OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MERCATOR SOFTWARE, INC.
AT
$3.00 NET PER SHARE IN CASH
BY
ASCENTIAL SOFTWARE CORPORATION
THROUGH ITS WHOLLY OWNED SUBSIDIARY
GREEK ACQUISITION CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 11:59 P.M., NEW YORK CITY
TIME, ON MONDAY, SEPTEMBER 8, 2003 UNLESS THE OFFER IS EXTENDED. SHARES
WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY
TIME PRIOR TO THE EXPIRATION DATE.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF AUGUST 2, 2003, BY AND AMONG ASCENTIAL SOFTWARE CORPORATION ("ASCENTIAL"),
GREEK ACQUISITION CORPORATION ("PURCHASER," "WE" OR "US") AND MERCATOR SOFTWARE,
INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY
APPROVED THE OFFER, THE MERGER AGREEMENT AND THE MERGER AND HAS DETERMINED THAT
THE TERMS OF THE OFFER AND THE MERGER ARE ADVISABLE, FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY'S STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY ASCENTIAL OR
PURCHASER, IF ANY, REPRESENTS AT LEAST FIFTY-ONE PERCENT OF THE SHARES OF THE
COMPANY'S COMMON STOCK ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED
FOR PAYMENT PURSUANT TO THE OFFER. THE OFFER IS ALSO SUBJECT TO THE OTHER
CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE (THE "OFFER TO PURCHASE"). SEE
SECTION 14.
IMPORTANT
Any stockholder who desires to tender all or any portion of such
stockholder's Shares (as defined herein) should either (i) complete and sign the
enclosed Letter of Transmittal (or a facsimile thereof) in accordance with the
instructions in the Letter of Transmittal, mail or deliver it and any other
required documents to the Depositary (as defined herein) and either deliver the
certificates for such Shares to the Depositary or tender such Shares pursuant to
the procedures for book-entry transfer set forth in Section 3 -- "Procedure for
Tendering Shares" of this Offer to Purchase or (ii) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Any stockholder 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 to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, may tender such
Shares by following the procedures for guaranteed delivery set forth in Section
3 -- "Procedure for Tendering Shares" of this Offer to Purchase.
Questions and requests for assistance may be directed to the Information
Agent at the address and telephone numbers set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase, the
Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent. A stockholder also may contact brokers,
dealers, commercial banks or trust companies for assistance concerning the
Offer.
---------------------
THE DEALER MANAGER FOR THE OFFER IS:
BEAR, STEARNS & CO. INC.
August 8, 2003
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
SUMMARY TERM SHEET..................................................................... ii
INTRODUCTION........................................................................... 1
THE OFFER.............................................................................. 3
1. Terms of the Offer.............................................................. 3
2. Acceptance for Payment and Payment.............................................. 4
3. Procedure for Tendering Shares.................................................. 5
4. Withdrawal Rights............................................................... 8
5. Certain U.S. Federal Income Tax Consequences.................................... 9
6. Price Range of the Shares; Dividends on the Shares.............................. 10
7. Effect of the Offer on the Market for the Shares; Stock Listing; Exchange Act
Registration; Margin Regulations................................................ 10
8. Certain Information Concerning the Company...................................... 11
9. Certain Information Concerning Ascential and Purchaser.......................... 12
10. Source and Amount of Funds...................................................... 13
11. Background of the Offer; Purpose of the Offer and the Merger; The Merger
Agreement and Certain Other Agreements.......................................... 13
12. Plans for the Company; Other Matters............................................ 27
13. Dividends and Distributions..................................................... 29
14. Conditions to the Offer......................................................... 29
15. Certain Legal Matters........................................................... 31
16. Fees and Expenses............................................................... 33
17. Miscellaneous................................................................... 33
Schedule I Information Concerning Directors and
Executive Officers of Purchaser and Ascential............... 35
</Table>
SUMMARY TERM SHEET
Ascential, through its wholly owned subsidiary, Greek Acquisition
Corporation, is offering to purchase all of the outstanding shares of common
stock, par value $0.01 per share, of Mercator Software, Inc. for $3.00 per share
in cash, net to the stockholder with no interest thereon. The following are some
of the questions you, as a stockholder of the Company, may have and answers to
those questions. We urge you to read carefully the remainder of this Offer to
Purchase and the Letter of Transmittal because the information in this summary
is not complete, and it may not contain all the information that is important to
you.
WHO IS OFFERING TO BUY MY SHARES?
We are a wholly owned subsidiary of Ascential, a corporation organized
under the laws of Delaware. Our name is Greek Acquisition Corporation and we are
a Delaware corporation formed for the purpose of making a tender offer for all
of the common stock of the Company. See "Introduction" and Section 9 -- "Certain
Information Concerning Ascential and Purchaser."
WHAT SHARES ARE BEING SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding common stock of Mercator
Software, Inc. See "Introduction" and Section 1 -- "Terms of the Offer."
HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to pay $3.00 per share, net to you, in cash without
interest thereon. If you are a registered record holder and you tender your
shares to us in the Offer, you will not have to pay brokerage fees or similar
expenses. See "Introduction" and Section 1 -- "Terms of the Offer."
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
To finance the purchase, Ascential will provide Purchaser with the funds
required to pay for the shares and related expenses from Ascential's working
capital. The Offer is not contingent on obtaining new sources of financing. See
Section 10 -- "Source and Amount of Funds."
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
The Offer is not subject to any financing condition. Because the form of
payment consists solely of cash and all of the funding which will be needed will
come from Ascential's working capital, we do not think our financial condition
is relevant to your decision as to whether to tender in the Offer. Pursuant to
the merger agreement, Ascential has agreed to provide us with funds necessary to
consummate the Offer and the merger.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 11:59 P.M., New York City time, on Monday,
September 8, 2003, to decide whether to tender your shares in the Offer.
Further, if you cannot deliver everything that is required in order to make a
valid tender by that time, you may be able to use a guaranteed delivery
procedure, which is described later in this Offer to Purchase. See Section
1 -- "Terms of the Offer" and Section 3 -- "Procedures for Tendering Shares."
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
Subject to the terms of the merger agreement, we can extend the Offer
without the Company's consent as follows:
-- if all conditions to the Offer have not been satisfied or waived, we may
from time to time extend the Offer three times for a period of ten business
days each;
-- if, immediately prior to the expiration date of the Offer (as it may be
extended), the shares of common stock of the Company tendered and not
withdrawn constitute less than 90% of the outstanding shares of
ii
Company's common stock (on a fully diluted basis), Purchaser may extend the
Offer, on one or more occasions, for an aggregate period of not more than
ten business days; provided that if all conditions to the Offer have been
satisfied we cannot extend beyond September 15, 2003;
-- in addition, we may extend the Offer for any reason for up to two business
days; provided that no more than three such extensions are permitted and
provided that if all conditions to the Offer have been satisfied we cannot
extend the Offer beyond September 15, 2003; and
-- we may elect to provide a 'subsequent offering period' for the Offer. A
'subsequent offering period', if one is included, will be an additional
period of time beginning after we have purchased shares tendered during the
Offer, during which stockholders may tender, but not withdraw, their shares
and receive the offer consideration. We do not currently intend to include
a 'subsequent offering period', although we reserve the right to do so.
See Section 1 -- "Terms of the Offer."
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the Offer, we will make a public announcement of the
extension, no later than 9:00 A.M., New York City time, on the day after the day
on which the Offer was scheduled to expire.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
- We are not obligated to purchase any shares unless the number of shares
validly tendered and not withdrawn before the expiration date of the
offer represents at least 51% of the outstanding shares of the Company's
common stock on a fully diluted basis (the "Minimum Condition").
- We are not obligated to purchase any tendered shares if there has been a
material adverse effect on the Company or an event or circumstance that
could reasonably be likely to result in a material adverse effect on the
Company.
- We are not obligated to purchase any tendered shares if the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act has
not expired or been terminated.
- The Offer is also subject to a number of other conditions. See Section
14 -- "Conditions to the Offer."
HOW DO I TENDER MY SHARES?
If you hold your shares in your own name, you tender your shares by:
- completing the enclosed Letter of Transmittal, and
- delivering your stock certificates along with the Letter of Transmittal
to the Depositary in the enclosed envelope.
If your stock certificates are not immediately available, see the
guaranteed delivery procedures at page 6.
If your shares are held in the name of your broker, dealer, commercial
bank, trust company or other nominee, you must instruct your nominee to tender
your shares on your behalf by completing the form sent to you by the nominee and
returning the form to it. See Section 3 -- "Procedures for Tendering Shares."
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw shares at any time until the offer has expired and, if we
have not agreed to accept your shares for payment by October 6, 2003, you can
withdraw them at any time after such date until we accept shares for payment.
This right to withdraw will not apply to any 'subsequent offering period', if
one is included. See Section 1 -- "Terms of the Offer" and Section
4 -- "Withdrawal Rights."
iii
WHAT IS THE PROCEDURE FOR WITHDRAWING TENDERED SHARES?
For as long as you still have a right to withdraw the tendered shares, you
may withdraw tendered shares by sending a written or facsimile transmission
notice of withdrawal to the Depositary if your shares are held in your name or
to your broker, dealer, commercial bank, trust company or other nominee if they
are held in its name. In general, in order for the notice to be effective,
notice of the withdrawal must be received by the Depositary prior to the
expiration of the Offer. See Section 1 -- "Terms of the Offer" and Section 4 --
"Withdrawal Rights."
WHAT DOES THE COMPANY'S BOARD OF DIRECTORS THINK OF THE OFFER?
We are making the Offer pursuant to a merger agreement among us, Ascential
and the Company. The Company's board of directors unanimously approved and
adopted the merger agreement, the Offer and our proposed merger with the
Company. The board of directors of the Company has determined that the Offer and
the merger are advisable, fair to and in the best interest of the Company and
its stockholders and unanimously recommends that stockholders tender their
shares in the Offer. The factors considered by the board of directors of the
Company in arriving at its decision to approve and adopt the merger agreement,
the Offer, and the merger are described in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 which has been filed
with the Securities and Exchange Commission (the "Commission") and is being
mailed to Company stockholders together herewith. See -- "Introduction."
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL THE COMPANY SHARES ARE NOT
TENDERED IN THE OFFER?
If we accept for payment and pay for shares tendered in the Offer, subject
to the terms and conditions of the merger agreement, we expect to be merged with
and into the Company. The Company will be the surviving corporation and will
become a wholly owned subsidiary of Ascential. In the merger, stockholders who
did not tender their shares will receive $3.00 per share in cash (or any other
higher price per share which is paid in the Offer) in exchange for their shares
without any interest thereon. If shares tendered in the Offer constitute more
than 90% of the outstanding shares of the Company's common stock, we may be able
to effect the merger without convening a meeting of stockholders. We may not,
without the Company's consent, waive the Minimum Condition. See Section
11 -- "The Merger Agreement and Certain Other Agreements" and Section
12 -- "Plans for the Company."
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AND THE MERGER AFFECT MY SHARES?
If you don't tender your shares and the merger described above takes place,
your shares will be cancelled. Unless you exercise dissenters' rights under
Delaware law (see page 29), you will receive the same amount of cash per share
without interest thereon which you would have received had you tendered your
shares in the Offer. Therefore, if we accept shares in the Offer and the merger
takes place, the only difference to you between tendering your shares and not
tendering your shares is that you will be paid earlier if you tender your
shares. If we accept shares for payment pursuant to the Offer and one of the
conditions to the merger is not satisfied and the merger does not take place,
the number of stockholders and the number of shares of Company common stock
which are still in the hands of the public may be so small that there may no
longer will be an active public trading market (or, possibly, any public trading
market) for the Company common stock. Also, the shares may no longer be eligible
to be traded on the Nasdaq National Market or any other stock market, and the
Company may cease making filings with the SEC or otherwise cease being required
to comply with the SEC rules relating to publicly held companies. See Section
7 -- "Effect of the Offer on the Market for Shares."
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On August 1, 2003, the last trading day before the Company and Ascential
announced that they had signed the merger agreement, the high and low sale
prices of the shares reported on the Nasdaq National Market were $2.74 and $2.24
per share, respectively, and the shares' trailing average price for the last
iv
12 months was $1.38. We advise you to obtain a recent quotation for shares of
the Company in deciding whether to tender your shares. See Section 6 -- "Price
Range of the Shares."
WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF TENDERING SHARES?
The receipt of cash for shares pursuant to the Offer or the merger will be
a taxable transaction for United States federal income tax purposes and possibly
for state and local income tax purposes as well. In general, a stockholder who
receives cash for tendered shares pursuant to the Offer or receives cash in
exchange for shares pursuant to the merger will recognize gain or loss for
United States federal income tax purposes equal to the difference, if any,
between the amount of cash received and the stockholder's adjusted tax basis in
the shares sold pursuant to the Offer or exchanged for cash pursuant to the
merger. If the shares tendered or exchanged constitute capital assets in the
hands of the stockholder, such gain or loss will be capital gain or loss. In
general, capital gains recognized by an individual will be subject to a maximum
United States federal income tax rate of 15% if the shares were held for more
than one year, and if held for one year or less they will be subject to tax at
ordinary income rates. Because individual circumstances may differ, you should
consult your tax advisor to determine the particular tax effects to you. See
Section 5 -- "Certain U.S. Federal Income Tax Consequences."
WHOM CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OFFER?
You can call Innisfree M&A Incorporated at (888) 750-5834 (toll free).
Innisfree M&A Incorporated is acting as the information agent for our tender
offer. See the back cover of this offer to purchase.
v
To the Holders of Common Stock of
Mercator Software, Inc.
INTRODUCTION
Ascential Software Corporation, a Delaware corporation, through its wholly
owned subsidiary, Greek Acquisition Corporation, a Delaware corporation, hereby
offers to purchase all outstanding shares of common stock, par value $0.01 per
share, of Mercator Software, Inc., a Delaware corporation, together with the
associated preferred stock purchase rights (such shares, together with such
rights, the "Shares") at a price of $3.00 per Share (the "Offer Price"), net to
the seller in cash without interest thereon, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer."
Tendering stockholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase
of Shares by us pursuant to the Offer. Stockholders who hold their Shares
through a bank or broker should check with such institution as to whether they
charge any service fees. Purchaser will not pay such service fees. Purchaser
will pay all fees and expenses of The Bank of New York, as depositary (the
"Depositary"), Bear, Stearns & Co. Inc., as dealer manager (the "Dealer
Manager") and Innisfree M&A Incorporated, as information agent (the "Information
Agent"), incurred in connection with the Offer and in accordance with the terms
of the agreements entered into between Purchaser and/or Ascential and each such
person. See Section 16 -- "Fees and Expenses."
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 2, 2003, by and among Ascential, Purchaser and the Company.
Pursuant to the merger agreement and subject to the Delaware General Corporation
Law (the "DGCL"), as soon as practicable after the completion of the Offer and
satisfaction or waiver, if permissible, of all conditions to the merger,
Purchaser will be merged with and into the Company and the separate corporate
existence of Purchaser will thereupon cease. The merger, as effected pursuant to
the immediately preceding sentence, is referred to as the "merger," and the
Company, as the surviving corporation of the merger, is sometimes referred to as
the "Surviving Corporation." At the effective time of the merger, each Share
then outstanding (other than any Shares held by Ascential, Purchaser, the
Company or their respective subsidiaries, and Shares held by stockholders who
properly perfect their dissenters' rights under the DGCL) will be cancelled and
converted into the right to receive $3.00 in cash (or any higher price per Share
paid in the Offer), without interest thereon. The merger agreement is more fully
described in Section 11 -- "The Merger Agreement."
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, AND HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE
ADVISABLE, FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
The factors considered by the Board of Directors of the Company in arriving
at its decision to approve the merger agreement, the Offer, and the merger are
described in the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9") which has been filed with the Securities and
Exchange Commission and is being mailed to holders of Shares herewith.
J.P. Morgan Securities Inc. ("JP Morgan") has delivered to the Company's
Board of Directors its opinion, dated as of August 2, 2003, to the effect that,
as of such date and based upon and subject to certain assumptions and matters
stated therein, the consideration to be received in the Offer and the merger by
the holders of Shares pursuant to the Offer and the merger is fair, from a
financial point of view, to such holders. A copy of the opinion, which sets
forth the assumptions made, the matters considered and the limitations on the
review undertaken, is attached as an exhibit to the Schedule 14D-9. Holders of
Shares are urged to read the Schedule 14D-9 and JP Morgan's opinion carefully.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1 -- "TERMS OF THE OFFER") THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES
BENEFICIALLY OWNED BY ASCENTIAL OR PURCHASER (IF ANY), REPRESENTS AT LEAST
FIFTY-ONE PERCENT OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE
WE ACCEPT SHARES FOR PAYMENT. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS
SET FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14 -- "CONDITIONS TO THE
OFFER."
The Company has informed the Purchaser that, as of July 31, 2003, there
were: (a) 35,266,939 Shares issued and outstanding; (b) 11,332,346 Shares
subject to outstanding options to purchase Shares from the Company; and (c)
1,133,119 Shares subject to warrants. Based upon the foregoing and assuming that
no Shares, options or warrants are otherwise issued after July 31, 2003, the
Minimum Condition will be satisfied if at least 24,343,526 Shares are validly
tendered and not withdrawn prior to the expiration of the Offer. The actual
number of Shares required to be tendered to satisfy the Minimum Condition will
depend upon the actual number of fully diluted shares on the date that the Offer
is scheduled to expire. Pursuant to the merger agreement, we may not waive the
Minimum Condition without the Company's consent. If we accept for payment Shares
tendered pursuant to the Offer we will be able to designate a number of
directors to the Company's Board of Directors so that our designees constitute
the same portion of the Board of Directors as our percentage of the outstanding
Shares of the Company, rounded up to the next whole number. If we accept payment
shares tendered pursuant to the Offer which constitutes more than 50% of the
outstanding shares, we will also be able to effect the merger without the
affirmative vote of any other stockholder of the Company. In addition, if
following the Offer we own more than 90% of the outstanding Shares, we will be
able to effect the merger without convening a meeting of stockholders. See
Section 12 -- "Plans for the Company."
Ascential and Purchaser have entered into a Stock Tender Agreement, dated
as of August 2, 2003, with the directors and certain executive and other
officers (the "Individuals") who are stockholders of the Company or holders of
options to purchase Shares and who collectively own 2,107,706 Shares and
3,802,428 options to purchase Shares. The Shares owned by such individuals
represent approximately 6% of the outstanding Shares. Pursuant to the Stock
Tender Agreement, those Individuals have agreed to tender their Shares pursuant
to the Offer, to grant us an option to purchase such shares under certain
circumstances, and to grant us an irrevocable proxy with respect to the voting
of such Shares. See Section 11 -- "Stock Tender Agreement."
Ascential, Purchaser and the Company have entered into a Common Stock
Option Agreement, dated as of August 2, 2003. Pursuant to the option agreement,
the Company granted us an option to purchase Shares constituting up to 19.99% of
the then outstanding Shares if we have accepted Shares for payment pursuant to
the Offer and if following such exercise, we would own more than 90% of the then
outstanding Shares.
Certain U.S. federal income tax consequences of the sale of Shares pursuant
to the Offer and the conversion of Shares pursuant to the merger are described
in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
2
THE OFFER
1. TERMS OF THE OFFER
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), we will accept for payment and pay for all Shares validly
tendered prior to the expiration date and not properly withdrawn in accordance
with Section 4 of this Offer to Purchase. The term "Expiration Date" shall mean
11:59 p.m., New York City time, on Monday, September 8, 2003, unless and until
we, in accordance with the terms of the merger agreement, shall have extended
the period of time for 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 us, shall expire.
The Offer is conditioned upon the satisfaction of the Minimum Condition and
the other conditions set forth in Section 14 -- "Conditions to the Offer." If
such conditions are not satisfied prior to the Expiration Date, Purchaser
reserves the right, subject to the terms of the merger agreement and subject to
the applicable rules and regulations of the Commission, to (i) decline to
purchase any Shares tendered in the Offer and terminate the Offer and return all
tendered Shares to the tendering stockholders, (ii) waive any or all conditions
to the Offer and, to the extent permitted by applicable law, purchase all Shares
validly tendered and not withdrawn, (iii) subject to the conditions summarized
below, extend the Offer and, subject to the right of stockholders to withdraw
Shares until the Expiration Date, retain all Shares which have been validly
tendered and not withdrawn during the period or periods for which the Offer is
extended or (iv) subject to the following sentence, modify the terms of the
Offer. The merger agreement provides that without the written consent of the
Company, we will not reduce the Offer Price, reduce the number of Shares subject
to the Offer, waive the Minimum Condition, change the form of consideration to
be paid in the Offer, or modify or add conditions to the Offer which otherwise
adversely affect the holders of the Shares or, except as described below, extend
the Expiration Date of the Offer.
If, on the initial scheduled Expiration Date of the Offer, all conditions
to the Offer have not been satisfied or waived, we may, without the consent of
the Company, extend the expiration date of the Offer up to three times for
periods of ten business days each. In addition, if, immediately prior to the
Expiration Date, the Shares tendered and not withdrawn pursuant to the Offer
constitute less than 90% of the outstanding Shares, we may extend the Offer for
a period not to exceed ten business days, notwithstanding that all conditions to
the Offer are satisfied as of the Expiration Date, but not beyond September 15,
2003. We may also extend the Expiration Date for any reason on up to three
occasions for up to two business days each, provided that if all the conditions
to the Offer have been met, we cannot extend the Offer beyond September 15,
2003. In addition, Purchaser may increase the amount it offers to pay for Shares
in the Offer (but is not obligated to do so), and the Offer may be extended to
the extent required by law in connection with such increase.
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement thereof, and in the case of an
extension the announcement will be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date in
accordance with the public announcement requirements of rules under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). As used in
this Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1
under the Exchange Act. Purchaser currently intends to make announcements by
issuing a press release to the Dow Jones News Service.
If we extend the Offer, or if we (whether before or after our acceptance
for payment of Shares) are delayed in our purchase of, or payment for, Shares or
are unable to pay for Shares pursuant to the Offer for any reason, then, without
prejudice to Purchaser's rights under the Offer, the Depositary may retain
tendered Shares on our behalf, and such Shares may not be withdrawn except to
the extent tendering stockholders are entitled to withdrawal rights as described
in Section 4 -- "Withdrawal Rights." However, the ability of Purchaser to delay
the payment for Shares that Purchaser has accepted for payment is limited by
Rule 14e-l(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities deposited by, or on behalf of,
holders of securities promptly after the termination or withdrawal of the Offer.
3
If we make a material change in the terms of the Offer or the information
concerning the Offer or waive a material condition of the Offer, we will
disseminate additional tender offer materials and extend the Offer to the extent
required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act. The
minimum period during which an offer must remain open following material changes
in the terms of such offer or information concerning such offer, other than a
change in price or a change in the percentage of securities sought, will depend
upon the facts and circumstances then existing, including the relative
materiality of the changed terms or information. With respect to a change in
price or a change in the percentage of securities sought, a minimum period of 10
business days is generally required to allow for adequate dissemination to
stockholders.
Pursuant to Rule 14d-11 under the Exchange Act, we may, subject to certain
conditions, elect to provide a subsequent offering period from three business
days up to 20 business days in length following the expiration of the Offer on
the Expiration Date and acceptance for payment of the Shares tendered in the
Offer (a "Subsequent Offering Period"). A Subsequent Offering Period would be an
additional period of time, following the expiration of the Offer and the
purchase of Shares in the Offer, during which stockholders may tender Shares not
tendered in the Offer. A Subsequent Offering Period, if one is included, is not
an extension of the Offer, which already will have been completed.
During a Subsequent Offering Period, tendering stockholders will not have
withdrawal rights and the Purchaser will promptly purchase and pay for any
Shares tendered at the same price paid in the Offer. Rule 14d-11 provides that
the Purchaser may provide a Subsequent Offering Period so long as, among other
things, (i) the initial 20 business day period of the Offer has expired, (ii)
the Purchaser offers the same form and amount of consideration for Shares in the
Subsequent Offering Period as in the initial Offer, (iii) the Purchaser
immediately accepts and promptly pays for all securities tendered during the
Offer prior to its expiration, (iv) the Purchaser announces the results of the
Offer, including the approximate number and percentage of Shares deposited in
the Offer, no later than 9:00 a.m., Eastern time, on the next business day after
the Expiration Date and immediately begins the Subsequent Offering Period and
(v) the Purchaser immediately accepts and promptly pays for Shares as they are
tendered during the Subsequent Offering Period. In the event the Purchaser
elects to include a Subsequent Offering Period, it will make a public
announcement of the election no later than 9:00 a.m. New York City time, on the
next business day following the Expiration Date of the Offer.
ALTHOUGH THE PURCHASER DOES NOT CURRENTLY INTEND TO INCLUDE A SUBSEQUENT
OFFERING PERIOD IN THE OFFER, IT RESERVES THE RIGHT TO DO SO IN ITS SOLE
DISCRETION. PURSUANT TO RULE 14D-7 UNDER THE EXCHANGE ACT, NO WITHDRAWAL RIGHTS
APPLY TO SHARES TENDERED DURING A SUBSEQUENT OFFERING PERIOD AND NO WITHDRAWAL
RIGHTS APPLY DURING THE SUBSEQUENT OFFERING PERIOD WITH RESPECT TO SHARES
TENDERED IN THE OFFER AND ACCEPTED FOR PAYMENT. THE SAME CONSIDERATION WILL BE
PAID TO STOCKHOLDERS TENDERING SHARES IN THE OFFER OR IN A SUBSEQUENT OFFERING
PERIOD, IF ONE IS INCLUDED.
The Company has provided us with the Company's stockholder lists 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 by us to record holders of Shares and will be furnished by us to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the stockholder lists or, if applicable,
who are listed as participants in a clearing agency's security position listing,
for subsequent transmittal to beneficial owners of Shares. If the Company's
lists include beneficial owners, the Offer to Purchase and related Letter of
Transmittal will be mailed to beneficial owners.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions to the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), we will accept for payment and will pay, promptly after the
Expiration Date, for all Shares validly tendered prior to the Expiration Date
and not properly withdrawn in accordance with Section 4 -- "Withdrawal Rights."
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or a timely Book-Entry Confirmation (as defined below) with respect
thereto), (ii) a Letter of Transmittal (or facsimile thereof), properly
completed
4
and duly executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message (as described in Section 3 -- "Procedure
for Tendering Shares," below), and (iii) any other documents required by the
Letter of Transmittal. The per Share consideration paid to any holder of Shares
pursuant to the Offer will be the highest per Share consideration paid to any
other holder of such Shares pursuant to the Offer.
We reserve the right, in our sole discretion, to delay acceptance for
payment of, or payment for, Shares in order to comply with any applicable law
including the Hart-Scott-Rodino Antitrust Improvements Act. If we are delayed in
our acceptance for payment of, or payment for, Shares or are unable to accept
for payment, or pay for, Shares pursuant to the Offer for any reason, then,
without prejudice to our rights under the Offer (including such rights as are
set forth in Sections 1 -- "Terms of the Offer" and 14 -- "Conditions to the
Offer," but subject to compliance with Rule 14e-1(c) under the Exchange Act),
the Depositary may, nevertheless, on our behalf, retain tendered Shares, and
such Shares may not be withdrawn except to the extent tendering stockholders are
entitled to exercise, and duly exercise, withdrawal rights as described in
Section 4 -- "Withdrawal Rights."
For purposes of the Offer, we will be deemed to have accepted for payment,
and thereby purchased, Shares properly tendered to us and not withdrawn, if and
when we give oral or written notice to the Depositary of our acceptance for
payment of such Shares. Payment for Shares accepted for payment pursuant to the
Offer will be made by deposit of the Offer Price therefor with the Depositary,
which will act as agent for tendering stockholders for the purpose of receiving
payment from us and transmitting payment to tendering stockholders.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE TO BE PAID
BY US FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates evidencing Shares not tendered or not accepted for
purchase will be returned to the tendering stockholder, or such other person as
the tendering stockholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility (as described below)
pursuant to the procedures set forth in Section 3 -- "Procedure for Tendering
Shares," such shares will be credited to such account maintained at the
Book-Entry Transfer Facility as the tendering stockholder shall specify in the
Letter of Transmittal, as promptly as practicable following the expiration,
termination or withdrawal of the Offer. If no such instructions are given with
respect to Shares delivered by book-entry transfer, any such shares not tendered
or not purchased will be returned by crediting the account at the Book-Entry
Transfer Facility designated in the Letter of Transmittal as the account from
which such Shares were delivered.
We reserve the right to transfer or assign, in whole or in part, to
Ascential or to any direct or indirect wholly owned subsidiary of Ascential, the
right to purchase Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve our obligations under the Offer and will in no
way prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message (as described below), and any
other required documents, must 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 prior to the expiration of any Subsequent Offering Period,
and either certificates for tendered Shares must be received by the Depositary
at one of such addresses or such Shares must be delivered pursuant to the
procedures for book-entry transfer set forth below (and a Book-Entry
Confirmation (as defined below) received by the Depositary), in each case prior
to the Expiration
5
Date or prior to the expiration of any Subsequent Offering Period or (ii) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth below.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY TRANSFER FACILITY
(AS DESCRIBED BELOW), IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER.
SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION)
TOGETHER WITH ANY REQUIRED DOCUMENTS. 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 Depository Trust Company (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
Book-Entry Transfer Facility's system may make book-entry delivery of Shares by
causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the Book-Entry Transfer Facility's
procedure for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as described below), and any other required documents must
be transmitted to, and 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 stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH 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 such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such 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. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this section, includes any participant in
the Book Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (ii) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) which is a participant in good standing in
the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution" and, collectively, "Eligible Institutions"). In
all other cases, all signatures on Letters of Transmittal must be guaranteed by
an Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed or
accompanied by appropriate stock powers, signed exactly as the name or names of
the registered holders or owners appear on the certificates, with the signatures
on the certificates or stock powers guaranteed as aforesaid. See Instruction 5
to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer
6
cannot be completed on a timely basis or time will not permit all required
documents to reach the Depositary prior to the Expiration Date, such
stockholder's tender may be effected if all the following conditions are met:
(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 provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date or prior to
the expiration of any Subsequent Offering Period; and
(iii) the certificates for (or a Book-Entry Confirmation with respect
to) such Shares, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other required documents, are received by the Depositary within
three trading days after the date of execution of such Notice of Guaranteed
Delivery. A "trading day" is any day on which the Nasdaq National Market,
operated by the National Association of Securities Dealers, Inc. (the
"NASD"), is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Upon the acceptance of Shares for payment pursuant to the Offer, the valid
tender of Shares pursuant to one of the procedures described above will
constitute a binding agreement between the tendering stockholder and Purchaser
upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), each tendering stockholder will
irrevocably appoint designees of Purchaser as such stockholder's
attorneys-in-fact and proxies, in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by Purchaser, and with respect to any and all other Shares
or other securities or rights issued or issuable in respect of such Shares on or
after August 8, 2003. All such powers of attorney and proxies will be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective if, as and when, and only to the extent that, Purchaser accepts for
payment Shares tendered by such stockholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given by such stockholder and, if given,
will not be deemed effective. The designees of Purchaser will thereby be
empowered to exercise all voting and other rights with respect to such Shares
and other securities or rights, including, without limitation, in respect of any
annual, special or adjourned meeting of the Company's stockholders, actions by
written consent in lieu of any such meeting or otherwise, as they in their sole
discretion deem proper. Purchaser reserves the right to require that, in order
for Shares to be deemed validly tendered, immediately upon Purchaser's
acceptance for payment of such Shares, Purchaser must be able to exercise full
voting, consent and other rights with respect to such Shares and other related
securities or rights, including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by Purchaser, in its sole discretion, which determination
will be final and binding. Purchaser reserves the absolute right to reject any
or all tenders of any Shares determined by it not to be in proper form or the
acceptance for payment of which, or payment for which, may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right, in
its sole discretion, subject to the provisions of the merger agreement, to waive
any defect or irregularity in the tender of any Shares of any particular
stockholder, whether or not similar defects or irregularities are waived in the
case of other stockholders. No tender of Shares will be deemed to have been
validly made until all defects or irregularities relating thereto have been
cured or waived. None of Purchaser, Ascential, the Depositary, the Information
Agent or 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. Subject to the terms of
7
the merger agreement, 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.
Backup Withholding. In order to avoid "backup withholding" of U.S. federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding at a rate equal to
the fourth lowest rate applicable to ordinary income of unmarried individuals
(under current law, the backup withholding rate is 28%). All stockholders
surrendering Shares pursuant to the Offer should complete and sign the main
signature form and the Substitute Form W-9 included as part of the Letter of
Transmittal to provide the information and certification necessary to avoid
backup withholding (unless an applicable exemption exists and is proved in a
matter satisfactory to the Purchaser and the Depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Noncorporate foreign
stockholders should complete and sign the main signature form and a Form W-8BEN,
Certificate of Foreign Status of Beneficial Owner for United States Tax
Withholding, a copy of which may be obtained from the Depositary, in order to
avoid backup withholding. See Instruction 9 to the Letter of Transmittal.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, or as provided by
applicable law, tenders of Shares are irrevocable. Shares tendered pursuant to
the Offer may be withdrawn pursuant to the procedures set forth below at any
time prior to the Expiration Date and, unless theretofore accepted for payment
and paid for by Purchaser pursuant to the Offer, may also be withdrawn at any
time after October 6, 2003.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and must specify
the name of the person having tendered the Shares to be withdrawn, the number of
Shares to be withdrawn and the name of the registered holder of the Shares to be
withdrawn, if different from the name of the person who tendered the Shares. If
certificates for Shares have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary, and
unless such Shares have been tendered by an Eligible Institution, the signatures
on the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedures for book-entry transfer as
set forth in Section 3 -- "Procedure for Tendering Shares," any notice of
withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may be retendered again by following one
of the procedures described in Section 3 -- "Procedure for Tendering Shares" any
time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, Ascential, the
Depositary, the Information Agent, the Dealer Manager 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.
In the event the Purchaser provides a Subsequent Offering Period following
the Expiration Date, no withdrawal rights will apply to Shares tendered during
such Subsequent Offering Period or to Shares tendered in the Offer and accepted
for payment.
8
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for U.S. federal income tax purposes under the Internal Revenue Code
of 1986, as amended (the "Code"), and may also be a taxable transaction under
applicable state, local or foreign income or other tax laws. Generally, for U.S.
federal income tax purposes, a tendering stockholder will recognize gain or loss
equal to the difference between the amount of cash received by the stockholder
pursuant to the Offer or the merger and the stockholder's aggregate adjusted tax
basis in the Shares tendered by the stockholder and purchased pursuant to the
Offer or converted into cash in the merger, as the case may be. Gain or loss
will be calculated separately for each block of Shares tendered and purchased
pursuant to the Offer or converted into cash in the merger, as the case may be.
If tendered Shares are held by a tendering stockholder as capital assets,
gain or loss recognized by such stockholder will be capital gain or loss, which
will be long-term capital gain or loss if such stockholder's holding period for
the Shares exceeds one year. In the case of a tendering noncorporate
stockholder, long-term capital gains will generally be eligible for a maximum
U.S. federal income tax rate of 15%. In addition, there are limits on the
deductibility of capital losses.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
may be subject to backup withholding at a rate equal to the fourth lowest rate
applicable to ordinary income of unmarried individuals (under current law, the
backup withholding rate is 28%) unless the stockholder provides its TIN and
certifies under penalties of perjury that such TIN is correct (or properly
certifies that it is awaiting a TIN) and certifies as to no loss of exemption
from backup withholding and otherwise complies with the applicable requirements
of the backup withholding rules. A stockholder that does not furnish a required
TIN or that does not otherwise establish a basis for an exemption from backup
withholding may be subject to a penalty imposed by the IRS. See "Backup
Withholding" under Section 3 -- "Procedure for Tendering Shares." Each
stockholder should complete and sign the Substitute Form W-9 included as part of
the Letter of Transmittal so as to provide the information and certification
necessary to avoid backup withholding.
If backup withholding applies to a stockholder, the Depositary is required
to withhold from payments to such stockholder at a rate equal to the fourth
lowest rate applicable to ordinary income of unmarried individuals (under
current law, the backup withholding rate is 28%). Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the U.S. federal income tax liability of the person subject to the
backup withholding, provided that the required information is given to the IRS.
If backup withholding results in an overpayment of tax, a refund can be obtained
by the stockholder by filing a U.S. federal income tax return.
The foregoing summary is based on the Code, regulations promulgated
thereunder, judicial decisions and administrative rulings, all of which are
subject to change, possibly with retroactive effect. The foregoing summary does
not address all of the U.S. federal income tax consequences that may be relevant
to particular stockholders in light of their individual circumstances or to
stockholders who are subject to special rules, such as non-U.S. persons,
insurance companies, dealers or brokers in securities or currencies, tax-exempt
organizations, financial institutions, mutual funds, pass-through entities and
investors in such entities, stockholders who hold their Shares as a hedge or as
part of a hedging, straddle, conversion, synthetic security, integrated
investment or other risk-reduction transaction, or stockholders who acquired
their Shares upon the exercise of employee stock options or otherwise as
compensation.
THE SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS FOR
GENERAL INFORMATION ONLY AND IS BASED ON THE LAW IN EFFECT ON THE DATE HEREOF.
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY
STATE, LOCAL, OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
9
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded through the Nasdaq National Market under the symbol
MCTR. The following table sets forth, for each of the fiscal quarters indicated,
the high and low reported sales price per Share on the Nasdaq National Market.
MERCATOR SOFTWARE, INC.
<Table>
<Caption>
HIGH LOW
------- -----
Year Ended December 31, 2001
First Quarter............................................. $ 12.19 $3.25
Second Quarter............................................ $ 3.75 $1.40
Third Quarter............................................. $ 2.47 $0.95
Fourth Quarter............................................ $ 9.44 $1.09
Year Ending December 31, 2002
First Quarter............................................. $ 10.15 $3.91
Second Quarter............................................ $ 5.65 $1.38
Third Quarter............................................. $ 1.97 $1.09
Fourth Quarter............................................ $ 1.42 $0.54
Year Ending December 31, 2003
First Quarter............................................. $ 1.92 $0.90
Second Quarter............................................ $ 1.85 $1.26
Third Quarter (through August 6, 2003).................... $ 2.97 $1.46
</Table>
On August 1, 2003, the last full trading day prior to the public
announcement of the execution of the merger agreement by the Company, Ascential
and Purchaser, the high and low sale prices of the Shares on the Nasdaq National
Market were $2.74 and 2.24 per Share, respectively. STOCKHOLDERS ARE URGED TO
OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company did not declare or pay any cash dividends during any of the
periods indicated in the above table. Under the terms of the merger agreement,
the Company is not permitted to declare, set aside or pay dividends with respect
to the Shares without the prior written consent of Ascential.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
Market for the Shares. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares, which, depending upon the number of
Shares so purchased, could adversely affect the liquidity and market value of
the remaining Shares held by the public. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for, or the marketability
of, the Shares or whether it would cause future market prices to be greater or
lesser than the Offer Price.
Nasdaq Quotation. Depending upon the number of Shares purchased pursuant
to the Offer, the Shares may no longer meet the requirements for continued
inclusion in the Nasdaq National Market, which requires, for continued listing,
that there be at least 750,000 shares publicly held by at least 400 round lot
holders, with a market value of at least $5,000,000. Shares held directly or
indirectly by directors, officers or beneficial owners of more than 10% of the
Shares are not considered as being publicly held for this purpose. If the Nasdaq
National Market were to cease to publish quotations for the Shares, it is
possible that the Shares would continue to trade in the over-the-counter market
and that prices or other quotations would be reported by other sources. The
extent of the public market for such Shares and the availability of such
quotations would depend upon such factors as the number of stockholders and/or
the aggregate market value of such securities
10
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration under the
Exchange Act (as described below) and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
not held by 300 or more holders of record. Termination of registration of the
Shares under the Exchange Act, assuming there are no other securities of the
Company subject to registration, would substantially reduce the information
required to be furnished by the Company to its stockholders 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), the requirement of
furnishing a proxy statement pursuant to Section 14(a) in connection with
stockholders' meetings and the related requirement of furnishing an annual
report to stockholders, and the requirements of Rule 13e-3 under the Exchange
Act with respect to "going private" transactions, no longer applicable to the
Company. 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 or Rule 144A promulgated under the Securities Act of 1933,
as amended (the "Securities Act"), may be impaired or eliminated.
Purchaser may seek delisting of the Shares from the Nasdaq National Market
and the termination of the registration of the Shares under the Exchange Act as
soon after the completion of the Offer as the requirements for such delisting
and termination are met. If the Nasdaq National Market listing and the Exchange
Act registration of the Shares are not terminated prior to the merger, then the
Shares will be delisted from the Nasdaq National Market and the registration of
the Shares under the Exchange Act will be terminated following the consummation
of the merger.
Margin Regulations. The Shares presently are "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status 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 stock exchange
listing and market quotations, it is possible that, following the Offer, the
Shares would no longer constitute "margin securities" for the purposes of the
margin regulations of the Federal Reserve Board and therefore could no longer be
used as collateral for loans made by brokers. In addition, if registration of
the Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY
General. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption "Selected Financial
Information," has been furnished by Company or has been taken from or based upon
publicly available documents and records on file with the Commission and other
public sources. Neither Ascential nor Purchaser assumes responsibility for the
accuracy or completeness of the information concerning Company 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 us or to Ascential.
The Company provides business integration software solutions to global
enterprises. Its business integration solutions are designed to help customers
link technologies and transactions throughout the extended enterprise and with
external business partners in order to achieve improved speed, flexibility,
efficiency and return on investment in existing technology. Its solutions are
designed to allow its customers to integrate disparate enterprise technologies,
such as legacy applications, enterprise resource planning, customer relations
management and supply chain management applications including electronic data
interchange, to promote efficient transactions and exchange of business
information in the form of electronic data within an enterprise and externally
among its customers, suppliers and business partners. The Company is a Delaware
corporation with its principal executive office at 45 Danbury Road, Wilton, CT,
06897. The telephone number of the Company at that address is (203) 761-8600.
Selected Financial Information. Set forth below is certain selected
consolidated financial information with respect to the Company, derived from the
Company's Annual Report on Form 10-K for the fiscal year
11
ended December 31, 2002, and its Quarterly Report on Form 10-Q for the three
month period ended March 31, 2003, each as filed with the Commission pursuant to
the Exchange Act.
More comprehensive financial information is included in the reports and in
other documents filed by the Company with the Commission. The following summary
is qualified in its entirety by reference to such reports and all of the
financial information (including any related notes) contained therein. Such
reports may be inspected and copies may be obtained from the Commission in the
manner set forth below.
MERCATOR SOFTWARE, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<Table>
<Caption>
THREE MONTHS ENDED YEARS ENDED
------------------------------- -------------------------------------
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31,
2003 2002 2002 2001
-------------- -------------- ----------------- -----------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
Revenues....................... $ 23,009 $ 27,412 $111,930 $128,820
Operating Loss................. (4,461) (5,716) (27,150) (59,521)
Net Loss....................... (4,297) (6,113) (29,408) (63,460)
Net Loss per share............. (0.12) (0.18) (0.86) (2.08)
BALANCE SHEET DATA:
Current Assets................. 45,198 51,210 55,918 60,223
Total Assets................... 103,614 116,033 115,729 126,978
Current Liabilities............ 48,658 45,919 55,297 50,978
Long-term Debt................. 7,217 489 7,928 501
Total Stockholders' Equity..... 38,241 63,268 42,001 69,080
</Table>
Available Information. The Company is subject to the information and
reporting requirements of the Exchange Act and, in accordance therewith, is
obligated to file 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 interests of such persons
in transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of such information should be
obtainable by mail, upon payment of the Commission's customary charges, by
writing to the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a website at
http://www.sec.gov that contains reports, proxy statements and other information
relating to the Company that have been filed via the EDGAR System.
9. CERTAIN INFORMATION CONCERNING ASCENTIAL AND PURCHASER
Ascential and Purchaser. Ascential is a Delaware corporation whose
principal executive offices are located at 50 Washington Street, Westborough,
Massachusetts 01581. Its telephone number at that location is (508) 366-3888.
Its principal business is the supply of data integration solutions to the Global
2000 and other large organizations.
Purchaser is a newly organized Delaware corporation formed 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. All of the outstanding capital
stock of Purchaser is owned by Ascential. Until immediately prior to the time
Purchaser acquires 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
12
transactions contemplated by the Offer and the merger. Its principal office is
located at 50 Washington Street, Westborough, Massachusetts 01581. Purchaser's
telephone number is (508) 366-3888.
For certain information concerning executive officers and directors of
Ascential and Purchaser, see Schedule I.
Except as set forth in this Offer to Purchase, neither Purchaser nor
Ascential nor, to the best of Purchaser's and Ascential's knowledge, of any of
the persons or entities listed on Schedule I, nor any associate or
majority-owned subsidiary of any of the foregoing, beneficially owns or has a
right to acquire any Shares, and neither Ascential nor we, nor, to the best of
our knowledge, any of the persons or entities listed on Schedule I, has effected
any transaction in the Shares during the past sixty days.
Except as set forth in Section 11 -- "Background of the Offer," neither
Ascential nor Purchaser nor any of our respective subsidiaries, nor, to the best
of our knowledge, any of the persons or entities listed on Schedule I, has had
any business relationships or transactions with the Company or any of its
executive officers, directors or affiliates that would be required to be
reported under the rules of the Commission. Except as set forth in Section 11
- -- "Background of the Offer," during the past two years there have been no
negotiations, transactions, or material contacts between either Ascential or
Purchaser, any of our respective subsidiaries or, to the best of our knowledge,
any of the persons or entities listed on Schedule I, and the Company or its
affiliates concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, election of directors or a sale or other
transfer of a material amount of assets.
10. SOURCE AND AMOUNT OF FUNDS
The Offer is not conditioned upon any financing arrangements. The total
amount of funds required by us to purchase all of the currently issued and
outstanding Shares is estimated to be approximately $106 million. We will obtain
all such funds from Ascential in the form of capital contributions and/or loans.
Pursuant to the merger agreement, Ascential will make available to us sufficient
funds to consummate the Offer. Ascential will provide such funds through
available cash on hand.
11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER; THE MERGER
AGREEMENT AND CERTAIN OTHER AGREEMENTS
Background of the Offer
The following information was prepared by Ascential and the Company.
Information about the Company was provided by the Company, and neither Ascential
nor Purchaser takes any responsibility for the accuracy or completeness of any
information regarding meetings or discussions in which Ascential or its
representatives did not participate.
Ascential approached the Company regarding a possible business partnership
at the end of 2001. Preliminary discussions between representatives of the
Company and Ascential were held in January and February of 2002 regarding their
respective product suites, capabilities and technologies. At that time, the
parties mutually determined not to proceed with any further discussions.
During December 2002, representatives of Strategic Software Holdings, LLC
("SSH"), a company that had acquired 2,000,000 Shares during the prior month,
had several conversations with the Company's management and verbally indicated
that SSH was interested in acquiring 51% of the Shares. On March 14, 2003, SSH
nominated a slate of seven directors to replace the seven members of the board
of directors of the Company (the "Company Board"). During the ensuing proxy
contest, several members of the Company Board discussed the possibility of more
aggressively exploring the Company's strategic alternatives in order to improve
the return for its stockholders. On March 31, 2003, SSH submitted a proposal
directly to the Company Board purporting to contain an offer, subject to, among
other things, receipt of financing, pursuant to which SSH would acquire all of
the outstanding Shares not already owned by SSH for $2.17 per share in cash. At
a meeting on April 3, 2003, the Board considered the proposal made by Mr.
Bienvenu of SSH. After discussion and presentations from Jenkens & Gilchrist
Parker Chapin LLP, the Company's legal counsel
13
("Jenkens & Gilchrist"), and JP Morgan, the Company Board unanimously determined
that the proposal by SSH was not in the best interests of its stockholders.
On April 7, 2003, Messrs. Sisco, Stevens (two of the Company's directors),
King (the Company's Chief Executive Officer), Hall (the Company's Executive Vice
President, Chief Financial Officer and Treasurer), and Goret, (the Company's
General Counsel), met at the offices of JP Morgan with representatives of JP
Morgan and Jenkens & Gilchrist. The participants in the meeting discussed a
process in which JP Morgan would solicit indications of interest from third
parties who might be interested in acquiring the Company, discussed a
preliminary list of third parties to be contacted and reviewed strategic issues
involved in managing the process. At a meeting on April 8, 2003, the Board
considered the process reviewed by Messrs. Sisco, Stevens, Hall and Goret during
the previous day.
During the week of April 7, JP Morgan initiated a program to contact third
parties that could be interested in acquiring Mercator. On that date, JP Morgan
contacted Mr. McBride, Ascential's Chief Financial Officer, regarding a possible
transaction between Ascential and the Company. JP Morgan eventually contacted 17
third parties, nine of whom executed non-disclosure agreements. On April 11, Mr.
Gyenes, Ascential's Chief Executive Officer, spoke with Mr. King regarding the
possibility of Ascential purchasing the Company.
On April 17, the Company and SSH entered into a settlement agreement
pursuant to which, among other things, SSH agreed to support (and the members of
the SSH group agreed to vote all of their Shares in favor of) the Company's
slate of seven nominees standing for election as directors at its 2003 annual
meeting. Under the settlement agreement, SSH also agreed to certain "standstill"
restrictions until January 15, 2004. These restrictions prevent the members of
the SSH group from, among other things: (i) attempting to gain control of the
Board; (ii) making any "hostile" proposals to acquire the Company; and (iii)
subject to certain agreed-upon exceptions, selling any Shares.
On April 28, Bear Stearns, Ascential's financial advisor, executed a
confidentiality agreement on behalf of Ascential, and on the following day
Ascential and Bear Stearns received a package containing information with
respect to the Company.
During the period from April 25 through June 17, seven third parties
contacted by JP Morgan received management presentations and had question and
answer sessions with the Company's management, including Ascential.
On May 16, Ascential, the Company and their respective financial advisors
held discussions concerning the Company's business at JP Morgan's offices in New
York City.
During the period from April 30 to June 23, JP Morgan received preliminary
expressions of interest from Ascential and four other third parties interested
in acquiring the Company.
At a regularly scheduled meeting of the Board of the Company on May 14,
representatives of JP Morgan provided the Company's directors with an update of
the work that had been completed to date in connection with the solicitation of
third parties who might be interested in acquiring the Company.
From May 16 through July 2, members of the senior management of both
Ascential and the Company continued their discussions regarding the Company and
the possibility of a transaction.
At the annual meeting of the Company Board on May 30, representatives of JP
Morgan provided the Company's directors with an update of the work that had been
completed to date in connection with the solicitation of third parties who might
be interested in acquiring the Company.
On June 9, Ascential presented the Company with a non-binding preliminary
indication of interest to purchase the Company at a price per share of between
$2.30 and $3.00. Ascential highlighted the fact that additional due diligence
investigation would be required.
On June 12 and 13, senior management from Ascential and the Company met in
Westborough, MA for further discussions. The parties' respective financial
advisors participated in certain of these discussions. A financial diligence
conference call was held on June 25, and other conference calls were held during
this time.
14
On June 18, JP Morgan received a due diligence request list from Ascential.
On June 20, Mr. Gyenes spoke with Mr. Hall regarding Ascential's continued
interest in the possibility of a transaction with the Company. Mr. Gyenes said
that Ascential would need to conduct additional due diligence in order to
determine whether to proceed.
On June 30, the Company received proposals from Ascential and one other
third party seeking to enter into an exclusivity agreement and work toward
completing due diligence and signing a definitive agreement
On July 1, following discussion between JP Morgan and Bear Stearns,
Ascential sent the Company a non-binding letter of intent and attached
preliminary non-binding term sheet outlining the structure of the transaction as
a cash tender offer, as well as the proposed offer price of $3.00 per share,
assuming no additional share issuances, and a 30-day exclusivity period
beginning on the Company's acceptance of the letter, subject to due diligence
and other customary conditions. The parties and their legal and financial
advisors had discussions relating to the terms of the proposal and agreed to
certain changes in the term sheet on July 2.
On July 2, the Company Board met telephonically to consider Ascential's
proposal to acquire the Company. At the meeting, representatives of JP Morgan
reviewed with the Board the financial terms and relative merits of the proposal,
as well as the proposal from the other third party, and representatives of
Jenkens & Gilchrist spoke about legal aspects of the proposal, as well as the
fiduciary duties of the Board under the circumstances. After discussion of the
two proposals, the meeting adjourned to provide the directors with an
opportunity to review them. Later in the day, the meeting re-convened, and the
Company Board determined that Ascential's proposal was superior and approved the
letter of intent from Ascential.
On July 4 and 5, the parties exchanged information on the data needed for
Ascential to conduct its review of the Company. Ascential and its legal counsel
began further diligence during the week of July 7 in Norwalk, CT. During this
time numerous meetings between Ascential's and the Company's respective
management took place.
On July 18, Ascential sent the Company a draft of the merger agreement.
Discussions and negotiations regarding the merger agreement, including with
respect to the conditions to the closing of the merger, the non-solicitation
provisions, the representations and warranties, interim covenants, termination
events and the payment of a fee, conditions to the Offer and Ascential's rights
to amend or extend the offer, continued through August 2. During this time
senior Ascential management and senior members of Company's management met to
discuss future synergies and implementation plans for the combined company. Mr.
Gyenes also met with certain members of the Company's Board to explain
Ascential's plans for the combined company.
On July 23, Ascential's senior management made a presentation to
Ascential's Board of Directors regarding the transaction. Representatives of
Skadden, Arps, Slate, Meagher & Flom LLP, Ascential's legal counsel ("Skadden
Arps") and Bear Stearns were also present at this meeting.
On July 25, Ascential presented the Company and certain key members of its
executive team with draft agreements and other arrangements for the continued
employment of such individuals by Ascential following the transaction as well as
non-competition and non-solicitation agreements to be executed by each of the
executive officers and certain other employees of the Company.
During the week of July 28, Ascential sent the Company drafts of the stock
tender agreement and option agreement.
During the week of July 28, Purchaser was incorporated in the State of
Delaware.
On July 30, the Company Board met to consider Ascential's proposal and the
latest draft of the merger agreement. The Company Board received a detailed
presentation of the financial and legal aspects of the proposed transaction from
members of management, Jenkens & Gilchrist and JP Morgan. Messrs. Sisco and
Stevens also updated the Company Board. After discussion and without having made
any decision, the Company Board agreed that they would re-convene on August 1 in
order to formally consider the merger agreement and receive a fairness
presentation from JP Morgan.
15
On August 1, Ascential's senior management presented the transaction to
Ascential's Board of Directors, including a detailed presentation of the
financial and legal aspects of the terms of the transaction. Representatives of
Skadden Arps and Bear Stearns participated in the meeting. Ascential's Board
unanimously approved the merger agreement and the transactions contemplated
thereby, subject to management's approval of the final drafts of the agreements.
Purchaser's Board of Directors also approved the merger agreement, the merger
and the transactions contemplated thereby.
Also on August 1, the Company held a special meeting of the Company Board.
After discussion, which included review of all contacts between JP Morgan and
prospective bidders since April, updates regarding the financial and legal
aspects of the proposed transaction from members of the Company's management and
from Jenkens & Gilchrist, JP Morgan delivered its oral opinion, confirmed in
writing, to the effect that, as of that date, the consideration to be received
by holders of shares of Shares pursuant to the merger agreement was fair, from a
financial point of view, to those holders, and the Company Board unanimously
approved the merger agreement and the transactions contemplated thereby
(including the Offer and the merger) in all respects and recommended that the
Company's stockholders accept the Offer and approve and adopt the merger
agreement and the merger.
On August 2, the parties and their respective legal and financial advisors
finalized negotiations relating to the merger agreement, the stock tender
agreement and the option agreement.
On August 4, the parties publicly announced the transaction.
Purpose of the Offer and the Merger. The purpose of the Offer and the
merger is to enable Ascential to acquire control of, and the entire equity
interest in, the Company. The Offer is being made pursuant to the merger
agreement and is intended to increase the likelihood that the merger will be
effected. The purpose of the merger is to acquire all of the outstanding Shares
not purchased pursuant to the Offer. The transaction is structured as a merger
in order to ensure the acquisition by Ascential of all the outstanding Shares.
If the merger is consummated, Ascential's common equity interest in the
Company would increase to 100% and Ascential would be entitled to all benefits
resulting from that interest. These benefits include complete management and
control with regard to the future conduct of the Company's business and the
right to any increase in its value. Similarly, Ascential will also bear the risk
of any losses incurred in the operation of the Company and any decrease in the
value of the Company.
Stockholders of the Company who sell their Shares in the Offer will cease
to have any equity interest in the Company and any right to participate in its
earnings and any future growth. If the merger is consummated, non-tendering
stockholders will no longer have an equity interest in the Company and instead
will have only the right to receive the merger consideration pursuant to the
merger agreement or, if they perfect dissenter rights, the amount as determined
by the applicable process under Delaware law. See Section 12 -- "Other Matters."
Similarly, after selling their Shares in the Offer or the subsequent merger,
stockholders of the Company will not bear the risk of any decrease in the value
of the Company.
The primary benefits of the Offer and the merger to the stockholders of the
Company are that such stockholders are being afforded an opportunity to sell all
of their Shares for cash at a price which represents a premium of approximately
22.4% over the closing market price of the Shares on August 1, 2003, the last
full trading day prior to the initial public announcement that the Company,
Purchaser and Ascential executed the merger agreement and approximately 117.5%
over the stock's trailing average price for the last 12 months from such date.
The following is a summary of certain provisions of various agreements.
This summary is not a complete description of the terms and conditions of these
agreements and is qualified in its entirety by reference to the full text of
these agreements filed with the Commission as exhibits to the Schedule TO and
they are incorporated herein by reference. Capitalized terms used but not
otherwise defined herein shall have the meanings set forth in the merger
agreement. These agreements may be examined, and copies obtained, as set forth
in Section 8 of this Offer to Purchase.
16
MERGER AGREEMENT
The Offer. The merger agreement provides for the making of the Offer as
provided in this Offer to Purchase.
The Company Board. The merger agreement provides that, upon the purchase
of Shares pursuant to the Offer and from time to time thereafter, Ascential will
be entitled to designate such number of directors, rounded up to the next whole
number, on the Company Board as is equal to the product of the total number of
directors on the Company Board (including the directors designated by Ascential)
multiplied by a fraction, the numerator of which equals the number of Shares
beneficially owned by Ascential and its subsidiaries (including us) and the
denominator of which equals the total number of Shares then outstanding. The
Company shall take such actions as are necessary to cause such persons
designated by Ascential to be appointed or elected to the Company Board and
shall use its best efforts to secure resignations of such number of its
incumbent directors as is necessary to enable Ascential's designees to be so
elected or appointed.
The merger agreement also provides that in the event that Ascential's
designees are elected or appointed to the Company Board, until the effective
time of the merger, the Company Board shall have at least two directors who are
not stockholders or affiliates of Ascential or Purchaser and are otherwise
considered independent directors within the meaning of the rules of the Nasdaq
Stock Market, Inc. ("Independent Directors"). The Independent Directors shall
have the sole power and authority, by a majority vote of such Independent
Directors, from the acceptance for payment of Shares pursuant to the Offer and
prior to the effective time of the merger, to: (i) amend or terminate the merger
agreement by the Company; (ii) exercise or waive any of the Company's rights,
benefits or remedies under the merger agreement; or (iii) take any other action
under or in connection with the merger agreement if such action materially and
adversely affects holders of Shares other than Ascential or Purchaser.
The Merger. At the effective time of the merger, each Share then issued
and outstanding, other than Shares held by (i) Ascential, Purchaser or the
Company or their respective subsidiaries, and (ii) stockholders who properly
perfect their dissenters' rights under the DGCL, will be converted into the
right to receive the Offer Price, without interest. Purchaser will be merged
with and into the Company, whereupon the separate existence of Purchaser will
cease, and the Company will be the surviving corporation in the merger.
Options and Warrants. The merger agreement provides that each option
issued pursuant to the TSI International Software Ltd. 1997 Directors Stock
Option Plan will become fully vested and exercisable and, if not exercised prior
to the effective time of the merger, will be cancelled as of such time. All
other options to purchase Company stock will automatically convert into an
option to purchase Ascential common stock (an "Ascential Option") at the
effective time of the merger. With respect to any such Ascential Option, (i) the
number of whole shares of Ascential common stock subject to such Ascential
Option will be determined by multiplying the number of Shares subject to the
option by the Option Exchange Ratio (defined below), rounding any fractional
Share down to the nearest whole Share, and (ii) the exercise price per share of
such Ascential Option will be determined by dividing the exercise price per
Share applicable to the option by the Option Exchange Ratio, and rounding the
exercise price thus determined up to the nearest whole cent. Except as provided
above, the converted or substituted Ascential Options will be subject to the
same terms and conditions (including vesting schedule) as were applicable to the
option immediately prior to the effective time of the merger. The term "Option
Exchange Ratio" means (i) the price paid for shares in the Offer divided by (ii)
the average of (a) the closing prices of Ascential common stock on the Nasdaq
Stock Market, Inc. during the twenty trading days preceding the fifth trading
day prior to the public announcement of the merger agreement and (b) the closing
prices of Ascential common stock on the Nasdaq Stock Market, Inc. during the
twenty trading days preceding the fifth trading day prior to the date on which
the closing of the Merger occurs.
Except as described above, (i) as of the effective time of the merger, all
rights under any provision of any other plan, program or arrangement providing
for the issuance or grant of any other interest in respect of the capital stock
of the Company or any subsidiary of the Company will be canceled and (ii) the
Company shall take all action necessary to ensure that, as of and after the
effective time of the merger, no person shall have any right under the company
option plans or any other plan, program or arrangement with respect to equity
securities of the Company, the Surviving Corporation or any subsidiary thereof.
17
At the effective time of the merger, each outstanding warrant to purchase
Shares will be automatically converted into the right to receive the difference,
if any, between the Offer Price and the exercise price of such warrant.
Representations and Warranties. In the merger agreement, the Company has
made customary representations and warranties to Ascential and Purchaser, some
of which are qualified by knowledge or materiality, with respect to, among other
things:
- corporate organization and good standing,
- the authorization, execution, delivery, performance of the merger
agreement and related matters and enforceability of the merger agreement,
- the absence of conflict with its certificate of incorporation, by-laws,
or any agreements to which the Company is a party,
- filings and authorizations required,
- capitalization,
- subsidiaries,
- filings with the Commission and financial statements,
- material contracts,
- no undisclosed liabilities,
- absence of certain changes,
- litigation,
- taxes,
- employee benefit plans and compensation agreements,
- compliance with laws,
- owned and leased real property title to assets,
- environmental matters,
- receipt of the opinion of JP Morgan,
- amendment rights agreement,
- inapplicability of takeover statutes,
- intellectual property,
- offer documents and proxy statement,
- absence of questionable payments,
- insurance, and
- disclosure.
In the merger agreement, each of Ascential and Purchaser has made customary
representations and warranties to the Company with respect to, among other
things:
- corporate organization and good standing,
- the authorization, execution, delivery, performance and enforceability of
the merger agreement and related matters and enforceability of the merger
agreement,
- filings and authorizations required,
18
- the absence of conflict with their respective certificates of
incorporation, by-laws, or any applicable law,
- offer documents and proxy statement,
- Purchaser's operations,
- litigation, and
- sufficient funds.
Covenants. The merger agreement contains various customary covenants. A
description of certain of these covenants follows.
Interim Operations of the Company. Except as contemplated by the merger
agreement or agreed in writing by Ascential, prior to the earlier of (i) the
time at which Ascential's designees constitute a majority of the Board of
Directors or (ii) the effective time of the merger, or (iii) the termination of
the merger agreement, the operations of the Company and each of its subsidiaries
will be conducted only according to their ordinary course of business consistent
with past practice and the Company and each of its Subsidiaries shall use their
reasonable best efforts to preserve intact their current business operations,
keep available the services of their officers and employees and maintain
existing relationships with lessors, lessees, customers, suppliers, creditors,
partners and others having business dealings with it.
Additionally, except as contemplated by the merger agreement or agreed in
writing by Ascential, prior to the effective time of the merger, neither the
Company nor any of its subsidiaries shall:
- amend its Certificate of Incorporation or By-Laws or similar
organizational documents;
- issue or sell, or authorize the issuance or sale of, any shares of its
capital stock or any other equity securities, or any securities
convertible into or options, warrants or rights to purchase except for
the issuance and sale of Shares upon the exercise of stock options or
warrants which are outstanding on the date hereof and except for the
granting of options for Shares to new hires consistent with past
practice, not to exceed options exercisable for 50,000 Shares in the
aggregate;
- sell or pledge or agree to sell or pledge any stock or other equity
interest owned by it in any other entity;
- enter into any contract which is a Material Company Contract, as defined
in the merger agreement, or which involves payment by the Company in
excess of $150,000 or receipt by it in excess of $250,000 in any
consecutive twelve month period, or, in cases where the Company or a
Subsidiary of the Company is the party responsible for such payment,
which is not terminable upon thirty days notice;
- except to the extent required under employee benefit plans in effect on
the date of the merger agreement, grant any options to purchase Shares,
increase the compensation or fringe benefits of any of its directors,
officers or employees, grant any severance or termination pay not
currently required to be paid under existing severance plans; enter into
any employment, consulting or severance agreement or arrangement with any
present or former director, officer or other employee;
- except for payments of dividends by a subsidiary of the Company to the
Company, declare, pay or set aside any dividend or other distribution or
payment with respect to, or split, combine, redeem or reclassify, or
purchase or otherwise acquire, any shares of its capital stock or its
other securities;
- except as specifically set forth in the merger agreement or as required
in order to comply with applicable law, (a) establish, enter into, adopt,
amend or terminate any employee benefit plan or (b) change any actuarial
or other assumption used to calculate funding obligations with respect to
any employee benefit plan, change the manner in which contributions to
any employee benefit plan are made or the basis on which such
contributions are determined or take any action to accelerate any rights
or benefits, or make any material determinations not in the ordinary
course of business consistent with past practice, under any collective
bargaining agreement or employee benefit plan;
19
- transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of,
encumber or subject to any lien, any material assets other than entering
into contracts with customers in the ordinary course of business
consistent with past practice;
- sell, assign, transfer, license, modify or amend any rights to any
intellectual property, except in the ordinary course of business
consistent with past practice;
- agree to the settlement of any material claim or litigation;
- except as specifically permitted by the merger agreement, make, change or
rescind any material tax election, change any annual tax accounting
period, adopt or change any method of tax accounting, file any material
amended tax return, enter into any closing agreement, settle any material
tax claim or assessment, surrender any right to claim a tax refund,
offset or other reduction in tax liability, consent to any extension or
waiver of the limitations period applicable to any tax claim or
assessment, take or omit to take any other action, if any such action or
omission would have the effect of increasing the tax liability of the
Company or its subsidiaries, or file any income tax return or material
non-income tax return;
- except as required by applicable law or generally accepted accounting
principles, GAAP, make any change in its accounting principles, practices
or methods;
- (A) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, other than in respect of indebtedness
owing by the Company to any subsidiary of the Company or in respect of
indebtedness owing by any subsidiary of the Company to the Company or
another subsidiary of the Company or (B) make any loans or advances to
any other person, other than to the Company or to any subsidiary of the
Company;
- except as disclosed in the merger agreement, accelerate the payment,
right to payment or vesting of any bonus, severance, profit sharing,
retirement, deferred compensation, stock option, insurance or other
compensation or benefits or, except at Ascential's request, accelerate
the payment, right to payment or vesting, redeem or exercise a right to
redeem, any warrant;
- pay, discharge or satisfy any liabilities other than the payment,
discharge or satisfaction of any liabilities in the ordinary course of
business and consistent with past practice;
- delay or postpone the payment of accounts payable or other liabilities,
other than in the ordinary course of business consistent with past
practice;
- modify, amend or terminate any contract which is material to its business
or waive any of its material rights or claims except in the ordinary
course of business consistent with past practice; provided that the
waiver of any "standstill provision" shall be deemed, for purposes of the
merger agreement, a waiver of a material right not in the ordinary course
of business;
- make any single capital expenditure or commitment in excess of $150,000
or make aggregate capital expenditures or commitments in excess of
$250,000;
- merge or consolidate with another person or purchase a substantial
portion of the assets of any person;
- enter into any joint venture, partnership or other similar arrangement;
- take any action to exempt or make any person (other than Ascential) not
subject to the provisions of Section 203 of the DGCL or any other
potentially applicable anti-takeover or similar statute or regulation;
- take any action (including encouraging any other person to take such
action), engage in any transaction or enter into any agreement which
would reasonably be likely to cause the conditions to Ascential's and
Purchaser's obligations to consummate the merger to not be satisfied or
impair the ability of the Company, Ascential, Purchaser or the holders of
Shares to consummate the Offer or the merger in accordance with the terms
hereof or materially delay such consummation;
20
- sell or release, or agree to develop, sell or release, any product that
the Company does not make generally available to its customers; or
- agree, in writing or otherwise, to take any of the foregoing actions.
Employee Benefits. Beginning the Effective Time and for a three-year
period following the Effective Time the Surviving Corporation shall provide to
persons who were employees of the Company or a subsidiary of the Company
immediately prior to the Effective Time (who execute Ascential's standard terms
and conditions of employment and related agreements) welfare benefits that
provide benefits that, taken as a whole, are not materially less favorable in
the aggregate than those provided to similarly situated employees of Ascential.
With respect to such benefits, service accrued by such Employees during
employment with the Company and its Subsidiaries prior to the Effective Time
shall be recognized for all purposes, except to the extent necessary to prevent
duplication of benefits.
Stockholders' Meeting. In the event that Purchaser does not acquire at
least 90% of the outstanding Shares pursuant to the Offer or otherwise
(including through a Subsequent Offering Period and exercise of the option
pursuant to the option agreement), a stockholder vote will be required to
approve the merger. Pursuant to the merger agreement, if required by applicable
law in order to consummate the merger, the Company will: (i) duly call, give
notice of, convene and hold a special meeting of its stockholders as promptly as
practicable following the acceptance for payment and purchase of Shares by
Purchaser pursuant to the Offer for the purpose of considering and taking action
upon the approval of the merger and the adoption of the merger agreement; (ii)
prepare and file with the Commission a proxy or information statement relating
to the merger; (iii) cause a definitive proxy or information statement (and any
amendments thereto) to be mailed to stockholders, (iii) include in the proxy or
information statement the recommendation of the Company Board to stockholders to
approve the merger and adopt the merger agreement; and (iv) use its reasonable
best efforts to solicit from holders of Shares proxies in favor of the merger.
Ascential has agreed that it will vote, or cause to be voted, all of the
shares of capital stock of Purchaser and all Shares owned by Ascential, us or
any of Ascential's other subsidiaries in favor of approval of the merger and the
adoption of the merger agreement.
No Solicitation. The Company has agreed that neither it, its subsidiaries,
or its representatives will (i) directly or indirectly solicit, initiate or
encourage the submission of, any Alternative Proposal (as defined below), (ii)
directly or indirectly enter into or participate or engage in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Alternative Proposal or (iii) enter into any agreement with respect to any
Alternative Proposal. If, however, prior to the Effective Time, the Company
Board determines reasonably and in good faith, after consultation with and
receipt of advice of outside counsel, that such action is necessary to comply
with its fiduciary or statutory duties under applicable law, the Company may, in
response to an Alternative Proposal that is reasonably likely to lead to a
Superior Proposal (as defined below), which was not solicited by it following
July 2, 2003 and did not otherwise result from a breach of the merger agreement,
(A) furnish information with respect to the Company to the person or group
making such an Alternative Proposal pursuant to a confidentiality agreement
containing terms, including a standstill provision, no less favorable to the
Company than the Confidentiality Agreement and (B) participate in discussions
and negotiations with such person or group to the extent required regarding such
an Alternative Proposal. However, the Company shall provide Ascential with any
information to be provided to such person or group concurrently therewith and
provide Ascential with at least 24 hour prior notice with respect to any meeting
of the Company Board to discuss an Alternative Proposal. The Company agreed to
cease immediately any discussions and negotiations regarding any proposal that
constitutes, or may reasonably be expected to lead to, an Alternative Proposal.
The term "Alternative Proposal" means any inquiry, proposal or offer from
any person other than Ascential or us relating to any direct or indirect
acquisition or purchase of 15% or more of the assets of the Company and its
Subsidiaries, taken as a whole (measured by net book value), or 15% or more of
any class or series of equity securities of the Company or any of its
Subsidiaries, any tender offer or exchange offer that if consummated would
result in any Person beneficially owning 15% or more of any class or series of
equity
21
securities of the Company or any of its Subsidiaries, or any merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its Subsidiaries. The term "Superior Proposal" means any proposal made by a
third party to acquire all or substantially all of the equity securities or
assets of the Company and its Subsidiaries, pursuant to a tender or exchange
offer, merger, consolidation, liquidation or dissolution, a recapitalization or
a sale of all or substantially all its assets, on terms which a majority of the
directors of the Company determine reasonably and in good faith (based on the
written advice of an independent financial advisor and taking into account all
the terms and conditions of such proposal and the merger agreement) to be more
favorable to the Company's stockholders than the transaction contemplated by the
merger agreement that is reasonably capable of being completed, taking into
account all financial, regulatory, legal and other aspects of such proposal.
The merger agreement provides that neither the Company Board nor any
committee nor member thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Ascential or us, the approval or
recommendation by the Company Board, or any such committee, of the merger
agreement, the Offer or the merger, (ii) approve any letter of intent, agreement
in principle, acquisition agreement or similar agreement relating to any
Alternative Proposal or (iii) approve or recommend, or propose to approve or
recommend, any Alternative Proposal. Notwithstanding the foregoing, if, prior to
the acceptance for payment of Shares pursuant to the Offer, the Company Board
receives a Superior Proposal and the Company Board determines reasonably and in
good faith, after consultation with and receipt of advice of outside counsel,
that it is necessary to do so in order to comply with their fiduciary or
statutory obligations, the Company Board may withdraw its approval or
recommendation of the Offer, the merger and the merger agreement and, in
connection therewith, approve or recommend such Superior Proposal, but only if
the Company Board shall have given Ascential three business days' notice prior
to withdrawing its recommendation. No such termination shall be effective until
the Company makes payment to Ascential of funds equal to the Termination Fee (as
discussed under the heading "Termination Fee; Expenses" below).
The merger agreement further provides that the Company promptly, and in any
event within 24 hours, shall advise Ascential orally and in writing of any
Alternative Proposal or any inquiry with respect to, or that could reasonably be
expected to lead to, any Alternative Proposal, the identity of the person or
group making any such Alternative Proposal or inquiry, the material terms
(including price) of any such Alternative Proposal or inquiry and of any
determination to furnish information to a third party in response to an
Alternative Proposal. The Company has agreed to provide to Ascential any
non-public information concerning the Company provided to any other person in
connection with any Alternative Proposal that was not previously provided to
Ascential concurrently with the provision of such information to such person.
Indemnification and Insurance. The merger agreement provides that for six
years after the effective time of the merger, Ascential and the Surviving
Corporation shall indemnify jointly and severally, defend and hold harmless each
present and former officer and director of the Company, and each person who
becomes an officer or director of the Company prior to the Effective Time,
against all losses, claims, damages, liabilities, costs, fees and expenses
arising out of acts or omissions occurring at or prior to the effective time of
the merger to the full extent required under the terms of the Company's Amended
and Restated Certificate of Incorporation and Amended and Restated By-Laws or
any indemnification agreement between the Company and such person, each as in
effect as of the date of the merger agreement. Reasonable attorneys fees,
judgments, fines, losses, claims, liabilities and settlements (effected with the
written consent of Ascential or Surviving Corporation, which consent shall not
be unreasonably withheld) are included. In the event that any claim or assertion
is made within such six year period, rights to indemnification shall continue
until disposition of the claim.
The merger agreement further provides that Ascential or the Surviving
Corporation shall maintain the Company's existing officers' and directors'
liability insurance for a period of not less than two years after the effective
time of the merger, or such other insurance as the Board of Directors of the
Company shall identify. Ascential or the Surviving Corporation may substitute
policies of substantially equivalent coverage, amounts, and terms. However, in
no event shall Ascential and the Surviving Corporation be required to pay
aggregate premiums for all such insurance in excess of two times 105% of the
premiums paid or to be paid by the Company as of the date of the merger
agreement for such insurance during the 12-month period ending
22
June 30, 2004. If the premium for such coverage exceeds such amount, the
Surviving Corporation shall purchase a policy with the greatest coverage
available that does not exceed, in the aggregate, two times 105% of the premiums
paid or to be paid by the Company as of the date of the merger agreement for
such insurance during the 12-month period ending June 30, 2004.
Conditions to the Merger. The merger agreement provides that the
respective obligations of each party to effect the merger will be subject to the
satisfaction at or prior to the effective time of the merger of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Ascential or Purchaser, as the case may be, to the extent permitted
by applicable law: (i) the merger agreement and the merger shall have been
approved and duly adopted by the requisite vote of the stockholders of the
Company, if required by applicable law, in order to consummate the merger; (ii)
no statute, rule or regulation shall have been enacted or promulgated by any
governmental authority which restrains, enjoins or otherwise prevents or
prohibits the consummation of the merger; nor shall there be any preliminary or
permanent injunction or other order of any governmental entity precluding
consummation of the merger; (iii) the purchase of Shares pursuant to the Offer
shall have occurred; and (iv) any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and any applicable foreign anti-trust law, shall have expired or been
terminated.
Prior to the earlier of (i) the time at which Ascential's designees
constitute a majority of the Company's Board of Directors or (ii) the effective
time of the merger, the obligations of Ascential and Purchaser to consummate the
merger are subject to the satisfaction of each of the following conditions, any
and all of which may be waived in whole or in part by Ascential and Purchaser,
to the extent permitted by applicable law: (i) the representations and
warranties of the Company in the merger agreement shall be true and correct as
of the date of the merger agreement and as of the effective time of the merger,
without regard to qualifications as to knowledge, materiality or material
adverse effect, except to the extent that inaccuracies of representations or
breaches of warranties, in the aggregate, do not, and could not reasonably be
expected to, result in a material adverse effect on the Company; (ii) the
Company shall have complied in all material respects with its covenants under
the merger agreement; and (iii) there shall not have occurred any change,
effect, fact or circumstance that has or could reasonably be expected to have a
material adverse effect on the Company.
Termination. The merger agreement may be terminated and the Offer and the
merger may be abandoned at any time prior to the effective time, whether before
or after stockholder approval of the merger:
- by the mutual written consent of Ascential and the Company;
- by either Ascential or the Company if any law shall have been promulgated
which prohibits the consummation of the Offer or the merger or if any
governmental entity shall have issued an order or taken any other action
permanently restricting, enjoining, restraining or otherwise prohibiting
the consummation of the Offer or the merger and such order or other
action shall have become final and nonappealable and the party seeking to
terminate had used its reasonable best efforts to have such order or
other action vacated or lifted
- by either the Company or Ascential if: (i) the Offer shall not have been
consummated by November 15, 2003 or (ii) the Offer shall have terminated
or expired in accordance with its terms without any Shares being
purchased and the party seeking to terminate the has not materially
breached the merger agreement;
- by either Ascential or the Company if the merger agreement and the merger
are not approved by the requisite vote of stockholders of the Company, if
required by certificate of incorporation, the by-laws or applicable law;
- by Ascential (i) if a Triggering Event (as defined below) shall have
occurred; (ii) if the Company or its representatives participate in
discussions or negotiations with, or furnish or disclose nonpublic
information to, any person or entity in response to an Alternative
Proposal. A "Triggering Event" shall be deemed to have occurred if: (i)
the Company, any of its affiliates or any representatives violates any of
the non-solicitation provisions of the merger agreement; (ii) the
Company's Board publicly recommends to the Company's stockholders any
Superior Proposal; (iii) the Company enters into any
23
agreement, letter of intent or similar document contemplating or
otherwise relating to any Alternative Proposal or Superior Proposal; (iv)
the Company's Board withdraws, or materially and adversely modifies, its
recommendation of the Offer, the merger or the merger agreement; or (v)
if any of the conditions to the offer as set forth in set forth in
Section 14 -- "Conditions to the Offer" shall not have been satisfied by
the expiration date of the Offer and on or prior to such date (A) an
Alternative Proposal shall have been made or publicly announced or (B) it
shall have been publicly disclosed, or Ascential or Purchaser shall have
otherwise learned, that beneficial ownership (determined for this purpose
based on Rule 13d-3 under the Exchange Act) of 15% or more of the Shares
have been acquired by any person or group (as defined in Section 13(d)(3)
under the Exchange Act);
- by Ascential if prior to the earlier of (i) the time at which Ascential's
designees constitute a majority of the Board of Directors of the Company
and (ii) the effective time of the merger,
- if the Company shall have breached any of its representations or
warranties contained in the merger agreement without giving effect to
qualifications as to materiality or material adverse effect except to
the extent such breaches, in the aggregate, do not and would not be
likely to have a material adverse effect on the Company, and which
breach cannot be or has not been cured within fifteen days after giving
of written notice by Ascential to the Company,
- if the Company shall have breached in any material respects the
covenants and agreements contained in the merger agreement, and
- if one of the events set forth in Section 14 -- "Conditions to the
Offer" have occurred;
- by the Company if prior to the earlier of (i) the time at which
Ascential's designees constitute a majority of the Board of Directors of
the Company and (ii) the effective time of the merger,
- if Ascential or we have breached in any material respect any of their
respective representations or warranties contained in the merger
agreement without giving effect to qualifications as to materiality or
material adverse effect, except to the extent such breaches, in the
aggregate, do not and would not be likely to have a material adverse
effect on Ascential's or our ability, respectively, to consummate the
Offer or the merger, which breach cannot be or has not been cured within
fifteen days after giving of written notice by the Company to Ascential
or Purchaser, as applicable,
- if Ascential or we have breached in any material respects our respective
covenants and agreements contained in the merger agreement; and
- by the Company if the Company enters into a definitive agreement for a
Superior Proposal and it has complied with the non-solicitation
provisions in the merger agreement.
In the event of the termination of the merger agreement by any party
pursuant to the terms of the merger agreement, there shall be no liability on
the part of Ascential, Purchaser or the Company except (i) for fraud or for
willful breach of the merger agreement prior to such termination and (ii) as
described under the heading "Termination Fee; Expenses" below.
Termination Fee; Expenses. Pursuant to the merger agreement, if the Merger
agreement is terminated by:
- Ascential because (i) the Offer is not consummated by November 15, 2003
or (ii) the Offer is terminated or expires in accordance with its terms
without Purchaser having purchased and Shares thereunder, in each case,
because (x) of the failure of any of the representations and warranties
of the Company set forth in the merger agreement to be true and correct,
without giving effect to any qualification as to knowledge, materiality
or material adverse effect as of the date of the merger agreement and as
of the Expiration Date, except to the extent that such failures to be
true and correct, in the aggregate do not and would not reasonably be
expected to result in a material adverse effect on the Company or (y) the
Company failed to perform or comply in any material respect with any
obligation, agreement or covenant of the Company to be performed or
complied with by it under the
24
merger agreement as a result of a willful breach by the Company of any
representation, warranty, covenant or agreement of the Company;
- Ascential, if a Triggering Event shall have occurred, other than because
of the failure of any the conditions to the Offer as set forth in set
forth in Section 14 -- "Conditions to the Offer" to be satisfied by the
Expiration Date; or
- the Company if the Company enters into a definitive agreement for a
Superior Proposal, provided that the Company is not in violation of the
terms of the non-solicitation provisions of the merger agreement,
then the Company shall (A) reimburse Ascential in immediately available funds
for the out-of-pocket expenses of Ascential and Purchaser (including printing
fees, filing fees and fees and expenses of its legal and financial advisors and
all fees and expenses payable to any financing sources) related to the merger
agreement, the Offer, the merger, any other transactions contemplated hereby and
any related financing up to an aggregate amount of $1.5 million; and (B) pay to
Ascential in immediately available funds an amount equal to $4 million (the
"Termination Fee"). The Termination Fee is payable on the second business day
next succeeding the date of termination.
Pursuant to the merger agreement, if the merger agreement is terminated by:
- Ascential because one of the events described in Section
14 -- "Conditions to the Offer" have occurred and on or prior to such
date (A) an Alternative Proposal shall have been made or publicly
announced or (B) it shall have been publicly disclosed, or Ascential or
Purchaser shall have otherwise learned, that beneficial ownership
(determined based on Rule 13d-3 under the Exchange Act) of 15% or more of
the Shares have been acquired by any person or group (as defined in
Section 13(d)(3) under the Exchange Act); or
- Ascential if the Company or its representatives participate in
discussions or negotiations with, or furnish or disclose nonpublic
information to, any person or entity in response to an Alternative
Proposal,
and the Company consummates an Alternative Transaction within 12 months of the
date of termination, then the Company shall, within two business days of the
date of consummation of the Alternative Transaction, pay Ascential the
Termination Fee. The term "Alternative Transaction" means any direct or indirect
acquisition or purchase of 35% or more of the assets of the Company and its
Subsidiaries, taken as a whole (measured by net book value), or 35% or more of
any class or series of equity securities of the Company or any of its
Subsidiaries, any tender offer or exchange offer that if consummated would
result in any Person beneficially owning 35% or more of any class or series of
equity securities of the Company or any of its Subsidiaries, or any merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its Subsidiaries.
Except as specifically provided to the contrary in the merger agreement,
all costs and expenses incurred in connection with this the merger agreement and
the consummation of the transactions shall be paid by the party incurring such
costs and expenses.
STOCK TENDER AGREEMENT
Ascential and Purchaser have entered into a Stock Tender Agreement, dated
as of the date of the Merger agreement with each of Ernest E. Keet, Roy C. King,
Constance F. Galley, James P. Schadt, Dennis G. Sisco, Mark C. Stevens, Michael
E. Lehman, Kenneth J. Hall, David S. Linthicum, Mark W. Register, Thracy P.
Varvoglis, Jill M. Donohoe, Michael Collins, David L. Goret, Ronald R. Smith and
Greg O'Brien, as stockholders of the Company and holders of options to purchase
Shares (each a "Stockholder" and collectively, the "Stockholders") who
collectively own 2,107,706 Shares of the common stock of the Company which
represent approximately 6% of the Company's outstanding Shares. Pursuant to the
stock tender agreement, each Stockholder has agreed to (i) tender such
Stockholder's Shares promptly after we commence the Offer and (ii) appoint Peter
Fiore, Scott Semel and Robert McBride, as officers of Purchaser, an irrevocable
proxy (A) to vote the Stockholders' Shares in favor of the merger and the merger
agreement and
25
(B) vote against any action or agreement that is contrary to the merger
agreement or the stock tender agreement, or that would materially change the
Company's corporate structure or business. Pursuant to the stock tender
agreement, each Stockholder has granted us an option to acquire all such
Stockholder's Shares at a purchase price per share equal to the Offer Price (or
such higher price as may be offered by Purchaser in the Offer), exercisable only
if the Stockholders fail to comply with the stock tender agreement, or if the
Stockholders withdraw their tender of Shares made pursuant to the Offer.
Additionally, the Stockholders have agreed to (i) not transfer, or enter
into any agreement to transfer, their Shares to any other person or entity
except pursuant to the stock tender agreement; (ii) not take any action in
violation of any warranty or representation made by the Stockholders under the
stock tender agreement, or that would result in a breach by the Company of its
obligations under the merger agreement; (iii) not solicit an Alternative
Proposal or engage in any negotiations regarding an Alternative Proposal (other
than any action taken by a Stockholder in their capacity as a director or
executive officer of the Company and in compliance with the non-solicitation
provision of the merger agreement); (iv) waive all appraisal or dissenting
rights and (v) waive claims against the Company, Ascential or Purchaser
including claims arising from ownership of Shares, stockholder status, conduct
of business, and the consummation of the transactions contemplated by the merger
agreement or merger.
The parties to the stock tender agreement have each made certain
representations and warranties. The Stockholders' representations and warranties
include that they are the holder of record and have valid and marketable title
to their respective Shares, that they beneficially own their respective Shares,
that the stock tender agreement covers all of the Shares owned by each
Stockholder (including any options exercised by the Shareholder prior to the
Offer), and that no conflicts with other agreements will result. Ascential and
Purchaser's representations and warranties include that each is a is a duly
organized corporation with the power to perform its obligations under the stock
tender agreement.
COMMON STOCK OPTION AGREEMENT
To facilitate our effectuating a Short-Form Merger (as defined in Section
12 -- "Plans for the Company") to the extent permitted under the DGCL,
Ascential, we and the Company have entered into a Common Stock Option Agreement
under which the Company has granted us an option to purchase from the Company
not more than 19.99% of the then outstanding Shares, at a price per Share equal
to the Offer Price. This option is exercisable by us only after the purchase of
and payment for Shares pursuant to the Offer, and it is also conditioned upon
our owning at least 90% of the outstanding Shares immediately following the
exercise of the option. The portion of the purchase price owing upon exercise of
such option equal to the product of (i) the number of Shares purchased pursuant
to such option multiplied by (ii) the par value per Share will be paid to the
Company in cash, and the balance of the purchase price will be paid by delivery
to the Company of a non-interest bearing unsecured demand note from us that is
guaranteed by Ascential. Such option may be exercised on two day's written
notice given by Purchaser to the Company.
CONFIDENTIALITY AGREEMENT
Bear Stearns, on behalf of Ascential, and JP Morgan and the Company
executed a letter agreement (the "Confidentiality Agreement"), dated April 28,
2003, which was amended on July 17, 2003.
The Confidentiality Agreement contains customary provisions pursuant to
which, among other matters, the parties agreed, subject to certain exceptions,
to keep confidential all nonpublic, confidential or proprietary information
concerning the other party which is furnished to any party in connection with
its evaluation of a possible transaction involving Ascential and the Company
(the "Evaluation Material"), and to use the Evaluation Material, or notes,
summaries, or other material derived therefrom (collectively, "Notes") solely
for the purpose of evaluating a possible transaction involving the Company and
Ascential. The Company may, at any time, elect to terminate Ascential's access
to Evaluation Material. Upon such termination, Evaluation Material disclosed
under the Confidentiality Agreement must be returned to the disclosing party,
Notes must be destroyed, and each party will confirm in writing to the
disclosing party that all such material has been returned or destroyed. The
Confidentiality Agreement will remain in effect until April 28, 2005 unless
26
terminated earlier by the Company. Early termination by the Company does not
relieve a party of its obligation not to disclose confidential information, as
this obligation will continue for the term of the Confidentiality Agreement.
Until October 28, 2003, Ascential, and its subsidiaries and affiliates, may
not solicit to do business with any clients the Company has had since April 28,
2002, subject to certain exceptions. Until April 28, 2004, neither party (or its
affiliates) may acquire any security of the other without the written consent of
the other's Board of Directors. Until April 25, 2005, Ascential may not solicit
for employment or hire any officer, director, or vice president and above level
employee of the Company or any of its subsidiaries unless that person has been
terminated by the Company or its subsidiaries prior to the solicitation. The
July 17, 2003 amendment provided that this non-solicitation provision shall
apply to all employees of the Company with whom Ascential came into contact in
connection with the due diligence and evaluation of the possibility of this
transaction.
EMPLOYMENT AGREEMENTS
Ascential has entered into employment agreements with Mark W. Register and
Thracy P. Varvoglis, each an executive officer of the Company, as well as other
employees of the Company which will become effective immediately following the
purchase of the Shares by Purchaser. The agreements provide for the terms and
conditions of employment and may be terminated at any time by either party at
will. Pursuant to these new arrangements, Mr. Register and Mr. Varvoglis will be
entitled to annual base salary of $250,000 and $200,000, respectively and each
of them will be entitled to a bonus opportunity equal to 50% of base salary
pursuant to Ascential's Key Employee Incentive Plan. Each of these individuals
and Ascential also entered into Ascential's standard non-competition agreements
providing, among other things, that they will not compete with Ascential for a
period of twelve months after their employment with Ascential terminates and
each of Mr. Register and Mr. Varvoglis entered into a retention agreement
providing, among other things, for waiver of their severance rights under their
employment agreements with the Company, retention payments payable periodically
over the two-year period following the merger, and, upon becoming an Ascential
employee, execution of a change of control agreement with Ascential pursuant to
which each of Messers. Register and Varvoglis will be entitled to certain
benefits upon a change of control of Ascential, provided that if the executive
is terminated other than for Cause, or terminates his employment for Good Reason
(in each case, as defined in the agreement) within the first two years of
employment with Ascential, such executive will get the greater of the remaining
retention benefits or the benefits payable under the Ascential change of control
agreement. The Company and all other executive officers of the Company each
entered into a continuity agreement pursuant to which they will remain employed
by the Company for 60 days following our purchase of the Shares and will receive
any severance or change of control benefits they are entitled to under their
current change of control benefit plan or employment agreements during the 12
month period following such 60 days additional employment. Each executive
officer of the Company also entered into a non-competition agreement with the
Company providing, among other things, that they will not compete with the
Company and its affiliates for a period of twelve months after their employment
with the Company terminates as well as provisions relating to non-solicitation
of employees and confidential information.
The form of each of (i) the executive non-disclosure, non-competition and
development agreement, and (ii) the retention agreement referred to herein are
filed as an exhibit to the Schedule TO.
12. PLANS FOR THE COMPANY; OTHER MATTERS
Plans for the Company. If we acquire control of the Company, Ascential and
we intend to conduct a detailed review of the Company and its assets, corporate
structure, capitalization, operations, properties, policies, management and
personnel and to consider and determine what, if any, changes would be desirable
in light of the circumstances which then exist. Such changes could include,
among others things, changes in the Company's business, corporate structure,
certificate of incorporation, by-laws, capitalization, management or dividend
policy.
27
The merger agreement provides that the directors of Purchaser and the
officers of the Company at the effective time of the merger will, from and after
such time, be the initial directors and officers, respectively, of the Surviving
Corporation.
We or our affiliate may, following the consummation or termination of the
Offer, seek to acquire additional Shares through open market purchases,
privately negotiated transactions, a tender offer or exchange offer or
otherwise, upon such terms and at such prices as we shall determine, which may
be more or less than the price to be paid pursuant to the Offer. We, together
with our affiliates, also reserve the right to dispose of any or all Shares
acquired by us, subject to the terms of the merger agreement.
Except as disclosed in this Offer to Purchase, and except as may be
effected in connection with the integration of operations referred to above,
including following the merger described in this Offer to Purchase, the merger
of the Company with and into Ascential and related consolidation of operations,
neither Ascential nor Purchaser has any present plans or proposals that would
result in an extraordinary corporate transaction, such as a merger,
reorganization, liquidation, relocation of operations or sale or transfer of a
material amount of assets, involving the Company or its Subsidiaries, or any
material changes in the Company's capitalization, corporate structure, business
or composition of its management or the Company Board.
Stockholder Approval. Under the DGCL, the approval of the Company Board
and the affirmative vote of the holders of a majority of the outstanding Shares
are required to adopt and approve the merger agreement and the merger. The
Company has represented in the merger agreement that the execution and delivery
of the merger agreement by the Company and the consummation by the Company of
the transactions contemplated by the merger agreement have been duly authorized
by all necessary corporate action on the part of the Company, subject to the
approval of the merger by the Company's stockholders if required in accordance
with the DGCL. In addition, the Company has represented that the affirmative
vote of the holders of a majority of the outstanding Shares is the only vote of
the holders of any class or series of the Company's capital stock which is
necessary to approve the merger agreement and the transactions contemplated
thereby, including the merger. Therefore, unless the merger is consummated
pursuant to the Short-Form Merger provisions under the DGCL described below (in
which case no further corporate action by the stockholders of the Company will
be required to complete the merger), the only remaining required corporate
action of the Company will be the approval of the merger agreement and the
transactions contemplated thereby by the affirmative vote of the holders of a
majority of the Shares. The Company has agreed to duly call, give notice of,
convene and hold a special meeting of stockholders. The merger agreement
provides that Ascential will vote, or cause to be voted, all of the Shares then
owned by Ascential, Purchaser or any of Ascential's other subsidiaries and
affiliates in favor of the approval of the merger and the adoption of the merger
agreement. In the event that Ascential, Purchaser and Ascential's other
subsidiaries and affiliates acquire in the aggregate at least fifty-one percent
of the Shares (which would be the case if the Minimum Condition is satisfied and
Purchaser were to accept for payment Shares tendered in the Offer), they would
have the ability to effect the merger without the affirmative votes of any other
stockholders.
Short-Form Merger. Section 253 of the DGCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may merge itself into such
corporation without any action or vote on the part of the board of directors or
the stockholders of such other corporation. In the event that Ascential,
Purchaser and any other subsidiaries of Ascential acquire in the aggregate at
least 90% of the outstanding Shares, pursuant to the Offer or otherwise, then,
at the election of Ascential, a Short-Form Merger could be effected without any
approval of the Company Board or the stockholders of the Company, subject to
compliance with the provisions of Section 253 of the DGCL. Even if Ascential and
Purchaser do not own 90% of the outstanding Shares following consummation of the
Offer, Ascential and Purchaser could exercise the option granted to them by the
Company pursuant to the Option Agreement or seek to purchase additional shares
in the open market or otherwise in order to reach the 90% threshold and employ a
Short-Form Merger. The per share consideration paid for any Shares so acquired
may be greater or less than that paid in the Offer. Ascential presently intends
to effect a Short-Form Merger if permitted to do so under the DGCL.
28
Appraisal Rights. Holders of the Shares do not have appraisal rights in
connection with the Offer. However, if the merger is consummated, holders of the
Shares at the Effective Time will have certain rights pursuant to the provisions
of Section 262 of the DGCL, including the right to dissent and demand appraisal
of, and to receive payment in cash of the fair value of their Shares. Dissenting
stockholders of the Company who comply with the applicable statutory procedures
will be entitled to receive a judicial determination of the fair value of their
Shares (exclusive of any element of value arising from the accomplishment or
expectation of the merger) and to receive payment of such fair value in cash,
together with a fair rate of interest thereon, if any. Any such judicial
determination of the fair value of the Shares could be based upon factors other
than, or in addition to, the price per Share to be paid in the merger or the
market value of the Shares. The value so determined could be more or less than
the price per Share to be paid in the merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE
DGCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE
UNDER THE DGCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL. IF A SHAREHOLDER WITHDRAWS
OR LOSES HIS RIGHT TO APPRAISAL, SUCH HOLDER'S SHARES WILL BE AUTOMATICALLY
CONVERTED INTO, AND REPRESENT ONLY THE RIGHT TO RECEIVE, THE MERGER
CONSIDERATION, WITHOUT INTEREST.
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 because
it is anticipated that the merger would be effected within one year following
consummation of the Offer, and in the merger stockholders would receive the same
price per share as paid in the Offer. If Rule 13e-3 were applicable to the
merger, it 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 stockholders in
such a transaction, be filed with the Commission and disclosed to minority
stockholders prior to consummation of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS
The merger agreement provides that prior to the effective time of the
merger, neither the Company nor any Company Subsidiary shall (i) except for
payments of dividends by a Subsidiary of the Company, declare, pay or set aside
any dividend or other distribution or payment with respect to, or split,
combine, redeem or reclassify, or purchase or otherwise acquire, any shares of
its capital stock or its other securities or (ii) issue or sell, or authorize
the issuance or sale of, any shares of its capital stock or any other equity
securities, or issue or sell, or authorize the issuance or sale of, any
securities convertible into or options, warrants or rights to purchase or
subscribe to, or enter into or create any contract with respect to the issuance
or sale of, any shares of its capital stock or any other equity securities, or
make any other changes in its capital structure, except for the issuance and
sale of Shares upon the exercise of stock options or warrants which are
outstanding on the date hereof and except of the granting of options for Company
common stock to new hires consistent with past practice, not to exceed 50,000
shares.
14. CONDITIONS TO THE OFFER
Notwithstanding any other provisions 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 (subject to the provisions of the merger agreement),
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and may
delay the acceptance for payment of or, subject to the restriction referred to
above, the payment for, any tendered Shares, and may terminate or amend the
Offer as to any Shares not then paid for, if (i) any
29
applicable waiting period under the HSR Act or any applicable foreign
anti-competition law has not expired or terminated, (ii) the Minimum Condition
has not been satisfied, or (iii) at any time on or after the date of the merger
agreement and before the scheduled expiration date of the Offer, any of the
following events shall occur:
(a) there shall be pending any suit, action or proceeding (i) seeking
to prohibit or impose any material limitations on Ascential's or
Purchaser's ownership or operation (or that of any of their respective
subsidiaries or affiliates) of all or a material portion of their or the
Company's businesses or assets, or seeking to compel Ascential or Purchaser
or their respective subsidiaries and affiliates to dispose of or hold
separate any material portion of the business or assets of the Company or
Ascential and their respective subsidiaries, in each case taken as a whole,
(ii) challenging the acquisition by Ascential or Purchaser of any Shares
under the Offer or seeking to restrain or prohibit the making or
consummation of the Offer or the merger or the performance of any of the
other transactions contemplated by the merger agreement, or seeking to
obtain from the Company, Ascential or Purchaser any damages that are
material in relation to the Company and its subsidiaries, taken as a whole,
(iii) seeking to impose material limitations on the ability of Purchaser,
or rendering Purchaser unable, to accept for payment, pay for or purchase
some or all of the Shares pursuant to the Offer and the merger, (iv)
seeking to impose material limitations on the ability of Purchaser or
Ascential effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by it
on all matters properly presented to the Company's stockholders, or (v)
which otherwise is reasonably likely to have a material adverse change in
the assets, liabilities, financial condition, businesses, results of
operations or prospects of the Company and its subsidiaries, taken as a
whole provided, that for each such suit to the extent a governmental entity
is not a party to the suit, action or proceeding, Ascential believes that
there is a reasonable likelihood the result of such suit, action or
proceeding would materially adversely affect the Company or Ascential's or
Purchaser's effective exercise of ownership of the Shares or operation of
the Company, its business or assets; or
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the merger, or any other action shall be taken by any
governmental entity, other than the application to the Offer or the merger
of applicable waiting periods under the HSR Act or any applicable foreign
anti-competition law, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the NYSE or in the Nasdaq
National Market System, for a period in excess of 48 hours, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii) a
declaration of war by the United States or an international or national
calamity directly involving the United States, (iv) any limitation or
imposed limitation (whether or not mandatory) by any United States
governmental authority or agency on the extension of credit by banks or
other financial institutions, (v) any decline in the Standard & Poor's 500
Index by an amount in excess of 25% measured from the close of business on
the date of the merger agreement or (vi) a change in general financial,
bank or capital market conditions which materially or adversely affects the
ability of financial institutions in the United States to extend credit or
syndicate loans; or
(d) there shall have occurred any material adverse effect (or any
event, change, effect or fact that, could reasonably be likely to result in
any material adverse effect) on the Company; or
(e) the Company Board or any committee thereof (i) shall have
withdrawn, modified or changed in a manner adverse to Ascential or
Purchaser its approval or recommendation of the Offer, the merger agreement
or the merger, (ii) shall have recommended the approval or acceptance of an
Alternative Proposal, or similar business combination with, a person other
than Ascential, Purchaser or their affiliates, (iii) shall have executed an
agreement in principle or definitive agreement relating to an
30
Alternative Proposal or similar business combination with a person other
than Ascential, Purchaser or their affiliates or (iv) shall have adopted
any resolution or committed to effect any of the foregoing; or
(f) any of the representations and warranties of the Company set forth
in the merger agreement shall not be true and correct, without giving
effect to any qualification as to knowledge, materiality or material
adverse effect as of the date of the merger agreement and the Expiration
Date except to the extent that such failures to be true and correct, in the
aggregate, do not and would not reasonably be expected to result in a
material adverse effect on the Company; or
(g) the Company shall have failed to perform or comply in any material
respect with any obligation, agreement or covenant of the Company to be
performed or complied with by it under the merger agreement; or
(h) the Rights (as defined in the merger agreement) shall have become
exercisable; or
(i) the merger agreement shall have been terminated in accordance with
its terms;
which in the sole judgment of Ascential or Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Ascential
or Purchaser) giving rise to such condition, makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment of or payment for Shares.
The foregoing conditions are for the sole benefit of Ascential and
Purchaser, may be waived by Ascential or Purchaser, in whole or in part, at any
time and from time to time in the sole discretion of Ascential or Purchaser. The
failure by Ascential or Purchaser 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 which may be asserted at any time and from time to
time.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on information provided by
the Company, none of the Company, Purchaser or Ascential is aware of any license
or regulatory permit that appears to be material to the business of the Company
that might be adversely affected by Purchaser's acquisition of Shares pursuant
to the Offer or of any material approval or other action by a domestic or
foreign governmental, administrative or regulatory agency or authority that
would be required prior to the acquisition of the Shares by Purchaser as
contemplated herein. Should any such approval or other action be required,
Purchaser and Ascential presently contemplate that such approval or other action
will be sought. While, except as otherwise described in this Offer to Purchase,
Purchaser does not presently intend to delay the acceptance for payment of, or
payment for, Shares tendered pursuant to the Offer pending the outcome of any
such matter, there can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial conditions
or that failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of, or other substantial
conditions complied with, in the event that such approvals were not obtained or
such other actions were not taken or in order to obtain any such approval or
other action. If certain types of adverse action are taken with respect to the
matters discussed below, Purchaser could decline to accept for payment, or pay
for, any Shares tendered. See Section 14 -- "Conditions to the Offer" for
certain conditions to the Offer, including conditions with respect to
governmental actions.
State Antitakeover Statutes. A number of states have adopted laws and
regulations that purport to apply to attempts to acquire corporations that are
incorporated in such states, or whose business operations have substantial
economic effects in such states, or which have substantial assets, security
holders, employees, principal executive offices or principal places of business
in such states. In Edgar v. MITE Corp., the Supreme Court of the United States
(the "Supreme Court") invalidated on constitutional grounds the Illinois
Business Takeover statute, which, as a matter of state securities law, made
takeovers of corporations 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 stockholders. The
state
31
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there.
Ascential and Purchaser do not believe that the antitakeover laws and
regulations of any state will by their terms apply to the Offer and the merger,
and neither Ascential nor Purchaser has attempted to comply with any state
antitakeover statute or regulation. The Company represented and warranted to
Ascential that the Company Board has taken the necessary action to render
Section 203 of the Delaware Law, and any other potentially applicable
anti-takeover or similar statute or regulation, inapplicable to the merger
agreement and the transactions contemplated hereby. Purchaser reserves the right
to challenge the applicability or validity of any state law purportedly
applicable to the Offer and nothing in this Offer to Purchase or any action
taken in connection with the Offer is intended as a waiver of such right. If it
is asserted that any state antitakeover statute is applicable to the Offer, 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 to receive approvals from, the relevant state authorities, and
Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer or may be delayed in consummating the Offer. In such case,
Purchaser may not be obligated to accept for payment, or pay for, any Shares
tendered pursuant to the Offer. See Section 14 -- "Conditions to the Offer."
Antitrust. The Offer and the merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "DOJ") and the Federal Trade Commission (the "FTC")
and certain waiting period requirements have been satisfied.
The waiting period under the HSR Act with respect to the Offer will expire
at 11:59 p.m., New York City time, on the fifteenth day after the date
Ascential's form was filed unless early termination of the waiting period is
granted. However, the DOJ or the FTC may extend the waiting period by requesting
additional information or documentary material from Ascential or the Company. If
such a request is made, such waiting period will expire at 11:59 p.m., New York
City time, on the tenth day after substantial compliance by Ascential with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Ascential. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the DOJ or the FTC raises
substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue. The Purchaser
will not accept for payment Shares tendered pursuant to the Offer unless and
until the waiting period requirements imposed by the HSR Act with respect to the
Offer have been satisfied. See Section 14 -- "Conditions to The Offer."
The FTC and the DOJ frequently scrutinize the legality under the Antitrust
Laws (as defined below) of transactions such as Purchaser's acquisition of
Shares pursuant to the Offer and the merger. At any time before or after
Purchaser's acquisition of Shares, the DOJ or the FTC could take such action
under the Antitrust Laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the acquisition of Shares pursuant to the
Offer or otherwise seeking divestiture of Shares acquired by Purchaser or
divestiture of substantial assets of Ascential or its subsidiaries. Private
parties, as well as state governments, may also bring legal action under the
Antitrust Laws under certain circumstances. Based upon an examination of
information provided by the Company relating to the businesses in which
Ascential and the Company are engaged, Ascential and Purchaser believe that the
acquisition of Shares by Purchaser will not violate the Antitrust Laws.
Nevertheless, there can be no assurance that a challenge to the Offer or other
acquisition of Shares by Purchaser on antitrust grounds will not be made or, if
such a challenge is made, of the result. See Section 14 -- "Conditions to The
Offer" for certain conditions to the Offer, including conditions with respect to
litigation and certain government actions.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines,
32
and other laws that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of trade.
Purchaser and the Company may also be requested to make filings with and or
seek approval of the merger with governmental agencies in foreign countries.
Federal Reserve Board Regulations. Regulations G, U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or maintenance
of credit for the purpose of buying or carrying margin stock, including the
Shares, if the credit is secured directly or indirectly by margin stock. Such
secured credit may not be extended or maintained in an amount that exceeds the
maximum loan value of all the direct and indirect collateral securing the
credit, including margin stock and other collateral. As described in Section
10 -- "Source and Amount of Funds" of this Offer to Purchase, the funds for the
Offer are Ascential's cash on hand and therefore financing of the Offer will not
be directly or indirectly secured by the Shares or other securities which
constitute margin stock. Accordingly, all financing for the Offer will be in
full compliance with the Margin Regulations.
16. FEES AND EXPENSES
Bear Stearns has acted as financial advisor to Ascential in connection with
this transaction and is acting as Dealer Manager in connection with the Offer.
Ascential has agreed to pay Bear Stearns customary compensation for its services
as financial advisor and will reimburse Bear Stearns for reasonable expenses.
Ascential has also agreed to indemnify Bear Stearns against certain liabilities
and expenses in connection with its engagement, including certain liabilities
under federal securities laws.
Purchaser has retained Innisfree M&A Incorporated to act as the Information
Agent and The Bank of New York to act as the Depositary in connection with the
Offer. The Information Agent may contact holders of Shares by personal
interview, mail, telephone, facsimile and other methods of electronic
communication and may request brokers, dealers, commercial banks, trust
companies and other nominees to forward the Offer materials to beneficial
holders. The Information Agent and the Depositary will each receive reasonable
and customary compensation for their services. Purchaser has also agreed to
reimburse each such firm for certain reasonable out-of-pocket expenses and to
indemnify each such firm against certain liabilities in connection with their
services, including certain liabilities under federal securities laws.
Neither Ascential nor Purchaser will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent) for making
solicitations or recommendations in connection with the Offer. Brokers, dealers,
commercial banks and trust companies will be reimbursed by Purchaser for
customary mailing and handling expenses incurred by them in forwarding the Offer
materials to their customers.
17. MISCELLANEOUS
The Offer is being made to all holders of Shares other than the Company and
its subsidiaries. Purchaser is not aware of any jurisdiction in which the making
of the Offer or the tender of Shares in connection therewith would not be in
compliance with the laws of such jurisdiction. 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
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF ASCENTIAL OR PURCHASER NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Ascential have filed with the Commission the Schedule TO
pursuant to Rule 14d-3 under the Exchange Act furnishing certain additional
information with respect to the Offer. The Schedule TO and any amendments
thereto, including exhibits, may be examined and copies may be obtained at the
same places
33
and in the same manner as set forth in Section 9 -- "Certain Information
Concerning Ascential and Purchaser" of this Offer to Purchase.
Greek Acquisition Corporation,
a wholly owned subsidiary of
Ascential Software Corporation
August 8, 2003
34
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND ASCENTIAL. The following
table sets forth the name and present principal occupation or employment, and
material occupations, positions, offices or employment for the past five years
of the directors and executive officers of Purchaser and Ascential. Each such
person is a citizen of the United States. The business address of each person is
c/o Ascential Software Corporation, 50 Washington Street, Westborough,
Massachusetts 01581. Unless otherwise indicated, each person has held his or her
present position as set forth below, or has been an executive officer of
Ascential for the past five years. Persons who are also directors or officers of
Purchaser are indicated with an asterisk ("*"). Their positions with the
Purchaser took effect in July 2003.
<Table>
<Caption>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING PAST FIVE YEARS
- ---- ----------------------------------------------
David J. Ellenberger................. Mr. Ellenberger is a director of Ascential. He has held this
position since January 2002. Mr. Ellenberger also serves as
the Chief Executive Officer of 170 Systems, Inc. Until
January 2003, Mr. Ellenberger was Chief Executive Officer of
Vividon, Inc., a company he joined in August 2000. He also
served as President and Chief Operating Officer of DataSage
Inc. from November 1998 to February 2000, which was acquired
by Vignette Corporation. Mr. Ellenberger was the Vice
President of Vignette after it acquired DataSage on a
transitional basis until August 2000. Before his tenure at
DataSage, Mr. Ellenberger was with Data General Corporation
for ten years in various progressive leadership and general
management positions.
*Peter Fiore......................... Mr. Fiore is President of Ascential. He has served in this
position since July 2000. He is also a director of
Purchaser. Prior to becoming President, Mr. Fiore served as
Senior Vice President of Ascential Software, Inc., which was
a subsidiary of Informix Corporation that was later merged
into Ascential. Prior to Ascential's acquisition of Ardent
in March, 2000, Mr. Fiore served as the Executive Vice
President and General Manager of the data warehouse business
unit of Ardent, which he joined in 1994.
John J. Gavin, Jr.................... Mr. Gavin is a director of Ascential. Mr. Gavin has held
this position since October 2001. From February 2000 to
December 2001, Mr. Gavin was the Senior Vice President and
Chief Financial Officer to Cambridge Technology Partners,
which was acquired by Novell, Inc. Before joining Cambridge
Technology Partners, Mr. Gavin spent twelve years at Data
General Corporation, ultimately serving as Vice President
and Chief Financial Officer.
Peter Gyenes......................... Mr. Gyenes has been a director, the Chairman of the Board of
Directors, and the Chief Executive Officer of Ascential
since July 2000. Prior to that, he was the Chairman,
President, and Chief Executive Officer of Ardent Software,
Inc., which he joined in 1996. Ascential acquired Ardent in
March 2000.
*Robert McBride...................... Mr. McBride is a Vice-President and the Chief Financial
Officer of Ascential. He is also a director of Purchaser.
Prior to joining Ascential in June 2001, Mr. McBride worked
for seventeen years in various positions at Data General
(acquired by EMC Corporation), including Vice President,
Chief Administrative Officer, Corporate Comptroller, and
Corporate Treasurer. His tenure with Data General ended in
January 2000.
</Table>
35
<Table>
<Caption>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING PAST FIVE YEARS
- ---- ----------------------------------------------
Robert M. Morrill.................... Mr. Morrill is a director of Ascential and has been in that
position since March 2000. Since 1991, Mr. Morrill has been
the general partner of Morrill Associates, L.P. Mr. Morrill
was an investor in Ardent, and served on its Board from 1984
until March 1997. Mr. Morrill was also Ardent's Chief
Executive Officer and President from March 1996 to March
1997. Over the past fifteen years, Mr. Morrill has served as
a Director on numerous private and public company boards.
*Scott N. Semel...................... Mr. Semel is a Vice-President, the General Counsel, and the
Secretary of Ascential. He is also a director of Purchaser.
Before joining Ascential in August 2001, Mr. Semel served as
General Counsel and Secretary at NaviSite, Inc. from June
2000 to July 2001, and at Designs, Inc. from December 1986
to February 2000.
William J. Weyand.................... Mr. Weyand is a director of Ascential. He has been a
director since July 2002. Mr. Weyand is also the acting
Chief Executive Officer of Pavilion Technologies, Inc.,
which he joined in January 2003. From May 1997 to November
2001, Mr. Weyand served as the Chairman and Chief Executive
Officer of Structural Dynamics Research Corporation, which
was sold to Electronic Data Systems in August, 2001.
</Table>
36
The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each stockholder of the Company or his
broker, dealer, commercial bank, trust company or other nominee to the
Depositary, at the applicable address set forth below:
The Depositary for the Offer is:
(THE BANK OF NEW YORK LOGO)
<Table>
BY MAIL: BY HAND OR OVERNIGHT DELIVERY: FOR NOTICE OF GUARANTEED
DELIVERY:
(for Eligible Institutions
only)
The Bank of New York The Bank of New York By Facsimile Transmission:
Tender & Exchange Department Tender & Exchange Department- (212) 815 -6433
P.O. Box 11248 11 West
Church Street Station 101 Barclay Street To Confirm Facsimile
New York, NY 10286-1248 Receive and Deliver Window- Transmission Only:
Street Level (212) 815 -6212
New York, NY 10286
</Table>
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the other tender offer materials may be directed to the Information Agent at the
address and telephone number set forth below. Stockholders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
[INNISFREE LOGO]
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks & Brokers Call Collect: (212) 750-5833
ALL OTHERS CALL TOLL FREE: (888) 750-5834
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
383 Madison Avenue
New York, New York 10179
Call Toll Free: (866) 260-3054