonably be expected to
impair such determination; (v) all contributions required to be made to any
Company Employee Plan pursuant to Section 412 of the Code, or the terms of the
Company Employee Plan or any collective bargaining agreement, have been made on
or before their due dates and a reasonable amount has been accrued for
contributions to each Company Employee Plan for the current plan years; (vi)
with respect to each Company Employee Plan, no "reportable event" within the
meaning of Section 4043 of ERISA (excluding any such event for which the thirty
(30) day notice requirement has been waived under the regulations to Section
4043 of ERISA) nor any event described in Section 4062, 4063 or 4041 of ERISA
has occurred, (vii) no withdrawal (including a partial withdrawal) has occurred
with respect to any multiemployer plan within the meaning set forth in Section
3(37) of ERISA that has resulted in, or could reasonably be expected to result
in, any withdrawal liability for the Company or any subsidiary, and (viii)
neither the Company nor any Company ERISA Affiliate has incurred, nor reasonably
expects to incur, any liability under Title IV of ERISA (other than liability
for premium payments to the Pension Benefit Guaranty Corporation arising in the
ordinary course).
(c) Section 3.11(c) of the Company Disclosure Schedule sets forth a
true and complete list of each current or former employee, officer or director
of the Company or of any
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<PAGE>
Subsidiary who holds any option to purchase Company Common Stock as of the date
hereof, together with the number of shares of Company Common Stock subject to
such option, the date of grant of such option, the extent to which such option
is vested (or will become vested within six months from the date hereof, or as a
result of, the Merger), the option price of such option and the expiration date
of such option. Section 3.11(c) of the Company Disclosure Schedule also sets
forth the total number of such options.
(d) Except as set forth in Section 3.11(d) of the Company Disclosure
Schedule, the Company has made available to Parent (i) copies of all employment
agreements with officers of the Company; (ii) copies of all agreements with
consultants who are individuals obligating the Company to make annual cash
payments in an amount exceeding $50,000; (iii) a schedule listing all officers
and employees of the Company who have executed a non-competition agreement with
the Company; (iv) copies (or descriptions) of all severance agreements, programs
and policies of the Company with or relating to its employees, excluding
programs and policies required to be maintained by Applicable Law, and (v)
copies of all plans, programs, agreements and other arrangements of the Company
with or relating to its employees which contain change in control provisions.
SECTION 3.12. EMPLOYMENT MATTERS.
Except as set forth in Section 3.12 of the Company Disclosure Schedule,
(a) there are no controversies pending or, to the knowledge of the Company or
any Subsidiary, threatened, between the Company and any of its employees, which
controversies are reasonably expected to have a Material Adverse Effect; (b) the
Company is not a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company nor does the
Company know of any activities or proceedings of any labor union to organize any
such employees; and (c) the Company does not have any knowledge of any strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to
any employees of the Company.
SECTION 3.13. INFORMATION SUPPLIED.
Subject to the accuracy of the representations of Parent in Section 4,
the information supplied by the Company for (a) inclusion in the Offer Documents
and (b) inclusion or incorporation by reference in the Proxy Statement to be
sent to the shareholders of the Company in connection with the Special Meeting
will not, on the date the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to shareholders, at the time of the Special
Meeting, or at the Effective Time, contain any statement which, at such time and
in light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, or shall omit to state any
material fact necessary in order to make the statements made therein not false
or misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Special Meeting which has become false or misleading. If at any
time prior to the Effective Time any event relating to the Company or any of its
respective affiliates, officers or directors should be discovered by the Company
which should be set forth in an amendment or supplement to the Proxy Statement,
the Company shall promptly inform Parent and Newco. The Proxy Statement
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<PAGE>
shall comply in all material respects as to form and substance with the
requirements of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent or
Newco which is contained in any of the foregoing documents.
SECTION 3.14. TITLE TO PROPERTY.
The Company owns and leases only the real property set forth on Section
3.14 of the Company Disclosure Schedule. Except as set forth in Section 3.14 of
the Company Disclosure Schedule, the Company has good and marketable title to
all of its properties and assets, free and clear of all Liens except Liens for
taxes not yet due and payable and such Liens or other imperfections of title, if
any, as do not detract from the value of or interfere with the present use of
the property affected thereby and which, individually or in the aggregate, are
not reasonably expected to have a Material Adverse Effect; and, to the knowledge
of the Company, all leases pursuant to which the Company leases from others
material amounts of real or personal property, are in good standing, valid and
effective in accordance with their respective terms, and there is not, to the
knowledge of the Company, under any of such leases, any existing material
default or event of default (or event which with notice or lapse of time, or
both, would constitute a material default and in respect of which the Company
has not taken adequate steps to prevent such a default from occurring) except
where the lack of such validity and effectiveness or the existence of such
default or event of default is not reasonably expected to have a Material
Adverse Effect.
SECTION 3.15. TAXES.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
--- -----
fees, levies, duties, tariffs, imposts and governmental impositions or charges
of any kind in the nature of (or similar to) taxes, payable to any federal,
state, local or foreign taxing authority, including (without limitation) (i)
income, franchise, profits, gross receipts, ad valorem, net worth, goods and
services, fringe benefits, withholding, sales, use, service, real or personal
property, special assessments, license, payroll, withholding, employment, social
security, accident compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "Tax Returns" shall mean returns, reports and
-----------
information statements with respect to Taxes required to be filed with the IRS
or any other taxing authority, domestic or foreign, including, without
limitation, consolidated, combined and unitary tax returns.
(b) The Company has furnished to Parent all Tax Returns filed by the
Company and its Subsidiaries for all periods ending on or after December 31,
1995. Except as disclosed in Section 3.15(b) of the Company Disclosure Schedule,
the Company and each Subsidiary has filed all United States federal income Tax
Returns and all other material Tax Returns required to be filed by them, and
have duly paid or made adequate provision on their books for the payment of all
taxes which have been incurred or are due and payable. Except as disclosed in
Section 3.15(b) of the Company Disclosure Schedule (i) there are no pending
audits, examinations or proposed audits or examinations of any tax returns filed
by the Company or by
20
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any Subsidiary, (ii) there are no other Taxes that would be due if asserted by a
taxing authority, except with respect to which the Company or applicable
Subsidiary is maintaining reserves to the extent currently required and (iii)
neither the Company nor any Subsidiary has given or been requested to give
waivers or extensions of any statute of limitations relating to the payment of
Taxes for which the Company or any Subsidiary may be liable. Except as set forth
on Section 3.15(b) of the Company Disclosure Schedule, as of the date of this
Agreement the consolidated Tax Returns of the Company have not been audited by
the IRS (or the appropriate statute of limitations has expired) in the last five
fiscal years.
(c) The Company is not a party to any agreement providing for the
allocation, payment or sharing of taxes among the Company, and any third
parties. The Company does not have an application pending with respect to any
Tax requesting permission for a change in accounting method.
SECTION 3.16. ENVIRONMENTAL MATTERS.
Except as set forth in Section 3.16 of the Company Disclosure Schedule,
the Company (a) obtained all applicable permits, licenses and other
authorizations which are required under federal, state, foreign or local laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic materials or wastes into ambient air, surface
water, ground water or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
by the Company ("Environmental Approvals"), (b) is in material compliance with
-----------------------
all terms and conditions of the Environmental Approvals, and also is in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
such laws or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder, (c)
as of the date hereof, is not aware of nor has it received notice of any past or
present violation relating to or any event, condition, circumstance, activity,
practice, incident, action or plan which is reasonably likely to interfere with
or prevent continued compliance with or which would give rise to any common law
or statutory liability, or otherwise form the basis of any claim, action, suit
or proceeding, based on or resulting from the Company's manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste and (d) taken all actions
necessary under applicable requirements of federal, state, foreign and local
laws, rules or regulations to register any products or materials required to be
registered by the Company thereunder.
SECTION 3.17. BROKERS.
No broker, finder or investment banker (other than SoundView Financial
Group) is entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on behalf of
the Company. The Company has heretofore furnished to Parent a complete and
correct copy of all agreements between
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the Company and SoundView Financial Group pursuant to which such firm would be
entitled to any payment relating to the Transactions.
SECTION 3.18. FULL DISCLOSURE.
No statement contained in any certificate or schedule furnished or to
be furnished by the Company to Parent or Newco pursuant to the provisions of
this Agreement contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact necessary, in the light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
SECTION 3.19. OPINION OF FINANCIAL ADVISOR.
The Company has received the opinion of its financial advisor,
SoundView Financial Group, to the effect that, as of December 17, 1998, the
Merger Consideration to be received by holders of the Company Common Stock is
fair, from a financial point of view, to the Company's shareholders, and the
Company has delivered a written copy of such opinion to the Parent.
SECTION 3.20. INTELLECTUAL PROPERTY.
(a) Except as set forth in Section 3.20(a) of the Company Disclosure
Schedule, the Company and, to the best knowledge of the Company, the Israeli
Affiliate, directly or indirectly, own, or license or otherwise possess legally
enforceable rights to use, all patents, trademarks, trade names, service marks,
copyrights, and any applications therefor, technology, know-how and tangible or
intangible proprietary information or material that are used in any product or
service of the Company or the Israeli Affiliate, as the case may be, previously
sold or now being sold by the Company, now in beta phase by the Company or the
Israeli Affiliate, as the case may be, or otherwise in or material to the
business of the Company or the Israeli Affiliate, as the case may be, as
currently conducted (the "Intellectual Property Rights").
----------------------------
(b) Section 3.20(b) of the Company Disclosure Schedule sets forth (i)
each patent owned by the Company and (ii) each license agreement under which the
Company licenses, either to or from a third party, Intellectual Property Rights
on an exclusive or non-exclusive basis. Except as set forth in Section 3.20(b)
of the Company Disclosure Schedule, the Company is the sole and exclusive owner
of the Intellectual Property Rights and has sole and exclusive rights (and is
not contractually obligated to pay any compensation to any third party in
respect thereof) to the use thereof or the material covered thereby in
connection with the services or products in respect of which the Intellectual
Property Rights are being used. Except as set forth in Section 3.20(b) of the
Company Disclosure Schedule, no claims with respect to the Intellectual Property
Rights have been asserted or, to the best knowledge of the Company, are
threatened by any Third Party: (i) to the effect that the manufacture, sale,
licensing, or use of any of the products or processes of the Company infringes
on any copyright, patent, trade mark, service mark or trade secret of such
person; (ii) against the use by the Company of any Intellectual Property Rights;
or (iii) challenging the ownership by the Company or the validity of any of the
Intellectual Property Rights.
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(c) Section 3.20(c) of the Company Disclosure Schedule sets forth all
registered trademarks, service marks and copyrights held by the Company and each
are valid and subsisting. To the knowledge of the Company, there is no
unauthorized use, infringement or misappropriation of any of the Intellectual
Property Rights by any third party, including any employee or former employee of
the Company. No Intellectual Property Right or product or process of the Company
is subject to any outstanding decree, order, judgment, or stipulation
restricting in any manner the licensing thereof by the Company.
(d) Except as set forth in Section 3.20(d) of the Company Disclosure
Schedule, the Company and, to the best knowledge of the Company, the Israeli
Affiliate is not bound by any agreement which restricts the Company or the
Israeli Affiliate, as the case may be, from selling, licensing or otherwise
distributing any of its products to any class of customers, in any geographic
area, during any period of time or in any segment of the market.
SECTION 3.21. INTERESTED PARTY TRANSACTIONS.
Except as set forth in Section 3.21 of the Company Disclosure Schedule
or in the SEC Reports, since the date of the Company's most recent draft of the
annual report on Form 10-K for the fiscal year ended September 30, 1998, no
event has occurred that would be required to be reported as a Certain
Relationship or Related Transaction, pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
SECTION 3.22. INSURANCE.
The Company maintains fire and casualty, general liability, business
interruption, product liability and sprinkler and water damage insurance with
reputable insurance carriers that the Company believes to be reasonably prudent
for its business and are similar in character and amount to policies carried by
entities engaged in similar businesses. Except as set forth in Section 3.22 of
the Company Disclosure Schedule, there are no claims by the Company under any
such insurance as to which any insurance company is denying liability or
defending under a reservation of rights clause.
SECTION 3.23. VOTE REQUIRED.
If applicable, the affirmative vote of the holders (entitled to vote
and voting on the Merger) of at least a majority of the shares is the only vote
of the holders of Company Common Stock necessary to approve the Merger.
23
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
Parent and Newco, jointly and severally, represent and warrant to the
Company as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION.
(a) Organization. Parent is a business entity duly organized, validly
------------
existing and in good standing under the laws of the Federal Republic of Germany.
Newco is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of the Parent and Newco has all
requisite corporate power and authority and is in possession of all Approvals
necessary to own, or lease and operate its properties and assets and to carry on
its business as it is now being conducted. Each of Parent and Newco is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction in which the character of the properties owned, leased or
operated by it, or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified is not reasonably
expected to have a material adverse effect on Parent's or Newco's ability to
perform its respective obligations hereunder.
(b) Newco Activities. Since the date of its incorporation, Newco has
----------------
not engaged in any activity other than in connection with or as contemplated by
this Agreement, the Offer and the Merger or in connection with arranging
financing required to consummate the Transactions.
SECTION 4.2. AUTHORITY.
Each of Parent and Newco has all requisite corporate power and
authority to execute and deliver this Agreement and the Stock Option Agreement
and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement and the Stock Option Agreement by Parent and Newco
and the consummation by Parent and Newco of the Transactions have been duly
authorized by Parent and Newco, and no other corporate proceedings on the part
of Parent or Newco (including, without limitation, any action by their
respective shareholders) are necessary to authorize this Agreement, the Stock
Option Agreement and the Transactions. Each of this Agreement and the Stock
Option Agreement has been duly executed and delivered by each of Parent and
Newco and constitute a legal, valid and binding obligation of each of Parent and
Newco, enforceable against Parent and Newco in accordance with their terms,
except as such enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, or other similar laws, now or hereafter in effect,
affecting the enforcement of creditors' rights generally, and except that the
availability of equitable remedies, including specific performance, may be
subject to the discretion of the court before which any proceeding therefor may
be brought.
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SECTION 4.3. NON-CONTRAVENTION.
The execution and delivery of this Agreement and the Stock Option
Agreement by Parent and Newco and the consummation by Parent and Newco of the
Transactions will not (i) conflict with any provision of their respective
Certificates of Incorporation or Bylaws or equivalent organizational documents
or (ii) result (with the giving of notice or the lapse of time or both) in any
violation of or default or loss of a benefit under, or permit the acceleration
of any obligation under, any mortgage, indenture, lease, agreement or other
instrument, permit, concession, grant, franchise or license or any Applicable
Law applicable to Parent or Newco or any of their respective properties, other
than any such violation, default, loss or acceleration that is not reasonably
expected to materially adversely affect the ability of Parent or Newco, as the
case may be, to perform its respective obligations hereunder.
SECTION 4.4. GOVERNMENTAL APPROVALS.
No filing, declaration or registration with, or permit, authorization,
consent or approval, of, any Governmental Authority is required to be made or
obtained by Parent or Newco in connection with the execution and delivery of
this Agreement and the Stock Option Agreement by Parent or Newco or the
consummation by Parent or Newco of the Transactions, except for (i) the filing
of a premerger notification and report form under the HSR Act, and the
expiration or termination of the waiting period thereunder, (ii) the filing with
the SEC of (x) the Offer Documents and (y) such reports under the Exchange Act
as may be required in connection with this Agreement, the Stock Option Agreement
and the Transactions, (iii) the filing of the applicable documents with the
Secretary of State of the State of California, and the filing of appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (iv) as may be required by any applicable Blue Sky
Laws, (v) the filing of reports with the U.S. Department of Commerce regarding
foreign direct investment in the United States, (vi) notification under the AARC
and the approval by the FCO thereunder and any filings or notifications under
other similar laws throughout the world and (vii) such other consents,
approvals, orders, authorizations, registrations, declaration, filings and
notices the failure of which to be obtained or made would not prevent or
materially delay the consummation of the transactions contemplated by this
Agreement or the performance by Parent or Newco of any of their respective
material obligations hereunder or thereunder.
SECTION 4.5. BROKERS.
No person is entitled to any brokerage or finder's fee or commission in
connection with the Transactions as a result of any action taken by or on behalf
of Parent or Newco, other than Harris Roja Corporation.
SECTION 4.6. FINANCING.
Parent has available to it cash, credit lines or other sources of
financing to provide the funds necessary for completion of the Transactions.
25
<PAGE>
SECTION 4.6. INFORMATION SUPPLIED.
None of the information supplied or to be supplied by Parent or Newco
for inclusion in (i) the Schedule 14D-9, or (ii) the Proxy Statement will, in
the case of the Schedule 14D-9, at the time the Schedule 14D-9 is filed with the
SEC or first published, sent or given to the Company's shareholders, or, in the
case of the Proxy Statement, at the time the Proxy Statement is first mailed to
the Company's shareholders or at the time of the Special Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
ARTICLE V.
CERTAIN COVENANTS
SECTION 5.1. CONDUCT OF THE COMPANY'S BUSINESS.
The Company covenants and agrees that, prior to the Effective Time,
unless Parent shall otherwise consent in writing or as otherwise expressly
contemplated by this Agreement:
(a) the business of the Company shall be conducted only in, and
the Company shall not take any action except in, the ordinary course of
business consistent with past practice;
(b) the Company shall not, directly or indirectly, do any of the
following: (i) amend or propose to amend its Articles of Incorporation
or Bylaws or reincorporate in any jurisdiction; (ii) split, combine or
reclassify any issued and outstanding shares of its capital stock, or
declare, set aside or pay any dividend or other distribution (payable
in cash, stock, property or otherwise) with respect to such shares;
(iii) redeem, purchase, acquire or offer to acquire (or permit any
Subsidiary to redeem, purchase, acquire or offer to acquire) any shares
of its capital stock; or (iv) issue, sell, pledge, accelerate, modify
the terms of or dispose of, or agree to issue, sell, pledge,
accelerate, modify the terms of or dispose of, any additional shares
of, or securities convertible or exchangeable for, or any options,
warrants, calls, commitments or rights of any kind to acquire any
shares of, its capital stock of any class or other property or assets,
provided, that the Company (x) may issue shares of Company
--------
Common Stock upon the exercise of currently outstanding options as of
the date hereof; (y) grant options under the Company's 1993 Employee
Stock Option Plan to any new employee in amounts consistent with past
practices; and (z) may enter into agreements or arrangements
contemplated by Section 2.6;
(c) the Company shall not (i) transfer, lease, license, sell,
mortgage, pledge, dispose of or encumber any material assets, except in
the ordinary course of business consistent with past practice; (ii)
acquire (by merger, consolidation or acquisition of stock or assets)
any corporation, partnership or other business organization or division
thereof or any material assets; (iii) enter into or modify any material
contract, lease, agreement or
26
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commitment, except in the ordinary course of business consistent with
past practice; (iv) terminate, modify, assign, waive, release or
relinquish any material rights or claims or amend any material rights
or claims not in the ordinary course of business consistent with past
practice; (v) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction of any such claims, liabilities or obligations, in the
ordinary course of business, reflected or reserved against in, or
contemplated by, the consolidated financial statements of the Company
included in the SEC Reports; or (vi) settle or compromise any material
claim, action, suit or proceeding pending or threatened against the
Company, or, if the Company may be liable or obligated to provide
indemnification, against the Company's directors or officers, before
any court, governmental agency or arbitrator;
(d) except as provided in this Agreement, the Company shall not
(i) incur or adversely modify any material indebtedness or other
liability; provided, however, that the Company shall be permitted to
-------- -------
draw upon its existing credit lines as the Company may deem
appropriate; (ii) assume, guarantee, endorse or otherwise become liable
or responsible (directly or indirectly, contingent or otherwise) for
the obligations of any other person; or (iii) make any loans, advances
or capital contributions to, or investments in, any other person (other
than to wholly-owned Subsidiaries or customary loans or advances to
employees in the ordinary course of business consistent with past
practice);
(e) the Company shall not grant any increase in the salary or
other compensation of its employees, or grant any bonus to any employee
or enter into any employment agreement or make any loan to or enter
into any material transaction of any other nature with any employee of
the Company or any Subsidiary, except in the ordinary course of
business consistent with past practices, or as contemplated by Section
2.6;
(f) the Company shall not, except as contemplated by this
Agreement or as may be required by Applicable Law or, in the case of
employees who are not executive officers of the Company, in the
ordinary course of business consistent with past practices (i) adopt,
increase, accelerate the vesting of or payment of any amounts in
respect of, or otherwise amend, in any respect, any collective
bargaining, bonus, profit sharing, incentive or other compensation,
stock option, stock purchase or restricted stock, insurance, pension,
retirement, deferred compensation, employment or other employee benefit
plan, agreement, trust, fund, plan or arrangement for the benefit or
welfare of any directors, officers or employees (including, without
limitation, any such plan or arrangement relating to severance or
termination pay); or (ii) enter into any employment or severance
agreement with or grant any severance or termination pay to any officer
or director of the Company;
(g) the Company shall not take or knowingly permit any action that
would make any representation or warranty of the Company hereunder
materially inaccurate at, or as of any time prior to, the Effective
Time, or omit to take any action reasonably
27
<PAGE>
necessary to prevent any such representation or warranty from being
materially inaccurate at any such time;
(h) the Company shall not change any of the accounting methods
used by it without providing advance notice to Parent in writing;
(i) the Company shall not make any Tax election (other than in
the ordinary course of preparing and filing its Tax returns) or settle
or compromise any Tax liability or investigation;
(j) the Company shall not enter into any agreement, contract,
commitment or arrangement to do, or to authorize, recommend, propose or
announce an intention to do, any of the actions described in the above
paragraphs of Section 5.1, other than paragraph (a); and
(k) the Company shall use its reasonable efforts, to the extent
not prohibited by the foregoing provisions of this Section 5.1, to
maintain its relationships with its suppliers, customers and employees,
and, if and as requested by Parent or Newco, (i) to the extent
permitted by Applicable Law, the Company shall use its reasonable best
efforts to make reasonable arrangements for representatives of Parent
or Newco to meet with customers and suppliers of the Company or any
Subsidiary, and (ii) the Company shall schedule, and the management of
the Company shall participate to the extent requested in, meetings of
representatives of Parent or Newco with employees of the Company or any
Subsidiary.
SECTION 5.2. ACCESS TO INFORMATION.
(a) Access and Disclosure. Subject to the requirements of any binding
---------------------
confidentiality agreements with customers and subject to any applicable
limitations imposed by law, from the date hereof to the Effective Time, the
Company shall (and shall cause its officers, directors, employees,
representatives and agents to) afford the officers, employees, counsel,
representatives and agents of Parent reasonable access during regular business
hours to the Company's officers, employees, agents, properties, books, records
and work papers, and shall promptly furnish Parent all financial, operating and
other information and data as Parent, through its officers, employees or agents,
may reasonably request, provided, that in the event such access or the
--------
furnishing of such information is prohibited or limited due to binding customer
agreements or Applicable Law, the Company will so inform Parent and will upon
request use its reasonable best efforts to obtain any necessary consent to allow
such access or to provide such information. During such period, the Company
shall furnish promptly to Parent (i) a copy of each report, schedule,
registration statement or other document filed or received by it during such
period pursuant to the requirements of federal securities laws, and (ii) all
other information concerning its business, properties and personnel as Parent
may reasonably request.
(b) Mutual Non-Disclosure Agreement. Parent, Newco and the Company
-------------------------------
agree that the confidentiality provisions agreed to in the Mutual Non-Disclosure
Agreement dated as of August 6, 1998, as amended (the "Mutual Non-Disclosure
---------------------
Agreement") shall remain binding and
- ---------
28
<PAGE>
in full force and effect in accordance with the terms of such agreement and that
the terms thereof are incorporated herein by reference.
(c) Effect. No investigation pursuant to this Section 5.2 shall
------
affect, add to or subtract from any representations or warranties of the parties
hereto or the conditions to the obligations of the parties hereto to consummate
the Offer or effect the Merger.
SECTION 5.3. CONSENTS AND APPROVALS; FURTHER ASSURANCES.
(a) Consents and Approvals. Each of the Company, Parent and Newco will
----------------------
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to this Agreement, the
Common Stock Option, the Stock Option Agreement and the Transactions (which
actions shall include, without limitation, furnishing all information, making
all filings and taking all other acts (i) required under the Exchange Act, the
Securities Act and all other federal or state securities laws, (ii) required
under the HSR Act or any applicable foreign competition and antitrust statutes
and regulations, including any required by the FCO under the AARC, or (iii)
required or requested by any bank, stock exchange, or by any other Governmental
Authority) and will cooperate promptly with and furnish information to each
other in connection with any such requirements imposed on any of them or their
respective subsidiaries in connection with this Agreement, the Common Stock
Option, the Stock Option Agreement and the Transactions. Each of the Company,
Parent and Newco will, and will cause their respective subsidiaries to, take all
commercially reasonable action to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, or to provide any required notice to, any Governmental Authority or other
public or private third party required to be obtained or made by Parent, Newco
or the Company or any of their respective subsidiaries in connection with the
Merger or the taking of any action contemplated in connection with the Merger or
otherwise by this Agreement.
(b) Antitrust and Competition Filings. Without limiting the generality
---------------------------------
of sub-section (a) above, the Company and Parent shall take all reasonable
actions necessary to file as soon as practicable notifications under the HSR Act
and any applicable foreign competition and antitrust statutes and regulations,
including, to respond in a commercially reasonable manner to any inquiries
received from the Federal Trade Commission, the Antitrust Division of the
Department of Justice, the FCO any other Governmental Authority for additional
information or documentation and to respond in a commercially reasonable manner
to all inquiries and requests received from any Governmental Authority in
connection with antitrust and competition matters.
(c) Further Assurances. Subject to the terms and conditions herein
------------------
provided, each of the Parties agrees to use all commercially reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the Transactions, including, without limitation, using
all commercially reasonable efforts to obtain all necessary waivers, consents
and approvals.
(d) Shareholder Litigation. The Company shall give Parent the
----------------------
opportunity to participate in the defense and settlement of any shareholder
litigation against the Company or its
29
<PAGE>
directors or officers relating to any of the Transactions and shall not enter
into any such settlement without Parent's consent, which consent shall not be
unreasonably withheld.
(e) Limits. Nothing in this Agreement shall require Parent or Newco to
------
agree to make, or to permit the Company to make, any divestiture of or grant any
rights to a significant asset in order to obtain any waiver, consent or
approval.
SECTION 5.4. INQUIRIES AND NEGOTIATIONS.
(a) Notice. The Company shall immediately notify Parent if any
------
proposal, offer, inquiry or other contact is received by, any information is
requested from, or any discussions or negotiations are sought to be initiated or
continued with, the Company by or from any person, corporation, entity or
"group" (as defined in Section 13(d) of the Exchange Act) other than Parent and
its affiliates, representatives and agents (each, a "Third Party") in connection
-----------
with any Alternative Transaction, and shall, in any such notice to Parent,
indicate the identity of the Third Party and the terms and conditions of any
proposals or offers or the nature of any inquiries or contacts, and thereafter
shall keep Parent informed, on a current basis, of the status and terms of any
such proposals or offers and the status of any such discussions or negotiations.
Without limiting the generality of the foregoing, the Company shall provide
Parent with not less than two (2) Business Days' notice prior to the execution
by the Company of any definitive agreement with respect to any Alternative
Transaction or any public announcement relating to any Alternative Transaction.
(b) Third Parties. Prior to furnishing any non-public information to,
-------------
or entering into negotiations or discussions with, any Third Party, the Company
will obtain an executed confidentiality agreement from such Third Party on terms
substantially the same as, or no less favorable to the Company in any material
respect than, those contained in the Mutual Non-Disclosure Agreement. The
Company shall not release any Third Party from, or waive any provision of, any
such confidentiality agreement or any other confidentiality or standstill
agreement to which the Company is a party.
(c) Non-Solicitation. Neither the Company nor its officers, directors
----------------
or representatives, or any of their respective affiliates shall initiate,
solicit or encourage, directly or indirectly, or take any action to facilitate
inquiries or the making of any proposal with respect to or participation in
negotiations concerning any proposal with respect to or participation in
negotiations concerning any merger, consolidation, acquisition of more than 2%
of the capital stock of the Company, a business combination involving the
Company or the purchase of all or a significant portion of the assets of the
Company (an "Alternative Transaction"), except that the Company Board may
-----------------------
provide information to any third person making a bona fide, written and
unsolicited inquiry concerning an Alternative Transaction that would result in
the payment to the Company shareholders of a higher price per share in cash than
the Offer Price (a "Superior Proposal"), provided that counsel to the Company
-----------------
has advised the Company Board in writing that its fiduciary duties require it to
consider the Superior Proposal.
30
<PAGE>
SECTION 5.5. NOTIFICATION OF CERTAIN MATTERS.
The Company shall give prompt notice to Parent and Newco, and Parent
and Newco shall give prompt notice to the Company, of (a) the occurrence, or
failure to occur, of any event that such Party believes would be likely to cause
any of its representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Effective Time and (b) any material failure of the Company, Parent or Newco,
as the case may be, or any officer, director, employee or agent thereof, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any such
-------- -------
notice shall not limit or otherwise affect the remedies available hereunder to
the Party receiving such notice.
SECTION 5.7. FIRPTA CERTIFICATE.
Prior to the date of expiration of the Offer, the Company shall deliver
to Newco a certification that the Shares do not constitute U.S. real property
interests within the meaning of Section 897 of the Code, in form satisfactory to
Newco.
SECTION 5.7. EMPLOYEE BENEFITS.
For a period of twelve months from the Effective Time, Parent shall
cause the Surviving Corporation to provide active employees of the Company and
its Subsidiaries with benefits (including, without limitation, welfare benefits)
that are reasonably comparable, taken as a whole, to the benefits provided under
the Company's benefit plans (other than equity-based plans) as in effect
immediately prior to the Effective Time. Without limiting the generality of the
foregoing, it is expressly understood that the Company currently provides a
two-month paid sabbatical (the "Sabbatical") to its employees who have been
----------
employed by the Company for at least seven (7) years, and Parent shall cause the
Surviving Corporation to provide such benefit to such employees identified in
Sections 3.11 or 5.7 of the Company Disclosure Schedule. Parent shall provide
the Sabbatical if Surviving Corporation is merged with, or transfers all its
assets to, Parent or an affiliate of Parent.
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.1. LOAN.
(a) Subject to the limitations set forth herein, in the event that the
Merger is not consummated on or before March 5, 1999, Parent shall make
available a loan (the "Loan") to the Company in the aggregate principal sum of
----
$3,000,000 (the "Principal"). Interest on the Principal shall accrue at a
---------
floating rate per annum equal to the internal rate of interest assessed by
Parent or its affiliates on intercorporate loans made to or among subsidiaries
of Parent (the "Interest"). All Principal and accrued Interest shall be due and
--------
payable two years from the date such Loan is made (the "Maturity Date"). The
-------------
Loan and all payments of Principal and Interest
31
<PAGE>
shall be made in lawful money of the United States of America; the Loan shall be
evidenced by a promissory note in form reasonably satisfactory to Parent and
Company (the "Note").
----
(b) Parent shall not be obligated to make the Loan if any of the
following events occur: (i) the Offer has not expired by its terms or, if the
Offer has expired, the Shares tendered in the Offer are insufficient to satisfy
the Minimum Condition or the Revised Minimum Number; (ii) this Agreement shall
have been terminated by Parent pursuant to its rights under Section 8.1(e);
(iii) any shareholder of the Company shall default under the Voting Agreements;
(iv) any representation or warranty made by the Company under this Agreement,
the Common Stock Option or the Stock Option Agreement shall have been untrue at
the time such representation or warranty was made or shall be untrue on the date
the Loan is to be made and such failure to be true shall have been caused by an
event that would constitute a Material Adverse Effect under this Agreement; (v)
there shall be any preliminary or permanent injunction or other order, decree or
ruling issued by any court of competent jurisdiction or any statute, rule,
regulation or order entered, promulgated or enacted by any governmental,
regulatory or administrative agency or authority in effect that would impact the
effective operation of the business of the Company resulting in a Material
Adverse Effect from and after the Effective Time; (vi) any waiting period under
the HSR Act applicable to the purchase of Shares in connection with the Offer
shall not have expired or been terminated and the satisfaction of any applicable
foreign competition and antitrust statutes and regulations (including approval
by the FCO pursuant to the AARC) shall not have been obtained; (vii) there shall
be pending any proceeding or litigation, initiated prior to or after the date of
this Agreement, challenging this Agreement or the Transactions or seeking to
prohibit, alter, prevent or materially delay the Merger; (viii) there shall be
pending or threatened against the Company any claim, action, suit, proceeding or
investigation which would or could reasonably be expected to have a Material
Adverse Effect; or (ix) the Company shall have terminated this Agreement
pursuant to Section 8.1(f).
SECTION 6.2. OPTIONS.
The Company hereby grants to Parent options (the "Options"), to
-------
purchase an aggregate of 600,000 shares of Company Common Stock at an exercise
price of $2.00 per share evidenced by a Common Stock Option (the "Common Stock
------------
Option"), a form of which is attached hereto as Exhibit C. Options to purchase
- ------
100,000 shares of Company Common Stock shall become immediately exercisable if
and when the Loan is made by Parent to the Company as set forth in Section
6.1(a) (the "Loan Date"). The remaining Options shall become exercisable if and
---------
when a default occurs under the Note. All of the Options shall expire (a) on
March 5, 1999, if the Loan is not made, or (b) on the first anniversary of the
Maturity Date. The Company shall adjust the number of shares of Company Common
Stock subject to the Options to maintain the percentage of Company Common Stock
subject to the Options at the date of this Agreement, based on the number of
outstanding shares of the Company's fully diluted capital stock, if at any time
after the Loan Date the Company shall cause or effect: (i) a subdivision or
combination of the outstanding shares of the Company's capital stocks, (ii) a
stock distribution or dividend on its capital stock; or (iii) a recapitalization
or reclassification of its capital stock.
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SECTION 6.3 PROXY STATEMENT
If required, as promptly as practicable, the Company shall prepare and
file with the SEC the Proxy Statement with respect to approval of the Merger.
The Proxy Statement shall, subject to the fiduciary duties of the Company Board,
include the recommendation of the Company Board in favor of the Merger.
SECTION 6.4 COMPANY SHAREHOLDERS' MEETING
If required by the CGCL, the Company shall duly call, give notice of,
convene and hold the Special Meeting as promptly as practicable following the
acceptance for payment and purchase of Shares pursuant to the Offer for the
purpose of voting upon the approval of the Merger. The Company shall use its
best efforts to solicit from its shareholders proxies in favor of the approval
of the Merger, and shall take all other action necessary or advisable to secure
the vote or consent of shareholders required by the CGCL and the Articles of
Incorporation and Bylaws of the Company to obtain such approvals, unless
otherwise required under the applicable fiduciary duties of the Company Board,
as advised by its legal advisor.
SECTION 6.5 CONSENTS; APPROVALS
The Company and Parent shall each use their reasonable efforts to
obtain all consents, waivers, approvals, authorizations or orders (including,
without limitation, all governmental and regulatory rulings and approvals), and
the Company and Parent shall make all filings (including, without limitation,
all filings with any Governmental Authority) required in connection with the
authorization, execution and delivery of this Agreement by the Company and
Parent and the consummation by them of the Transactions. If required under
Applicable Law, the Company and Parent shall furnish all information required to
be included in the Proxy Statement, or for any application or other filing to be
made pursuant to the rules and regulations of any governmental body in
connection with the Transactions. Except where prohibited by applicable statutes
and regulations, and subject to the Mutual Non-Disclosure Agreement, each Party
shall promptly provide the other (or its counsel) with copies of all filings
made by such party with any state or federal government entity in connection
with this Agreement or the Transactions.
SECTION 6.6 INDEMNIFICATION.
For four years after the Effective Time, the Surviving Corporation (or
any successor to the Surviving Corporation) shall indemnify, defend and hold
harmless the present and former officers, directors, employees and agents of the
Company and its Subsidiaries (each an "Indemnified Party") against all losses,
-----------------
claims, damages, liabilities, fees, costs and expenses (including reasonable
fees and disbursements of counsel approved by the Surviving Corporation in
advance of disposition of judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided that any such settlement is effected with
the written consent of Parent or the Surviving Corporation)) based in whole or
in part on the fact that such person is or was such a director, officer,
employee or agent and arising out of actions or omissions occurring at or prior
to the Effective Time (including, without limitation, matters arising out of or
pertaining to the Transactions) to the full extent provided under the terms of
the Company's Articles of
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<PAGE>
Incorporation, Bylaws and indemnification agreements, all as in effect at the
date hereof, including provisions relating to advancement of expenses incurred
in the defense of any action or suit, and subject to applicable law; provided,
that, in the event any claim or claims are asserted or made within such four
year period, all rights to indemnification or advancement of expenses in respect
of such claim or claims shall continue until disposition of any and all such
claims; and provided, further, that nothing herein shall impair any existing
rights or obligations of any present or former directors or officers of the
Company. In the event of any threatened or actual claim, suit, proceeding or
investigation as to which an Indemnified Party is entitled to indemnification or
advancement of expenses hereunder (whether asserted before, at or after the
Effective Time), the Indemnified Party may retain counsel satisfactory to
Parent, but in no event shall the Surviving Corporation be required to reimburse
the costs of such counsel hereunder unless (i) the Surviving Corporation shall
have declined to assume the defense of such claim within ten Business Days of a
written request for indemnification given in accordance with Section 9.5.
ARTICLE VII.
CONDITIONS TO THE MERGER
SECTION 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each Party to effect the Merger shall be
subject, at its option, to the fulfillment at or prior to the Effective Time of
the following conditions:
(a) Shareholder Approval. If required by the CGCL, this Agreement
--------------------
and the Merger shall have been approved and adopted by the requisite
vote of the shareholders of the Company in accordance with applicable
provisions of the Company's Articles of Incorporation and the CGCL; and
(b) No Illegality. No Applicable Law shall prohibit consummation
-------------
of the Merger.
SECTION 7.2. CONDITIONS TO PARENT'S AND NEWCO'S OBLIGATION TO EFFECT THE
MERGER.
The obligation of Parent and Newco to effect the Merger in addition
shall be subject, at their option, to the fulfillment at or prior to the
Effective Time of the following conditions:
(a) Governmental Approvals. (i) Any waiting period under the HSR
----------------------
Act applicable to the purchase of shares of Company Common Stock
pursuant to the Merger shall have expired or been terminated and (ii)
all requirements of any applicable foreign competition and antitrust
statutes and regulations to the consummation of the Merger shall have
been satisfied, including approval by the FCO pursuant to the AARC;
(b) No Governmental Actions. No preliminary or permanent
-----------------------
injunction or other order, decree or ruling issued by any court of
competent jurisdiction nor any statute,
34
<PAGE>
rule, regulation or order entered, promulgated or enacted by any
governmental, regulatory or administrative agency or authority shall be
in effect that would restrain the effective operation of the business
of the Company and the Subsidiaries from and after the Effective Time,
and no proceeding challenging this Agreement, the Common Stock Option,
the Stock Option Agreement or the Transactions or seeking to prohibit,
alter, prevent or materially delay the Merger shall be pending before
any Governmental Authority;
(c) No Breach of Covenants. The Company shall not have breached or
----------------------
failed to perform in any material respect any of its covenants or
agreements under this Agreement;
(d) Consummation of Offer. Newco shall have purchased Shares
---------------------
pursuant to the Offer (provided that this condition shall be deemed
fulfilled if Newco shall have failed to purchase Shares in violation of
the Offer);
(e) Opinion of Counsel. Parent and Newco shall have received an
------------------
opinion from Thelen, Reid & Priest LLP, counsel to the Company, the
substance of which shall be in form reasonably satisfactory to Parent,
dated the Closing;
(f) Consents Obtained. All consents waivers or notices required to
-----------------
be obtained or made by the Company, for the authorization, execution,
delivery and performance of this Agreement and the consummation by it
of the Transactions shall have been obtained and made.
ARTICLE VIII.
TERMINATION AND ABANDONMENT
SECTION 8.1. TERMINATION AND ABANDONMENT.
Any Party desiring to terminate this Agreement pursuant to this Section
8.1 shall give notice to the other party in accordance with Section 9.5. This
Agreement, the Stock Option Agreement and the Voting Agreements may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after approval by the shareholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company, if (i) prior to the Effective
Time, any Governmental Authority shall have issued an order, decree or ruling or
taken any other action, in each case permanently restraining, enjoining or
otherwise prohibiting all or any material part of the Transactions and such
order, decree, ruling or other action shall have become final and non-
appealable; or (ii) the Merger shall not have been completed by June 30, 1999;
35
<PAGE>
(c) by Parent, if (i) the Offer is terminated or expires without the
purchase of any Shares thereunder, unless such termination or expiration has
been caused by the failure of Parent or Newco to perform in any material respect
its obligations under this Agreement, (ii) due to an occurrence that, if
occurring after the commencement of the Offer, could reasonably be expected to
result in a failure to satisfy any of the conditions set forth in Annex II
hereto, or (iii) Parent and Newco shall have failed to commence the Offer on or
prior to the fifth U.S. Business Day following the date of the initial public
announcement of the Offer;
(d) by Parent if: (i) the Company Board shall have resolved to enter
into a letter of intent, agreement in principle or similar agreement, whether or
not legally binding, or into any definitive written agreement with respect to an
Alternative Transaction with a Third Party; (ii) a Third Party has commenced a
tender offer, proxy solicitation or exchange offer for any shares of capital
stock of the Company; (iii) the Company Board shall have withdrawn, or modified
or amended in a manner adverse to Parent or Newco, its approval or
recommendation of the Offer and the Merger, or approved, recommended or endorsed
any proposal for an Alternative Transaction; (iv) SoundView Financial Group
shall have withdrawn the Fairness Opinion; or (v) the required approval of the
shareholders of the Company shall not have been obtained by reason of a failure
to obtain the required vote at a duly held meeting of shareholders or at any
adjournment thereof;
(e) by either Parent or Newco, on the one hand, or the Company, on the
other hand, if the other Party shall have failed to comply in any material
respect with any covenant or obligation contained in this Agreement to be
complied with or performed by such Party at or prior to such date of
termination; or
(f) by the Company, if, prior to acceptance for payment of Shares by
Newco under the Offer, the Company shall have done each of the following: (i)
entered into a definitive written agreement with respect to an Alternative
Transaction with a Third Party; (ii) determined, after receipt of written advice
from legal counsel to the Company Board, that the failure to take such action as
described in the preceding clause (i) would cause the Company Board to violate
its fiduciary duties to the Company's shareholders under Applicable Law; and
(iii) given notice to Parent and Newco of its intent to terminate this Agreement
and of the terms and conditions of the Alternative Transaction, such notice to
be given at least five Business Days prior to the date of termination of this
Agreement.
SECTION 8.2. EFFECT OF TERMINATION.
Except as provided in Section 5.2 and Section 9.2 hereof, in the event
of the termination of this Agreement, the Stock Option Agreement or the Voting
Agreements and the abandonment of the Merger all strictly pursuant to Section
8.1, this Agreement, the Stock Option Agreement or the Voting Agreements shall
thereafter become void and have no effect, and no Party shall have any liability
to any other Party or its shareholders or directors or officers in respect
thereof, except that nothing herein shall relieve any Party from liability for
any willful breach hereof. Notwithstanding anything to the contrary set forth
herein, if Parent terminates this Agreement, the Stock Option Agreement or the
Voting Agreements pursuant to Sections 8.1(d)(i), 8.1(d)(ii)
36
<PAGE>
or 8.1(d)(iii), or if the Company terminates this Agreement pursuant to Section
8.1(f), then Company shall pay to Parent, on the second U.S. Business Day
following any such termination, an amount equal to $1,023,000.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant hereto shall survive the Effective Time, provided
--------
that this Section 9.1 shall not limit any covenant or agreement of the Parties
that by its terms contemplates performance after the Effective Time.
SECTION 9.2. EXPENSES, ETC.
Except as contemplated by this Agreement, all costs and expenses
incurred in connection with this Agreement and the consummation of the
Transactions shall be paid by the Party incurring such costs and expenses,
except that Parent and the Company shall each pay one half of the costs incurred
in printing and distributing the Proxy Statement, if any.
SECTION 9.3. PUBLICITY.
The Company and Parent agree that they will not issue any press release
or make any other public announcement concerning this Agreement, the Stock
Option Agreement, the Voting Agreements or the Transactions without the prior
consent of the other Party, except that the Company or Parent may make such
public disclosure that it believes in good faith to be required by law (in which
event such Party shall consult with the other prior to making such disclosure).
SECTION 9.4. EXECUTION IN COUNTERPARTS.
For the convenience of the Parties, this Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 9.5. NOTICES.
All notices requests, claims, demands and other communications that are
required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed given on the day delivered personally or sent by
telecopy (with a confirmation copy by a means permitted hereunder), if delivered
or sent on a Business Day or on the first Business Day thereafter if not, and
one Business Day after consignment to an overnight courier (providing proof of
delivery), or mailed by registered or certified mail, postage prepaid, to the
respective parties at their addresses as follows:
37
<PAGE>
If to Newco or Parent to:
STEAG Electronic Systems GmbH
Ruttenscheider Strasse 1-3
45128 Essen, Germany
Attention: Dr. Peter Lockowandt
with a copy to:
Northrop, Stradar & Glenn, P.C.
One Corwin Court
P.O. Box 2395
Newburgh, New York 12550
Attention: George F. Stradar, Jr., Esq.
Telecopy: (914) 561-2083
and to:
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
Attention: John W. Campbell, Esq.
Telecopy: (415) 268-7522
If to the Company, to:
AG Associates, Inc.
4425 Fortran Drive
San Jose, California 95134
Attention: Dr. Arnon Gat
with a copy to:
Thelen Reid & Priest LLP
333 West San Carlos Street, 17th Floor
San Jose, CA 95110-2701
Attention: Jay L. Margulies, Esq.
Telecopy: (408) 287-8040
or such other address or addresses as any Party shall have designated by notice
in writing to the other parties hereto.
SECTION 9.6. WAIVERS.
The Company, on the one hand, and Parent and Newco, on the other hand,
may, by written notice to the other, at any time prior to the Effective Time (i)
extend the time for the
38
<PAGE>
performance of any of the obligations or other actions of the other under this
Agreement; (ii) waive any inaccuracies in the representations or warranties of
the other contained in this Agreement or in any document delivered pursuant to
this Agreement; (iii) waive compliance by the other with any of the conditions
contained in this Agreement; or (iv) waive performance of any of the obligations
of the other under this Agreement. Except as provided in the preceding sentence,
no action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any Party, shall be deemed to constitute a
waiver by the Party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any Party of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
SECTION 9.7. ENTIRE AGREEMENT.
This Agreement, the Stock Option Agreement, the Voting Agreements, the
Mutual Non-Disclosure Agreement, the Company Disclosure Schedule and the
documents executed at the Effective Time in connection herewith, constitute the
entire agreement among the Parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral and written, among the
Parties with respect to the subject matter hereof. No representation, warranty,
promise, inducement or statement of intention has been made by any Party that is
not embodied in this Agreement or such other documents, and none of the Parties
shall be bound by, or be liable for, any alleged representation, warranty,
promise, inducement or statement of intention not embodied herein or therein.
SECTION 9.8. APPLICABLE LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of California, without regard to principles of conflict of
laws.
SECTION 9.9. SPECIFIC PERFORMANCE.
The Parties agree that irreparable damage would occur in the event any
provision of this Agreement were not performed in accordance with the terms
hereof and that the Parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or in equity.
SECTION 9.10. BINDING EFFECT, BENEFITS.
This Agreement shall inure to the benefit of and be binding upon the
Parties and their respective permitted successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the Parties
or their respective permitted successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement; provided,
--------
however, that the provisions of Sections 5.7 and 6.6 hereof shall accrue to the
- -------
benefit of, and shall be enforceable by, each of the current and former
directors and officers of the Company and the provisions of Section 5.7 hereof
shall accrue to the benefit of, and shall be enforceable by each active employee
of the Company and its Subsidiaries as provided in Section 5.7 hereof.
39
<PAGE>
SECTION 9.11. ASSIGNABILITY.
Neither this Agreement nor any of the Parties' rights hereunder shall
be assignable by any Party without the prior written consent of the other
Parties.
SECTION 9.12. AMENDMENTS.
This Agreement may be varied, amended or supplemented at any time
before or after the approval and adoption of this Agreement by the shareholders
of the Company, by action of the respective boards of directors of the Company
and Newco and by the proper officers of Parent, without action by the
shareholders thereof; provided that, after approval and adoption of this
--------
Agreement by the Company's shareholders, if required, no such variance,
amendment or supplement shall, without consent of such shareholders, reduce the
amount or alter the form of the consideration that the holders of the capital
stock of the Company shall be entitled to receive following the Effective Time
pursuant to Section 2.5 hereof. Without limiting the generality of the
foregoing, this Agreement may only be amended, varied or supplemented by an
instrument in writing, signed by the Parties.
SECTION 9.13. HEADINGS.
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.14. MUTUAL DRAFTING.
Each Party has participated in the drafting of this Agreement, which
each Party acknowledges is the result of extensive negotiations between the
Parties.
40
<PAGE>
IN WITNESS WHEREOF, the Parties have caused their duly authorized
representatives to execute and deliver this Agreement as of the date first above
written.
STEAG ELECTRONIC SYSTEMS GMBH
By: /s/ Hans-Georg Betz
-----------------------------------------
Name: Hans-Georg Betz
---------------------------------------
Title: Chief Executive Officer
--------------------------------------
By: /s/ Peter Lockowandt
-----------------------------------------
Name: Peter Lockowandt
---------------------------------------
Title: Officer with Statutory Authority
---------------------------------------
MIG ACQUISITION CORPORATION
By: /s/ Berthold Lutke-Daldrup
-----------------------------------------
Name: Berthold Lutke-Daldrup
---------------------------------------
Title: Chief Financial Officer
---------------------------------------
AG ASSOCIATES, INC.
By: /s/ Arnon Gat
-----------------------------------------
Name: Arnon Gat
----------------------------------------
Title: Chief Executive Officer and Chairman
-------------------------------------
of the Board of Directors
-------------------------------------
41
<PAGE>
ANNEX I
DEFINED TERMS
"AARC" shall have the meaning ascribed to it in Section 3.5.
----
"Agreement" shall mean the Agreement and Plan of Merger to which this
---------
Annex I is attached. References in this Annex I to a "Section" shall mean a
-------
reference to the specified Section of the Agreement.
"Alternative Transactions" shall have the meaning ascribed to it in
------------------------
Section 5.4(c).
"Applicable Law" shall mean any foreign or domestic, federal, state or
--------------
local, statute, law, ordinance, rule, administrative interpretation, regulation,
order, writ, injunction, directive, permit, judgment, decree or other
requirement of any Governmental Authority.
"Approvals" shall have the meaning ascribed to it in Section 3.1.
---------
"Blue Sky" shall have the meaning ascribed to it in Section 3.5.
--------
"Business Day" shall mean a weekday other than a public holiday in the
------------
U.S. or the Federal Republic of Germany, as the case may be. The term "U.S.
----
Business Day" shall mean a business day for purposes of the Exchange Act.
- ------------
"Canon" shall have the meaning ascribed to it in the Recitals hereto.
-----
"Certificate" shall have the meaning ascribed to it in Section 2.7(a).
-----------
"CGCL" shall have the meaning ascribed to it in Section 1.2(a).
----
"Closing" shall have the meaning ascribed to it in Section 2.3.
-------
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Common Stock Option" shall have the meaning ascribed to it in Section
-------------------
6.2.
"Company" shall have the meaning ascribed to it in the Recitals to the
-------
Agreement.
"1998 Company Balance Sheet" shall have the meaning ascribed to it in
--------------------------
Section 3.9.
"Company Board" shall have the meaning ascribed to it in Section
-------------
1.2(a).
"Company Common Stock" shall have the meaning ascribed to it in the
--------------------
Recitals to the Agreement.
"Company Option Plans" shall have the meaning ascribed to it in Section
--------------------
3.3.
II-1
<PAGE>
"Company Permits" shall have the meaning ascribed to it in Section 3.6.
---------------
"Company Preferred Stock" shall have the meaning ascribed to it in
-----------------------
Section 3.3.
"Constituent Corporations" shall have the meaning ascribed to it in the
------------------------
Recitals to the Agreement.
"Continuing Director" shall have the meaning ascribed to it in Section
-------------------
1.4(a).
"Defined Benefit Plan" shall have the meaning ascribed to it in Section
--------------------
3.14(a).
"DGCL" shall have the meaning ascribed to it in Section 2.1.
----
"Dissenting Shares" shall have the meaning ascribed to it in Section
-----------------
2.8.
"Effective Time" shall have the meaning ascribed to it in Section 1.3.
--------------
"Encumbrance" shall mean any pledge, security interest, lien, claim,
-----------
encumbrance, mortgage, charge, hypothecation, option, right of first refusal or
offer, preemptive right, voting agreement, voting trust, proxy, power of
attorney, escrow, option, forfeiture, penalty, action at law or in equity,
security agreement, shareholder agreement or other agreement, arrangement,
contract, commitment, understanding or obligation, or any other restriction,
qualification or limitation on the use, transfer, right to vote, right to
dissent and seek appraisal, receipt of income or other exercise of any attribute
of ownership.
"Environmental Approvals" shall have the meaning ascribed to it in
-----------------------
Section 3.16 hereof.
"ERISA" shall have the meaning ascribed to it in Section 3.11(a).
-----
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Existing Option Plan" shall have the meaning ascribed to it in Section
--------------------
2.6.
"Fairness Opinion" shall have the meaning ascribed to it in Section
----------------
3.21.
"FCO" shall have the meaning ascribed to it in Section 3.5.
---
"FSC" shall have the meaning ascribed to it in Section 3.1(b).
---
"GAAP" shall have the meaning ascribed to it in Section 3.7(b).
----
"Governmental Authority" shall mean any: (a) nation, principality,
----------------------
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; (c) governmental or quasi-governmental authority of any
nature (including any governmental division, subdivision, department, agency,
bureau, branch, office, commission, council, board, instrumentality, officer,
official, representative, organization, unit, body or Entity and any court or
other tribunal);
II-2
<PAGE>
(d) multinational organization or body; or (e) individual, Entity or body
exercising, or entitled to exercise, any executive, legislative, judicial,
administrative, regulatory, police, military or taxing authority or power of any
nature.
"Holder" shall have the meaning ascribed to it in Section 2.6.
------
"HSR Act" shall have the meaning ascribed to it in Section 3.5.
-------
"Intellectual Property Rights" shall have the meaning ascribed to it in
----------------------------
Section 3.20(b).
"Interest" shall have the meaning ascribed to it in Section 6.1(a).
--------
"IRS" shall have the meaning ascribed to it in Section 3.11(b).
---
"Israeli Affiliate" shall mean AG Associates (Israel) Ltd., a company
-----------------
formed under the laws of Israel.
"Knowledge" or "best knowledge" of the Company shall mean the knowledge
--------- --------------
of any of the executive officers of the Company (within the meaning of Section
16 of the Exchange Act) which they have or would have had if they had discharged
their obligations as such officers in a reasonably prudent and customary manner.
"Liens" shall have the meaning ascribed to it in Section 3.3.
-----
"Loan" shall have the meaning ascribed to it in Section 6.1(a).
----
"Loan Date" shall have the meaning ascribed to it in Section 6.2.
---------
"Material" means material to the value of the Company and its
--------
Subsidiaries, taken as a whole.
"Material Adverse Effect" shall mean an effect on the business, assets,
-----------------------
condition (financial or other), operating results or prospects of the Company
that is material and adverse to the value of the Company and its Subsidiaries,
taken as a whole, other than the direct effects of (A) the announcement of the
Transactions, (B) general economic conditions or (C) conditions that are
generally applicable to the business segments in which the Company or its
Subsidiaries conducts business. In addition, and without limiting the generality
of the foregoing sentence, the term "Material Adverse Effect" shall not include
the effect on the Company of general business declines or reverses, such as
lower than forecast revenues or bookings (whether as a result of economic
conditions, actions of competitors or business interruptions), reductions in
gross margins or technical problems with product development, introduction or
evaluation or increases in operating expenses attributable to changes in product
shipment volumes or changes in supplier pricing.
"Material Contracts" shall have the meaning ascribed to it in Section
------------------
3.5.
"Maturity Date" shall have the meaning ascribed to it in Section
-------------
6.1(a).
II-3
<PAGE>
"Merger" shall have the meaning ascribed to it in the Recitals to the
------
Agreement.
"Merger Consideration" shall have the meaning ascribed to it in Section
--------------------
2.5(d).
"Mutual Non-Disclosure Agreement" shall have the meaning ascribed to it
-------------------------------
in Section 5.2(b).
"NASD" shall have the meaning ascribed to it in Section 3.5.
----
"Newco" shall have the meaning ascribed to it in the Recitals to the
-----
Agreement.
"Offer" shall have the meaning ascribed to it in the Recitals to the
-----
Agreement.
"Offer Documents" shall have the meaning ascribed to it in Section 1.3.
---------------
"Offer Price" shall have the meaning ascribed to it in Section 1.1(a).
-----------
"Options" shall have the meaning ascribed to it in Section 6.2.
-------
"Parent" shall have the meaning ascribed to it in the Recitals to the
------
Agreement.
"Paying Agent" shall have the meaning ascribed to it in Section 2.7(a).
------------
"Payment Date" shall have the meaning ascribed to it in Section 2.6.
------------
"Post-Acceptance Board" shall have the meaning ascribed to it in
---------------------
Section 1.4(a).
"Principal" shall have the meaning ascribed to it in Section 6.1(a).
---------
"Proxy Statement" shall have the meaning ascribed to it in Section 2.9.
---------------
"Rapro" shall have the meaning ascribed to it in Section 3.1(b).
-----
"Sabbatical" shall have the meaning ascribed to it in Section 5.7.
----------
"SEC" shall have the meaning ascribed to it in Section 1.3(a).
---
"SEC Reports" shall have the meaning ascribed to it in Section 3.7.
-----------
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Schedule 14D-1" shall have the meaning ascribed to it in Section
--------------
1.3(a).
"Schedule 14D-9" shall have the meaning ascribed to it in Section
--------------
1.3(b).
"Shares" shall have the meaning ascribed to it in the Recitals to the
------
Agreement.
"Special Meeting" shall have the meaning ascribed to it in Section
---------------
2.9(a).
II-4
<PAGE>
"Stock Option Agreement" shall have the meaning ascribed to it in the
----------------------
Recitals to the Agreement.
"Subsidiary" shall mean any corporation, partnership, joint venture or
----------
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time owned by the Company and/or one or
more other direct or indirect Subsidiaries.
"Superior Proposal" shall have the meaning ascribed to it in Section
-----------------
4.4(c).
"Surviving Corporation" shall have the meaning ascribed to it in
---------------------
Section 2.1.
"Tax" and "Taxes" shall have the meanings ascribed to it in Section
--- -----
3.15(e).
"Tax Returns" shall have the meaning ascribed to it in Section 3.15(a).
-----------
"Third Party" shall have the meaning ascribed to it in Section 5.4(a).
-----------
"Transaction Expenses" shall mean all legal and accounting fees and
--------------------
expenses incurred by or on behalf of the Company in connection with the
Transactions and the preparation, execution and delivery of this Agreement, it
being expressly understood that "Transaction Expenses" shall not include amounts
due to SoundView Financial Group arising out of their agreement with the Company
dated as of June 25, 1998.
"Transactions" shall have the meaning ascribed to it in the Recitals to
------------
the Agreement.
"Voting Agreements" shall have the meaning ascribed to it in the
-----------------
Recitals to the Agreement.
II-5
<PAGE>
ANNEX II
CONDITIONS TO THE OFFER
Capitalized terms used in this Annex II shall have the meanings
assigned to them in the Agreement to which it is attached (the "Merger
------
Agreement").
- ---------
Notwithstanding any other provision of the Offer, and in addition to
(and not in limitation of) Newco's rights to extend and amend the Offer at any
time in its sole discretion (subject to the provisions of the Merger Agreement),
Newco shall not be required to accept for payment or pay for any Shares, and may
delay the acceptance for payment of or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act, the
payment for, any tendered Shares, and may terminate or amend the Offer as to any
Shares not then paid for, if:
(1) at or prior to the expiration date of the Offer, the number of
Shares validly tendered and not withdrawn, together with any Shares then owned
by Parent or Newco, shall not satisfy the Minimum Condition or the Revised
Minimum Number; or
(2) at or prior to the expiration date of the Offer, (i) any waiting
period under the HSR Act applicable to the purchase of shares of Company Common
Stock pursuant to the Offer shall not have expired or been terminated or (ii)
all requirements of any applicable foreign competition and antitrust statutes
and regulations to the consummation of the Offer shall not have been satisfied,
including approval by the FCO pursuant to the AARC;
(3) immediately prior to the expiration date of the Offer, the
Transaction Expenses (as defined in the Merger Agreement) shall be in excess of
$250,000, as calculated by a schedule delivered by the Company to Newco (i)
identifying and disclosing any and all actual Transaction Expenses as of the
date of such schedule and (ii) identifying and providing reasonable estimates of
any and all other Transaction Expenses following the date of such schedule; or
(4) at any time prior to acceptance for payment of or payment for
Shares, any of the following events or conditions shall occur or exist:
(a) There shall have been instituted or be pending any action or
proceeding by any Governmental Authority, whether or not having the
force of law: (i) challenging or seeking to make illegal, to delay or
otherwise directly or indirectly to restrain or prohibit the making of
the Offer, the acceptance for payment of or payment for some of or all
the Shares by Newco, Parent or any affiliate of Parent or the
consummation by Newco or Parent of any other Transaction, or seeking to
obtain damages in connection with any Transaction; (ii) seeking to
restrain or prohibit Parent's or Newco's full rights of ownership or
operation (or that of Parent's subsidiaries or affiliates) of any
material portion of the business or assets of the Company, or to compel
Parent or any of its subsidiaries or affiliates to dispose of or hold
separate all or any portion of the business or assets of the Company or
of Parent or any of its subsidiaries; (iii) seeking to impose material
limitations on the ability of Parent or any of its Subsidiaries or
affiliates effectively to exercise full rights of ownership of the
Shares, including, without
II-1
<PAGE>
limitation, the right to vote any Shares acquired or owned by Parent or
any of its subsidiaries or affiliates on all matters properly presented
to the Company's shareholders; (iv) seeking to require divestiture by
Parent or any of its subsidiaries of any Shares; or (v) that otherwise,
in the judgment of Parent or Newco, may materially adversely affect the
Company, any of the subsidiaries or Parent or any of its subsidiaries;
or
(b) there shall have been any action taken or any statute, rule,
regulation, judgment, administrative interpretation, injunction, order
or decree proposed, enacted, enforced, promulgated, issued or deemed
applicable to Parent or Newco or any subsidiary or affiliate of Parent,
the Company or any of its subsidiaries or the Offer, the acceptance for
payment of or payment for any Shares, the Merger or any other
Transaction, by any Governmental Authority (other than the application
of the routine waiting period provisions of the HSR Act), that has,
directly or indirectly, resulted, or is reasonably likely to, directly
or indirectly, result in any of the consequences referred to in
paragraph (a) above; or
(c) an event shall have occurred that has had or could
reasonably be expected to have a Material Adverse Effect; or
(d) there shall have occurred and be continuing as of the
Effective Time (i) any general suspension of trading in securities on
the New York Stock Exchange or the Nasdaq National Market, (ii) the
declaration of any banking moratorium or any suspension of payments in
respect of banks or any limitation (whether or not mandatory) which is
material to the Transactions on the extension of credit by lending
institutions in the United States or the Federal Republic of Germany
(iii) a commencement of a war, armed hostilities or other national or
international crisis directly involving the United States or the
Federal Republic of Germany or otherwise having a significant adverse
effect on the functioning of the financial markets in the United States
or the Federal Republic of Germany, (iv) any significant change in the
United States or German currency exchange rates or suspension of the
markets therefor (whether or not mandatory) or the imposition of, or
any significant change in, any currency or exchange control laws in the
United States or the Federal Republic of Germany which change or
suspension is material to the Transactions, or (v) any limitation by
any Governmental Authority that is likely to materially and adversely
affect the financing of the Offer or the Merger; or
(e) it shall have been publicly disclosed or Parent or Newco
shall have otherwise learned that any Third Party shall have entered
into a definitive agreement or an agreement in principle with respect
to an Alternative Transaction; or
(f) the Company Board (i) shall have withdrawn, or modified or
changed in a manner adverse to Parent or Newco (including by amendment
of the Schedule 14D-9) its approval or recommendation of the Offer, the
Merger Agreement or the Merger, (ii) shall have recommended an
Alternative Transaction, or (iii) upon request of the Parent or Newco,
shall have failed to reaffirm such approval or recommendation or shall
have resolved to do any of the foregoing; or
II-2
<PAGE>
(g) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger
Agreement. The representations and warranties of the Company set forth
in the Merger Agreement, the Common Stock Option or the Stock Option
Agreement shall not be true in any respect when made or at the
Effective Time as if made at and as of such time (other than
representations and warranties which by their terms address matters
only as of a certain date, which shall be true as of such date), and in
either case the effect thereof shall have had or could reasonably be
expected to have a Material Adverse Effect on the Company; or
(h) the Merger Agreement shall have been terminated in
accordance with its terms or amended in accordance with its terms to
provide for such termination or amendment of the Offer.
The foregoing conditions are for the sole benefit of Parent and Newco
and may be asserted or waived by Parent or Newco, regardless of the
circumstances giving rise to any such condition, in whole or in part at any time
and from time to time in their sole discretion. The failure by Parent or Newco
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right, and each such right shall be deemed an ongoing right and may
be asserted at any time and from time to time.
<PAGE>
EXHIBIT (C)(2)
STOCK OPTION AGREEMENT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I THE STOCK OPTION................................................ 1
SECTION 1.01. Grant of Top-Up Stock Option.......................... 1
SECTION 1.02. Exercise of the Top-Up Stock Option................... 2
SECTION 1.03. Conditions to Closing................................. 3
SECTION 1.04. Closing............................................... 3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY................... 3
SECTION 2.01. Organization; Authority Relative to this Agreement.... 3
SECTION 2.02. Authority to Issue Shares............................. 4
SECTION 2.03. No Conflict; Required Filings and Consents............ 4
ARTICLE III COVENANTS OF THE COMPANY...................................... 5
SECTION 3.01. Further Action......................................... 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO............. 5
SECTION 4.01. Organization; Authority Relative to this Agreement.... 5
SECTION 4.02. No Conflict; Required Filings and Consents............ 6
ARTICLE V COVENANTS OF PARENT AND NEWCO................................... 6
SECTION 5.01. Distribution.......................................... 6
SECTION 5.02. Parent Guaranty....................................... 7
ARTICLE VI TERMINATION OF AGREEMENT....................................... 7
SECTION 6.01. Termination........................................... 7
ARTICLE VII MISCELLANEOUS................................................. 7
SECTION 7.01. Amendment............................................. 7
SECTION 7.02. Waiver................................................ 7
SECTION 7.03. Fees and Expenses..................................... 7
SECTION 7.04. Notices............................................... 7
SECTION 7.05. Severability.......................................... 8
SECTION 7.06. Assignment; Binding Effect; Benefit................... 8
SECTION 7.07. Governing Law......................................... 8
SECTION 7.08. Enforcement........................................... 8
SECTION 7.09. Headings.............................................. 9
SECTION 7.10. Counterparts.......................................... 9
SECTION 7.11. Entire Agreement...................................... 10
</TABLE>
i
<PAGE>
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of January 18, 1999 (this "Agreement"),
---------
among STEAG Electronic Systems GmbH, a German business entity with an office in
Essen, Germany ("Parent"), MIG Acquisition Corporation, a Delaware corporation
------
and an indirect wholly owned subsidiary of Parent ("Newco"), and AG Associates,
-----
Inc., a California corporation (the "Company").
-------
WITNESSETH:
WHEREAS, Parent, Newco and the Company propose to enter into,
simultaneously herewith, an Agreement and Plan of Merger (the "Merger
------
Agreement"; capitalized terms used but not defined in this Agreement shall have
- ---------
the meanings ascribed to them in the Merger Agreement), which provides, upon the
terms and subject to the conditions thereof, for (i) the commencement by Newco
of a tender offer (the "Offer") to purchase all of the issued and outstanding
-----
shares of the common stock, no par value, of the Company ("Company Common
--------------
Stock"), at a purchase price of $5.50 per share, net to the seller in cash, and
- -----
(ii) the subsequent merger of Newco with and into the Company (the "Merger"),
------
whereby each share of Company Common Stock, other than shares owned directly or
indirectly by Parent or by the Company and other than Dissenting Shares, will be
converted into the right to receive $5.50 (or such greater amount to be paid per
share in the Offer); and
WHEREAS, as a condition to the willingness of Parent and Newco to enter
into the Merger Agreement, Parent and Newco have required that the Company
agree, and in order to induce Parent and Newco to enter into the Merger
Agreement, the Company has agreed, to grant Newco an option to purchase shares
of Company Common Stock, upon the terms and subject to the conditions of this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
THE STOCK OPTION
SECTION 1.01. GRANT OF TOP-UP STOCK OPTION.
The Company hereby grants to Newco an irrevocable option (the "Top-Up Stock
------------
Option") to purchase that number of shares of Company Common Stock (the "Top-Up
- ------ ------
Option Shares") equal to the number of shares of Company Common Stock that, when
- -------------
added to the number of shares of Company Common Stock owned by Newco and its
affiliates immediately following consummation of the Offer, shall constitute 90%
of the shares of Company Common Stock then outstanding on a fully diluted basis
(assuming the issuance of the Top-Up Option Shares), at a cash purchase price
per Top-Up Option
1
<PAGE>
Share equal to $5.50 (the "Purchase Price"), subject to the terms and conditions
--------------
set forth herein; provided, however, that (i) the Top-Up Stock Option shall only
-------- -------
be exercisable if and when at least 80% of the shares of Company Common Stock
then outstanding on a fully diluted basis shall have been tendered pursuant to
and upon the expiration date of the Offer and (ii) the Top-Up Stock Option shall
not be exercisable if the number of shares of Company Common Stock subject
thereto exceeds the number of authorized shares of Company Common Stock
available for issuance.
SECTION 1.02. EXERCISE OF TOP-UP STOCK OPTION.
(a) Subject to the conditions set forth in Section 1.05 and to any
additional requirements of Applicable Law, the Top-Up Stock Option may be
exercised by Newco, in whole but not in part, at any time or from time to time
after the occurrence of a Top-Up Exercise Event (as defined below) and prior to
the Top-Up Termination Date (as defined below).
(b) A "Top-Up Exercise Event" shall occur for purposes of this Agreement if
and when at least 80% of the shares of Company Common Stock then outstanding on
a fully diluted basis shall have been tendered pursuant to and upon the
expiration date of the Offer.
(c) The "Top-Up Termination Date" shall occur for purposes of this
Agreement upon the first to occur of any of the following:
(i) the Effective Time;
(ii) the date which is 10 business days after the occurrence of a
Top-Up Exercise Event (unless prior thereto the Top-Up Stock Option shall
have been exercised); or
(iii) the termination of the Merger Agreement.
(d) In the event Newco wishes to exercise the Top-Up Stock Option, Newco
shall send a written notice (a "Top-Up Exercise Notice") to the Company
----------------------
specifying the denominations of the certificate or certificates evidencing the
Top-Up Option Shares which Newco wishes to receive, a date (subject to the
earlier satisfaction or waiver of the conditions set forth in Section 1.03) (the
"Closing Date"), which shall be a business day which is not later than 10
- -------------
business days and not earlier than the fifth business day after delivery of such
notice, and place for the closing of such purchase (the "Closing"). The Company
-------
shall, within two business days after receipt of a Top-Up Exercise Notice,
deliver written notice to Newco specifying the number of Top-Up Option Shares
and the aggregate Purchase Price therefor.
2
<PAGE>
SECTION 1.03. CONDITIONS TO CLOSING.
The obligation of the Company to deliver Top-Up Option Shares upon any
exercise of the Top-Up Stock Option is subject to the following conditions:
(a) Such delivery would not in any material respect violate, or otherwise
cause the material violation of, Rule 4460(i)(1) of the NASD Manual ("Rule
----
4460") or any material Applicable Law, including, without limitation, the HSR
- ----
Act, applicable thereto;
(b) There shall be no preliminary or permanent injunction or other final,
non-appealable judgment by a court of competent jurisdiction preventing or
prohibiting such exercise of the Top-Up Stock Option or the delivery of the Top-
Up Option Shares in respect of such exercise; and
(c) The Company shall have available from its authorized shares of Company
Common Stock such number of shares as is sufficient to issue the Top-Up Option
Shares; provided, however, that the Company shall have fully complied with its
obligations under Section 3.01(b).
SECTION 1.04. CLOSING.
(a) At the Closing, (i) the Company shall deliver to Newco a certificate or
certificates evidencing the applicable number of Top-Up Option Shares (in the
denominations specified therein), and (ii) Newco shall purchase each Top-Up
Option Share from the Company at the Purchase Price. Payment by Newco of the
Purchase Price for the Top-Up Option Shares shall be made in cash.
(b) All cash payments made pursuant to this Agreement shall be made by wire
transfer of immediately available funds. Certificates evidencing Top-Up Option
Shares delivered hereunder may, at the Company's election, contain the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933 OR AN EXEMPTION THEREFROM.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Newco as follows:
SECTION 2.01. ORGANIZATION; AUTHORITY RELATIVE TO THIS AGREEMENT.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of California. The Company has all
requisite
3
<PAGE>
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly executed and delivered by the Company.
SECTION 2.02. AUTHORITY TO ISSUE SHARES.
The Company has taken all necessary corporate action to authorize and
reserve and permit it to issue, and at all times from the date hereof through
the Top-Up Termination Date shall have reserved, all the Top-Up Option Shares
issuable pursuant to this Agreement, and the Company shall take all necessary
corporate action to authorize and reserve and permit it to issue all additional
shares of the Company Common Stock or other securities which may be issued
pursuant to Section 1.03, all of which, upon their issuance and delivery in
accordance with the terms of this Agreement, shall be duly authorized, validly
issued, fully paid and nonassessable, shall be delivered free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on Newco's voting rights, charges, adverse rights and
other encumbrances of any nature whatsoever (other than this Agreement) and
shall not be subject to any preemptive rights.
SECTION 2.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Section 3.5 of the Company Disclosure Schedule,
the execution and delivery of this Agreement by the Company do not, and the
performance by the Company of its obligations hereunder and the consummation of
the transactions contemplated hereby will not, (i) conflict with or violate the
Articles of Incorporation or Bylaws or equivalent organizational documents of
the Company, Rapro, FSC or the Israeli Affiliate, (ii) assuming that all
consents, approvals, orders and authorizations described in Section 2.03(b) have
been obtained and all registrations, declarations, filings and notifications
described in Section 2.03(b) have been made, conflict with or violate any
Applicable Law relating to the Company, Rapro, FSC or the Israeli Affiliate or
by which any property or asset of the Company, Rapro or FSC is bound or affected
or (iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any right of termination, amendment, acceleration or cancellation of, or result
in the creation of a Lien on any property or asset of the Company, Rapro or FSC
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation, other than, in the
case of clauses (ii) and (iii), any such conflicts, violations, breaches,
defaults or other occurrences that individually or in the aggregate would not
prevent or materially delay the consummation of the transactions contemplated
hereby or the performance by the Company of any of its obligations hereunder.
4
<PAGE>
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, or notice to, any Governmental Entity is required by
the Company, any of its Subsidiaries or the Israeli Affiliate in connection with
the execution and delivery of this Agreement except for (i) the filing of a pre-
merger notification and report form by the Company under the HSR Act and the
expiration or termination of the waiting period thereunder and (ii) such other
consents, approvals, orders, authorizations, registrations, declarations,
filings and notices the failure of which to be obtained or made would not,
individually or in the aggregate, prevent or materially delay the consummation
of the transactions contemplated hereby or the performance by the Company of any
of its obligations hereunder.
ARTICLE III
COVENANTS OF THE COMPANY
SECTION 3.01. FURTHER ACTION.
(a) The Company shall use its best efforts to take, or cause to be taken,
all appropriate action, and to do, or cause to be done, all things necessary,
proper or advisable under Applicable Laws to consummate and make effective the
transactions contemplated hereunder, including, without limitation, using all
best efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Authorities.
(b) The Company shall not take any action in order to cause intentionally
the exercise of the Top-Up Stock Option to violate Rule 4460.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
Parent and Newco hereby jointly and severally represent and warrant to the
Company as follows:
SECTION 4.01. ORGANIZATION; AUTHORITY RELATIVE TO THIS AGREEMENT.
Each of Parent and Newco is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation.
Each of Parent and Newco has all requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Newco and the consummation by Parent and Newco of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Parent and Newco. This Agreement
has been duly executed and delivered by Parent and Newco and, assuming the due
authorization, execution and delivery by the
5
<PAGE>
Company, constitutes a legal, valid and binding obligation of Parent and Newco,
enforceable against each of Parent and Newco in accordance with its terms.
SECTION 4.02. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent and Newco do
not, and the performance by Parent and Newco of their obligations hereunder and
the consummation of the transactions contemplated hereby will not, (i) conflict
with or violate the Articles of Incorporation or Bylaws or equivalent
organizational documents of Parent or Newco, (ii) assuming that all consents,
approvals, orders and authorizations described in Section 4.02(b) have been
obtained and all registrations, declarations, filings and notifications
described in Section 4.02(b) have been made, conflict with or violate any
Applicable Law applicable to Parent or Newco or by which any property or asset
of Parent or Newco is bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien
on any property or asset of Parent or Newco pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, breaches, defaults or other occurrences
that individually or in the aggregate would not prevent or materially delay the
consummation of the transactions contemplated hereby or the performance by
Parent or Newco of any of their respective obligations hereunder.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, or notice to, any Governmental Authority is required
by Parent or Newco in connection with the execution and delivery of this
Agreement, the performance by Parent or Newco of any of its obligations
hereunder or the consummation by Parent or Newco of the transactions
contemplated hereby, except for (i) the filing of a pre-merger notification and
report form under the HSR Act and the expiration or termination of the waiting
period thereunder and (ii) such other consents, approvals, orders,
authorizations, registrations, declarations, filings and notices the failure of
which to be obtained or made would not, individually or in the aggregate,
prevent or materially delay the consummation of the transactions contemplated
hereby or the performance by Parent or Newco of any of their respective
obligations hereunder.
ARTICLE V
COVENANTS OF PARENT AND NEWCO
SECTION 5.01. DISTRIBUTION.
Newco shall acquire the Top-Up Option Shares for investment purposes only
and only for the purpose of effecting a short-form merger with the Company and
not with a view to any distribution thereof in violation of the Securities Act,
and shall not sell any
6
<PAGE>
Top-Up Option Shares purchased pursuant to this Agreement except in compliance
with the Securities Act and applicable state securities and Blue Sky Laws.
SECTION 5.02. PARENT GUARANTY.
Parent hereby agrees to cause Newco to perform all of Newco's obligations
under this Agreement.
ARTICLE VI
TERMINATION OF AGREEMENT
SECTION 6.01. TERMINATION.
This Agreement, other than the rights and obligations of the Company and
Newco under Sections 3.01, 5.01 and 5.02 and Article VII, shall terminate on the
Top-Up Termination Date.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. AMENDMENT.
This Agreement may not be amended except by an instrument in writing signed
by the parties hereto.
SECTION 7.02. WAIVER.
Any party hereto may (a) extend the time for or waive compliance with the
performance of any obligation or other act of any other party hereto or (b)
waive any inaccuracy in the representations and warranties contained herein or
in any document delivered pursuant hereto. Any such extension or waiver shall
be valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
SECTION 7.03. FEES AND EXPENSES.
Except as otherwise provided herein or in Section 9.2 of the Merger
Agreement, all Transaction Expenses incurred in connection with this Agreement
shall be paid by the party incurring such Transaction Expenses.
SECTION 7.04. NOTICES.
All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or sent by
telecopy or by
7
<PAGE>
overnight courier (providing proof of delivery) to the respective parties at
their addresses as specified in Section 9.5 of the Merger Agreement.
SECTION 7.05. SEVERABILITY.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of Applicable Law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner to
the fullest extent permitted by Applicable Law in order that the transactions
contemplated hereby may be consummated as originally contemplated to the fullest
extent possible.
SECTION 7.06. ASSIGNMENT; BINDING EFFECT; BENEFIT.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned, in whole or in part, by operation of law or
otherwise, by any of the parties hereto without the prior written consent of the
other parties, except that Newco may assign, in its discretion, any or all of
its rights, interests and obligations hereunder to Parent or any direct or
indirect wholly owned subsidiary of Parent, but no such assignment shall relieve
Newco of any of its obligations hereunder. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and permitted
assigns. Notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, express or implied, is intended to confer on any
person other than the parties hereto or their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
SECTION 7.07. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California.
SECTION 7.08. ENFORCEMENT.
The parties agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of California
or in California state court (a "Specified Court"), this being in addition to
---------------
any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto (i) consents to submit itself to the personal
jurisdiction
8
<PAGE>
of any Specified Court in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, (ii) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a Specified Court and (iv) agrees to
waive any defense based upon venue or forum non conveniens grounds.
SECTION 7.09. HEADINGS.
The descriptive headings contained in this Agreement are included for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 7.10. COUNTERPARTS.
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when one or more counterparts
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.
9
<PAGE>
SECTION 7.11. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, all as of the
date first written above.
STEAG Electronic Systems GmbH STEAG Electronic Systems GmbH
By: /s/ Hans-Georg Betz By: /s/ Peter Lockowandt
---------------------------- -------------------------------------
Name: Hans-Georg Betz Name: Peter Lockowandt
-------------------------- -----------------------------------
Title: Chief Executive Officer Title: Officer with Statutory Authority
------------------------- ----------------------------------
MIG Acquisition Corporation
By: /s/ Berthold Lutke-Daldrup
-----------------------------
Name: Berthold Lutke-Daldrup
---------------------------
Title: Chief Financial Officer
--------------------------
AG Associates, Inc.
By: /s/ Arnon Gat
---------------------------------------------
Name: Arnon Gat
---------------------------------------------
Title: Chief Executive Officer and Chairman of the
--------------------------------------------
Board of Directors
--------------------------------------------
10
<PAGE>
EXHIBIT (C)(3)
VOTING AGREEMENT
VOTING AGREEMENT (this "Agreement"), dated as of January 18, 1999, by and
---------
among STEAG ELECTRONIC SYSTEMS GmbH, a German business entity ("Parent"), MIG
------
ACQUISITION CORPORATION, a Delaware corporation and a wholly-owned subsidiary of
Parent ("Newco"), and Arnon And Anita Gat, ("Shareholder").
----- -----------
WHEREAS, Shareholder is, as of the date hereof, the record and beneficial
owner of 1,138,905 shares of common stock, no par value per share (the "Common
------
Stock") of , AG Associates, Inc., a California corporation (the "Company"); and
- -----
WHEREAS, Parent, Newco and the Company concurrently herewith are entering
into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
------
Agreement"), which provides, among other things, for the acquisition of the
- ---------
Company by Parent by means of a cash tender offer (the "Offer") for any and all
-----
of the outstanding shares of Common Stock and for the subsequent merger (the
"Merger") of Newco with and into the Company upon the terms and subject to the
------
conditions set forth in the Merger Agreement; and
WHEREAS, as a condition to the willingness of Parent and Newco to enter
into the Merger Agreement, and in order to induce Parent and Newco to enter into
the Merger Agreement, Shareholder has agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by Parent
and Newco of the Merger Agreement and the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein and
therein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Representations and Warranties of Shareholder. Shareholder
---------------------------------------------
hereby represents and warrants to Parent and Newco as follows:
(a) Shareholder is the record and beneficial owner of 1,138,905
shares of Common Stock (as may be adjusted from time to time pursuant to Section
6 hereof, the "Shares").
------
(b) This Agreement has been duly executed and delivered by
Shareholder and constitutes the legal, valid and binding obligation of
Shareholder, enforceable against Shareholder in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) the availability of the remedy of specific
performance or injunctive or other forms of equitable relief may be subject to
equitable defenses and would be subject to the discretion of the court before
which any proceeding therefor may be brought.
(c) Neither the execution and delivery of this Agreement nor the
consummation by Shareholder of the transactions contemplated hereby will result
in a violation of, or a default
1
<PAGE>
under, or conflict with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to which Shareholder is a
party or bound or to which the Shares are subject. To the best of Shareholder's
knowledge, consummation by Shareholder of the transactions contemplated hereby
will not violate, or require any consent, approval, or notice under, any
provision of any judgment, order, decree, statute, law, rule or regulation
applicable to Shareholder or the Shares, except for any necessary filing under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
---
Act"), or state takeover laws.
- ---
(d) The Shares and the certificates representing Shares are now and
at all times during the term hereof will be held by Shareholder, or by a nominee
or custodian for the benefit of Shareholder, free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements, understandings
or arrangements or any other encumbrances whatsoever.
SECTION 2. Representations and Warranties of Parent and Newco. Each of
--------------------------------------------------
Parent and Newco hereby, jointly and severally, represents and warrants to
Shareholder as follows:
(a) Each of Parent and Newco is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered
by each of Parent and Newco and constitutes the legal, valid and binding
obligation of each of Parent and Newco, enforceable against each of them in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) the availability
of the remedy of specific performance or injunctive or other forms of equitable
relief may be subject to equitable defenses and would be subject to the
discretion of the court before which any proceeding therefor may be brought.
(c) Neither the execution and delivery of this Agreement nor the
consummation by each of Parent and Newco of the transactions contemplated hereby
will result in a violation of, or a default under, or conflict with, any
contract, trust, commitment, agreement, understanding, arrangement or
restriction of any kind to which each of Parent and Newco is a party or bound.
To the best knowledge of each of Parent and Newco, consummation by each of
Parent and Newco of the transactions contemplated hereby will not violate, or
require any consent, approval, or notice under, any provision of any judgment,
order, decree, statute, law, rule or regulation applicable to each of Parent and
Newco except for any necessary filing under the HSR Act or state takeover laws.
SECTION 3. Purchase and Sale of Shares. Shareholder hereby agrees that
---------------------------
it shall, and direct any nominee, custodian or trustee to, tender the Shares
into the Offer; provided that Newco's obligation to accept for payment and pay
--------
for the Shares in the Offer is subject to all the terms and conditions of the
Offer set forth in the Merger Agreement and Annex II thereto. Simultaneously
with or prior to its tender of the Shares into the Offer, Shareholder shall, if
2
<PAGE>
applicable, deliver to Newco an affidavit stating, under penalty of perjury, the
Shareholder's U.S. taxpayer identification number and that the Shareholder is
not a foreign person, pursuant to Section 1445(b)(2) of the Internal Revenue
Code of 1986, as amended.
SECTION 4. Transfer of Shares. Prior to the termination of this
------------------
Agreement, except as otherwise provided herein and in the Merger Agreement,
Shareholder shall not: (i) transfer (which term shall include, without
limitation, for the purposes of this Agreement, any sale, gift, pledge or other
disposition), or consent to any transfer of, any or all of the Shares or any
interest therein; (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of the Shares or any
interest therein; (iii) grant any proxy, power-of-attorney or other
authorization or consent in or with respect to the Shares; or (iv) take any
other action that would in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions contemplated
hereby.
SECTION 5. Grant of Irrevocable Proxy; Appointment of Proxy.
------------------------------------------------
(a) Shareholder hereby irrevocably grants to, and appoints, Parent
and any nominee thereof, Shareholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of Shareholder, to
vote the Shares, or grant a consent or approval in respect of the Shares, in
connection with any meeting of the Shareholders of the Company, if applicable,
(i) in favor of the Merger and (ii) against any action or agreement which would
impede, interfere with or prevent the Merger, including any other extraordinary
corporate transaction, such as a merger, reorganization or liquidation involving
the Company and a third party or any other proposal of a third party to acquire
the Company.
(b) Shareholder represents that any proxies heretofore given in
respect of the Shares are not irrevocable, and that such proxies are hereby
revoked.
(c) Shareholder hereby affirms that the irrevocable proxy set forth
in this Section 5 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of Shareholder under this Agreement. Shareholder hereby further
affirms that the irrevocable proxy is coupled with an interest and, except as
set forth in Section 8 hereof, is intended to be irrevocable in accordance with
the provisions of Section 418 of the California General Corporation Law.
SECTION 6. Certain Events. In the event of any stock split, stock
--------------
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Common Stock, or the acquisition
of additional shares of Common Stock or other securities or rights of the
Company by Shareholder, the number of Shares shall be adjusted appropriately,
and this Agreement and the obligations hereunder shall attach to any additional
shares of Common Stock or other securities or rights of the Company issued to or
acquired by Shareholder.
SECTION 7. Further Assurances. Shareholder shall, upon request of Parent
------------------
or Newco, execute and deliver any additional documents and take such further
actions as may reasonably be
3
<PAGE>
deemed by Parent or Newco to be necessary or desirable to carry out the
provisions hereof and to vest the power to vote the Shares as contemplated by
Section 5 hereof in Parent.
SECTION 8. Covenants.
---------
(a) From and after the date hereof to the Effective Time, Shareholder
shall not, and shall not permit the Company to, make any elections, or change
any existing elections, with respect to Taxes (as that term is defined in the
Merger Agreement), without the prior written consent of Parent.
(b) From and after the date that Newco shall have purchased and paid
for all of the Shares of Shareholder pursuant to Section 3 hereof, Shareholder
shall make available to Parent any and all records and other materials in
Shareholder's possession or control that relate to any of the Company's filings
or returns relating to Taxes affecting the Company, or any other records
relating to Taxes of the Company or for which the Company may be responsible.
(c) Shareholder shall continue to reimburse the Company for any
foregone federal tax deductions relating to state income or franchise taxes for
any period ending on or before the Effective Time (as that term is defined in
the Merger Agreement) during which the Company was part of a California unitary
tax filing with Shareholder or any affiliate of Shareholder.
SECTION 9. Indemnification. From and after the Closing Date, Shareholder
---------------
shall protect, defend, indemnify and hold harmless Parent and Company from any
claims, liabilities, costs or expenses arising out of all Taxes (including
without limitation any obligation to contribute to the payment of any Taxes
determined on a consolidated, combined or unitary basis with respect to a group
of corporations that includes or included the Company to the extent that such
obligation to contribute exceeds an amount attributable to Taxes of or
attributable to the Company or its Subsidiaries) which are imposed on the
Shareholder or any member (other than the Company or its Subsidiaries) of the
consolidated, unitary or combined group which includes or included the Company
or its Subsidiaries that Parent or the Company or its Subsidiaries pay, or
otherwise satisfy in whole or in part, or that result in liens or encumbrances
on any assets of the Company or its Subsidiaries or Parent.
SECTION 10. Termination. This Agreement, and all rights and obligations
-----------
of the parties hereunder, shall terminate immediately upon the earlier of (a)
the date upon which the Merger Agreement is terminated in accordance with its
terms (i) by either Parent and Newco, on the one hand, or the Company, on the
other hand, or (ii) by mutual written consent of Parent, Newco and the Company,
or (b) the date that Newco shall have purchased and paid for all of the Shares
of Shareholder pursuant to Section 3 hereof; provided, however, that (A) the
indemnification obligation set forth in Section 9 hereof shall survive for a
period equal to (i) three years following the Effective Time and (ii) the
applicable statute of limitations, respectively and (B) the covenants set forth
in Sections 8(a) through (c) shall survive without limitation. The proxy given
pursuant to Section 5 hereof shall be automatically revoked and be of no further
force or effect, without further action on the part of any party hereto,
immediately upon the termination of this Agreement.
4
<PAGE>
SECTION 11. Expenses. All fees and expenses incurred by any one party
--------
hereto shall be borne by the party incurring such fees and expenses.
SECTION 12. Public Announcements. Each of Parent, Newco and the Company
--------------------
agrees that it will not issue any press release or otherwise make any public
statement with respect to this Agreement or the transactions contemplated hereby
without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that such disclosure can be
-------- -------
made without obtaining such prior consent if (i) the disclosure is required by
law or by obligations imposed pursuant to any listing agreement with the Nasdaq
National Market and (ii) the party making such disclosure has first used its
best efforts to consult with the other party about the form and substance of
such disclosure.
SECTION 13. Miscellaneous.
-------------
(a) Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned to such terms in the
Merger Agreement.
(b) All notices and other communications hereunder shall be in
writing and shall be deemed given upon (i) transmitter's confirmation of a
receipt of a facsimile transmission, (ii) confirmed delivery by a standard
overnight carrier or when delivered by hand or (iii) the expiration of five
business days after the day when mailed in the United States by certified or
registered mail, postage prepaid, addressed at the following addresses (or at
such other address for a party as shall be specified by like notice):
(A) if to Shareholder to:
Arnon and Anita Gat
2000 Bryant Street
Palo Alto, CA 94301
Telephone: (650) 323-9040
Facsimile: (408) 935-2732
Attention: Dr. Arnon Gat
with a copy to:
Thelen Reid & Priest LLP
333 W. San Carlos Street, 17th Floor
San Jose, CA 95110
Telephone: (408) 292-5800
Facsimile: (408) 287-8040
Attention: Jay L. Margulies
and
5
<PAGE>
(B) if to Parent or Newco, to:
STEAG Electronic Systems GmbH
Ruttenscheider Strasse 1-3
D-45128 Essen
Germany
Telephone: 011-49-201-801-2510
Facsimile: 011-49-201-801-6684
Attention: Dr. Peter Lockowandt
with a copy to:
Northrop, Stradar & Glenn, P.C.
One Corwin Court
Post Office Box 2395
Newburgh, New York 12550
Telephone: (914) 561-8000
Facsimile: (914) 561-2083
Attention: George F. Stradar, Jr., Esq.
and
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
Telephone: (415) 268-7000
Facsimile: (415) 268-7522
Attention: John W. Campbell, Esq.
(c) 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.
(d) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall be considered one
and the same agreement.
(e) This Agreement (including the Merger Agreement and any other
documents and instruments referred to herein) constitutes the entire agreement,
and supersedes all prior agreements and understandings, whether written and
oral, among the parties hereto with respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California without giving effect to the
principles of conflicts of laws thereof.
(g) 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. Subject to the preceding
6
<PAGE>
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by, the parties and their respective successors and assigns, and the
provisions of this Agreement are not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
(h) If any term, provision, covenant or restriction herein is held by
a court of competent jurisdiction or other authority to be invalid, void or
unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
(i) Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto (i) will waive, in any
action for specific performance, the defense of adequacy of a remedy at law and
(ii) shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this Agreement
in any action instituted in any state or federal court sitting in California.
The parties hereto consent to personal jurisdiction in any such action brought
in any state or federal court sitting in California and to service of process
upon it in the manner set forth in Section 11(b) hereof.
(j) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and signed by
such party.
7
<PAGE>
IN WITNESS WHEREOF, Parent, Newco and Shareholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
STEAG Electronic Systems GmbH
By: /s/ Hans-Georg Betz
---------------------------------------
Name: Hans-Georg Betz
Title: Chief Executive Officer
STEAG Electronic Systems GmbH
By: /s/ Peter Lockowandt
---------------------------------------
Name: Peter Lockowandt
Title: Officer with Statutory authority
MIG ACQUISITION CORPORATION
By: /s/ Berthold Lutke-Daldrup
---------------------------------------
Name: Berthold Lutke-Daldrup
Title: Chief Financial Officer
/s/ Arnon Gat
------------------------------------------
Name: Arnon Gat
/s/ Anita Gat
------------------------------------------
Name: Anita Gat
<PAGE>
January 14, 1999
STEAG Electronic Systems GmbH
MIG Acquisition Corporation
Ruttenscheider Strasse 1-3
45128 Essen
GERMANY
Ladies and Gentlemen:
We understand that you intend to enter into an Agreement and Plan of Merger
with AG Associates, Inc. (the "Company"), providing for a cash tender offer (the
"Offer") for the outstanding shares of common stock of the Company by MIG
Acquisition Corporation ("Newco"), and the subsequent merger (the "Merger") of
Newco with and into the Company. We further understand that you have asked
Poalim Investments LTD. ("Poalim") and certain other significant shareholders of
the Company (a) to agree to tender into the Offer any AG Associates shares such
person owns, and (b) to grant to STEAG Electronic Systems GmbH ("Parent") an
irrevocable proxy to vote such person's shares in favor of the Merger.
By delivering this letter, we hereby agree that, in the event you enter
into an Agreement and Plan of Merger with the Company providing for the Offer
and the Merger, Poalim will tender into the Offer 520,000 shares of which Poalim
has record or beneficial ownership (The "Shares"). Poalim will not, at any time
prior to June 30, 1999, transfer or consent to transfer any of the Shares to any
person, enter into any contract option or agreement with respect to the Shares
or take any other action that would in any way restrict, limit or interfere with
the tendering the Shares into the Offer.
Poalim has granted to Dr. Arnon Gat its proxy (which shall be irrevocable
prior to June 30, 1999) to vote the Shares in favor of the Merger and against
any action or agreement which would impede, interfere with or prevent the
Merger.
Very truly yours,
POALIM INVESTMENTS LTD.
By: /s/ Avigdor Kelner By: /s/ P. Bittermann Cohen
------------------ ------------------------
Name: Avigdor Kelner Name: P. Bitterman Cohen
Title: Chief executive Officer Title: Vice - President
<PAGE>
PROXY
The undersigned hereby constitutes and appoints Dr. Arnon Gat, his lawful
agent and proxy with full power of substitution, to represent the undersigned,
and to vote 520,000 shares of common stock (the "Shares") of AG Associates,
Inc., a California corporation (the "Company"), of which the undersigned has
record or beneficial ownership or in respect of which the undersigned otherwise
may be entitled to vote at a shareholders' meeting (a) in favor of the merger of
MIG Acquisition Corporation ("Newco") with and into the Company, pursuant to an
Agreement and Plan of Merger made by and among STEAG Electronic Systems GmbH
("Parent"), Newco and the Company (the "Merger Agreement"), concurrently with
the delivery of this Proxy (the "Merger"); and (b) against any action or
agreement which would impede, interfere with or prevent the Merger.
This Proxy is coupled with an interest and is given to secure the
performance of the undersigned's obligations under that certain letter dated
January 14, 1999 from the undersigned to Parent and Newco. This Proxy shall
remain in effect and shall be irrevocable in accordance with the provisions of
Section 705 of the California General Corporation Law from the date it is
delivered by the undersigned to Dr. Gat until the earlier to occur of (a) the
Merger and (b) June 30, 1999.
Dated: January 14, 1999
POALIM INVESTMENTS LTD.
By: /s/ P. Bittermann Cohen By: /s/ Avigdor Kelner
------------------------ -------------------
Name: P. Bitterman Cohen Name: Mr. Avigdor Kelner
Title: Vice - President Title: Chief Executive Officer
<PAGE>
VOTING AGREEMENT
VOTING AGREEMENT (this "Agreement"), dated as of January 18, 1999, by and
---------
among STEAG ELECTRONIC SYSTEMS GMBH, a German business entity ("Parent"), MIG
------
ACQUISITION CORPORATION, a Delaware corporation and a wholly-owned subsidiary of
Parent ("Newco"), and Clal Electronics Industries Ltd. ("Shareholder").
----- -----------
WHEREAS, Shareholder is, as of the date hereof, the record and beneficial
owner of 550,000 shares of common stock, no par value per share (the "Common
------
Stock") of , AG ASSOCIATES, INC., a California corporation (the "Company"); and
- -----
WHEREAS, Parent, Newco and the Company concurrently herewith are entering
into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
------
Agreement"), which provides, among other things, for the acquisition of the
- ---------
Company by Parent by means of a cash tender offer (the "Offer") for any and all
-----
of the outstanding shares of Common Stock and for the subsequent merger (the
"Merger") of Newco with and into the Company upon the terms and subject to the
------
conditions set forth in the Merger Agreement; and
WHEREAS, as a condition to the willingness of Parent and Newco to enter
into the Merger Agreement, Shareholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by Parent
and Newco of the Merger Agreement and the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein and
therein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Representations and Warranties of Shareholder. Shareholder
---------------------------------------------
hereby represents and warrants to Parent and Newco as follows:
(a) Shareholder is the record and beneficial owner of 550,000 shares
of Common Stock (as may be adjusted from time to time pursuant to Section 6
hereof, the "Shares").
------
(b) Shareholder is a corporation duly organized, validly existing and
in good standing under the laws of Israel has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement.
(c) This Agreement has been duly authorized, executed and delivered
by Shareholder and constitutes the legal, valid and binding obligation of
Shareholder, enforceable against Shareholder in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) the availability of the remedy of specific
performance or injunctive or other forms of equitable relief may be subject to
equitable defenses
1
<PAGE>
and would be subject to the discretion of the court before which any proceeding
therefor may be brought.
(d) Neither the execution and delivery of this Agreement nor the
consummation by Shareholder of the transactions contemplated hereby will result
in a violation of, or a default under, or conflict with, any contract, trust,
commitment, agreement, understanding, arrangement or restriction of any kind to
which Shareholder is a party or bound or to which the Shares are subject. To the
best of Shareholder's knowledge, consummation by Shareholder of the transactions
contemplated hereby will not violate, or require any consent, approval, or
notice under, any provision of any judgment, order, or decree or under any
Israeli law, statute, law, rule or regulation applicable to Shareholder or the
Shares, except for any necessary filing under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), or state takeover laws.
-------
(e) The Shares and the certificates representing Shares are now and
at all times during the term hereof will be held by Shareholder, or by a nominee
or custodian for the benefit of Shareholder, free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements, understandings
or arrangements or any other encumbrances whatsoever, other than restrictions,
if any, under the Company's Article of Association and under the securities
laws.
SECTION 2. Representations and Warranties of Parent and Newco. Each of
--------------------------------------------------
Parent and Newco hereby, jointly and severally, represents and warrants to
Shareholder as follows:
(a) Each of Parent and Newco is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered
by each of Parent and Newco and constitutes the legal, valid and binding
obligation of each of Parent and Newco, enforceable against each of them in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) the availability
of the remedy of specific performance or injunctive or other forms of equitable
relief may be subject to equitable defenses and would be subject to the
discretion of the court before which any proceeding therefor may be brought.
(c) Neither the execution and delivery of this Agreement nor the
consummation by each of Parent and Newco of the transactions contemplated hereby
will result in a violation of, or a default under, or conflict with, any
contract, trust, commitment, agreement, understanding, arrangement or
restriction of any kind to which each of Parent and Newco is a party or bound.
To the best knowledge of each of Parent and Newco, consummation by each of
Parent and Newco of the transactions contemplated hereby will not violate, or
require any consent, approval, or notice under, any provision of any judgment,
order, decree, statute, law,
2
<PAGE>
rule or regulation applicable to each of Parent and Newco except for any
necessary filing under the HSR Act or state takeover laws.
SECTION 3. Purchase and Sale of Shares. Shareholder hereby agrees that it
---------------------------
shall, and direct any nominee, custodian or trustee to, tender the Shares into
the Offer; provided that Newco's obligation to accept for payment and pay for
--------
the Shares in the Offer is subject to all the terms and conditions of the Offer
set forth in the Merger Agreement and Annex II thereto. Simultaneously with or
prior to its tender of the Shares into the Offer, Shareholder shall, if
applicable, deliver to Newco an affidavit stating, under penalty of perjury, the
Shareholder's U.S. taxpayer identification number. If the terms of the Offer are
amended and the price offered for the Shares in the Offer is increased,
Shareholder shall benefit from such amended terms and price.
SECTION 4. Transfer of Shares. Prior to the termination of this
------------------
Agreement, except as otherwise provided herein and in the Merger Agreement,
Shareholder shall not: (i) transfer (which term shall include, without
limitation, for the purposes of this Agreement, any sale, gift, pledge or other
disposition), or consent to any transfer of, any or all of the Shares or any
interest therein; (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of the Shares or any
interest therein; or (iii) grant any proxy, power-of-attorney or other
authorization or consent in or with respect to the Shares.
SECTION 5. Grant of Irrevocable Proxy; Appointment of Proxy.
------------------------------------------------
(a) Shareholder hereby irrevocably grants to, and appoints, Parent
and any nominee thereof, Shareholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of Shareholder, to
vote the Shares, or grant a consent or approval in respect of the Shares, in
connection with any meeting of the Shareholders of the Company, if applicable,
(i) in favor of the Merger and (ii) against any action or agreement which would
impede, interfere with or prevent the Merger, including any other extraordinary
corporate transaction, such as a merger, reorganization or liquidation involving
the Company and a third party or any other proposal of a third party to acquire
the Company.
(b) Shareholder represents that any proxies heretofore given in
respect of the Shares are not irrevocable, and that such proxies are hereby
revoked.
(c) Shareholder hereby affirms that the irrevocable proxy set forth
in this Section 5 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of Shareholder under this Agreement. Shareholder hereby further
affirms that the irrevocable proxy is coupled with an interest and, except as
set forth in Section 8 hereof, is intended to be irrevocable in accordance with
the provisions of Section 418 of the California General Corporation Law.
SECTION 6. Certain Events. In the event of any stock split, stock
--------------
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Common Stock, or the acquisition
of additional shares of Common Stock or other securities or rights of the
Company by Shareholder, the number of Shares shall be adjusted appropriately,
and this Agreement and the obligations hereunder shall attach to any additional
shares of
3
<PAGE>
Common Stock or other securities or rights of the Company issued to or acquired
by Shareholder.
SECTION 7. Further Assurances. Shareholder shall, upon request of Parent
------------------
or Newco, execute and deliver any additional documents and take such further
actions as may reasonably be deemed to be necessary or desirable to carry out
the provisions hereof and to vest the power to vote the Shares as contemplated
by Section 5 hereof in Parent, provided such activities do not expose
Shareholder to any liability or expenditure.
SECTION 8. Covenants.
---------
From and after the date hereof to the Effective Time, Shareholder shall
not, and shall not permit the Company * to, make any
elections, or change any existing elections, with respect to Taxes (as that term
is defined in the Merger Agreement), without the prior written consent of
Parent.
SECTION 9. Termination. This Agreement, and all rights and obligations of
-----------
the parties hereunder, shall terminate immediately upon the earlier of (a) the
date upon which the Merger Agreement is terminated in accordance with its terms
(i) by either Parent and Newco, on the one hand, or the Company, on the other
hand, or (ii) by mutual written consent of Parent, Newco and the Company, or (b)
the date that Newco shall have purchased and paid for all of the Shares of
Shareholder pursuant to Section 3 hereof; or (c) on June 30, 1999, provided,
however, that the covenants set forth in Section 8 shall survive without
limitation. The proxy given pursuant to Section 5 hereof shall be automatically
revoked and be of no further force or effect, without further action on the part
of any party hereto, immediately upon the termination of this Agreement.
SECTION 10. Expenses. All fees and expenses incurred by any one party
--------
hereto shall be borne by the party incurring such fees and expenses.
SECTION 11. Public Announcements. Each of Parent, Newco and the Company
--------------------
agrees that it will not issue any press release or otherwise make any public
statement with respect to this Agreement or the transactions contemplated hereby
without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that such disclosure can be
-------- -------
made without obtaining such prior consent if (i) the disclosure is required by
law or by obligations imposed pursuant to any listing agreement with the Nasdaq
National Market or Israeli law and (ii) the party making such disclosure has
first used its best efforts to consult with the other party about the form and
substance of such disclosure.
SECTION 12. Miscellaneous.
-------------
(a) Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned to such terms in the
Merger Agreement.
(b) All notices and other communications hereunder shall be in
writing and shall be deemed given upon (i) transmitter's confirmation of a
receipt of a facsimile transmission, (ii) confirmed delivery by a standard
overnight carrier or when delivered by hand or (iii) the expiration of five
business days after the day when mailed in the United States by
*(to the extent its holdings in the Company enable it to control the Company's
actions in this matter)
4
<PAGE>
certified or registered mail, postage prepaid, addressed at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(A) if to Shareholder to:
Clal Electronics Industries Ltd.
Clal Atidin Tower
Tel Aviv, Israel
Telephone: 972-3-765-0352
Facsimile: 972-3-765-0360
Attention: Ken Lalo, General Counsel
(B) if to Parent or Newco, to:
STEAG Electronic Systems GmbH
Ruttenscheider Strasse 1-3
45128 Essen, Germany
Telephone: 011-49-201-801-2510
Facsimile: 011-49-201-801-6684
Attention: Dr. Peter Lockowandt
with a copy to:
Northrop, Stradar & Glenn, P.C.
One Corwin Court
Post Office Box 2395
Newburgh, New York 12550
Telephone: (914) 561-8000
Facsimile: (914) 561-2083
Attention: George F. Stradar, Jr., Esq.
and
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
Telephone: (415) 268-7000
Facsimile: (415) 268-7522
Attention: John W. Campbell, Esq.
(c) 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
(d) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which shall be considered
one and the same agreement.
5
<PAGE>
(e) This Agreement (including the Merger Agreement and any other
documents and instruments referred to herein) constitutes the entire agreement,
and supersedes all prior agreements and understandings, whether written and
oral, among the parties hereto with respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the principles of conflicts of laws thereof
(g) 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. 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, and the provisions of this Agreement are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
(h) If any term, provision, covenant or restriction herein is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
(i) Each of the parties hereto acknowledges and agrees that in
the event of any breach of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto (i) will waive, in any
action for specific performance, the defense of adequacy of a remedy at law and
(ii) shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this Agreement
in any action instituted in any state or federal court sitting in California.
The parties hereto consent to personal jurisdiction in any such action brought
in any state or federal court sitting in California and to service of process
upon it in the manner set forth in Section 12(b) hereof.
(j) No amendment, modification or waiver in respect of this
Agreement shall be effective against any party unless it shall be in writing and
signed by such party.
6
<PAGE>
IN WITNESS WHEREOF, Parent, Newco and Shareholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
STEAG ELECTRONIC SYSTEMS GMBH
By:/s/ Hans-Georg Betz
--------------------------
Name: Hans-Georg Betz
Title:Chief Financial Officer
By:/s/ Peter Lockowandt
---------------------------
Name: Peter Lockowandt
Title: Officer with Statutory Authority
MIG ACQUISITION CORPORATION
By:/s/ Berthold Lutke-Daldrup
---------------------------
Name: Berthold Lutke-Daldrup
Title: Chief Financial Officer
CLAL ELECTRONICS INDUSTRIES LTD.
By:/s/ Ken Lalo
---------------------------
Name: Ken Lalo
Title: General Counsel
CLAL ELECTRONICS INDUSTRIES LTD.
By:/s/ Rimon Ben-Shaoul
---------------------------
Name: Rimon Ben-Shaoul
Title: Chairman of the Board of Directors
7
<PAGE>
VOTING AGREEMENT
VOTING AGREEMENT (this "Agreement"), dated as of December 16, 1998, by and
---------
among Steag Electronics Systems, GmbH, a German corporation ("Parent"), A.G.
------
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Newco"), and Canon Sales Co., Inc., a Japanese corporation and Nippon
-----
Typewriter Company Ltd., a Japanese corporation and a 52% owned subsidiary of
Canon Sales Co., Inc. ("Shareholder").
-----------
WHEREAS, Shareholder is, as of the date hereof, the record and beneficial
owner of 604,166 shares of common stock, no par value per share (the "Common
------
Stock") of A.G. Associates, Inc., a California corporation (the "Company"); and
- -----
WHEREAS, Parent, Newco and the Company concurrently herewith are entering
into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
------
Agreement"), which provides, among other things, for the acquisition of the
- ---------
Company by Parent by means of a cash tender offer (the "Offer") for any and all
-----
of the outstanding shares of Common Stock at the price of $5.50 per share and
for the subsequent merger (the "Merger") of Newco with and into the Company upon
------
the terms and subject to the conditions set forth in the Merger Agreement; and
WHEREAS, as a condition to the willingness of Parent and Newco to enter
into the Merger Agreement, and in order to induce Parent and Newco to enter into
the Merger Agreement, Shareholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by Parent
and Newco of the Merger Agreement and the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein and
therein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Representations and Warranties of Shareholder. Shareholder
---------------------------------------------
hereby represents and warrants to Parent and Newco as follows:
(a) Shareholder is the record and beneficial owner of 604,166 shares of
Common Stock (as may be adjusted from time to time pursuant to Section 6 hereof,
the "Shares").
------
(b) Shareholder is a corporation duly organized, validly existing and
in good standing under the laws of Japan, has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement.
(c) This Agreement has been duly authorized, executed and delivered by
Shareholder and constitutes the legal, valid and binding obligation of
Shareholder, enforceable against Shareholder in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) the availability of the remedy of specific
1
<PAGE>
performance or injunctive or other forms of equitable relief may be subject to
equitable defenses and would be subject to the discretion of the court before
which any proceeding therefor may be brought.
(d) Neither the execution and delivery of this Agreement nor the
consummation by Shareholder of the transactions contemplated hereby will result
in a violation of, or a default under, or conflict with, any contract, trust,
commitment, agreement, understanding, arrangement or restriction of any kind to
which Shareholder is a party or bound or to which the Shares are subject. To
the best of Shareholder's knowledge, consummation by Shareholder of the
transactions contemplated hereby will not violate, or require any consent,
approval, or notice under, any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to Shareholder or the Shares, except
for any necessary filing under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), or state takeover laws.
-------
(e) The Shares and the certificates representing Shares are now and at
all times during the term hereof will be held by Shareholder, or by a nominee or
custodian for the benefit of Shareholder, free and clear of all liens, claims,
security interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever.
SECTION 2. Representations and Warranties of Parent and Newco. Each of
--------------------------------------------------
Parent and Newco hereby, jointly and severally, represents and warrants to
Shareholder as follows:
(a) Each of Parent and Newco is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by
each of Parent and Newco and constitutes the legal, valid and binding obligation
of each of Parent and Newco, enforceable against each of them in accordance with
its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally and (ii) the availability of the
remedy of specific performance or injunctive or other forms of equitable relief
may be subject to equitable defenses and would be subject to the discretion of
the court before which any proceeding therefor may be brought.
2
<PAGE>
(c) Neither the execution and delivery of this Agreement nor the
consummation by each of Parent and Newco of the transactions contemplated hereby
will result in a violation of, or a default under, or conflict with, any
contract, trust, commitment, agreement, understanding, arrangement or
restriction of any kind to which each of Parent and Newco is a party or bound.
To the best knowledge of each of Parent and Newco, consummation by each of
Parent and Newco of the transactions contemplated hereby will not violate, or
require any consent, approval, or notice under, any provision of any judgment,
order, decree, statute, law, rule or regulation applicable to each of Parent and
Newco except for any necessary filing under the HSR Act or state takeover laws.
SECTION 3. Purchase and Sale of Shares. Shareholder hereby agrees that it
---------------------------
shall, and direct any nominee, custodian or trustee to, tender the Shares into
the Offer; provided that Newco's obligation to accept for payment and pay for
--------
the Shares in the Offer is subject to all the terms and conditions of the Offer
set forth in the Merger Agreement and Annex II thereto. Simultaneously with or
prior to its tender of the Shares into the Offer, Shareholder shall, if
applicable, deliver to Newco an affidavit stating, under penalty of perjury, the
Shareholder's U.S. taxpayer identification number.
SECTION 4. Transfer of Shares. Prior to the termination of this
------------------
Agreement, except as otherwise provided herein and in the Merger Agreement,
Shareholder shall not: (i) transfer (which term shall include, without
limitation, for the purposes of this Agreement, any sale, gift, pledge or other
disposition), or consent to any transfer of, any or all of the Shares or any
interest therein; (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of the Shares or any
interest therein; (iii) grant any proxy, power-of-attorney or other
authorization or consent in or with respect to the Shares; or (iv) take any
other action that would in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions contemplated
hereby.
SECTION 5. Grant of Irrevocable Proxy; Appointment of Proxy.
------------------------------------------------
(a) Shareholder hereby irrevocably grants to, and appoints, Parent and
any nominee thereof, Shareholder's proxy and attorney-in-fact (with full power
of substitution), for and in the name, place and stead of Shareholder, to vote
the Shares, or grant a consent or approval in respect of the Shares, in
connection with any meeting of the Shareholders of the Company, if applicable,
(i) in favor of the Merger and (ii) against any action or agreement which would
impede, interfere with or prevent the Merger, including any other extraordinary
corporate transaction, such as a merger, reorganization or liquidation involving
the Company and a third party or any other proposal of a third party to acquire
the Company.
(b) Shareholder represents that any proxies heretofore given in
respect of the Shares are not irrevocable, and that such proxies are hereby
revoked.
(c) Shareholder hereby affirms that the irrevocable proxy set forth in
this Section 5 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of Shareholder under this Agreement. Shareholder hereby further
affirms that the irrevocable proxy is coupled with an
3
<PAGE>
interest and, except as set forth in Section 8 hereof, is intended to be
irrevocable in accordance with the provisions of Section 418 of the California
General Corporation Law.
SECTION 6. Certain Events. In the event of any stock split, stock
--------------
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Common Stock, or the acquisition
of additional shares of Common Stock or other securities or rights of the
Company by Shareholder, the number of Shares shall be adjusted appropriately,
and this Agreement and the obligations hereunder shall attach to any additional
shares of Common Stock or other securities or rights of the Company issued to or
acquired by Shareholder.
SECTION 7. Further Assurances. Shareholder shall, upon request of Parent
------------------
and Newco, execute and deliver any additional documents and take such further
actions as may reasonably be deemed by Parent and Newco to be necessary or
desirable to carry out the provisions hereof and to vest the power to vote the
Shares as contemplated by Section 5 hereof in Parent.
SECTION 8. Covenants.
---------
(a) From and after the date hereof to the Effective Time, Shareholder
shall not, and shall not permit the Company to, make any elections, or change
any existing elections, with respect to Taxes (as that term is defined in the
Merger Agreement), without the prior written consent of Parent.
(b) From and after the date that Newco shall have purchased and paid
for all of the Shares of Shareholder pursuant to Section 3 hereof, Shareholder
shall make available to Parent any and all records and other materials in
Shareholder's possession or control that relate to any of the Company's filings
or returns relating to Taxes affecting the Company, or any other records
relating to Taxes of the Company or for which the Company may be responsible.
SECTION 9. DELETED
SECTION 10. Termination. This Agreement, and all rights and obligations
-----------
of the parties hereunder, shall terminate immediately upon the earlier of (a)
the date upon which the Merger Agreement is terminated in accordance with its
terms (i) by either Parent and Newco, on the one hand, or the Company, on the
other hand, or (ii) by mutual written consent of Parent, Newco and the Company,
or (b) the date that Newco shall have purchased and paid for all of the Shares
of Shareholder pursuant to Section 3 hereof; provided, however, that (A) the
indemnification obligation set forth in Section 9 hereof shall survive for a
period equal to (i) three years following the Effective Time and (ii) the
applicable statute of limitations, respectively and (B) the covenants set forth
in Sections 8(a) through (c) shall survive without limitation. The proxy given
pursuant to Section 5 hereof shall be automatically revoked and be of no further
force or effect, without further action on the part of any party hereto,
immediately upon the termination of this Agreement.
SECTION 11. Expenses. All fees and expenses incurred by any one party
--------
hereto shall be borne by the party incurring such fees and expenses.
4
<PAGE>
SECTION 12. Public Announcements. Each of Parent, Newco and the Company
--------------------
agrees that it will not issue any press release or otherwise make any public
statement with respect to this Agreement or the transactions contemplated hereby
without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that such disclosure can be
-------- -------
made without obtaining such prior consent if (i) the disclosure is required by
law or by obligations imposed pursuant to any listing agreement with the Nasdaq
National Market and (ii) the party making such disclosure has first used its
best efforts to consult with the other party about the form and substance of
such disclosure.
SECTION 13. Miscellaneous.
-------------
(a) Capitalized terms used and not otherwise defined in this Agreement
shall have the respective meanings assigned to such terms in the Merger
Agreement.
(b) All notices and other communications hereunder shall be in writing
and shall be deemed given upon (i) transmitter's confirmation of a receipt of a
facsimile transmission, (ii) confirmed delivery by a standard overnight carrier
or when delivered by hand or (iii) the expiration of five business days after
the day when mailed in the United States by certified or registered mail,
postage prepaid, addressed at the following addresses (or at such other address
for a party as shall be specified by like notice):
(A) if to Shareholder to:
Canon Sales Company, Inc.
12-3 2-chome, Kounan
Minato-Ku, Tokyo 108 Japan
Telephone: 011 813-3-740-3313-4
Facsimile:_______________________
Attention: Norio Kuroda
with a copy to:
Thelen Reid & Priest LLP
333 W. San Carlos Street, 17th Floor
San Jose, CA 95110
Telephone: (408) 292-5800
Facsimile: (408) 287-8040
Attention: Jay L. Margulies
and
(B) if to Parent or Newco, to:
STEAG ELECTRONIC SYSTEMs, GmbH
5
<PAGE>
Ruttenscheider Strasse 1-3
D-45128 Essen
Germany
Telephone:______________________________
Facsimile:______________________________
Attention:______________________________
with a copy to:
Northrop, Stradar & Glenn, P.C.
One Corwin Court
Post Office Box 2395
Newburgh, New York 12550
Telephone:______________________________
Facsimile:______________________________
Attention: George F. Stradar, Jr., Esq.
and
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 94105
Telephone: (415) 268-7000
Facsimile: (415) 268-7522
Attention: John W. Campbell, Esq.
(c) 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.
(d) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be considered one and
the same agreement.
(e) This Agreement (including the Merger Agreement and any other documents
and instruments referred to herein) constitutes the entire agreement, and
supersedes all prior agreements and undertakings, whether written or oral, among
the parties hereto with respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of California without giving effect to the principles of
conflicts of laws thereof.
(g) 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.
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, and the provisions of this Agreement are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
6
<PAGE>
(h) If any term, provision, covenant or restriction herein is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
(i) Each of the parties hereto acknowledges and agrees that in the event of
any breach of this Agreement, each non-breaching party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (i) will waive, in any action for
specific performance, the defense of adequacy of a remedy at law and (ii) shall
be entitled, in addition to any other remedy to which they may be entitled at
law or in equity, to compel specific performance of this Agreement in any action
instituted in any state or federal court sitting in California. The parties
hereto consent to personal jurisdiction in any such action brought in any state
or federal court sitting in California and to service of process upon it in the
manner set forth in Section 11(b) hereof.
(j) No amendment, modification or waiver in respect of this Agreement shall
be effective against any party unless it shall be in writing and signed by such
party.
7
<PAGE>
IN WITNESS WHEREOF, Parent, Newco and Shareholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
STEAG ELECTRONIC SYSTEMS GmbH
By: /s/ Hans-Georg Betz
-------------------------
Name: Hans-Georg Betz
Title: Chief Executive Officer
MIG ACQUISITION CORPORATION
By: /s/ Berthold Lutke-Daldrup
-------------------------
Name:Berthold Lutke - Daldrup
Title: Officer with Statutory Authority
CANON SALES COMPANY, INC.
By:/s/ Norio Kuroda
--------------------------
Name: Norio Kuroda
Title: Managing Director
NIPPON TYPEWRITER COMPANY LTD.
By:/s/ Yasuo Yoshida
--------------------------
Name: Yasuo Yoshida
Title: President and Chief Executive Officer
8
<PAGE>
EXHIBIT (C)(4)
THIS OPTION AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
January 18, 1999
COMMON STOCK OPTION
-------------------
This Option is issued, for good and valuable consideration, receipt of
which is hereby acknowledged, to STEAG Electronic Systems GmbH, a German
business entity ("Holder"), by AG Associates, Inc., a California corporation
(the "Company").
1. Exercise of Option. Subject to the terms and conditions hereinafter
------------------
set forth, the Holder of this Option is entitled, upon surrender of this Option
at the address of the Company set forth in Section 16 below (or at such other
place as the Company shall notify the Holder hereof in writing pursuant to
Section 16 below), to purchase from the Company, by payment of the exercise
price per share specified in Section 2 below, Six Hundred Thousand (600,000)
fully paid and non-assessable shares of common stock, no par value per share
(the "Common Stock"), of the Company (as adjusted pursuant to Section 8 hereof,
the "Shares").
2. Exercise Price. The exercise price for the Shares shall be two dollars
--------------
($2.00) per share. Such price shall be subject to adjustment pursuant to Section
8 hereof (such price, as adjusted from time to time, is herein referred to as
the "Option Price").
3. Exercise Period. Options to purchase one hundred thousand (100,000) of
---------------
the Shares will become exercisable if and when a loan (the "Loan") is made by
Holder to Company as set forth in Section 6.1 of the Agreement and Plan of
Merger dated as of the date hereof by and among Holder the Company and Newco as
evidenced by a note as contemplated therein (the "Note"). The remainder of this
Option to purchase five hundred thousand (500,000) Shares shall become
exercisable if and when a default occurs under the Note. Options to purchase the
shares shall expire (a) on March 5, 1999, if the Loan is not made or (b) on the
first anniversary of the scheduled maturity date of the Note (the periods during
which Holder shall be entitled to exercise this Option shall be referred to
herein as the "Exercise Periods").
4. Method of Exercise. While this Option remains outstanding and
------------------
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
1
<PAGE>
a. the surrender of this Option, together with a duly executed copy
of the form of Subscription attached hereto, to the Secretary of the Company at
its principal offices; and
b. the payment to the Company of an amount equal to the aggregate
purchase price for the number of Shares being purchased in cash, a certified
check made payable to the Company or any combination of the foregoing.
In the event that the Holder shall exercise the right to purchase less than
all of the purchase rights evidenced hereby, the Company shall return to the
Holder a new Option, identical in all respects to this Option, providing for a
right to purchase that number and kind of securities as to which the Holder's
rights hereunder shall not have been exercised.
5. Exercise by Exchange. In addition to and without limiting the rights
--------------------
of the Holder hereof under the terms hereof, this Option may be exercised by
being exchanged in whole or in part at any time or from time to time prior to
its expiration, for a number of shares of Common Stock having an aggregate fair
market value on the date of such exercise equal to the difference between (x)
the fair market value of the number of shares of Common Stock subject to this
Option designated by the Holder hereof on the date of the exercise and (y) the
aggregate Option Price as adjusted by Section 8 for such number of designated
shares. Upon any such exercise, the number of shares of Common Stock purchasable
upon exercise of this Option shall be reduced by such designated number of
shares of Common Stock and, if a balance of purchasable shares of Common Stock
remains after such exercise, whether or not it is exercisable as to such shares
the Company shall execute and deliver to the Holder hereof a new Option for such
balance of shares of Common Stock. No payment of any cash or other consideration
shall be required from the Holder of this Option in connection with any exercise
of this Option by exchange pursuant to this Section. Such exchange shall be
effective upon the date of receipt by the Company of the original Option
surrendered for cancellation and a written request from the Holder hereof that
the exchange pursuant to this Section be made, or at such later date as may be
specified in such request. Any tax liability related to such transaction that is
attributable to the Holder shall be paid by the Holder. For the purposes of this
Section, the "fair market value" of any number of shares of Common Stock shall
be calculated on the basis of (a) if the Common Stock is then traded on a
securities exchange, the average of the closing prices of the Common Stock on
such exchange over the 30-day period ending three (3) days prior to the date of
exercise, (b) if the Common Stock is then actively traded over the counter, the
average of the closing bid or sale prices (whichever is applicable) of the
Common Stock over the 30-day period ending three (3) days prior to the date of
exercise, and (c) if there is no active public market for the Common Stock, the
fair market value thereof as determined in good faith by the Board of Directors
of the Company.
6. Certificates for Shares. Upon the exercise of the purchase rights
-----------------------
evidenced by this Option, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the Option, Subscription and purchase
price in accordance with Section 4 hereof.
2
<PAGE>
7. Reservation of Shares. The Company covenants that it will at all times
---------------------
keep available such number of authorized shares of its Common Stock, free from
all preemptive rights with respect thereto, which will be sufficient to permit
the exercise of this Option for the full number of Shares specified herein. The
Company further covenants that such Shares, when issued pursuant to the exercise
of this Option, will be duly and validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof.
8. Adjustment of Option Price and Number of Shares. The number of and
-----------------------------------------------
kind of securities purchasable upon exercise of this Option and the Option Price
shall be subject to adjustment from time to time as follows:
a. Subdivisions, Combinations and Other Issuances. If the Company
----------------------------------------------
shall at any time prior to the expiration of this Option subdivide its Common
Stock, by stock split or otherwise, combine its Common Stock or issue additional
shares of its Common Stock (or other securities or rights convertible into, or
entitling the Holder thereof to receive, directly or indirectly, additional
shares of Common Stock) as a dividend with respect to any shares of its Common
Stock, the number of Shares issuable on the exercise of this Option shall
forthwith be proportionately increased in the case of a subdivision or stock
dividend and proportionately decreased in the case of a combination. Appropriate
adjustments shall also be made to the Option Price payable per share, but the
aggregate purchase price payable for the total number of Shares purchasable
under this Option (as adjusted) shall remain the same. Any adjustment under this
Section 8(a) shall become effective at the close of business on the date the
subdivision or combination becomes effective or as of the record date of such
dividend, or in the event that no record date is fixed upon the making of such
dividend.
b. Reclassification or Reorganization. In the event of any
----------------------------------
reclassification, capital reorganization or other change in the Common Stock of
the Company (other than as a result of a subdivision, combination or stock
dividend provided for in Section 8(a) above), then as a condition of such
reclassification, reorganization or change, lawful provision shall be made, and
duly executed documents evidencing the same shall be delivered to the Holder of
this Option, so that the Holder of this Option shall have the right at any time
prior to the expiration of this Option to purchase, at a total price equal to
that payable upon the exercise of this Option immediately prior to such event,
the kind and amount of shares of stock or other securities or property
receivable in connection with such reclassification, reorganization or change by
a Holder of the same number of shares of Common Stock as were purchasable by the
Holder of this Option immediately prior to such reclassification, reorganization
or change. In any such case appropriate provisions shall be made with respect to
the rights and interest of the Holder of this Option so that the provisions
hereof shall thereafter be applicable with respect to any shares of stock or
other securities or property deliverable upon exercise hereof, and appropriate
adjustments shall be made to the purchase price per share payable hereunder,
provided the aggregate purchase price shall remain the same.
9. Fractions of Shares. No fractional shares shall be issued upon the
-------------------
exercise or conversion of this Option. In lieu thereof, the Company shall pay
the Holder in cash an
3
<PAGE>
amount equal to the value of such fractional share based on the fair market
value of a share of Common Stock as determined in accordance with Section 5
hereof.
10. Pre-Exercise Rights. Prior to exercise of this Option, the Holder
-------------------
shall not be entitled to any rights of a shareholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
shareholder meetings, and the Holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company.
11. Restricted Securities. The Holder understands that this Option and the
---------------------
Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are being, or will be, acquired from
the Company in transactions not involving a public offering and accordingly may
not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933 (the "Securities Act") or
an applicable exemption from registration. In this connection, the Holder
acknowledges that Rule 144 of the Securities and Exchange Commission is not now,
and may not in the future be, available for resales of the Shares purchased
hereunder. The Holder further acknowledges that the Shares and any other
securities issued upon exercise of this Option shall bear a legend substantially
in the form of the legend appearing on the face hereof.
12. Certification of Investment Purpose. Unless a current registration
-----------------------------------
statement under the Securities Act shall be in effect with respect to the
securities to be issued upon exercise of this Option, the Holder hereof, by
accepting this Option, covenants and agrees that, at the time of exercise
hereof, and at the time of any proposed transfer of securities acquired upon
exercise hereof the Holder will deliver to the Company a written certification
that the securities acquired by the Holder upon exercise hereof are for the
account of the Holder and acquired for investment purposes only and that such
securities are not acquired with a view to, or for sale in connection with, any
distribution thereof.
13. Registration Under the Securities Act.
-------------------------------------
a. The Company agrees that if, at any time during the Exercise
Periods as provided in Section 3, the Company proposes to register any Common
Stock under the Securities Act or the Company receives a written request from
the Holder that the Company file a registration statement under the Securities
Act, the Company shall (i) cause such registration statement to cover all
Shares, (ii) use its best efforts to cause such registration statement to become
effective as soon as practicable and (iii) take all other action necessary under
any federal or state law or regulation of any governmental authority to permit
all Shares which it has been so requested to include in such registration
statement to be sold or otherwise disposed of, and will maintain such compliance
with such federal and state law and regulation of any governmental authority for
the period necessary for the Holder to effect the proposed sale or other
disposition. The Company shall furnish to the Holder and to each underwriter, if
any, a signed counterpart, addressed to the Holder or underwriter, of (i) an
opinion of counsel to the Company, dated the effective date of such registration
statement (and, if such registration includes an underwritten public offering,
an opinion dated the date of the closing under the
4
<PAGE>
underwriting agreement), and (ii) a "comfort" letter dated the effective date of
such registration statement (and, if such registration includes an underwritten
public offering, a letter dated the date of the closing under the underwriting
agreement) signed by the independent public accountants who have issued a report
on the Company's financial statements included in such registration statement,
in each case covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the case of
such accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters public offerings of
securities.
b. The Company shall pay all expenses incurred in connection with
any registration statement or other action pursuant to the provisions of this
Section 13, other than underwriting discounts and applicable transfer taxes
relating to the Shares.
c. In the event of any registration of any of the Shares under the
Securities Act pursuant to this Section 13, the Company shall indemnify and hold
harmless the Holder, each underwriter (as defined in the Securities Act), and
each controlling person of the Holder or underwriter, if any (within the meaning
of the Securities Act), against any losses, claims, damages, settlements or
liabilities, joint or several (or actions in respect thereof), to which the
Holder, underwriter or controlling person may be subject under the Securities
Act, under any other statute or at common law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement (or alleged untrue statement) of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any summary prospectus issued in connection
with any securities being registered, or any amendment or supplement thereto, or
any other document used with the Company's consent to sell the Shares (including
an illegal prospectus), (ii) any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (iii) any violation by the Company of the
Securities Act or any blue sky law, or any rule or regulation promulgated under
the Securities Act or any blue sky law, or any other law applicable to the
Company in connection with any such registration, and shall reimburse the
Holder, underwriter or controlling person for any legal or other expenses
reasonably incurred by the Holder, underwriter or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable to
the Holder, underwriter or controlling person in any such event to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or omission made in such registration statement,
preliminary prospectus, summary prospectus, prospectus, or amendment or
supplement thereto, or any other document, in reliance upon and in conformity
with written information furnished to the Company by the Holder, underwriter or
controlling person, specifically for use therein. The indemnity provided for
herein shall remain in full force and effect regardless of any investigation
made by or on behalf of the Holder, underwriter or controlling person, and shall
survive transfer of the Shares by the Holder.
5
<PAGE>
d. The rights to cause the Company to register securities granted to
the Holder under this Section 13 may be transferred or assigned by the Holder to
a transferee or assignee in connection with any transfer or assignment of the
Shares of the Holder; provided, however, that: (a) such transfer or assignment
may otherwise be effected in accordance with applicable securities laws, (b)
prompt written notice of such transfer or assignment is given to the Company and
(c) such transferee or assignee either (i) controls, is controlled by, or is
under common control with the Holder or (ii) is acquiring all of the Holder's
securities.
e. From and after the date of this Option, the Company shall not,
without the prior written consent of the Holder, grant rights to any person with
priority over, or on a parity with, the registration rights granted to Holder
pursuant to this Section 13.
14. Replacement of Option. On receipt by the Company of evidence
---------------------
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Option and, in the case of any such loss, theft or
destruction of this Option, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Option, the Company at its
expense and deliver, in lieu thereof, a new Option of like tenor.
15. Transfer. Subject to the transfer conditions referred to in the legend
--------
endorsed hereon, this Option and all rights hereunder are transferable, in whole
or in part, without charge to the Holder hereof upon surrender of this Option
with a properly executed assignment at the principal office of the Company. Upon
any partial transfer, the Company will at its expense issue and deliver to the
Holder hereof a new Option of like tenor, in the name of the Holder hereof,
which shall be exercisable for such number of shares of Common Stock which were
not so transferred.
16. Successors and Assigns. The terms and provisions of this Option shall
----------------------
inure to the benefit of, and be binding upon, the Company and the Holder hereof
and their respective successors and assigns.
17. Notice. Any notice or other communication required or permitted
------
hereunder shall be in writing and shall be delivered personally, telegraphed or
sent by certified, registered, or express mail, postage prepaid, and shall be
deemed given when so delivered personally, telegraphed or, if mailed, three (3)
days after the date of deposit in the United States mails, as follows:
If to the Company to:
AG Associates, Inc.
4425 Fortran Drive
San Jose, California 95134
Attention: Dr. Arnon Gat
If to the Holder to the address for the Holder shown on the records of the
Company:
6
<PAGE>
18. Governing Law. This Option shall be governed by and construed in
-------------
accordance with the laws of the State of California, without giving effect to
conflict of law principles.
IN WITNESS WHEREOF, the Company has caused this Option to be signed in
its corporate name by a duly authorized officer and to be dated as of the date
first above written.
AG Associates, Inc.
By: /s/ Arnon Gat
-------------------------------
Name: Arnon Gat
Title: Chief Executive Officer and
Chairman of the Board of
Directors
7
<PAGE>
FORM OF SUBSCRIPTION
(To be signed only on exercise of Option)
TO _____________________________
The undersigned, the Holder of the within Option, hereby irrevocably elects
to exercise the purchase right represented by such Option for, and to purchase
thereunder, ____________* shares of Common Stock of _________________________,
and herewith makes payment of $__________ therefor, and requests that the
certificates for such shares be issued in the name of, and delivered to,
________________________________, whose address is ____________________________.
__________________________________________________
(Signature must conform in all respects to name of
Holder as specified on the face of the Option)
__________________________________________________
__________________________________________________
(Address)
Dated:
_____________________________
_____________________________
* Insert here the number of shares as to which the Option is being exercised.
8
<PAGE>
FORM OF ASSIGNMENT
(To be signed only on transfer of Option)
For value received, the undersigned hereby sells, assigns, and transfers
unto ________________________________ the right represented by the within Option
to purchase shares of Common Stock of ____________________________________ to
which the within Option relates, and appoints __________________________________
Attorney to transfer such right on the books of __________________________ with
full power of substitution in the premises.
__________________________________________________
(Signature must conform in all respects to name of
Holder as specified on the face of the Option)
__________________________________________________
__________________________________________________
(Address)
Dated:
_____________________________
9
<PAGE>
EXHIBIT (C)(5)
AG ASSOCIATES, INC.
January 14, 1999
STEAG Electronic Systems GmbH
Ruttenscheider Strasse 1-3
45128 Essen
Germany
Ladies and Gentlemen:
AG Associates, Inc., a California corporation ("we" or the "Company"),
is the record and beneficial owner of 4,289,500 Ordinary Shares, nominal value
NIS 0.01 per share (as such number of shares may be increased or decreased
pursuant to the following paragraph, the "Shares"), of AG Associates (Israel)
LTD., a corporation formed under the laws of the State of Israel ("AG Israel").
The Company and STEAG Electronic Systems GmbH, a German business entity ("you or
"STEAG"), are parties to that certain Agreement and Plan of Merger, dated as of
January 18, 1999 (the "Merger Agreement"), which contemplates, among other
things, the merger of one of your wholly owned subsidiaries with and into the
Company (the "Merger"). STEAG also has entered into an agreement with AG Israel
and its shareholders, dated as of January 18, 1999 (the "AG Israel Agreement"),
which contemplates the acquisition by STEAG of the Ordinary and Preferred Shares
of AG Israel that are not owned by the Company.
If (a) you shall have the right to purchase the Other AGI Shares, (b)
the Closing under the Merger Agreement does not occur and (c) the Merger
Agreement is terminated for any reason, then (a) you shall have the right to
purchase, and we shall be required to sell, all but not less than all of the
Shares for the aggregate purchase price of US$5,404,770.00 (the "Purchase
Price"), and (b) we shall have the right to sell to you, and you shall be
required to purchase, all but not less than all of the Shares at the Purchase
Price (in either case, the "Sale"), on the terms and subject to the conditions
set forth herein. If AG Israel causes the Shares to be subdivided or combined
into a greater or smaller number of shares, then the term "Shares" herein shall
refer to such subdivided or combined shares and the Purchase Price shall remain
the same.
You may assign your right and/or obligation to purchase the Shares to
any person, including any company or business entity, that you control or is
controlled by you or is under common control with you (your "affiliates"),
provided that you deliver to us written notice of such assignment prior to the
date of an Election Notice (as defined below).
If either you or we elect to effect the Sale (in either case, an
"Election"), such Election must be made by delivering written notice (an
"Election Notice") to Morrison & Foerster LLP, 425 Market Street, San Francisco,
CA 94105 attention John Campbell (the "Trustee") notifying the Trustee of our
desire to effect the Sale. We have deposited, or within one week of the signing
of this letter will deposit, the Shares with the Trustee, together with such
instruments, endorsed in blank, as may be
<PAGE>
necessary in order to permit the Trustee to effect a sale of the Shares to you
pursuant to this letter without the necessity of our taking any further action.
An Election Notice shall be deemed effective upon receipt by the
Trustee. An Election must be made, if at all, on or prior to the date which is
thirty (30) days following the Effective Date (the "Expiration Date"). We agree
not to sell, pledge or otherwise transfer any of the Shares to any person other
than you or one of your affiliates prior to the Expiration Date, unless you
shall have given your prior written consent.
If an Election is made by you, the Election Notice you deliver to the
Trustee must be accompanied by the Purchase Price, in the form of a bank or
certified check or wire transfer. If an Election is made by us, you shall
deliver the Purchase Price, in the form of a bank or certified check or wire
transfer, to the Trustee within five (5) business days in Israel following the
date the Trustee informs you that our Election Notice has been received by the
Trustee.
The closing of the Sale (the "Closing") shall take place on the date
that is five (5) business days in Israel following the date the Purchase Price
is received by the Trustee, or on the earliest subsequent date upon which all
regulatory approvals, if any, shall have been obtained. At the Closing, the
Trustee shall deliver (a) share transfer deeds representing all of the Shares to
you together with such instruments and documents as you or your counsel believe
are necessary in order to convey full title to the Shares to you, and (b) the
Purchase Price to us.
In connection with the delivery of the Shares to the Trustee, and
again at such time, if ever, as they are sold to you, we represent and warrant
to you as follows:
(a) all of the Shares are duly authorized, validly issued, fully
paid and nonassessable Ordinary Shares of AG Israel;
(b) all of the Shares are owned by the Company free and clear of
all security interests, liens, claims, pledges, agreements, limitations in the
Company's voting rights, charges or other encumbrances of any nature whatsoever;
(c) this letter has been duly and validly executed and delivered
by us and assuming the due authorization, execution and delivery by you
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be subject to or limited by bankruptcy, insolvency, reorganization, or other
similar laws, now or hereafter in effect, affecting the enforcement of
creditors' rights generally, and except that the availability of equitable
remedies, including specific performance, may be subject to the discretion of
the court before which any proceeding therefor may be brought;
(d) the execution and delivery of this letter by us does not,
and the performance of the obligations outlined in this letter by the Company
will not, (i) conflict with or violate the Articles of Incorporation or Bylaws
of the Company, (ii) conflict with or violate any law relating to the Company,
or by which any of its properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or impair the Company's rights or alter
the rights or obligations of any third party
<PAGE>
under, or give to others any rights of termination, amendment, acceleration or
cancellation of any contract to which the Company is bound.
Our respective obligations under this letter shall be governed by the
laws of the State of California, and we agree to resolve any disputes under this
letter in a court located in California having subject matter jurisdiction over
such dispute.
If you agree to the matters set forth in this letter, including
without limitation the terms and conditions under which you or we can require
the Sale, please indicate such agreement by signing the enclosed photocopy of
this letter in the space indicated and returning such signed copy to us.
We each agree that the Trustee is acting as our joint agent for the
sole purpose of effecting the transfer of the Shares, and owes no fiduciary
duty to either one of us as a result of this letter.
Sincerely,
By: /s/ Arnon Gat
-------------------------
Name: Arnon Gat
Title: Chief Executive Officer
AG ASSOCIATES, INC.
Accepted and Agreed: The undersigned agrees to act as the
Trustee, as described above.
STEAG ELECTRONIC
SYSTEMS GMBH MORRISON & FOERSTER LLP
By: /s/ Hans-Joachim Wolf By: /s/ John W. Campbell
-------------------------- -----------------------
Name: Hans-Joachim Wolf Name: John W. Campbell III
------------------------ --------------------
Title: Chief Financial Officer Title: General Partner
----------------------- -------------------
By: /s/ Peter Lockowandt
--------------------------
Name: Peter Lockowandt
-------------------------
Title: Officer with Statutory Authority
--------------------------------
