SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of
the Securities Exchange Act of 1934
Check the appropriate box:
/ / Preliminary Information Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
/X/ Definitive Information Statement
VITRONICS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required
/X/ Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
(1) Title of each class of securities to which transaction applies:
COMMON
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
2,360,681*
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
$4,052,905.15**
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$4,052,905.15**
------------------------------------------------------------------------
(5) Total fee paid: $810.58
------------------------------------------------------------------------
* REPRESENTS 1,913,281 SHARES OF COMMON STOCK OUTSTANDING WHICH WERE NOT
PURCHASED BY DOVER TECHNOLOGIES INTERNATIONAL, INC. OR AFFILIATES IN THE CASH
TENDER OFFER FOR ALL OUTSTANDING SHARES OF COMMON STOCK OF VITRONICS CORPORA-
TION, AND "IN THE MONEY" OPTIONS TO PURCHASE 447,400 SHARES OF COMMON STOCK OF
VITRONICS CORPORATION.
** BASED ON 1,913,281 SHARES OF COMMON STOCK AT $1.90 PER SHARE, AND OPTIONS TO
PURCHASE COMMON STOCK WITH A TOTAL "OPTION SPREAD" OF $417,671.25.
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
[LOGO]
VITRONICS CORPORATION
1 FORBES ROAD
NEWMARKET, NEW HAMPSHIRE 03857
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 2, 1997
To: The Stockholders of Vitronics Corporation:
A Special Meeting of Stockholders of Vitronics Corporation will be held on
December 2, 1997 at 10:00 a.m., local time, at the offices of Coughlin &
Gerhart, LLP, One Marine Midland Plaza, East Tower, Eighth Floor, Binghamton,
New York, to consider and act upon the following matters:
1. To consider and vote upon a proposal to approve and adopt an Agreement
and Plan of Merger dated as of September 3, 1997 by and among Dover Technologies
International, Inc., a Delaware corporation ("Dover"), DTI Intermediate, Inc., a
Delaware corporation and a wholly owned subsidiary of Dover ("DTI") and the
Company (the "Merger Agreement"). The Merger Agreement provides, among other
things, that the Company will be merged with and into DTI, or vice versa (the
"Merger"), and that, upon filing of a Certificate of Merger with the Secretary
of State of the state of incorporation of the surviving corporation (the
"Effective Time"), each outstanding share of the common stock, par value $.01
per share ("Common Stock") of the Company (other than shares held by the Company
as treasury stock, shares held by DTI or Dover or any wholly owned subsidiary of
Dover, or shares held by stockholders who perfect their appraisal rights under
Massachusetts law) will be converted into the right to receive $1.90 in cash,
without interest thereon (the "Merger Consideration").
2. To transact such other business as may properly be presented at the
meeting or any adjournment thereof.
A copy of the Merger Agreement is attached as Annex I to the Information
Statement that accompanies this Notice of Special Meeting of Stockholders (the
"Notice") and is incorporated by reference into this Notice.
The Merger Agreement has been approved by the Board of Directors of the Company
(the "Board"). The Board has carefully reviewed and considered the terms and
conditions of the proposed Merger, and the Board believes the Merger is in the
best interests of the Company and its stockholders. The Board has received a
written opinion dated September 3, 1997 from an affiliate of Scott-Macon, Ltd.,
financial advisor to the Company, to the effect that, as of the date of such
written opinion, the cash consideration to be received by the holders of shares
of Common Stock of the Company pursuant to the Merger Agreement is fair from a
financial point of view to such stockholders. THE BOARD RECOMMENDS A VOTE FOR
THE ADOPTION OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
Under Massachusetts law, the affirmative vote of the holders of two thirds of
the outstanding shares of Common Stock that are entitled to vote thereon is
required to adopt the Merger Agreement. DTI owns approximately 80.6% of the
issued and outstanding shares of Common Stock. Dover, DTI and the Company have
agreed that DTI will vote all shares of Common Stock owned by it as of the
Record Date (as defined below) in favor of adoption of the Merger Agreement.
Accordingly, under Massachusetts law,
with the vote of such shares of Common Stock in favor of the adoption of the
Merger Agreement, the Merger Agreement will be adopted and the transactions
contemplated thereby will be approved without the affirmative vote of any other
stockholders. In light of the foregoing, the Company has determined not to
solicit proxies from its stockholders.
Only stockholders of record at the close of business November 3, 1997 (the
"Record Date") will be entitled to notice of and to vote at the Special Meeting
or any adjournment or postponement thereof.
If the Merger Agreement is approved by the stockholders at the Special Meeting
and the Merger is consummated, any stockholder (1) who files with the Company,
before the taking of the vote on the approval of such action, a written
objection to the proposed action stating that he intends to demand payment for
his shares if the action is taken and (2) whose shares are not voted in favor of
such action has or may have the right to demand in writing from the Company,
within twenty days after the date of mailing to him of notice in writing that
the corporate action has become effective, payment for his shares and an
appraisal of the value thereof. The Company and any such stockholder shall in
such cases have the rights and duties and shall follow the procedure set forth
in sections 86 to 98, inclusive of chapter 156B of the General Laws of
Massachusetts. See "STOCKHOLDERS' RIGHTS OF APPRAISAL" in the accompanying
Information Statement for a statement of the appraisal rights of stockholders
and a description of the procedures required to be followed by them to obtain
appraisal of their shares. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING, PLEASE READ THE ATTACHED INFORMATION STATEMENT CAREFULLY. THE COMPANY
IS NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY.
PLEASE DO NOT SEND ANY CERTIFICATES FOR YOUR STOCK AT THIS TIME. YOU WILL
RECEIVE INSTRUCTIONS REGARDING THE SURRENDER OF YOUR STOCK CERTIFICATES AND
RECEIPT OF PAYMENT FOR YOUR SHARES AFTER THE MERGER IS EFFECTIVE.
By Order of the Board of Directors,
Daniel J. Sullivan
CLERK
Newmarket, New Hampshire
November 10, 1997
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[LOGO]
VITRONICS CORPORATION
1 FORBES ROAD
NEWMARKET, NEW HAMPSHIRE 03857
INFORMATION STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 2, 1997
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY
INTRODUCTION
GENERAL INFORMATION
This Information Statement is being furnished to the holders of record as of
November 3, 1997 (the "Record Date") of shares of common stock, par value $.01
per share (the "Common Stock") of Vitronics Corporation, a Massachusetts
corporation (the "Company"), in connection with a Special Meeting of the
Stockholders of the Company to be held on December 2, 1997, at 10:00 a.m., local
time, at the offices of Coughlin & Gerhart, LLP, One Marine Midland Plaza, East
Tower, Eighth Floor, Binghamton, New York. This Information Statement is being
mailed to stockholders on or about November 10, 1997.
MATTERS TO BE CONSIDERED
The Special Meeting has been called for the following purposes:
1. To consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger dated as of September 3, 1997 by and among
Dover Technologies International, Inc., a Delaware corporation ("Dover"),
DTI Intermediate, Inc., a Delaware corporation and a wholly owned subsidiary
of Dover ("DTI") and the Company (the "Merger Agreement"). The Merger
Agreement provides, among other things, that the Company will be merged with
and into DTI, or vice versa (the "Merger"), and that, upon filing of a
Certificate of Merger with the Secretary of State of the surviving
corporation (the "Effective Time"), each outstanding share of the common
stock, par value $.01 per share ("Common Stock") of the Company (other than
shares held by the Company as treasury stock, shares held by DTI or Dover or
any wholly owned subsidiary of Dover, or shares held by stockholders who
perfect their appraisal rights under Massachusetts law) will be converted
into the right to receive $1.90 in cash, without interest thereon (the
"Merger Consideration").
2. To transact such other business as may properly be presented to the
Special Meeting or any adjournment or postponement thereof.
OUTSTANDING SHARES, VOTING RIGHTS AND PROCEDURES
At November 3, 1997 (the "RECORD DATE"), there were 9,856,572 shares of
Common Stock outstanding. Holders of record of Common Stock outstanding at the
close of business on the Record Date are entitled to notice of, and to vote at,
the Special Meeting or any adjournment or postponement thereof. Record holders
of Common Stock are entitled to one vote for each share held on matters properly
presented at the Special Meeting. The holders of a majority of the shares of the
Common Stock entitled to vote present in person or by proxy will constitute a
quorum for the transaction of business at the Special Meeting, but if a
1
quorum should not be present, the Special Meeting may be adjourned from time to
time until a quorum is obtained. Abstentions of shares of Common Stock that are
present at the Special Meeting are treated as present but non-voting and will
have the same effect as votes against the adoption of the Merger Agreement, and
broker non-votes will also have the same effect as a vote against adoption of
the Merger Agreement.
Under the Massachusetts Business Corporation Law (the "MBCL"), the
affirmative vote of the holders of two thirds of the outstanding shares of
Common Stock that are entitled to vote thereon is required to adopt the Merger
Agreement. DTI owns approximately 80.6% of the outstanding shares of Common
Stock which were acquired in a tender offer by DTI for all outstanding shares of
Common Stock, made at $1.90 per share, which expired on October 6, 1997 (the
"Offer"). Dover, DTI and the Company have agreed that Dover/DTI will vote all
shares of Common Stock held by them as of the Record Date in favor of adoption
of the Merger Agreement. ACCORDINGLY, ADOPTION OF THE MERGER AGREEMENT IS
ASSURED WITHOUT THE VOTE OF ANY OTHER STOCKHOLDER. YOU ARE NOT BEING ASKED FOR A
PROXY AND YOU ARE REQUESTED NOT TO SEND ONE. You may vote your shares, if you so
wish, by attending the Special Meeting in person.
No persons have been authorized to give any information or to make any
representations other than those contained in, or incorporated by reference in,
this Information Statement, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company, Dover, DTI, or any other person.
All information contained in this Information Statement relating to the
Company has been supplied by the Company, and all information contained in this
Information Statement relating to Dover, DTI or any affiliates has been supplied
by Dover or DTI.
The date of this Information Statement is November 10, 1997.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Copies of such
reports, proxy statements and other information may be inspected and copied at
the Public Reference Section maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; and at the
public reference facilities of the Commission's regional offices at Suite 1300,
Seven World Trade Center, New York, New York 10048 and at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such materials may
be obtained by mail, at prescribed rates, from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material
relating to the Company should also be available for inspection at the offices
of the American Stock Exchange (the "AMEX") at 86 Trinity Place, New York, New
York 10006. In addition, material filed electronically with the Commission by
the Company is available at the Commission's web site, http:// www.sec.gov,
which contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission.
The Common Stock is currently registered under the Exchange Act. Following
the Merger, the Company will become a wholly-owned direct subsidiary of Dover.
Public trading of the Common Stock will cease upon closing of the merger
described herein when the Common Stock will be removed from quotation on the
AMEX. Registration of the shares of Common Stock under the Exchange Act will be
terminated upon application by the Company to the Commission no later than the
time the Merger is consummated and thereafter the Company will no longer be
subject to the reporting requirements of the Exchange Act.
The Company is also providing to its stockholders as part of the mailing of
the Information Statement (i) the Company's most recent Form 10-K for the year
ended December 31, 1996 which was included in its annual report for such year,
and (ii) the Company's most recent Form 10-Q for the quarter ended June 29,
1997.
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TABLE OF CONTENTS
INTRODUCTION.......................................................... 1
AVAILABLE INFORMATION................................................. 2
TABLE OF CONTENTS..................................................... 3
SUMMARY............................................................... 4
THE SPECIAL MEETING................................................... 7
THE MERGER............................................................ 8
THE MERGER AGREEMENT.................................................. 13
STOCKHOLDERS' RIGHTS OF APPRAISAL..................................... 21
CERTAIN FEDERAL INCOME TAX CONSEQUENCES............................... 22
MARKET PRICE OF THE COMMON STOCK AND DIVIDEND POLICY.................. 22
REGULATORY FILINGS AND APPROVAL....................................... 23
ACCOUNTING TREATMENT.................................................. 23
CHANGE OF CONTROL..................................................... 23
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........ 24
INTEREST OF CERTAIN PERSONS IN THE MERGER............................. 24
CERTAIN INFORMATION CONCERNING DTI AND DOVER.......................... 27
INDEPENDENT PUBLIC ACCOUNTANTS........................................ 28
INCORPORATION BY REFERENCE............................................ 28
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING...................... 29
3
SUMMARY
The following is a brief summary of certain information contained elsewhere
in this Information Statement. This Summary is not intended to be complete and
is qualified in its entirety by the more detailed information contained in this
Information Statement and the Annexes hereto, to which reference is made for a
complete statement of the matters discussed below. Capitalized terms used and
not defined in the following summary have the meanings set forth under
"Introduction" above. Stockholders are urged to read this Information Statement
and the Annexes hereto in their entirety.
THE PARTIES
Vitronics Corporation (the "Company"). The Company is a supplier of
state-of-the-art thermal processing and associated equipment, with an
established reputation in the surface mount industry. The Company's equipment is
primarily aimed at the electronics industry, particularly in connection with the
production of printed circuit boards. The Company also supplies its equipment to
the medical, chemical, pharmaceutical, plastics, graphics and textile
industries. The principal executive offices of the Company are located at 1
Forbes Road, Newmarket, New Hampshire 03857, and its telephone number is (603)
659-6550.
DTI Intermediate, Inc. ("DTI"). DTI, a Delaware corporation and a direct
wholly owned subsidiary of Dover, was recently organized for the purpose of
effecting the Merger and has not carried on any activities except in connection
with the Offer (as defined below) and the Merger. All the outstanding capital
stock of DTI is owned by Dover. The principal executive offices of DTI are
located at One Marine Midland Plaza, East Tower, Sixth Floor, Binghamton, New
York 13901, and its telephone number is (607) 773-2290.
Dover Technologies International, Inc. ("Dover"). Dover, a Delaware
corporation, is a wholly owned indirect subsidiary of Dover Corporation, a
publicly traded company listed on the New York Stock Exchange under the symbol
"DOV." Dover is a high technology corporation with subsidiaries in the fields of
electronic components, automated assembly equipment for printed circuit boards,
spring probes and test equipment and fixtures for printed circuit boards, among
other things. The principal executive offices of Dover are located at One Marine
Midland Plaza, East Tower, Sixth Floor, Binghamton, New York 13901, and its
telephone number is (607) 773-2290.
THE TENDER OFFER AND THE MERGER TRANSACTION
Pursuant to the Merger Agreement, DTI commenced a tender offer (the "Offer")
on September 9, 1997, in which DTI offered to purchase any and all outstanding
shares of Common Stock of the Company at $1.90 per share net to the seller in
cash without interest. 7,943,291 shares of Common Stock were validly tendered
and not withdrawn prior to the expiration of the Offer on October 6, 1997.
During the following week, DTI accepted for payment, and, therefore, purchased,
all 7,943,291 shares of Common Stock tendered in response to the Offer. The
Merger Agreement further provides that following consummation of the Offer,
either DTI would merge with and into the Company, or the Company would merge
with and into DTI. Dover has advised the Company that, upon adoption of the
Merger Agreement at the Special Meeting, it intends to merge the Company with
and into DTI, with DTI to be the surviving corporation and a wholly- owned
subsidiary of Dover to be known as "Vitronics Corporation." In the Merger, each
remaining share of Common Stock (other than shares held by DTI, Dover or any
affiliates of Dover, or in the treasury of the Company, or that are held by
stockholders who perfect their appraisal rights under Massachusetts law) will be
converted into the right to receive the Merger Consideration, and each option to
purchase shares of Common Stock will be canceled and converted into an amount in
cash equal to the excess, if any, of the Merger Consideration over the per share
exercise price of such option multiplied by the number of shares of Common Stock
to which the option remains unexercised. As a result of the Merger, the Company
will become a wholly-owned subsidiary of Dover. A copy of the merger Agreement
is annexed hereto as Annex I and incorporated by reference into this Information
Statement. Dover is funding the approximately $19 million required for the
transactions from its internal cash flow. See "THE MERGER."
4
THE SPECIAL MEETING
Date, Time and Place of Special Meeting. December 2, 1997 at 10:00 a.m.,
local time, at the offices of Coughlin & Gerhart, LLP, One Marine Midland Plaza,
East Tower, Eighth Floor, Binghamton, New York.
Purpose. To consider and vote upon a proposal to adopt the Merger Agreement.
See "THE MERGER AGREEMENT."
Record Date. November 3, 1997.
Vote Required. The affirmative vote of the holders of two thirds of the
outstanding shares of Common Stock that are entitled to vote thereon is required
to adopt the Merger Agreement. Dover, DTI and the Company have agreed that
Dover/DTI will vote all shares of Common Stock owned by them in favor of
adoption of the Merger Agreement. Because DTI owns approximately 80.6% of the
outstanding shares of Common Stock, the adoption of the Merger Agreement is
assured. ACCORDINGLY, ADOPTION OF THE MERGER AGREEMENT IS ASSURED WITHOUT THE
VOTE OF ANY OTHER STOCKHOLDER. YOU ARE NOT BEING ASKED FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND ONE. You may vote your shares, if you so wish, by
attending the Special Meeting in person. See "THE SPECIAL MEETING--Voting Rights
and Vote Required."
BACKGROUND OF THE MERGER
The terms of the Merger Agreement resulted from arm's length negotiations
between representatives of Dover and the Company. See "THE MERGER --Background
of the Merger."
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS DETERMINED THAT THE
MERGER AGREEMENT IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS. THE BOARD HAS APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT
THE STOCKHOLDERS ADOPT THE MERGER AGREEMENT. For a discussion of the Board's
reasons for the Merger and the factors considered by the Board in making its
recommendation, see "THE MERGER -- Recommendation of the Board; Reasons for the
Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board with respect to the Merger
Agreement, stockholders should be aware that certain members of the Board and of
the Company's management may have certain interests in the Merger that are in
addition to or different from the interests of the stockholders of the Company
generally. See "INTEREST OF CERTAIN PERSONS IN THE MERGER."
EXCHANGE OF SHARES
Pursuant to the Merger, each share of Common Stock (other than shares held
by the Company as treasury stock, shares held by DTI or Dover or any wholly-
owned subsidiary of Dover, or shares held by stockholders who perfect their
appraisal rights under Massachusetts law) will be converted into the right to
receive the Merger Consideration. A letter of transmittal for use in
surrendering stock certificates and obtaining payment for surrendered shares
will be mailed to such holders promptly following the Effective Time (as defined
below). See "THE MERGER AGREEMENT -- The Merger." CERTIFICATES SHOULD NOT BE
SURRENDERED UNTIL THE LETTER OF TRANSMITTAL AND INSTRUCTIONS ARE OBTAINED AND
THEN SHOULD BE SURRENDERED ONLY IN ACCORDANCE WITH SUCH INSTRUCTIONS.
OPINION OF THE COMPANY'S FINANCIAL ADVISOR
Scott-Macon Securities, Inc. has delivered to the Board its written opinion,
dated September 3, 1997, as amended, to the effect that, as of the date of such
written opinion, the cash consideration to be received by the holders of shares
of Common Stock pursuant to the Offer and the Merger Agreement is fair from a
5
financial point of view to such stockholders. Such opinion, which was for the
information of the Board of Directors, is directed only to the Offer and Merger
Consideration and does not constitute a recommendation to any stockholder. A
copy of the full text of the written opinion of Scott-Macon Securities, Inc. is
attached hereto as Annex II. See also "The MERGER -- Recommendation of the
Board, Reasons for the Merger."
CONDITIONS TO THE MERGER
Consummation of the Merger is subject to certain conditions, including
without limitation (1) the adoption of the Merger Agreement by the requisite
vote of the stockholders entitled to vote thereon, and (2) the absence of any
statute, rule, regulation, order, or injunction prohibiting the Merger. See "THE
MERGER AGREEMENT -- The Merger." The Company is not aware of any governmental or
regulatory requirements for consummation of the Merger other than compliance
with the Hart-Scott-Rodino Antitrust Improvements Act ("HSR Act") and applicable
state corporate laws and federal and state securities laws. The waiting period
under the HSR Act expired on September 26, 1997.
EFFECTIVE TIME OF THE MERGER
The Merger shall become effective upon the filing of the certificate of
merger with the Secretary of State of the surviving corporation (the "Effective
Time"). Since Dover has indicated that the Company will be merged with and into
DTI, the Effective Time will occur upon the filing of a certificate of merger
with the Secretary of State of Delaware. See "THE MERGER AGREEMENT -- The
Merger."
EFFECTS OF THE MERGER
Pursuant to the Merger, holders of shares of Common Stock (other than shares
held by the Company as treasury stock, shares held by DTI or Dover or any wholly
owned subsidiary of Dover, or shares held by stockholders who perfect their
appraisal rights under Massachusetts law) will be entitled to receive the Merger
Consideration for shares of Common Stock owned by them. After consummation of
the Merger, the Company will become a wholly-owned subsidiary of Dover, and the
former holders of the shares of Common Stock will no longer possess any interest
in the Company. No later than the consummation of the Merger, the Company will
terminate the registration of the Common Stock under Section 12 of the Exchange
Act. Also no later than the consummation of the Merger, the Common Stock will no
longer be listed on any public stock exchange. See "THE MERGER AGREEMENT -- The
Merger."
TAX CONSEQUENCES TO STOCKHOLDERS
The receipt of cash by a Company stockholder pursuant to the Merger will be
a taxable transaction for federal income tax purposes and may also be taxable
under applicable state, local and foreign tax laws. See "CERTAIN FEDERAL INCOME
TAX CONSEQUENCES." EACH HOLDER OF COMMON STOCK IS URGED TO CONSULT A QUALIFIED
TAX ADVISOR TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH
HOLDER.
APPRAISAL RIGHTS
If the Merger Agreement is approved by the stockholders at the Special
Meeting and the Merger is consummated, any stockholder (1) who files with the
Company, before the taking of the vote on the approval of such action, a written
objection to the proposed action stating that he intends to demand payment for
his shares if the action is taken and (2) whose shares are not voted in favor of
such action has or may have the right to demand in writing from the Company,
within twenty days after the date of mailing to him of notice in writing that
the corporate action has become effective, payment for his shares and an
appraisal of the value thereof. The Company and any such stockholder shall in
such cases have the rights and duties and shall follow the procedure set forth
in sections 86 to 98, inclusive of chapter 156B of the General Laws of
Massachusetts. See "STOCKHOLDERS' RIGHTS OF APPRAISAL" and Annex III.
6
THE SPECIAL MEETING
INTRODUCTION
This Information Statement is being furnished to the stockholders of the
Company as of the record date in connection with the Special Meeting to be held
on December 2, 1997 at 10:00 a.m., local time, at the offices of Coughlin &
Gerhart, LLP, One Marine Midland Plaza, East Tower, Eighth Floor, Binghamton,
New York, and any adjournment or postponement thereof.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, holders of shares of Common Stock will be asked to
consider and vote upon a proposal to adopt the Merger Agreement, pursuant to
which the Company will be merged with and into DTI, with DTI as the surviving
corporation (the "Surviving Corporation"). The Surviving Corporation will be a
wholly-owned subsidiary of Dover to be known as "Vitronics Corporation." The
Company's stockholders will also consider and vote upon such other matters as
may properly come before the Special Meeting.
VOTING RIGHTS AND VOTE REQUIRED
Pursuant to the Massachusetts Business Corporation Law ("the "MBCL"), the
affirmative vote of at least two thirds of the shares of Common Stock
outstanding as of the Record Date is required to approve and adopt the Merger
Agreement. At the Record Date, there were 9,856,572 shares of Common Stock
outstanding. Holders of record of the Common Stock outstanding as of the Record
Date are entitled to one vote per share at the Special Meeting. The presence,
either in person or by proxy, of the holders of a majority of the shares of the
Common Stock outstanding as of the Record Date is necessary to constitute a
quorum at the Special Meeting. If a quorum is not present at the Special
Meeting, the holders of Common Stock who are present and entitled to vote at the
Special Meeting may, by majority vote, adjourn the Special Meeting from time to
time without notice or other announcement until a quorum is present. Because the
shares of Common Stock owned by DTI will be represented at the Special Meeting,
a quorum will be present, even if no other shares of Common Stock are
represented.
Abstentions of shares of Common Stock that are present at the Special
Meeting will have the same effect as votes against adoption of the Merger
Agreement, and broker non-votes will have the same effect as a vote against
adoption of the Merger Agreement. DTI owns approximately 80.6% of the issued and
outstanding shares of Common Stock, which were acquired by DTI in the Offer.
DTI, Dover and the Company have agreed that Dover/DTI will vote all of their
shares as of the record date in favor of adoption of the Merger Agreement.
ACCORDINGLY, ADOPTION OF THE MERGER AGREEMENT IS ASSURED WITHOUT THE VOTE OF ANY
OTHER STOCKHOLDER. YOU ARE NOT BEING ASKED FOR A PROXY AND YOU ARE REQUESTED NOT
TO SEND ONE. You may vote your shares of Common Stock, if you so wish, by
attending the Special Meeting in person or by granting a proxy to another
person.
STOCKHOLDERS' RIGHTS OF APPRAISAL
As more fully described in "STOCKHOLDERS' RIGHTS OF APPRAISAL," holders of
shares of Common Stock have the right to demand appraisal of, and obtain a cash
payment for, the "fair value" of their shares (excluding any element of value
arising from the consummation of the Merger Agreement) pursuant to Sections 86
to 98, inclusive, of the MBCL. In order to exercise such rights, such holders of
Common Stock must comply with the procedural requirements of Sections 86 to 98,
inclusive, of the MBCL. The full text of Sections 86 to 98, inclusive, of the
MBCL is attached to this Information Statement as Annex III and any stockholder
of the Company desiring to exercise rights of appraisal in connection with the
Merger should consult with legal counsel prior to taking any action to ensure
that the stockholder complies with the applicable statutory provisions. Failure
to take any of the steps required under Sections
7
86 to 98, inclusive, of the MBCL on a timely basis may result in the loss of
appraisal rights. See "STOCKHOLDERS' RIGHTS OF APPRAISAL" and Annex III.
In accordance with the MBCL, if the Company and any stockholders who
properly perfect their appraisal rights fail to agree on the value of the
share(s) of Common Stock, either any such stockholder or the Company may file a
bill in equity to petition the Superior Court in the county where the Company
has its principal office in the Commonwealth Of Massachusetts to determine the
value of the share(s) of Common Stock. The Company has not made any
determination at this time as to whether it would file such a bill in equity.
Therefore, if the Company and any objecting stockholder fail to agree on the
value of the stock, the stockholder may be required to file a bill in equity in
accordance with Sections 86 to 98, inclusive, of the MBCL for the action to
proceed.
THE MERGER
BACKGROUND OF THE MERGER
On April 5, 1995, John E. Pomeroy, President and Chief Executive Officer of
Dover, met with Ronald Lawler, then President of the Company, and Chairman of
the Board James Manfield at the Company's headquarters in Newmarket, New
Hampshire for the purpose of discussing a possible business combination of the
Company and Dover's wholly owned subsidiary Soltec International, B.V. During
the following five months there were several discussions with the
representatives of Scott-Macon, Ltd., investment bankers for the Company.
On September 7, 1995, Ronald Lawler and Jim Manfield met with John Pomeroy
and Michiel van Schaik, Managing Director of Soltec International, B.V., in
Holland to discuss some type of business combination of the Company and Soltec
International, B.V. In the following months there were discussions with the
representatives of Scott-Macon, Ltd. regarding some type of business combination
of the Company and Soltec International, B.V. and a visit by Michiel van Schaik
to the Company at its headquarters in Newmarket, New Hampshire to continue the
review of a potential business combination. During the ensuing months Michiel
van Schaik met with Company Board member David Steadman at the airport in
Amsterdam to discuss the potential transaction.
Michiel van Schaik was present at a Company Board meeting on February 9,
1996 and discussed ways of consolidating the Company and Soltec International,
B.V. After that Board meeting, Michiel van Schaik prepared a plan of
consolidation and presented it at the March 13, 1996 meeting of the Board in
Boston, Massachusetts. At that time, Al Scott of Scott-Macon, Ltd. was to
respond to Dover with a proposed structure of a transaction.
The Company responded with a proposal regarding an exchange of shares which
Dover found unacceptable. At a meeting on May 14, 1996 between John Pomeroy,
Robert A. Livingston, Vice President of Dover, Robert A. Tyre, Vice President
Corporate Development of Dover Corporation and James Manfield of the Company at
Scott-Macon, Ltd. in New York City, Dover came to the conclusion that the
parties could not agree on valuation and the discussion of a potential business
combination was terminated.
On or about July 1, 1997 Al Scott from Scott-Macon, Ltd. contacted John
Pomeroy regarding the potential sale of Company. From July 1, 1997 to July 28,
1997 John Pomeroy, Robert A. Livingston and Al Scott participated in several
phone discussions regarding the potential sale of Company. On July 28, 1997 John
Pomeroy met with James Manfield and Thomas Nash, Vice President Sales and
Marketing of the Company at Company headquarters in Newmarket, New Hampshire
regarding an update on current business conditions and an overall review of the
business as a potential acquisition candidate. After July 28, 1997 there were
again several telephone conversations with John Pomeroy, Robert Livingston,
Edgar Masinter from Beacon Group Capital Services, LLC (investment bankers
representing Dover) and representatives from Scott-Macon, Ltd. regarding a
possible acquisition of the Company.
8
On Sunday, August 3, 1997, Michiel van Schaik met with James Manfield at the
Heathrow Airport to discuss more details of the potential acquisition of
Company. On Monday, August 4, 1997 Dover faxed an expression of interest to the
Company expressing interest in pursuing the purchase of the outstanding shares
of the Company, subject to a satisfactory due diligence review.
On August 7, 1997, the Board of Directors of Dover Corporation held a
meeting to consider the proposed terms of the transaction. At such meeting,
after a full discussion, the Board of Directors of Dover Corporation authorized
Dover Technologies to pursue a possible transaction. Between Tuesday, August 12,
1997 and Monday, August 18, 1997, Edgar Masinter, John Pomeroy, Robert
Livingston and Zenas Colt of Scott-Macon, Ltd., participated in discussions
regarding the value of the Company.
On Monday, August 18, 1997 Michiel van Schaik and his operations team
arrived at the Company headquarters in Newmarket, New Hampshire to begin a
review of the business and continued such review through Thursday, August 21,
1997. On August 18, 1997 and August 20, 1997 environmental review and testing
was performed on site by Eder Associates, on behalf of Dover. On August 19, 1997
and August 20, 1997 Robert A. Livingston and his due diligence team arrived on
site in Newmarket, New Hampshire at the Company to conduct the legal and
financial due diligence in connection with the acquisition. As a result of the
due diligence review the price was agreed to be $1.90 per share, subject to the
negotiation, execution and delivery of a definitive Agreement and Plan of
Merger.
At a meeting of the Board of Directors of the Company held on September 3,
1997, the Board unanimously approved the Merger Agreement, the Offer and the
Merger and determined that the terms of the Offer and the Merger are fair to,
and in the best interests of, the Company's stockholders, and unanimously
recommended that stockholders of the Company accept the Offer and tender their
Shares. On September 3, 1997, Scott-Macon Securities, Inc., an affiliate of
Scott-Macon, Ltd., delivered to the Company's Board its written opinion to the
effect that the consideration to be received by the public stockholders of the
Company in the Offer and the Merger is fair to such stockholders from a
financial point of view as of the date of such meeting. The final opinion of
Scott-Macon Securities, Inc. is set forth in full as Annex II hereto.
Following the approval of the respective Boards of Directors, on September
3, 1997, Dover Technologies, DTI and the Company executed and delivered the
Merger Agreement. On September 9, 1997, DTI and Dover commenced the Offer which
expired October 6, 1997, at 12:00 midnight, New York City time and DTI and Dover
thereafter purchased the shares tendered.
RECOMMENDATION OF THE BOARD; REASONS FOR THE MERGER
At a special meeting of the Board held on September 3, 1997, the Board
unanimously approved the Merger Agreement, the Offer and the Merger, and
determined that the terms of the Offer and the Merger are fair to, and in the
best interests of, the Company and its stockholders. ACCORDINGLY, THE BOARD
RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ADOPT AND APPROVE THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AT THE SPECIAL MEETING.
In arriving at a determination to recommend the Merger and the Offer to
stockholders, the Board considered, among other things, (i) the terms and
conditions of the Merger Agreement; (ii) the approximately 38% premium
represented by the Merger Consideration (same as the "Offer Price") over the
market value of the Company's stock as last reported on the American Stock
Exchange on September 2, 1997, the last full trading day prior to the
announcement of the Offer and the 21% premium the Merger Consideration
represented over the highest closing price in the last twelve months; (iii) the
all-cash nature of the transaction; (iv) the Board's knowledge of the Company's
business, operations and properties and its assessment of the Company's future
prospects; (v) the fact that the Board's protracted and unsuccessful discussions
and negotiations with other interested parties over many months reduced the
likelihood that the Company will receive alternative offers on terms more
favorable to the Company and its stockholders
9
than those contained in the Merger Agreement; (vi) the potential effects of the
transaction on the Company's employees and customers; (vii) the likelihood that
the proposed Merger would take place as planned; (viii) the competitive and
international nature of the thermal processing equipment industry; (ix) the fact
that under the Merger Agreement, the Company was not prohibited from responding
to any unsolicited Acquisition Proposal (as defined in the Merger Agreement) by
another company to acquire the Company to the extent that the Board determined
in good faith, after receiving advice from Scott-Macon Securities, Inc. or a
nationally recognized investment banking firm, that any such Acquisition
Proposal represented a superior transaction to the Offer and the Merger and
which the Board determined in good faith could be fully financed and in the
opinion of the Board, only after receipt of advice from outside legal counsel to
the Company, the failure to provide such information or access or to engage in
such discussions or negotiations could reasonably be expected to cause the Board
to violate its fiduciary duties to the Company's stockholders under applicable
law; (x) the fact that stockholders who believe the Offer and the Merger
Consideration is inadequate may exercise their rights to an appraisal of the
value of their shares of Common Stock in accordance with the provisions of
Chapter 156B of the MBCL; and (xi) the opinion of Scott-Macon Securities, Inc.
that the $1.90 per share in cash to be received by the holders of shares of
Common Stock pursuant to the Offer and Merger Agreement is fair to such
stockholders from a financial point of view as of such date.
THE OPINION OF SCOTT-MACON SECURITIES, INC. CONTAINS A DESCRIPTION OF THE
FACTORS THAT IT CONSIDERED, THE ASSUMPTIONS THAT IT MADE AND THE SCOPE OF REVIEW
THAT IT UNDERTOOK IN RENDERING ITS OPINION. THE FULL TEXT OF THE OPINION IS
FILED AS ANNEX II TO THIS INFORMATION STATEMENT. STOCKHOLDERS ARE URGED TO READ
THE OPINION IN ITS ENTIRETY.
The Board also took into consideration the fact that the consummation of the
Offer and the Merger will deprive current stockholders of the Company of the
opportunity to participate in its future growth prospects. Therefore, in
reaching its conclusion to approve and recommend the Offer and the Merger, the
Board determined that the historical results of operations and future prospects
of the Company are adequately reflected in the Offer Price and the Merger
Consideration. In addition, the Board considered the possibility that, in the
unlikely event that the Offer, but not the Merger, is consummated, the number of
stockholders could be significantly reduced, which in turn could adversely
affect the liquidity and market value of the Common Stock. In reaching its
conclusions, the Board did not assign relative weights to the specific factors
that it considered.
OPINION OF SCOTT-MACON SECURITIES, INC.
The Company retained Scott-Macon Securities, Inc. ("SMS") to render an
opinion to the Board of Directors as to the fairness from a financial point of
view of the consideration to be received pursuant to the Offer and the Merger.
The Company also retained Scott-Macon, Ltd. ("SML"), an affiliate of SMS, to act
as the Company's financial advisor in connection with the Offer and subsequent
Merger. SMS and SML were selected by the Board of Directors to provide such
services based upon their qualifications, expertise and reputation, as well as
SML's investment banking relationship with the Company.
On September 3, 1997, the day of the Board of Directors meeting prior to the
signing of the Merger Agreement, SMS delivered to the Company's Board of
Directors its opinion that, as of such date, the consideration to be received by
the holders of Common Stock pursuant to the Offer and the Merger was fair from a
financial point of view. The decision to accept the terms of the Offer and the
Merger, however, was made by the Board of Directors of the Company.
A COPY OF THE FULL TEXT OF THE OPINION OF SMS DATED AS OF SEPTEMBER 3, 1997,
AS AMENDED, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED, AND LIMITS ON
THE REVIEW UNDERTAKEN BY SMS, IS ATTACHED HERETO AS ANNEX II. STOCKHOLDERS ARE
URGED TO READ THIS OPINION IN ITS ENTIRETY. SMS'S OPINION, WHICH IS DIRECTED
ONLY TO THE OFFER AND MERGER CONSIDERATION, WAS FOR THE INFORMATION OF THE BOARD
OF DIRECTORS AND DOES NOT
10
CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER. THE SUMMARY OF THE OPINION OF
SMS SET FORTH IN THIS INFORMATION STATEMENT IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF SUCH OPINION.
For purposes of its opinion, SMS: (i) reviewed a draft of the Merger
Agreement, (ii) analyzed certain publicly available financial statements for the
Company, (iii) analyzed certain financial statements and other financial and
operating data concerning the Company prepared by its management, (iv) analyzed
certain financial forecasts of the Company, prepared by the management of the
Company, (v) discussed the past and current business operations and financial
condition and future prospects of the Company with members of the senior
management of the Company, (vi) reviewed and evaluated reported market prices
and historical trading activity of the Company's Common Stock, (vii) reviewed
the financial performance of the Company together with the stock market data
relating to the Company and similar data available for certain companies deemed
comparable in certain relevant respects by SMS and their publicly traded
securities, and (viii) conducted such other studies, analyses and examinations
as it deemed appropriate.
In connection with its review, SMS relied upon and assumed, without
independent verification, the accuracy and completeness of the financial and
other information regarding the Company provided to SMS by the Company and its
representatives. With respect to the financial forecasts, SMS assumed that they
had been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the Company's management as to the future financial
performance of the Company. SMS was not retained to conduct a physical
inspection of any of the properties or facilities of the Company, nor did SMS
make any independent valuation or appraisal of the Company's assets or
liabilities. SMS also assumed that the Offer and the Merger in all respects is
and will be in compliance with all laws and regulations that are applicable to
the Company.
SMS's opinion was based solely upon the information available to it and the
economic, market and other circumstances as they existed as of September 3,
1997. Events occurring after that date could materially affect the assumptions
and conclusions contained in the opinion. SMS has not undertaken to reaffirm or
revise its opinion or otherwise comment upon any events occurring after
September 3, 1997.
In connection with rendering its opinion, SMS performed a variety of
financial analyses, which included those summarized below. Although the
evaluation of the fairness, from a financial point of view, of the consideration
to be paid in the Offer and the Merger was to some extent a subjective one based
on the experience and judgment of SMS and not merely the result of mathematical
analyses of financial data, SMS relied on several basic financial valuation
methodologies in its determinations. SMS believes its analyses must be
considered as a whole and that selecting portions of such analyses and factors
considered by SMS without considering all such analyses and factors could create
an incomplete view of the process underlying SMS's opinion. In its analyses, sMS
made numerous assumptions with respect to business, market, monetary and
economic conditions, industry performance and other matters, many of which are
beyond the Company's control. Any estimates contained in SMS's analyses are not
necessarily indicative of future results or values, which may be significantly
more or less favorable than such estimates. None of the analyses performed by
SMS was assigned a greater significance by SMS than any other.
SMS compared the consideration per share reflected in the Offer and the
Merger with (i) the stock price at September 2, 1997 which equated to a 38.18%
premium; (ii) the 10-day average stock price for the period ended September 2,
1997 which equated to a 41.37% premium; (iii) the 30-day average stock price for
the period ended September 2, 1997 which equated to a 67.70% premium; (iv) the
60-day average stock price for the period ended September 2, 1997 which equated
to an 88.68% premium; (v) the 90-day average stock price for the period ended
September 2, 1997 which equated to a 95.47% premium; and (vi) the average stock
price from January 1, 1997 through September 2, 1997 which equated to an 87.93%
premium.
SMS analyzed the average Company stock price and average volume for the
period from January 31, 1994 through August 31, 1997. SMS also did a comparable
company analysis in which it calculated multiples of market value to revenue,
market value to earnings before interest, taxes, depreciation and
11
amortization ("EBITDA"), market value to earnings before interest and taxes
("EBIT"), market value to net income and market value to book values for BTU
International Inc. ("BTU"), Arguss Holdings Inc. ("Arguss"), Research Inc., Quad
Systems Corp. and Amistar Corp. SMS calculated a normalized average of these
multiples for these companies noting that the normalized average excluded (i)
Arguss because Conceptronic, a company deemed comparable to the Company in
certain respects and a recent Arguss acquisition, comprised only a small part of
Arguss' total business and market multiples were, therefore, not comparable; and
(ii) BTU multiples of market value to EBITDA, market value to EBIT and market
value to net income given that BTU's EBITDA, EBIT and net income results were
only marginally positive, thus distorting the averages. SMS reviewed these same
multiples for the Company's latest twelve month financial results and projected
financial results for the year ending December 31, 1997. The multiples were
derived using the Company's market value at September 2, 1997 as well as using
the value reflected in the Offer and the Merger.
SMS also performed a discounted cash flow analysis based on five-year
projections prepared by management. The discounted cash flow model utilized
eight assumptions as follows: (1) sales were projected to increase at a rate of
10% per annum; (2) gross margins were projected to remain constant at 39.5%; (3)
selling, general and administrative expenses and research and development costs
were projected to increase at a rate of 8% per annum; (4) depreciation was based
on historical results at $250,000 per annum; (5) the income tax rate was assumed
to remain constant at 1998 percentages throughout the projection period; (6)
capital expenditures were estimated at $200,000 per annum; (7) working capital
was assumed at 22% of sales; and (8) an average terminal value was calculated
based on multiples of sales, EBIT, EBITDA, net income and book value. SMS
utilized five different discount rates, of 18.0%, 20.0%, 22.0%, 24.0% and 26.0%,
which it indicated reflected certain alternative investments with similar risk
attributes as compared to the Company. The consideration reflected in the Offer
and the Merger was compared to the values derived from the discounted cash flow
model, which resulted in premiums ranging from 12% to 48%.
SMS received a fee for the preparation of its opinion in the amount of
$75,000. During the past two years, SML and its affiliates have performed
investment banking services for the Company, including acting as financial
advisor to the Company in connection with the Offer and the Merger, and have
received or will receive fees for such services in the amount of approximately
$440,000 in the aggregate.
12
THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
The summary is qualified in its entirety by reference to the Merger Agreement
which is attached hereto as Annex I and incorporated herein by reference. ALL
STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE MERGER AGREEMENT IN ITS
ENTIRETY.
THE MERGER. The Merger Agreement provides that, subject to the terms and
conditions of the Merger Agreement, at the election of Dover, (i) the Company
will be merged with and into DTI and the separate corporate existence of the
Company will thereupon cease, or (ii) DTI will be merged with and into the
Company and the separate corporate existence of DTI will cease. Dover has
advised the Company that, following the adoption of the Merger Agreement at the
Special Meeting, it intends to merge the Company with and into DTI. Accordingly,
at the Effective Time and pursuant to the Merger Agreement, DTI will be the
successor or Surviving Corporation in the Merger and will continue to be
governed by the laws of the State of Delaware, all the rights, privileges,
immunities, powers and franchises of the Company will vest in DTI, and, except
as otherwise provided for in the Merger Agreement, all obligations, duties,
debts and liabilities of the Company will then be the obligations, duties, debts
and liabilities of DTI. In addition, the charter of DTI immediately prior to the
Effective Time will be the charter of the Surviving Corporation (except that the
name of the Surviving Corporation will be "Vitronics Corporation") until
thereafter amended, and the bylaws of DTI in effect immediately prior to the
Effective time will be the bylaws of the Surviving Corporation until thereafter
amended.
The obligations of the parties to effect the Merger are subject to the
satisfaction on or prior to the Closing Date (as defined in the Merger
Agreement) of each of the following conditions, any and all of which may be
waived in whole or in part jointly by the Company and Dover to the extent
permitted by applicable law: (a) the Merger Agreement is approved and adopted by
the requisite vote of the holders of the shares of Common Stock, if required by
applicable law in order to consummate the Merger; (b) no statute, rule or
regulation has been enacted or promulgated by any governmental authority which
prohibits the consummation of the Merger; and there is no order or injunction of
a court of competent jurisdiction in effect precluding consummation of the
Merger; (c) Dover, DTI or their affiliates have purchased shares of Common Stock
pursuant to the Offer, except that this condition does not apply if Dover, DTI
or their affiliates have failed to purchase shares of Common Stock pursuant to
the Offer in breach of their obligations under the Merger Agreement; and (d) the
applicable waiting period under the HSR Act has expired or been terminated. In
addition, the obligations of Dover and DTI to consummate the Merger are further
subject to the fulfillment of the condition that the Company has complied with
its obligations regarding stock options, described below.
The Merger becomes effective on the date on which a Certificate of Merger is
duly filed with the Secretary of State of the state of incorporation of the
Surviving Corporation or at such time as is agreed upon by the parties and
specified in the Certificate of Merger. That time is referred to as the
"EFFECTIVE TIME." At the Effective Time, as a result of the Merger and without
any action on the part of the holders of any shares of Common Stock, each issued
and outstanding share of DTI's common stock will be converted into and become
one fully paid and non-assessable share of common stock of the Surviving
Corporation.
At the Effective Time, each issued and outstanding share of Company Common
Stock (other than shares held by DTI, Dover or any affiliate of Dover, or in the
treasury of the Company or that are held by stockholders who perfect their
appraisal rights under the MBCL) will be converted into the right to receive the
Merger Consideration, upon surrender of the certificate representing the shares.
The converted shares of Common Stock will no longer be outstanding and will
automatically be canceled and retired and will cease to exist, and each holder
of a certificate representing any such shares will cease to have any rights with
respect thereto, except the right to receive the Merger Consideration upon the
surrender of the certificate in accordance with the Merger Agreement, without
interest, or the right, if any, to receive
13
payment from the Surviving Corporation of the "fair value" of the shares as
determined in accordance with the MBCL.
Promptly after the Effective Time, the Surviving Corporation will mail to
each record holder a letter of transmittal with instructions for effecting the
surrender of the certificate(s) which, prior to the Effective Time, represented
shares of Common Stock. Upon surrender of the certificate(s) representing a
holder's shares, together with a properly executed letter of transmittal in
accordance with the instructions delivered to the record holder, such holder
will be entitled to receive the Merger Consideration in respect thereof.
THE OFFER. The Merger Agreement provided that DTI would (i) commence the
Offer and (ii) that subject to there being validly tendered and not withdrawn
prior to the expiration of the Offer the number of shares of Common Stock which
represents at least sixty-six and two-thirds percent (66 2/3%) of the shares
outstanding on a fully diluted basis (the "MINIMUM CONDITION") and the
satisfaction of the other conditions set forth in the Offer, would consummate
the Offer in accordance with its terms. The Offer expired on October 6, 1997,
12:00 midnight, New York City time, following which time DTI and Dover purchased
all shares tendered pursuant to the Offer, which amounted to 7,943,291 shares or
80.6% of the total shares of Common Stock outstanding.
The Merger Agreement also provided that without the written consent of the
Company, DTI could not decrease the Offer Price, decrease the number of shares
of Common Stock sought in the Offer, amend or waive the Minimum Condition or
amend any condition of the Offer in a manner adverse to the holders of shares of
Common Stock except that (x) DTI or Dover could waive the Minimum Condition
without the written consent of the Company, and (y) if on the initial scheduled
expiration date of the Offer, all conditions to the Offer had not been satisfied
or waived, DTI could, from time to time without the consent of the Company
extend the expiration date for one or more periods totaling not more than thirty
business days. If immediately prior to the initial expiration date of the Offer
(as it may have been extended), the shares of Common Stock tendered and not
withdrawn equaled more than seventy-five percent (75%) of the outstanding
shares, but less than 90% of the outstanding shares, DTI could have extended the
Offer for a period not to exceed twenty business days, notwithstanding that all
conditions to the Offer were satisfied as of the expiration date of the Offer.
DTI could also have extended the scheduled expiration date or any extension
thereof to comply with any legal or regulatory requirements. Notwithstanding the
fact that approximately 80.6% of the outstanding shares of Common Stock had been
tendered as of the initial expiration date of the Offer (October 6, 1997), DTI
and Dover opted to acquire all such shares validly tendered and not withdrawn as
of such date without extending the Offer .
CONDITIONS TO THE OFFER. The Merger Agreement provided that notwithstanding
any other provisions of the Offer, and in addition to (and not in limitation of)
DTI's rights to extend and amend the Offer at any time in its sole discretion
(subject to the provisions of the Merger Agreement), DTI was not required to
accept for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-l(c) under the Exchange Act (relating to DTI's
obligation to pay for or return tendered shares promptly after termination or
withdrawal of the Offer), pay for, and could delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
shares, and could terminate or amend the Offer as to any shares of Common Stock
not then paid for, if (i) any applicable waiting period under the
Hart-Scott-Rodino Anti Trust Improvements Act of 1976, as amended, and the
regulations thereunder (the "HSR ACT") had not expired or terminated, (ii) the
Minimum Condition had not been satisfied, or (iii) at any time on or after the
date of the Merger Agreement and prior to the expiration date, any of the
following events were determined by DTI, in its judgment reasonably exercised,
to have occurred:
(a) there shall be threatened or pending any suit, action or proceeding
by any court, arbitral tribunal, administrative agency or commission or
other governmental or regulatory authority or agency (a "GOVERNMENTAL
ENTITY") against DTI, Dover, the Company or any subsidiary of the Company
(i) seeking to prohibit or impose any material limitations on Dover's or
DTI's ownership or operation
14
(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 to
compel Dover or DTI or their respective subsidiaries and affiliates to
dispose of or hold separate any material portion of the business or assets
of the Company or Dover and their respective subsidiaries, in each case
taken as a whole, (ii) challenging the acquisition by Dover or DTI of any
shares of Common Stock under the Offer, 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, Dover or DTI 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 DTI, or render DTI unable,
to accept for payment, pay for or purchase some or all of the shares of
Common Stock pursuant to the Offer and the Merger, (iv) seeking to impose
material limitations on the ability of DTI or Dover effectively to exercise
full rights of ownership of the shares of Common Stock, 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 an effect materially adverse to the Company and
its subsidiaries, taken as a whole;
(b) any statute, rule, regulation, judgment, order or injunction
enacted, entered, enforced, promulgated, or deemed applicable, pursuant to
an authoritative interpretation by or on behalf of a Government Entity, to
the Offer or the Merger, or any other action is taken by any Governmental
Entity, other than the application to the Offer or the Merger of applicable
waiting periods under the HSR Act, 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;
(c) (i) any general suspension of trading in, or limitation on prices
for, securities on the New York Stock Exchange or the American Stock
Exchange for a period in excess of 24 hours (excluding suspensions or
limitations resulting solely from physical damage or interference with such
exchanges not related to market conditions); (ii) any decline in either the
Dow Jones Industrial Average or the Standard & Poor's Index of 400
Industrial Companies or in the New York Stock Exchange Composite Index in
excess of 15% measured from the close of business on the trading day next
preceding the date of the Merger Agreement, (iii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (iv) a commencement of a war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States, (v) any limitation (whether or not
mandatory) by any United States governmental authority on the extension of
credit generally by banks or other financial institutions, (vi) a change in
general financial, bank or capital market conditions which materially and
adversely affects the ability of financial institutions in the United States
to extend credit or syndicate loans or (vii) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(d) any events after the date of the Merger Agreement which, either
individually or in the aggregate, would have a material adverse effect on
the Company and its subsidiaries taken as a whole (a "Material Adverse
Effect");
(e) the Board of Directors of the Company withdraws or adversely
modifies its approval or recommendation of the Offer, the Merger or the
Merger Agreement;
(f) the representations and warranties of the Company are not true and
correct unless the inaccuracies under such representations and warranties,
taken together in their entirety, would not individually or in the
aggregate, result in a Material Adverse Effect;
(g) the Company fails to perform any obligation or to comply with any
agreement or covenant to be performed or complied with by it under the
Merger Agreement other than any failure which would not have, either
individually or in the aggregate, a Material Adverse Effect;
15
(h) any person acquires beneficial ownership of at least 25% of the
outstanding Common Stock of the Company;
(i) the Merger Agreement is terminated in accordance with its terms.
THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provided that
promptly upon the purchase of and payment for shares of Common Stock by DTI
which represented at least a majority of the outstanding shares, Dover would be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board as is equal to the product of the total number of directors
on the Board (giving effect to the directors designated by Dover) multiplied by
the percentage that the number of shares so accepted for payment bears to the
total number of shares then outstanding. On October 23, 1997, the Company
secured the resignation of three (3) of its four (4) directors and replaced such
directors with Dover designees as described in the Schedule 14 F-1 previously
filed with the Commission on October 7, 1997.
Following the election or appointment of DTI's designees and prior to the
earlier to occur of (i) the Effective Time or (ii) November 21, 1997, any
amendment or termination of the Merger Agreement, grant by the Company of any
extension for the performance or waiver of the obligations or other acts of DTI
or Dover, waiver of the Company's rights under the Merger Agreement, or action
with respect to the Company's employee benefit plans or option agreements, will
require the concurrence of a majority of the Company's directors then in office
who were directors on the date of the Merger Agreement or are directors (other
than directors designated by DTI) designated by such directors to fill any
vacancy (the "CURRENT DIRECTORS"). In addition, following the election or
appointment of DTI's designees and prior to the earlier to occur of (i) the
Effective Time or (ii) November 21, 1997, neither Dover, DTI nor any such
designee will cause the Company to take any action or fail to take any action
that would cause or result in any obligation of the Company or condition under
the Merger Agreement not being satisfied without the concurrence of a majority
of the Company's directors then in office who are Current Directors. In
addition, no Current Director will be removed except for cause, and DTI agrees
to cause its designees to vote for the election of any designee of the Current
Directors to fill a vacancy if any Current Director ceases to be a director.
STOCKHOLDERS' MEETING. The Merger Agreement also provided that if required
by applicable law in order to consummate the Merger, the Company, acting through
its Board of Directors, would convene a Special Meeting of its stockholders as
promptly as practicable following the acceptance for payment and purchase of
shares of Common Stock by DTI pursuant to the Offer for the purpose of taking
action on the approval of the Merger and the adoption of the Merger Agreement.
As required by the Merger Agreement, this Information Statement contains the
recommendation of the Board that stockholders of the Company vote in favor of
the approval of the Merger and the adoption of the Merger Agreement. Pursuant to
the Merger Agreement, Dover has agreed to vote, or cause to be voted, all of the
shares of Common Stock then owned by it, by DTI or by any of its other
subsidiaries and affiliates in favor of the approval of the Merger and the
approval and adoption of the Merger Agreement. Since Dover/DTI acquired over
two-thirds of the outstanding shares in the Offer, Dover/DTI has sufficient
voting power to approve the Merger, even if no other stockholder votes in favor
of the Merger. In the event that Dover, DTI and any other subsidiaries of Dover
acquire in the aggregate at least 90% of the outstanding shares of Common Stock
of the Company pursuant to the Offer or otherwise, the Company, Dover and DTI
agreed that at the request of Dover and subject to the conditions to the
consummation of the Merger, they will take all necessary and appropriate action
to cause the Merger to become effective as soon as practicable after the
acquisition without a meeting of stockholders of the Company, in accordance with
the MBCL.
Pursuant to the Merger Agreement and in connection with the Special Meeting,
the Company agreed to prepare, file with the SEC and mail to its stockholders a
proxy or information statement relating to the Merger and the Merger Agreement
and use its best efforts to obtain and furnish the information required to be
included by the Commission in such proxy or information statement. The Company
further agreed,
16
after consultation with Dover, to respond promptly to any comments made by the
Commission with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement to be mailed to its
stockholders, provided that no amendment or supplement to the such proxy or
information statement will be made by the Company without consultation with
Dover and its counsel.
STOCK OPTIONS. The Merger Agreement provides that at the Effective Time,
each holder of a then outstanding option (collectively, the "OPTIONS") to
purchase shares of Common Stock granted by the Company, whether or not then
exercisable, will receive for each share subject to such Option an amount
(subject to any applicable withholding tax) in cash equal to the difference
between the Merger Consideration and the per-share exercise price of such
Option. The Company agreed that prior to the Effective Time it would use
reasonable efforts to obtain all consents or releases from holders of Options to
this treatment of their Options that are required by the Company's option plans
or the option agreements themselves other than from holders of Options with a
per-share exercise price in excess of the Merger Consideration. The Company also
agreed to take all action necessary to ensure that (i) the Company's 1995 Key
Employees Stock Option Plan (the "STOCK OPTION PLAN") would be terminated as of
the Effective Time and the provisions in 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 of its subsidiaries would be canceled as of
the Effective Time, and (ii) following the Effective Time, (a) no participant in
any Stock Option Plan or other plans, programs or arrangements would have any
right thereunder to acquire equity securities of the Company, the surviving
corporation or any subsidiary thereof and all such plans would have been
terminated, and (b) the Company would not be bound by any convertible security,
option, warrant, right or agreement which would entitle any person to own any
capital stock of the Company, the surviving corporation or any of its
subsidiaries. The Company has complied with its requirements hereunder with
respect to Options.
INTERIM OPERATIONS; COVENANTS. Pursuant to the Merger Agreement, the
Company agreed that, except as expressly contemplated by the Merger Agreement or
as agreed to in writing by Dover, prior to the time the designees of Dover
constitute a majority of the Board (which occurred on October 21, 1997) (the
"APPOINTMENT DATE") _
(a) the business of the Company and its subsidiaries would be conducted
only in the ordinary and usual course (other than actions necessary to
consummate the transactions described in the Merger Agreement) and, to the
extent consistent therewith, each of the Company and its subsidiaries would
use its best efforts to preserve its business organization intact and
maintain its existing relations with customers, suppliers, employees,
creditors and business partners subject, however, to any changes to such
relationships necessitated or caused by the announcement of the transactions
proposed by the Merger Agreement;
(b) the Company would not, directly or indirectly, (i) except upon
exercise of Options or other rights to purchase shares of Common Stock,
issue, sell, transfer or pledge or agree to sell, transfer or pledge any
treasury stock of the Company or any capital stock of any of its
subsidiaries beneficially owned by it, (ii) amend its Articles of
Incorporation or Bylaws or similar organizational documents; or (iii) split,
combine or reclassify the outstanding shares of Common Stock or any
outstanding capital stock of any of the subsidiaries of the Company;
(c) neither the Company nor any of its subsidiaries would (i) declare,
set aside or pay any dividend or other distribution payable in cash, stock
or property with respect to its capital stock; (ii) issue, sell, pledge,
dispose of or encumber any additional shares of, or securities convertible
into or exchangeable for, or options, warrants, calls, commitments or rights
of any kind to acquire, any shares of capital stock of any class of the
Company or its subsidiaries, other than shares reserved for issuance on the
date of the Merger Agreement pursuant to the exercise of Options outstanding
on the date of the Merger Agreement ; (iii) transfer, lease, license, sell
or dispose of any assets, or incur any indebtedness or other liability other
than in the ordinary course of business, or mortgage, pledge or
17
encumber any assets or modify any indebtedness; or (iv) redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(d) neither the Company nor any of its subsidiaries would (i) grant any
increase in the compensation payable to its executive officers or (ii) adopt
any new, or amend or otherwise increase, or accelerate the payment or
vesting of the amounts payable or to become payable under any existing
bonus, incentive compensation, deferred compensation, severance, profit
sharing, stock option, stock purchase, insurance, pension, retirement or
other employee benefit plan, agreement or arrangement; or (iii) enter into
any employment or severance agreement with or, except in accordance with the
existing written policies of the Company, grant any severance or termination
pay to any officer, director or employee of the Company or any of its
subsidiaries;
(e) neither the Company nor any of its subsidiaries would permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated without notice to Dover;
(f) neither the Company nor any of its subsidiaries would enter into any
contract or transaction relating to the purchase of assets other than in the
ordinary course of business;
(g) neither the Company nor any of its subsidiaries would change any of
the accounting methods used by it unless required by generally accepted
accounting principles ("GAAP"), neither the Company nor any of its
subsidiaries would make any material Tax election, change any material Tax
election already made, adopt any material Tax accounting method, change any
material Tax accounting method unless required by GAAP, enter into any
closing agreement, settle any Tax claim or assessment or consent to any Tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment; and
(h) neither the Company nor any of its subsidiaries would enter into any
agreement with respect to the foregoing or take any action with the intent
of causing any of the conditions to the Offer not to be satisfied.
NO SOLICITATION. Pursuant to the Merger Agreement, the Company has agreed
that neither the Company nor any of its subsidiaries will (and the Company and
its subsidiaries will cause their respective officers, directors, employees,
representatives and agents, including, but not limited to, investment bankers,
attorneys and accountants, not to), directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Dover or any of its affiliates or representatives) concerning any
proposal or offer to acquire all or a substantial part of the business and
properties of the Company or any of its subsidiaries or any capital stock of the
Company or any of its subsidiaries, whether by merger, tender offer, exchange
offer, sale of assets or similar transactions involving the Company or any
subsidiary, division or operating or principal business unit of the Company (an
"ACQUISITION PROPOSAL"), except that the Merger Agreement does not prohibit the
Company or the Board from (i) taking and disclosing to the Company's
stockholders a position with respect to a tender or exchange offer by a third
party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or
(ii) making such disclosure to the Company's stockholders as, in the good faith
judgment of the Board, after receiving advice from outside counsel, is required
under applicable law; provided that, except as permitted under the Merger
Agreement, neither the Board nor any committee thereof will (x) approve or
recommend or propose to approve or recommend any Acquisition Proposal, (y) enter
into any agreement with respect to any Acquisition Proposal, or (z) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Dover or DTI,
the approval or recommendation by the Board or by any such committee of the
Offer, the Merger Agreement or the Merger. The Company has also agreed to cease
any existing activities, discussions or negotiations with any parties conducted
prior to the date of the Merger Agreement with respect to any of the foregoing.
18
The Merger Agreement provided that notwithstanding the foregoing, prior to
the acceptance of shares pursuant to the Offer constituting the Minimum
Condition, the Company could furnish information concerning its business,
properties or assets to any corporation, partnership, person or other entity or
group pursuant to appropriate confidentiality agreements, and could negotiate
and participate in discussions and negotiations with such entity or group
concerning an Acquisition Proposal if (x) such entity or group had on an
unsolicited basis submitted a bona fide written proposal to the Company relating
to any such transaction which the Board determined in good faith, after
receiving advice from Scott-Macon Securities, Inc. or a nationally recognized
investment banking firm, represented a superior transaction to the Offer and the
Merger and which the Board determined in good faith could be fully financed and
(y) in the opinion of the Board, only after receipt of advice from outside legal
counsel to the Company, the failure to provide such information or access or to
engage in such discussions or negotiations could reasonably be expected to cause
the Board to violate its fiduciary duties to the Company's stockholders under
applicable law (an Acquisition Proposal which satisfies clauses (x) and (y)
being referred to herein as a "SUPERIOR PROPOSAL"). The Company would within one
business day following receipt of a Superior Proposal notify Dover of the
receipt of the same and will promptly provide to Dover any material non-public
information regarding the Company that has been provided to any other party
which was not previously provided to Dover. At any time after two business days
following notification to Dover of the Company's intent to do so (which
notification would include the identity of the bidder and a complete summary of
the material terms and conditions of the proposal) and if the Company has
otherwise complied with the terms of the Merger Agreement, the Board could
withdraw or modify its approval or recommendation of the Offer.
In the event of a Superior Proposal which (i) was to be paid entirely in
cash and (ii) is not subject to any financing condition or contingency, the
Company could enter into an agreement with respect to the Superior Proposal no
sooner than four days after giving Dover written notice of its intention to
enter into such agreement; provided that DTI or Dover had not, prior to the
expiration of the four-day period, advised the Company of its intention to raise
the Merger Consideration to match the Superior Proposal. Upon expiration of the
four-day period without such action by DTI or Dover, the Company could enter
into an agreement with respect to the Superior Proposal (with the bidder and on
terms no less favorable than those specified in such notification), provided
that concurrently with entering into the agreement the Company paid or caused to
be paid to Dover an amount equal to the greater of $750,000, or an amount equal
to Dover's actual, reasonable and reasonably documented out-of-pocket fees and
expenses incurred by Dover and DTI in connection with the Offer, the Merger, the
Merger Agreement, the consummation of the transactions contemplated under the
Merger Agreement and the financing therefor, provided that in no event will the
Company be obligated to pay any such fees and expenses in excess of $1,000,000.
The Company did not receive any Superior Proposals prior to acceptance and
payment of the shares by Dover and DTI which were tendered in the Offer.
INDEMNIFICATION. The Merger Agreement provides that for six years after the
Effective Time, Dover and the surviving corporation (or any successor to the
surviving corporation) agree jointly to indemnify, defend and hold harmless the
present and former officers and directors of the Company and its subsidiaries,
and persons who become any of the foregoing prior to the Effective Time against
all losses, claims, damages, liabilities, costs, fees and expenses (including
reasonable fees and disbursements of counsel and judgments, fines, losses,
claims, liabilities and amounts paid in settlement (provided that any such
settlement is effected with the written consent of Dover or the surviving
corporation which consent may not unreasonably be withheld)) arising out of
actions or omissions occurring at or prior to the Effective Time to the full
extent permissible under applicable Massachusetts law, the terms of the
Company's Articles of Incorporation or the Bylaws, as in effect at the date of
the Merger Agreement, provided that, in the event any claim or claims are
asserted or made within the six-year period, all rights to indemnification in
respect of any such claims will continue until they are disposed of.
19
REPRESENTATIONS & WARRANTIES. The Company has made customary
representations and warranties to Dover and DTI pursuant to the Merger Agreement
with respect to, among other things, its organization, capitalization, financial
statements, public filings, conduct of business, employee benefit plans,
intellectual property, employment matters, compliance with laws, tax matters,
litigation, environmental matters, the vote required to approve the Merger
Agreement, undisclosed liabilities, information in the proxy or information
statement, and the absence of any material adverse effect on the Company since
December 31, 1996.
TERMINATION; FEES. The Merger Agreement may be terminated and the
transactions contemplated by the Merger Agreement may be abandoned at any time
prior to the Effective Time, whether before or after stockholder approval
thereof
(a) by the mutual written consent of Dover and the Company; or
(b) by either of the Company or Dover: (i) if (x) the Offer had expired
without any shares of Common Stock being purchased or (y) DTI has not
accepted for payment all shares tendered pursuant to the Offer by November
17, 1997; provided, however, that the right to terminate the Merger
Agreement would not have been available to any party whose failure to
fulfill any obligation under the Merger Agreement had been the cause of, or
resulted in, the failure of Dover or DTI, as the case may be, to purchase
the shares pursuant to the Offer on or prior to such date; or(ii) if any
Governmental Entity had issued an order, decree or ruling or takes any other
action (which order, decree, ruling or other action the parties are obliged
to use their reasonable efforts to lift), which permanently restrained,
enjoined or otherwise prohibited the acceptance for payment of, or payment
for, shares pursuant to the Offer or the Merger and the order, decree,
ruling or other action becomes final and non-appealable; or
(c) by the Company (i) if Dover, DTI or any of their affiliates had
failed to commence the Offer on or prior to five business days following the
date of the initial public announcement of the Offer; provided, that the
Company could not have terminated the Merger Agreement if the Company was at
the time in breach of its obligations under the Merger Agreement such as to
cause a material adverse effect on the Company; or (ii) if Dover or DTI have
breached in any material respect any of their respective representations,
warranties, covenants or other agreements contained in the Merger Agreement,
which breach cannot be or has not been cured, in all material respects,
within 30 days after the giving of written notice to Dover or DTI, as
applicable; or (iii) in connection with entering into a definitive agreement
in accordance with a Superior Proposal, provided it had complied with all
provisions of the Merger Agreement, including the notice provisions, and
that it made simultaneous payment of an amount equal to the greater of
$750,000 or an amount equal to Dover's actual, reasonable and reasonably
documented out-of-pocket fees and expenses incurred by Dover and DTI in
connection with the Offer, the Merger, the Merger Agreement, the
consummation of the transactions contemplated by the Merger Agreement and
the financing therefor, provided that in no event would the Company have
been obligated to pay any such fees and expenses in excess of $1,000,000; or
(d) by Dover (i) if, due to an occurrence, not involving a breach by
Dover or DTI of their obligations under the Merger Agreement, which made it
impossible to satisfy any of the conditions to the Offer set forth in
Section 14 of the Offer to Purchase, Dover, DTI, or any of their affiliates
failed to commence the Offer on or prior to five business days following the
date of the initial public announcement of the Offer; (ii) if prior to the
purchase of shares pursuant to the Offer, the Company had breached any
representation, warranty, covenant or other agreement contained in the
Merger Agreement which (A) would have given rise to the failure of a
condition set forth in paragraph (f) or (g) of Section 14 of the Offer to
Purchase and (B) could not have been cured, in all material respects, within
30 days after the giving of written notice to the Company; or (iii) upon the
occurrence of any event set forth in paragraph (e) of Section 14 of the
Offer to Purchase.
20
In accordance with the Merger Agreement, if (1) Dover had terminated the
Merger Agreement pursuant to clause (d)(iii) of the immediately preceding
paragraph (regarding withdrawal of approval of the Offer or the Merger Agreement
in connection with an Acquisition Proposal), (2) the Company had terminated the
Merger Agreement pursuant to clause (c)(iii) of the immediately preceding
paragraph, or (3) either the Company or Dover had terminated the Merger
Agreement pursuant to clause (b)(i) of the immediately preceding paragraph and
prior thereto there shall have been publicly announced another Acquisition
Proposal or an event set forth in paragraph (h) of Section 14 of the Offer to
Purchase has occurred, the Company would have paid to Dover an amount equal to
the greater of $750,000 or an amount equal to Dover's actual, reasonable and
reasonably documented out-of-pocket fees and expenses incurred by Dover and DTI
in connection with the Offer, the Merger, the Merger Agreement, the consummation
of the transactions contemplated by the Merger Agreement and the financing
therefor, provided that in no event would the Company have been obligated to pay
any such fees and expenses in excess of $1,000,000.
The Merger Agreement also provided that if the Company had terminated the
Merger Agreement pursuant to (1) clause (b), or (2) clause (c)(i) , or if the
Company terminates the Merger Agreement pursuant to clause (c)(ii) of the
immediately preceding paragraph, then Dover would pay to the Company an amount
equal to the Company's reasonable legal fees and expenses incurred, as of the
date of the termination, with respect to Merger Agreement and the transactions
contemplated in it.
STOCKHOLDERS' RIGHTS OF APPRAISAL
Stockholders of the Company who do not vote in favor of adoption of the
Merger Agreement have the right to seek payment in cash of the fair value of
their shares of Common Stock by complying with Sections 86 to 98, inclusive, of
Chapter 156B of the MBCL ("Sections 86-98").
The following discussion is not a complete statement of the law pertaining
to appraisal rights under the MBCL, and is qualified in its entirety by the full
text of Sections 86-98, which are provided in their entirety as Annex III to
this Information Statement. All references in Sections 86-98 and in this summary
to a "stockholder" are to the record holder of the shares of Common Stock as to
which appraisal rights are asserted.
If the Merger Agreement is approved by the stockholders at the Special
Meeting and the Merger is consummated, any stockholder (1) who files with the
Company, before the taking of the vote on the approval of such action, a written
objection to the proposed action stating that he intends to demand payment for
his shares if the action is taken and (2) whose shares are not voted in favor of
such action has or may have the right to demand in writing from the Company,
within twenty days after the date of mailing to him of notice in writing that
the corporate action has become effective, payment for his shares and an
appraisal of the value thereof. The Company and any such stockholder shall in
such cases have the rights and duties and shall follow the procedure set forth
in Sections 86-98.
Therefore, under the MBCL, a stockholder wishing to exercise his appraisal
rights (1) must not vote in favor of adoption of the Merger Agreement, (2) must
deliver to the Company prior to the vote on the Merger Agreement at the Special
Meeting a written objection to the proposed action stating that he intends to
demand payment for his shares of Common Stock if the action is taken, and (3)
within twenty (20) days after the date of mailing to him of notice in writing
that the Merger has become effective, must demand in writing from the Company,
payment for his shares of Common Stock. Within ten (10) days after the Effective
Time, the Company will notify each stockholder who has properly filed written
objection and who did not vote in favor of adoption of the Merger Agreement that
the Merger has become effective. The stockholder must be the record holder of
such shares of Common Stock on the date the written objection is made and must
continue to hold such shares of Common Stock of record until the Effective Time.
Accordingly, a stockholder who is the record holder of shares of Common Stock on
the date the written
21
demand for appraisal is made, but who thereafter transfers such shares of Common
Stock prior to the Effective Time, will lose any right to appraisal in respect
of such shares of Common Stock.
In accordance with the MBCL, if the Company and any stockholders who
properly perfect their appraisal rights fail to agree on the value of the
share(s) of Common Stock, either any such stockholder or the Company may file a
bill in equity to petition the Superior Court in the county where the Company
has its principal office in the Commonwealth Of Massachusetts to determine the
value of the share(s) of Common Stock. The Company has not made any
determination at this time as to whether it would file such a bill in equity.
Therefore, if the Company and any objecting stockholder fail to agree on the
value of the stock, the stockholder may be required to file a bill in equity in
accordance with Sections 86-98, inclusive, of the MBCL for the action to
proceed.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of the Merger Consideration for shares pursuant to the Offer or
the Merger will be a taxable transaction for U.S. federal income tax purposes
and also may be a taxable transaction under state, local or foreign tax laws. In
general, a stockholder who tenders shares in the Offer or receives cash in
exchange for shares in the Merger will recognize gain or loss for federal income
tax purposes equal to the difference, if any, between the amount of cash
received and the stockholder's tax basis in the shares sold. Gain or loss will
be determined separately for each block of shares (i.e., shares acquired at the
same time and price) exchanged pursuant to the Offer or the Merger. Such gain or
loss generally will be capital gain or loss if the shares disposed of were held
as capital assets by the stockholder, and will be long-term capital gain or loss
if the shares disposed of were held for more than one year at the date of sale.
A stockholder who perfects such stockholder's dissenter's rights, if any,
under Sections 86-98 of the MBCL probably will recognize gain or loss at the
Effective Time in an amount equal to the difference between the "amount
realized" and such stockholder's adjusted tax basis of such shares. For this
purpose, although there is no authority to this effect directly on point, the
amount realized generally should equal the trading value per share of the shares
at the Effective Time. Ordinary interest income and/or capital gain (or capital
loss, assuming that the shares were held as capital assets) should be recognized
by such stockholder at the time of actual receipt of payment, to the extent that
such payment exceeds (or is less than) the amount realized at the Effective
Time.
The foregoing summary constitutes a general description of certain U.S.
federal income tax consequences of the Offer and the Merger without regard to
the particular facts and circumstances of each stockholder of the Company and is
based on the provisions of the Internal Revenue Code of 1986, as amended,
Treasury Department Regulations issued pursuant thereto and published rulings
and court decisions in effect as of the date hereof, all of which are subject to
change, possibly with retroactive effect. Special tax consequences not described
herein may be applicable to certain stockholders subject to special tax
treatment (including, but not limited to, insurance companies, tax-exempt
organizations, financial institutions or broker dealers, foreign stockholders
and stockholders who have acquired their shares pursuant to the exercise of
employee stock options or otherwise as compensation). ALL STOCKHOLDERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO SPECIFIC TAX EFFECTS APPLICABLE TO
THEM IN CONNECTION WITH THE MERGER AND RECEIPT OF THE MERGER CONSIDERATION,
INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY
STATE, LOCAL AND FOREIGN TAX LAWS.
MARKET PRICE OF THE COMMON STOCK AND DIVIDEND POLICY
The Common Stock is traded on the AMEX under the symbol VTC. On September 2,
1997, the last full trading day prior to the public announcement of DTI's
intention to commence the Offer, the last reported sales price of the Common
Stock on the AMEX was $1.375 per share. The Company has never declared or paid
any cash dividends on its capital stock.
22
REGULATORY FILINGS AND APPROVAL
The Company is not aware of any governmental or regulatory requirements for
consummation of the Merger other than compliance with the HSR Act and applicable
state corporate laws and federal and state securities laws. The waiting period
under the HSR Act expired on September 26, 1997.
ACCOUNTING TREATMENT
It is expected that the Merger will be accounted for as a "purchase"
transaction in accordance with GAAP.
CHANGE OF CONTROL
There has been a change in control of the Company since the beginning of its
last fiscal year. DTI has acquired control of the Company through a cash tender
offer by acquiring 80.6% or 7,943,291 of the outstanding shares of the Company
at $1.90 per share, net to the seller in cash. Funds were used from internal
cash flow to purchase the shares for a total consideration of $15,092,252.90.
Beneficial ownership of more than five (5%) as of the date hereof is as follows:
(1) TITLE OF (2) NAME AND ADDRESS OF (3) AMOUNT AND NATURE (4) PERCENT OF
CLASS BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
- --------------- ------------------------------------------------ -------------------------- -------------------
Common DTI Intermediate, Inc.
One Marine Midland Plaza
East Tower, Sixth Floor 7,943,291
Binghamton, NY 13901 direct 80.6%
Common Dover Technologies International, Inc.
One Marine Midland Plaza 7,943,291
East Tower, Sixth Floor indirect as direct owner
Binghamton, NY 13901 of DTI 80.6%
Common Dover Corporation 7,943,291
280 Park Avenue indirect as ultimate
New York, NY 10017 parent of DTI 80.6%
DTI was organized solely for the purpose of acquiring the Company and has
conducted no activities unrelated to such purpose since its organization. DTI is
a wholly owned direct subsidiary of Dover. Dover is a high technology
corporation with subsidiaries in the fields of electronic components, automated
assembly equipment for printed circuit boards, spring probes and test equipment
and fixtures for printed circuit boards, among other things. Dover has a
subsidiary, Soltec International, B.V. which manufactures automated soldering
equipment for printed circuit boards which will be complemented by the
acquisition of the Company.
23
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of September 30, 1997
The following table sets forth certain information as of September 30, 1997
with respect to the beneficial ownership of the Company's Common Stock by each
director; certain executive officers; all directors and executive officers as a
group; and, at September 30, 1997 as to each person believed to be a beneficial
owner of 5% or more of the Common Stock. All information with respect to
ownership has been furnished by the respective directors, officers and 5%
owners.
The numbers and percentages assume for each person or group listed, the
exercise of all stock options, warrants or conversion privileges held by such
person or group that are exercisable within 60 days of September 30, 1997 in
accordance with Rule 13d-3(d)(1) of the Securities Exchange Act of 1934, but not
the exercise thereof by any other person listed.
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME OWNED CLASS
- ------------------------------------------------------------------------------ ----------------- -------------------
James J. Manfield, Jr. (1).................................................... 540,244(2) 5.4%
David R. A. Steadman.......................................................... 102,500(3) *
Allen H. Keough............................................................... 30,000(4) *
James R. Kanely............................................................... 4,000(5) *
Albert J. Chanasyk............................................................ 43,000(5) *
All directors and executive officers as a group (7 persons)................... 724,744(6) 7.2%
- ------------------------
* Denotes less than 1% of class.
(1) Mr. Manfield's address is the address of the Company set forth on the first
page of this Information Statement.
(2) Of these shares, 207,518 are owned by members of Mr. Manfield's family and
100,000 are purchasable within 60 days of September 30, 1997 under
outstanding stock options.
(3) Of these shares, 51,500 are purchasable within 60 days of September 30, 1997
under outstanding stock options.
(4) Of these shares, 18,000 are purchasable within 60 days of September 30, 1997
under outstanding stock options.
(5) These shares are purchasable within 60 days of September 30, 1997 under
outstanding stock options.
(6) Of these shares, 216,500 are purchasable within 60 days of September 30,
1997 under outstanding stock options.
As of November 3, 1997
On October 21, 1997, as contemplated by the Merger Agreement and the
Company's Information Statement pursuant to Section 14(F) of the Exchange Act
which was filed with the Commission on October 7, 1997, the Company's directors
(with the exception of Mr. Manfield) tendered their resignations, and Dover's
three designees (Messrs. Livingston, Pomeroy and van Schaik) were appointed as
directors of the Company. On October 23, 1997, the new Board appointed a new
slate of officers of the Company consisting of: Michiel J. van Schaik
(President); Robert A. Livingston (Vice President, Assistant Treasurer,
Assistant Clerk); James Andrus (Vice President, Sales and Marketing); Cees Kops
(Vice President--Finance and Administration, Treasurer), Pedro van den Eijnde
(Vice President--Operations), Barbara van der Ploeg (Vice
President--Development) and Daniel J. Sullivan (Clerk, Controller).
The following table sets forth certain information as of November 3, 1997
with respect to the beneficial ownership of the Company's Common Stock by each
director; certain executive officers, all
24
directors and officers as a group; and each person believed to be a beneficial
owner of 5% or more of the Common Stock. The information with respect to the
security ownership of the directors appointed by Dover on October 21, 1997 and
of the new officers appointed by Dover on October 23, 1997 was provided by
representatives of Dover.
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME OWNED CLASS
- ------------------------------------------------------------------------------ ----------------- -----------------
James J. Manfield, Jr.(1)..................................................... 125,000(2) 1.25%
Michiel J. van Schaik(1)...................................................... -- --
John E. Pomeroy(3)............................................................ -- --
Robert A. Livingston(3)....................................................... -- --
Albert J. Chanasyk(4)......................................................... 83,000(5) *
Thomas F. Nash(6)............................................................. 25,000(7) *
All directors and executive offices as a group (11 persons)................... 258,000 2.6%
DTI Intermediate, Inc.(8)..................................................... 7,943,291 80.6%
- ------------------------
* Denotes less than 1% of class.
(1) The address of this person is the address of the Company, One Forbes Road,
Newmarket, New Hampshire 03857.
(2) These shares are purchasable within 60 days of November 3, 1997 under
outstanding stock options.
(3) The address of this person is the address of Dover, One Marine Midland
Plaza, East Tower, Sixth Floor, Binghamton, New York 13901.
(4) The address of this person is 15 Evergreen Road, Hampton Falls, New
Hampshire 03844.
(5) These shares are purchasable within 60 days of November 3, 1997 under
outstanding stock options.
(6) The address of this person is 41 Winterset Land, Simsbury, Connecticut
06070.
(7) These shares are purchasable within 60 days of November 3, 1997 under
outstanding stock options.
(8) The address of DTI Intermediate, Inc. is the same address as Dover set forth
in footnote (3) above. See "CHANGE OF CONTROL."
INTEREST OF CERTAIN PERSONS IN THE MERGER
JAMES J. MANFIELD, JR. In March 1995, the Company renewed its March 2, 1992
employment agreement with James J. Manfield, Jr. for a one-year period. The
agreement is automatically renewed for additional one-year periods unless
terminated by the Company on notice given 90 days prior to the end of a
twelve-month period, in which event the Company will continue to pay him his
then current salary for a period of 12 months. If termination of his employment
is by the Company without cause or for disability, payment of salary is to
continue for a period of (i) 12 months if the termination occurs before a
"Change in Control" or an "Approved Change in Control" or after an Approved
Change in Control; (ii) 24 months if the termination occurs after a Change in
Control; (iii) 24 months if Mr. Manfield resigns his employment after a Change
in Control because his duties, responsibilities or conditions of employment are
materially reduced or because of a breach of his employment agreement by the
Company; or (iv) six months if after an Approved Change in Control, his duties,
responsibilities or conditions of employment are materially reduced, and if he
has not obtained employment within the first six months, up to an additional six
months or until he finds employment, whichever occurs first. The agreement
provides for payment by the Company of a minimum annual base salary of $140,000.
25
A Change in Control is defined as a circumstance in which control (as
defined in the securities laws) of the Company has changed or the acquisition by
a person or entity of 50% or more of the voting power of the Company; or if the
persons who constitute a majority of the Board of Directors at the time the
agreement was executed no longer represent such majority other than by reason of
nominations made by such majority. An Approved Change in Control means a Change
in Control that is approved by such majority. The Change in Control that will
result from the consummation of the Offer and the Merger would constitute an
Approved Change in Control of the Company.
Mr. Manfield currently holds five-year non-qualified stock options granted
to him in each of December 1992, 1993 and 1994 to purchase in the aggregate
125,000 shares of Common Stock at prices ranging from $0.56 to $1.31 per share.
The option shares become subject to purchase in installments of 20% of the
shares on the grant date and on each of the subsequent four anniversaries of the
grant date.
On September 3, 1997, Mr. Manfield and Dover entered into an employment
arrangement to come into effect only upon the Effective Time of the Merger. It
provides for the employment of Mr. Manfield at his current annual salary of
$157,000 for a period of two years to assist the President of Soltec
International, N.V , a subsidiary of Dover, which is in the same business as the
Company ("Soltec"), in the transition and consolidation of the two businesses.
Under the arrangement, Mr. Manfield is eligible for an increase in salary in
early 1998 commensurate with salary increases given to other senior executives
of the consolidated entities if he is then still engaged in the consolidation
process. The arrangement also provides for the payment to Mr. Manfield of a
bonus for the nine months ended September 30, 1997 pursuant to the Company's
current bonus plan and a bonus in January 1999 of $50,000 provided that he has
not actively hindered the transition and consolidation process. If the
transition and consolidation process is completed prior to the expiration of the
two-year period of the arrangement, Mr. Manfield will be free to pursue other
interests, but for the balance of the two-year period will continue to receive
his salary and, unless and until he commences full-time employment, his current
health, retirement, disability, life insurance, vacation, automobile and other
benefits in accordance with the policies and practices established by the
Company/Soltec.
On October 23, 1997, the new Board of Directors of the Company, composed of
three Dover designees and Mr. Manfield, relieved Mr. Manfield of his duties
under the employment arrangement with Dover to provide services during the
transition period after the Effective Time, although Mr. Manfield will continue
to receive the salary contemplated thereby for the applicable two year period.
ALBERT J. CHANASYK. Mr. Chanasyk, formerly Vice President of Research and
Development, currently holds six-year stock options to purchase Common Stock
granted to him in December 1995 and December 1996 to purchase 30,000 shares at
$2.37 per share and 10,000 shares at $1.00, respectively.
DANIEL J. SULLIVAN. Mr. Sullivan, Controller and Clerk of the Company,
entered into an employment agreement with the Company dated as of January 1,
1995. The agreement provides for an initial term of one year and automatic
annual renewals thereafter unless the Company gives Mr. Sullivan at least notice
of non-renewal at least ninety days prior to the expiration of the initial term
or any annual renewal term. In the event of a non-renewal, the Company is
obligated to pay him his then current salary for three months after the end of
the term or a renewal term, as the case may be. The agreement provides for the
payment of a minimum salary of $67,500. In the event that the Company terminates
his employment without cause, it is obligated to continue to pay him his then
current salary for three months unless termination occurs after a Change in
Control (which is not an Approved change in Control), in which event the Company
is obligated to continue to pay him his salary for an additional six months. Mr.
Sullivan may resign his employment if his duties, responsibilities or conditions
of employment are materially reduced or because of a breach of his employment
agreement by the Company. If he does so, the Company is obligated to continue to
pay him his then current salary for a period of twelve months if the resignation
occurs after a Change in Control or for three months and up to an additional
three months or until he finds employment (whichever occurs first) if such
resignation occurs after an Approved Change in Control. See the
26
description of Mr. Manfield's employment agreement, above, for the meaning of
"Change in Control" and "Approved Change in Control."
Mr. Sullivan also participates in the Company's health and other benefit
plans and at the discretion of the Chief Executive Officer and the Board of
Directors in a bonus plan.
Mr. Sullivan currently holds a six-year incentive stock option granted to
him in August 1997 to purchase 25,000 shares of Common Stock at a price of $1.09
per share. The option shares become subject to purchase in installments of 20%
of the shares on each of the first five anniversaries of the grant date. The
option replaced several options that had expired at the time Mr. Sullivan
rejoined the Company after a short hiatus.
THOMAS F. NASH. The Company entered into an employment agreement with Mr.
Nash as of October 15, 1996 providing for employment through November 4, 1998
pursuant to which he was to serve as Vice President-Sales and Marketing at a
salary of $110,000 per year. Mr. Nash's employment with the Company was
terminated in October 1997.
Mr. Nash currently holds a six-year incentive stock option granted to him in
November 1996 to purchase 25,000 shares of Common Stock at a price of $1.09 per
share. The option shares become subject to purchase in installments of 20% of
the shares on each of the first five anniversaries of the grant date.
NON-EMPLOYEE DIRECTORS. The three non-employee directors of the Company who
resigned on October 23, 1997 hold non-qualified stock options to purchase shares
of Common Stock granted during the period from December 1992 through December
1994, as follows: James R. Kanely, 20,000 at $2.34 per share; Allen H. Keough,
30,000 shares at $1.31 per share; and David R. A. Steadman, 65,000 shares in the
aggregate at prices ranging from $0.56 to $1.31 per share. The options have a
duration of five to six years and vest over the first five years of the option
in equal installments.
PAYMENT OF THE OPTION SPREAD. Pursuant to the Company's option agreements,
all unvested options vested upon the change in control of the Company that
occurred when Dover purchased the shares tendered in the Offer on or about
October 13, 1997. Pursuant to the Merger Agreement, upon the consummation of the
Merger, all officers, directors and employees, including those mentioned above,
will receive a cash payment equal to the difference, if any, between the Merger
Consideration and his or her option exercise price per share multiplied by the
number of shares then subject to the option.
BONUS PLAN. Dover has agreed to honor the Company's 1997 discretionary
bonus plan in accordance with the Company's past practice in which a bonus pool
of 15% of pre-tax profits is allocated 75% for the grant of bonuses to senior
management and 25% for the grant of bonuses to other employees (other than
members of the sales organization). The bonus pool will be computed for the
period from the beginning of the current year through September 30, 1997. Dover
has also agreed to honor the Company's existing severance policies with respect
to any employee whose employment is terminated as a result of the Merger.
CERTAIN INFORMATION CONCERNING DTI AND DOVER
DTI. DTI, a Delaware corporation and a direct wholly owned subsidiary of
Dover, recently was organized for the purpose of effecting the Merger and has
not carried on any activities except in connection with the Offer and the
Merger. The principal executive offices of DTI are located at One Marine Midland
Plaza, East Tower, Sixth Floor, Binghamton, New York 13901. All the outstanding
capital stock of DTI is owned by Dover.
DOVER. Dover, a Delaware corporation, is a wholly owned indirect subsidiary
of Dover Corporation, a publicly traded company listed on the New York Stock
Exchange under the symbol "DOV." Dover is a high technology corporation with
subsidiaries in the fields of electronic components, automated assembly
equipment for printed circuit boards, spring probes and test equipment and
fixtures for printed circuit
27
boards, among other things. The principal executive offices of Dover are located
at One Marine Midland Plaza, East Tower, Sixth Floor, Binghamton, New York
13901.
INDEPENDENT PUBLIC ACCOUNTANTS
A representative of Coopers & Lybrand L.L.P. is not expected to be present
at the Special Meeting.
INCORPORATION BY REFERENCE
The following documents previously filed with the Commission by the Company
and Dover pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are incorporated by reference into this Information Statement:
(1) the Solicitation/Recommendation Statement on Schedule 14D-9 filed by the
Company on September 9, 1997, as amended on October 6, 1997; (2) the Tender
Offer Statement on Schedule 14D-1 filed by Dover, DTI and Dover Corporation on
September 9, 1997, as amended on October 6, 1997; (3) the Annual Report on Form
10-K of the Company for the fiscal year ended December 31, 1997; and (4) the
Quarterly Reports on Form 10-Q of the Company for the fiscal quarters ended
March 31, 1997 and June 30, 1997
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Information Statement and prior
to the date of the Special Meeting shall be deemed to be incorporated by
reference into this Information Statement and to be a part hereof from the dates
of filing such documents or reports. Any statement contained herein or in a
document incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Information Statement to the extent that a
statement contained herein or in any other subsequently filed document which is
also incorporated or deemed to be incorporated herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Information Statement.
THIS INFORMATION STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN CERTAIN
EXHIBIT TO DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE) ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM A COPY OF THIS
INFORMATION STATEMENT HAS BEEN DELIVERED UPON WRITTEN OR ORAL REQUEST, IN THE
CASE OF COMPANY DOCUMENTS, TO VITRONICS CORPORATION, 1 FORBES ROAD, NEWMARKET,
NEW HAMPSHIRE 03857, ATTENTION: DANIEL J. SULLIVAN, CLERK, TELEPHONE NUMBER
(603) 659-6550, AND, IN THE CASE OF DOVER, TO DOVER TECHNOLOGIES INTERNATIONAL,
INC., ONE MARINE MIDLAND PLAZA, EAST TOWER, SIXTH FLOOR, BINGHAMTON, NEW YORK
13901, ATTENTION: ROBERT A. LIVINGSTON, VICE PRESIDENT, CHIEF FINANCIAL OFFICER,
SECRETARY AND TREASURER, TELEPHONE NUMBER (607) 773-2290.
28
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
No other matters are intended to be brought before the Special Meeting by
the Company nor does the Company know of any matters that are expected to be
brought properly before the Special Meeting by others.
By Order of the Board of Directors,
Daniel J. Sullivan
CLERK
Newmarket, New Hampshire
November 10, 1997
29
ANNEX I--AGREEMENT AND PLAN OF MERGER
ANNEX II--OPINION OF SCOTT-MACON
ANNEX III--APPRAISAL RIGHTS UNDER MASSACHUSETTS LAW
30
ANNEX I
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DOVER TECHNOLOGIES INTERNATIONAL, INC.,
DTI INTERMEDIATE, INC.
AND
VITRONICS CORPORATION
DATED AS OF
SEPTEMBER 3, 1997
TABLE OF CONTENTS
PAGE
-----
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.................................................................................. 1
Section 1.2 Company Actions............................................................................ 5
Section 1.3 Directors.................................................................................. 7
Section 1.4 The Merger................................................................................. 9
Section 1.5 Effective Time............................................................................. 10
Section 1.6 Closing.................................................................................... 11
Section 1.7 Directors and Officers of the Surviving Corporation........................................ 11
Section 1.8 Shareholders' Meeting...................................................................... 11
Section 1.9 Merger Without Meeting of Shareholders..................................................... 13
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock................................................................ 13
Section 2.2 Exchange of Certificates................................................................... 14
Section 2.3 Dissenters' Rights......................................................................... 16
Section 2.4 Options.................................................................................... 17
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Section 3.1 Organization............................................................................... 18
Section 3.2 Capitalization............................................................................. 19
Section 3.3 Authorization; Validity of Agreement; Company Action....................................... 21
Section 3.4 Consents and Approvals; No Violations...................................................... 21
Section 3.5 SEC Reports and Financial Statements....................................................... 22
Section 3.6 Absence of Certain Changes................................................................. 23
Section 3.7 No Undisclosed Liabilities................................................................. 24
Section 3.8 Litigation................................................................................. 24
Section 3.9 Employee Benefit Plans..................................................................... 24
Section 3.10 Tax Matters; Government Benefits........................................................... 27
Section 3.11 Intellectual Property...................................................................... 31
Section 3.12 Employment Matters......................................................................... 32
Section 3.13 Compliance with Laws....................................................................... 32
Section 3.14 Vote Required.............................................................................. 33
Section 3.15 Environmental Laws......................................................................... 33
Section 3.16 Information in Proxy Statement............................................................. 35
Section 3.17 Opinion of Financial Advisor............................................................... 36
Section 3.18 Brokers or Finders......................................................................... 36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Section 4.1 Organization............................................................................... 37
Section 4.2 Authorization; Validity of Agreement; Necessary Action..................................... 37
Section 4.3 Consents and Approvals; No Violations...................................................... 38
Section 4.4 Information in Proxy Statement............................................................. 38
i
PAGE
-----
Section 4.5 Financing.................................................................................. 39
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company.......................................................... 39
Section 5.2 Access; Confidentiality.................................................................... 41
Section 5.3 Consents and Approvals..................................................................... 42
Section 5.4 No Solicitation............................................................................ 43
Section 5.5 Additional Agreements...................................................................... 46
Section 5.6 Publicity.................................................................................. 46
Section 5.7 Notification of Certain Matters............................................................ 47
Section 5.8 Directors' and Officers' Indemnification................................................... 47
Section 5.9 Purchaser Compliance....................................................................... 48
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger................................. 48
Section 6.2 Condition to Parent's and the Purchaser's Obligations to Effect the Merger................. 49
ARTICLE VII
TERMINATION
Section 7.1 Termination................................................................................ 49
Section 7.2 Effect of Termination...................................................................... 51
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses.......................................................................... 52
Section 8.2 Amendment and Modification................................................................. 53
Section 8.3 Non-survival of Representations and Warranties............................................. 54
Section 8.4 Notices.................................................................................... 54
Section 8.5 Interpretation............................................................................. 55
Section 8.6 Counterparts............................................................................... 55
Section 8.7 Entire Agreement; No Third Party Beneficiaries............................................. 56
Section 8.8 Severability............................................................................... 56
Section 8.9 Governing Law.............................................................................. 56
Section 8.10 Assignment................................................................................. 56
ANNEX A Conditions of the Offer.................................................................... A-1
ii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this "Agreement"),
dated as of September 3, 1997, by and among Dover Technologies International,
Inc., a Delaware corporation ("Parent"), DTI Intermediate, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent (the "Purchaser"), and
Vitronics Corporation, a Massachusetts corporation (the "Company").
WHEREAS, the Board of Directors of each of Parent, the Purchaser and the
Company has approved, and deems it advisable and in the best interests of its
respective shareholders to consummate, the acquisition of the Company by Parent
upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
SECTION 1.1 THE OFFER.
(a) As promptly as practicable (but in no event later than five business
days after the public announcement of the execution hereof), the Purchaser shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) a tender offer (the "Offer") for all of
the outstanding shares (the "Shares") of common stock, $.01 par value per share
(the "Common Stock"), of the Company at a price of $1.90 per Share, net to the
seller in cash (such price, or any such higher price per Share as may be paid in
the Offer, being referred to herein as the "Offer Price"), subject to (i) there
being validly tendered and not withdrawn prior to the expiration of the Offer,
that number of Shares which represents at least sixty-six and two-thirds percent
(66 2/3%) of the Shares outstanding on a fully diluted basis (the "Minimum
Condition") and (ii) the other conditions set forth in Annex A hereto, and shall
consummate the Offer in accordance with its terms. As used herein, "fully
diluted basis" takes into account issued and outstanding Shares and Shares
subject to issuance under outstanding stock options and warrants. The
obligations of the Purchaser to accept for payment and to pay for any Shares
validly tendered on or prior to the expiration of the Offer and not withdrawn
shall be subject only to the Minimum Condition and the other conditions set
forth in Annex A hereto. The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") containing the terms set forth in this
Agreement, the Minimum Condition and the other conditions set forth in Annex A
hereto. The Purchaser shall not decrease the Offer Price or decrease the number
of Shares sought, or amend any other condition of the Offer in any manner
adverse to the holders of the Shares without the written consent of the Company;
provided, however, that if on the initial scheduled expiration date of the
Offer, which shall be twenty business days after the date the Offer is
commenced, all conditions to the Offer shall not have been satisfied or waived,
the Purchaser may, from time to time, in its sole discretion, extend the
expiration date for one or more periods totaling not more than thirty business
days. Notwithstanding the foregoing, the Purchaser may extend the initial
expiration date or any extension thereof, as the Purchaser reasonably deems
necessary to comply with any legal or regulatory requirements, including but not
limited to, the termination or expiration of any applicable waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"). The Purchaser shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Shares tendered as soon as it is legally permitted to do so under
applicable law; provided, however, that if, immediately prior to the initial
expiration date of the Offer (as it may be extended), the Shares tendered and
not withdrawn pursuant to the Offer equal more than seventy-five percent (75%)
of the outstanding Shares, but less than 90% of the outstanding Shares, the
Purchaser may extend the Offer for a period not to exceed twenty business days,
notwithstanding that all conditions to the Offer are satisfied as of such
expiration date of the Offer. Notwithstanding the foregoing, the Offer may not
be extended beyond the date of termination of this Agreement pursuant to Article
VII hereof.
A-I-1
(b) As soon as practicable on the date the Offer is commenced, Parent and
the Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will include, as
exhibits, the Offer to Purchase and a form of letter of transmittal and summary
advertisement (collectively, together with any amendments and supplements
thereto, the "Offer Documents"). Parent represents and warrants to the Company
that the Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by Parent or
the Purchaser with respect to information furnished by the Company to Parent or
the Purchaser, in writing, expressly for inclusion in the Offer Documents. The
Company represents and warrants to Parent and the Purchaser that the information
supplied by the Company to Parent or the Purchaser, in writing, expressly for
inclusion in the Offer Documents and Parent represents and warrants to the
Company that the information supplied by Parent or the Purchaser to the Company,
in writing, expressly for inclusion in the Schedule 14D-9 (as hereinafter
defined) will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(c) Each of Parent and the Purchaser will take all steps necessary to cause
the Offer Documents to be filed with the SEC and to be disseminated to holders
of the Shares, in each case as and to the extent required by applicable federal
securities laws. Each of Parent and the Purchaser, on the one hand, and the
Company, on the other hand, will promptly correct any information provided by it
for use in the Offer Documents if and to the extent that it shall have become
false or misleading in any material respect and Parent will take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to holders of the Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given the opportunity to review the Schedule 14D-1 before it is
filed with the SEC. In addition, Parent and the Purchaser will provide the
Company and its counsel, in writing, with any comments, whether written or oral,
Parent, the Purchaser or their counsel may receive from time to time from the
SEC or its staff with respect to the Offer Documents promptly after the receipt
of such comments.
SECTION 1.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer and represents
and warrants that its Board of Directors, at a meeting duly called and held, has
(i) unanimously determined that each of this Agreement, the Offer and the Merger
(as defined in Section 1.4 hereof) are fair to and in the best interests of the
shareholders of the Company, (ii) approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (collectively, the
"Transactions"), and such approval constitutes approval of the Offer, this
Agreement and the Transactions, including the Merger, for purposes of Chapter
110F of the Massachusetts General Laws (the "MBCA"), such that, if applicable to
the Company the provisions of the MBCA will not apply to the Transactions, and
(iii) resolved to recommend that the shareholders of the Company accept the
Offer, tender their Shares thereunder to the Purchaser and approve and adopt
this Agreement and the Merger; provided, that such recommendation may be
withdrawn, modified or amended if, in the opinion of the Board of Directors,
only after receipt of advice from outside legal counsel, failure to withdraw,
modify or amend such recommendation would result in the Board of Directors
violating its fiduciary duties to the Company's shareholders under applicable
law. The Company represents and warrants that the actions set forth in this
Section 1.2(a) and all other actions it has taken in connection herewith are
sufficient to render the relevant provisions of the MBCA and Chapter 110D of the
Massachusetts General Laws inapplicable to the Offer and the Merger.
A-I-2
(b) As soon as practicable on the date the Offer is commenced, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall, subject to the provisions
of Section 5.4(b) hereof, contain the recommendation referred to in clause (iii)
of Section 1.2(a) hereof. The Company represents and warrants to Parent and the
Purchaser that the Schedule 14D-9 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by the Company
with respect to information furnished by Parent or the Purchaser, in writing,
expressly for inclusion in the Schedule 14D-9. The Company further agrees to
take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC
and to be disseminated to holders of the Shares, in each case as and to the
extent required by applicable federal securities laws. Each of the Company, on
the one hand, and Parent and the Purchaser, on the other hand, agrees promptly
to correct any information provided by it for use in the Schedule 14D-9 if and
to the extent that it shall have become false and misleading in any material
respect and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of the Shares, in each case as and to the extent required by
applicable federal securities laws. Parent and its counsel shall be given the
opportunity to review the Schedule 14D-9 before it is filed with the SEC. In
addition, the Company agrees to provide Parent, the Purchaser and their counsel,
in writing, with any comments, whether written or oral, that the Company or its
counsel may receive from time to time from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments or other
communications.
(c) In connection with the Offer, the Company will promptly furnish or cause
to be furnished to the Purchaser mailing labels, security position listings and
any available listing, or computer file containing the names and addresses of
all record holders of the Shares as of a recent date, and shall furnish the
Purchaser with such additional information (including, but not limited to,
updated lists of holders of the Shares and their addresses, mailing labels and
lists of security positions) and assistance as the Purchaser or its agents may
reasonably request in communicating the Offer to the record and beneficial
holders of the Shares. Except for such steps as are necessary to disseminate the
Offer Documents, Parent and the Purchaser shall hold in confidence the
information contained in any of such labels and lists and the additional
information referred to in the preceding sentence, will use such information
only in connection with the Offer, and, if this Agreement is terminated, will
upon request of the Company deliver or cause to be delivered to the Company all
copies of such information then in its possession or the possession of its
agents or representatives.
SECTION 1.3 DIRECTORS.
(a) Promptly upon the purchase of and payment for Shares by the Purchaser
which represent at least a majority of the outstanding Shares, Parent shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board of Directors of the Company as is equal to the product of
the total number of directors on such Board (giving effect to the directors
designated by Parent pursuant to this sentence) multiplied by the percentage
that the number of Shares so accepted for payment bears to the total number of
Shares then outstanding. In furtherance thereof, the Company shall, upon the
request of Parent, use its best reasonable efforts promptly either to increase
the size of its Board of Directors, including amending the Bylaws of the Company
if necessary to so increase the size of the Company's Board of Directors, or
secure the resignations of such number of its incumbent directors, or both, as
is necessary to enable Parent's designees to be so elected to the Company's
Board of Directors, and shall take all actions available to the Company to cause
Parent's designees to be so elected. At such time, the Company shall, if
requested by Parent, also cause persons designated by Parent to constitute at
least the same percentage (rounded up to the next whole number) as is on the
Company's Board of
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Directors of (i) each committee of the Company's Board of Directors, (ii) each
board of directors (or similar body) of each Subsidiary (as defined in Section
3.1 hereof) of the Company and (iii) each committee (or similar body) of each
such board.
(b) The Company shall promptly take all actions required pursuant to Section
14(f) of the Exchange Act and Rule 14f-l promulgated thereunder in order to
fulfill its obligations under Section 1.3(a) hereof, including mailing to
shareholders the information required by such Section 14(f) and Rule 14f-1 as is
necessary to enable Parent's designees to be elected to the Company's Board of
Directors. Parent or the Purchaser shall supply the Company and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1. The provisions of this Section 1.3(b) are in addition to and shall
not limit any rights which the Purchaser, Parent or any of their affiliates may
have as a holder or beneficial owner of Shares as a matter of law with respect
to the election of directors or otherwise.
(c) Following the election or appointment of the Purchaser's designees
pursuant to this Section and prior to the earlier to occur of (i) the Effective
Time or (ii) November 21, 1997, any amendment or termination of this Agreement,
grant by the Company of any extension for the performance or waiver of the
obligations or other acts of the Purchaser or Parent, waiver of the Company's
rights hereunder, or action with respect to the Company's employee benefit plans
or option agreements, shall require the concurrence of a majority of the
Company's directors then in office who are directors on the date hereof, or are
directors (other than directors designated by the Purchaser in accordance with
this Section) designated by such directors to fill any vacancy ("Current
Directors"). In addition, following the election or appointment of the
Purchaser's designees pursuant to this Section and prior to the earlier to occur
of (i) the Effective Time or (ii) November 21, 1997, none of Parent, the
Purchaser or such designee shall cause the Company to take any action or fail to
take any action that would cause or result in any obligation of the Company
hereunder or any condition herein not being satisfied without the concurrence of
a majority of the Company's directors then in office who are Current Directors.
Prior to the earlier to occur of (i) the Effective Time or (ii) November 21,
1997, neither the Purchaser nor its designees shall remove any Current Director,
except for cause, and the Purchaser agrees to cause its designees to vote for
the election of any designee of the Current Directors to fill a vacancy created
by any Current Director ceasing to be a director.
SECTION 1.4 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time, the Company and the Purchaser shall
consummate a merger (the "Merger") as set forth below.
(a) At the election of Parent, pursuant to the Merger (i) the Company shall
be merged with and into the Purchaser and the separate corporate existence of
the Company shall thereupon cease, (ii) the Purchaser shall be the successor or
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Purchaser Surviving Corporation" or the "Surviving Corporation") and shall
continue to be governed by the laws of the State of Delaware, and (iii) all the
rights, privileges, immunities, powers and franchises of the Company shall vest
in the Purchaser Surviving Corporation and, except as otherwise provided for in
this Agreement, all obligations, duties, debts and liabilities of the Company
shall be the obligations, duties, debts and liabilities of the Purchaser
Surviving Corporation; or
(b) At the election of Parent, pursuant to the Merger (i) the Purchaser
shall be merged with and into the Company and the separate corporate existence
of the Purchaser shall cease, (ii) the Company shall be the successor or
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Company Surviving Corporation" or the "Surviving Corporation") and shall
continue to be governed by the laws of the Commonwealth of Massachusetts, and
(iii) the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger, except as set forth in this Section 1.4(b).
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(c) The Articles of Incorporation of the Surviving Corporation shall be the
Articles of Incorporation of the Surviving Corporation immediately prior to the
Effective Time, until thereafter amended as provided therein and under the
Delaware or Massachusetts corporation law, as applicable. The Bylaws of the
Surviving Corporation shall be the Bylaws of the Purchaser, as in effect
immediately prior to the Effective Time, until thereafter amended as provided
therein and under the Delaware or Massachusetts corporation law, as applicable.
SECTION 1.5 EFFECTIVE TIME. Parent, the Purchaser and the Company will
cause a Certificate of Merger to be executed and filed on the Closing Date (as
defined in Section 1.6 hereof) (or on such other date as Parent and the Company
may agree) with the Secretary of State of Delaware and the Secretary of the
Commonwealth of Massachusetts as provided by applicable law. The Merger shall
become effective on the date on which the Certificate of Merger is duly filed
with the Secretary of State of the state of incorporation of the Surviving
Corporation or such time as is agreed upon by the parties and specified in the
Certificate of Merger, and such time is hereinafter referred to as the
"Effective Time."
SECTION 1.6 CLOSING. The closing of the Merger (the "Closing") shall take
place at 10:00 a.m. on the second business day after satisfaction or waiver of
all of the conditions set forth in Article VI hereof, or such other date as may
be agreed to by the parties in writing (the "Closing Date"), at the offices of
the Company at 1 Forbes Road, Newmarket Industrial Park, Newmarket, New
Hampshire 03857 unless another place is agreed to in writing by the parties
hereto.
SECTION 1.7 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors and officers of the Purchaser at the Effective Time shall, from and
after the Effective Time, be the directors and officers, respectively, of the
Surviving Corporation until their successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation or removal in
accordance with the Articles of Incorporation and the Bylaws of the Surviving
Corporation.
SECTION 1.8 SHAREHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the Merger, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law and subject to the fiduciary duties of the Board of Directors:
(i) duly call, give notice of, convene and hold a special meeting of its
shareholders (the "Special Meeting") as promptly as practicable following
the acceptance for payment and purchase of Shares by the Purchaser pursuant
to the Offer for the purpose of considering and taking action upon the
approval of the Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement and use its best efforts
(x) to obtain and furnish the information required to be included by the SEC
in the Proxy Statement (as hereinafter defined) and, after consultation with
Parent, to respond promptly to any comments made by the SEC with respect to
the preliminary proxy or information statement and cause a definitive proxy
or information statement, including any amendment or supplement thereto (the
"Proxy Statement") to be mailed to its shareholders, provided that no
amendment or supplement to the Proxy Statement will be made by the Company
without consultation with Parent and its counsel and (y) to obtain the
necessary approvals of the Merger and this Agreement by its shareholders;
and
(iii) include in the Proxy Statement the recommendation of the Board of
Directors that shareholders of the Company vote in favor of the approval of
the Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares then owned by
it, the Purchaser or any of its other Subsidiaries and affiliates in favor of
the approval of the Merger and the approval and adoption of this Agreement.
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SECTION 1.9 MERGER WITHOUT MEETING OF SHAREHOLDERS. Notwithstanding Section
1.8 hereof, in the event that Parent, the Purchaser and any other Subsidiaries
of Parent shall acquire in the aggregate at least 90% of the outstanding Shares
of the Company, pursuant to the Offer or otherwise, the parties hereto shall, at
the request of Parent and subject to Article VI hereof, take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without a meeting of shareholders of the
Company, in accordance with Section 82 of the Massachusetts Business Corporation
Law ("MBCL").
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holders of any Shares or
holders of common stock, par value $.01 per share, of the Purchaser (the
"Purchaser Common Stock"):
(a) THE PURCHASER COMMON STOCK. Each issued and outstanding share of the
Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Company Surviving Corporation or
shall remain outstanding and constitute one fully paid and non-assessable share
of the Purchaser Surviving Corporation, as the case may be, and shall constitute
the only outstanding shares of capital stock of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT OWNED STOCK. All Shares that
are owned by the Company as treasury stock and any Shares owned by Parent, the
Purchaser or any other wholly owned Subsidiary of Parent shall be canceled and
retired and shall cease to exist and no consideration shall be delivered in
exchange therefor.
(c) EXCHANGE OF SHARES. Each issued and outstanding Share (other than Shares
to be canceled in accordance with Section 2.1(b) above and any Shares which are
held by shareholders exercising appraisal rights pursuant to Sections 85-98 of
the MBCL ("Dissenting Shareholders")) shall be converted into the right to
receive the Offer Price, payable to the holder thereof, without interest (the
"Merger Consideration"), upon surrender of the certificate formerly representing
such Share in the manner provided in Section 2.2 hereof. All such Shares, when
so converted, shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 2.2 hereof, without
interest, or the right, if any, to receive payment from the Surviving
Corporation of the "fair value" of such Shares as determined in accordance with
the MBCL.
SECTION 2.2 EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Parent shall designate a bank or trust company reasonably
acceptable to the Company to act as agent for the holders of the Shares in
connection with the Merger (the "Paying Agent") to receive in trust the funds to
which holders of the Shares shall become entitled pursuant to Section 2.1(c)
above. Such funds shall be invested by the Paying Agent as directed by Parent or
the Surviving Corporation.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates"), whose Shares were converted
pursuant to Section 2.1 hereof into the right to receive the Merger
Consideration (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions as Parent and the Company may reasonably
specify) and (ii) instructions for use in effecting the
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surrender of the Certificates in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration for
each Share formerly represented by such Certificate and the Certificate so
surrendered shall forthwith be canceled. If payment of the Merger Consideration
is to be made to a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the person requesting such payment shall have
paid any transfer and other taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 2.2.
(c) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN THE SHARES. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article II.
(d) TERMINATION OF FUND; NO LIABILITY. At any time following six months
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which had not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
SECTION 2.3 DISSENTERS' RIGHTS. If any Dissenting Shareholder shall demand
to be paid the fair value of such holder's Shares, as provided in Sections 85-98
of the MBCL, the Company shall give Parent notice thereof and Parent shall have
the right to participate in all negotiations and proceedings with respect to any
such demands to the extent permitted by the MBCL. Neither the Company nor the
Surviving Corporation shall, except with the prior written consent of Parent,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment. If any Dissenting Shareholder shall fail to perfect or
shall have effectively withdrawn or lost the right to dissent, the Shares held
by such Dissenting Shareholder shall thereupon be treated as though such Shares
had been converted into the Merger Consideration pursuant to Section 2.1 hereof.
SECTION 2.4 OPTIONS. At the Effective Time, each holder of a then
outstanding option (collectively, the "Options") to purchase Shares granted by
the Company, whether or not then exercisable, shall in settlement thereof,
receive for each Share subject to such Option an amount (subject to any
applicable withholding tax) in cash equal to the difference between the Offer
Price and the per Share exercise price of such Option to the extent such
difference is a positive number. Prior to the Effective Time, the Company shall
use all commercially reasonable efforts to obtain all necessary consents or
releases from holders of Options, to the extent required by the terms of the
plans or agreements governing such Options, as the case may be, or pursuant to
the terms of any Option granted thereunder, and take all such other lawful
action as may be necessary to give effect to the transactions contemplated by
this Section 2.4 (except for
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such action that may require the approval of the Company's shareholders). The
Company shall take all action necessary to ensure that (i) the Company's 1995
Key Employees Stock Option Plan (the "Stock Option Plan") shall have been
terminated as of the Effective Time and the provisions in 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 thereof, shall
be canceled as of the Effective Time, and (ii) following the Effective Time, (a)
no participant in any Stock Option Plan or other plans, programs or arrangements
shall have any right thereunder to acquire equity securities of the Company, the
Surviving Corporation or any Subsidiary thereof (except options to acquire
approximately 96,000 Shares of the Company where the exercise price is higher
than $1.90 per Share) and all such plans shall have been terminated, and (b) the
Company will not be bound by any convertible security, option, warrant, right or
agreement which would entitle any person to own any capital stock of the
Company, the Surviving Corporation or any Subsidiary thereof.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as disclosed in the schedule attached to this Agreement setting forth
exceptions to the Company's representations and warranties set forth herein (the
"Company Disclosure Schedule"), the Company represents and warrants to Parent
and the Purchaser as set forth below (any matter disclosed in any Section hereof
or in the Company Disclosure Schedule being deemed disclosed for purposes of all
Sections hereof and all Sections of the Company Disclosure Schedule). The
Company Disclosure Schedule will be arranged in sections corresponding to
sections of this Agreement to be modified thereby.
SECTION 3.1 ORGANIZATION. (a) Each of the Company and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization and has all requisite
corporate power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power, authority, and governmental approvals would not,
individually or in the aggregate, have a Company Material Adverse Effect (as
defined below). As used in this Agreement, the term "Subsidiary" shall mean all
corporations or other entities in which the Company or the Parent, as the case
may be, owns a majority of the issued and outstanding capital stock or similar
interests. As used in this Agreement, "Company Material Adverse Effect" with
reference to any events, changes or effects, shall mean that such events,
changes or effects are materially adverse to the Company and its Subsidiaries,
taken as a whole.
(b) The Company and each of its Subsidiaries is duly qualified or licensed
to do business and in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing would not individually or in
the aggregate have a Company Material Adverse Effect. The Company does not own
any equity interest in any corporation or other entity other than its
Subsidiaries.
SECTION 3.2 CAPITALIZATION. (a) The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, par value $.01 per share. As of
the date hereof, (i) 9,856,572 Shares are issued and outstanding, (ii) none of
the Shares are issued and held in the treasury of the Company and (iii) 543,400
Shares are reserved for issuance upon the exercise of outstanding Options.
Section 3.2(a) of the Company Disclosure Schedule discloses the number of shares
subject to each outstanding Option and the exercise price thereof. All the
outstanding shares of the Company's capital stock are, and all Shares which may
be issued pursuant to the exercise of outstanding Options will be, when issued
in accordance with the respective terms thereof, duly authorized, validly
issued, fully paid and non-assessable. There are no bonds, debentures, notes or
other indebtedness having general voting rights (or convertible into
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securities having such rights) ("Voting Debt") of the Company or any of its
Subsidiaries issued and outstanding. Except as set forth above and except for
the transactions contemplated by this Agreement, as of the date hereof, (i)
there are no shares of capital stock of the Company authorized, issued or
outstanding, (ii) there are no existing options, warrants, calls, preemptive
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character, relating to the issued or unissued capital stock of the
Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest in,
the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment and
(iii) there are no outstanding contractual obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or the
capital stock of the Company or of any Subsidiary or affiliate of the Company or
to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Subsidiary or any other entity.
(b) All of the outstanding shares of capital stock of each of its
Subsidiaries are owned beneficially and of record by the Company or one of its
Subsidiaries, directly or indirectly, and all such shares have been validly
issued and are fully paid and nonassessable and are owned by either the Company
or one of its Subsidiaries free and clear of all liens, charges, claims or
encumbrances ("Encumbrances").
(c) There are no voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the Subsidiaries.
SECTION 3.3 AUTHORIZATION; VALIDITY OF AGREEMENT; COMPANY ACTION. The
Company has full corporate power and authority to execute and deliver this
Agreement and to consummate the Transactions. The execution, delivery and
performance by the Company of this Agreement, and the consummation by it of the
Transactions, have been unanimously approved and duly authorized by its Board of
Directors and no other corporate action on the part of the Company is necessary
to authorize (i) the execution and delivery by the Company of this Agreement and
(ii) the consummation by it of the Transactions, except that consummation of the
Merger may require approval of the Company's shareholders as contemplated by
Section 1.8 hereof. This Agreement has been duly executed and delivered by the
Company and, assuming due and valid authorization, execution and delivery hereof
by Parent and the Purchaser, is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization, or other laws affecting creditors' rights generally or by the
availability of equitable remedies generally.
SECTION 3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for the filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act and the HSR Act, none of the
execution, delivery or performance of this Agreement by the Company, the
consummation of the Transactions or compliance by the Company with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the Articles of Incorporation, the Bylaws or similar organizational
documents of the Company or any of its Subsidiaries, (ii) require any filing
with, or permit, authorization, consent or approval of, any court, arbitral
tribunal, administrative agency or commission or other governmental or
regulatory authority or agency (a "Governmental Entity"), (iii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party or by which any of them or any of their properties or assets may be
bound (the "Company Agreements") or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company, any of its
Subsidiaries or any of their properties or assets, excluding from the foregoing
clauses (ii), (iii) and (iv) such violations,
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breaches or defaults which would not, individually or in the aggregate, have a
Company Material Adverse Effect or have a material adverse effect on the ability
of the Company to consummate the Transactions. Section 3.4 of the Company
Disclosure Schedule sets forth a list of all third party consents and approvals
required to be obtained in connection with this Agreement under the Company
Agreements prior to the consummation of the Transactions.
SECTION 3.5 SEC REPORTS AND FINANCIAL STATEMENTS. The Company has filed
with the SEC, and has heretofore made available to Parent, true and complete
copies of all forms, reports, schedules, statements and other documents required
to be filed by it since January 1, 1994 under the Exchange Act or the Securities
Act of 1933, as amended (the "Securities Act") (as such documents have been
amended since the time of their filing, collectively, the "Company SEC
Documents"). As of their respective dates, the Company SEC Documents, including,
without limitation, any financial statements or schedules included therein (a)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder. None of the
Company's Subsidiaries is required to file any forms, reports or other documents
with the SEC. The financial statements of the Company included in the Company
SEC Documents (the "Financial Statements") have been prepared from, and are in
accordance with, the books and records of the Company and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position and the consolidated results of
operations and cash flows (and changes in financial position, if any) of the
Company and its consolidated Subsidiaries as of the times and for the periods
referred to therein.
SECTION 3.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Section 3.6
of the Company Disclosure Schedule or in the Company SEC Documents filed prior
to the date hereof, since December 31, 1996, the Company and its Subsidiaries
have conducted their respective businesses only in the ordinary and usual course
consistent with past practices and (i) there have not occurred any events or
changes (including the incurrence of any liabilities of any nature, whether or
not accrued, contingent or otherwise) having, individually or in the aggregate,
a Company Material Adverse Effect and (ii) the Company has not taken any action
since December 31, 1996 which is prohibited under Section 5.1 hereof.
SECTION 3.7 NO UNDISCLOSED LIABILITIES. Except (a) as disclosed in the
Financial Statements and (b) for liabilities and obligations (i) incurred in the
ordinary course of business and consistent with past practice since December 31,
1996, (ii) pursuant to the terms of this Agreement, (iii) as disclosed in
Section 3.7 of the Company Disclosure Schedule, or (iv) as disclosed in Section
3.8 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has any material liabilities or material obligations of any nature,
whether or not accrued, contingent or otherwise.
SECTION 3.8 LITIGATION. Except as disclosed in Section 3.8 of the Company
Disclosure Schedule, as of the date hereof, there are no suits, claims, actions,
proceedings, including, without limitation, arbitration proceedings or
alternative dispute resolution proceedings, or investigations pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries before any Governmental Entity that, either individually or in the
aggregate, would be reasonably likely to have a Company Material Adverse Effect.
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SECTION 3.9 EMPLOYEE BENEFIT PLANS.
(a) Section 3.9(a) of the Company Disclosure Schedule contains a true and
complete list of each deferred compensation and each incentive compensation,
stock purchase, stock option and other equity compensation plan, program,
agreement or arrangement; each severance or termination pay, medical, surgical,
hospitalization, life insurance and other "welfare" plan, fund or program
(within the meaning of section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus or other
"pension" plan, fund or program (within the meaning of section 3(2) of ERISA);
each employment, termination or severance agreement; and each other employee
benefit plan, fund, program, agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Company would be deemed a "single employer"
within the meaning of section 4001(b) of ERISA, or to which the Company or an
ERISA Affiliate is party, whether written or oral, for the benefit of any
employee or former employee of the Company or any Subsidiary (the "Plans"). Each
of the Plans that is subject to section 302 or Title IV of ERISA or section 412
of the Internal Revenue Code of 1986, as amended (the "Code") is hereinafter
referred to in this Section 3.9 as a "Title IV Plan." Neither the Company, any
Subsidiary nor any ERISA Affiliate has any commitment or formal plan, whether
legally binding or not, to create any additional employee benefit plan or modify
or change any existing Plan that would affect any employee or former employee of
the Company or any Subsidiary.
(b) No liability under Title IV or section 302 of ERISA has been incurred by
the Company or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring any such liability, other than liability for premiums due
the Pension Benefit Guaranty Corporation ("PBGC") (which premiums have been paid
when due).
(c) [Reserved.]
(d) With respect to each Title IV Plan, the present value of accrued
benefits under such Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such Plan's actuary
with respect to such Plan did not exceed, as of its latest valuation date, the
then current value of the assets of such Plan allocable to such accrued
benefits.
(e) No Title IV Plan is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, nor is any Title IV Plan a plan described in section
4063(a) of ERISA. Neither the Company nor any ERISA Affiliate has made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in sections 4203 and 4205 of ERISA (or any liability
resulting therefrom has been satisfied in full).
(f) Each Plan has been operated and administered in accordance with its
terms and applicable law, including but not limited to ERISA and the Code.
(g) Each Plan intended to be "qualified" within the meaning of section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service with respect to the qualified status of such Plan under
the Code, including all amendments to the Code effected by the Tax Reform Act of
1986 and subsequent legislation, and nothing has occurred since the issuance of
such letter which could reasonably be expected to cause the loss of the
tax-qualified status of such Plan and the related trust maintained thereunder.
Each Plan intended to satisfy the requirements of Section 501(c)(9) has
satisfied such requirements.
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(h) No Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of the
Company or any Subsidiary for periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law, (ii)
death benefits under any "pension plan," or (iii) benefits the full cost of
which is borne by the current or former employee (or his or her beneficiary).
(i) Except as disclosed in Section 3.9(i) of the Company Disclosure Schedule
or as set forth in Section 5.10 of this Agreement, the consummation of the
transactions contemplated by this Agreement will not, either alone or in
combination with another event, except as expressly provided in Section 2.4 of
this Agreement, (a) entitle any current or former employee or officer of the
Company or any ERISA Affiliate to severance pay, unemployment compensation or
any other payment, or (b) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer.
(j) There are no pending, or to the knowledge of Company, threatened or
anticipated claims by or on behalf of any Plan, by any employee or beneficiary
covered under any such Plan, or otherwise involving any such Plan (other than
routine claims for benefits) which could have a material adverse effect upon the
Plans or have a Company Material Adverse Effect.
SECTION 3.10 TAX MATTERS; GOVERNMENT BENEFITS.
(a) Except as disclosed in Section 3.10(a) of the Company Disclosure
Schedule, the Company and each of its Subsidiaries have duly filed (or there has
been filed on its behalf) all Tax Returns (as hereinafter defined) that are
required to be filed and have duly paid or caused to be duly paid in full or
made provision in accordance with GAAP (or there has been paid or provision has
been made on their behalf) for the payment of all Taxes (as hereinafter defined)
shown due on such Tax Returns. All such Tax Returns are correct and complete in
all material respects and accurately reflect all liability for Taxes for the
periods covered thereby. All Taxes owed and due by the Company and each of its
Subsidiaries for results of operations through December 31, 1996 (whether or not
shown on any Tax Return) have been paid or have been adequately reflected on the
Company's balance sheet as of December 31, 1996 included in the Financial
Statements (the "Balance Sheet"). Since December 31, 1996, the Company has not
incurred liability for any Taxes other than in the ordinary course of business.
Neither the Company nor any of its Subsidiaries has received written notice of
any claim made by an authority in a jurisdiction where neither the Company nor
any of its Subsidiaries file Tax Returns, that the Company is or may be subject
to taxation by that jurisdiction.
(b) Except as disclosed in Section 3.10(b) of the Company Disclosure
Schedule, there are no liens for Taxes upon any property or assets of the
Company or any of its Subsidiaries except for liens for Taxes not yet due.
(c) The federal income Tax Returns of the Company and its Subsidiaries have
been examined by the Internal Revenue Service (or the applicable statutes of
limitation for the assessment of federal income Taxes for such periods have
expired) for all periods through and including December 31, 1992, and, except as
disclosed in Section 3.10(c) of the Company Disclosure Schedule, no deficiencies
were asserted as a result of such examinations that have not been resolved or
fully paid. Neither the Company nor any of its Subsidiaries has waived any
statute of limitations in any jurisdiction in respect of Taxes or Tax Returns or
agreed to any extension of time with respect to a Tax assessment or deficiency.
(d) The deductibility of compensation paid by the Company or any of its
Subsidiaries prior to the Effective Time will not be limited by Section 162(m)
of the Code.
(e) No federal, state, local or foreign audits, examinations or other
administrative proceedings have been commenced or, to the Company's knowledge,
are threatened with regard to any Taxes or Tax Returns of the Company or of any
of its Subsidiaries. No written notification has been received by the Company or
by any of its Subsidiaries that such an audit, examination or other proceeding
is pending or threatened with
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respect to any Taxes due from or with respect to or attributable to the Company
or any of its Subsidiaries or any Tax Return filed by or with respect to the
Company or any of its Subsidiaries. To the Company's knowledge, there is no
dispute or claim concerning any Tax liability of the Company, or any of its
Subsidiaries either claimed or raised by any taxing authority in writing.
(f) Except as set forth in the Company Disclosure Schedule, no power of
attorney granted by either the Company or any of its Subsidiaries is currently
in force.
(g) Neither the Company nor any of its Subsidiaries is a party to any
agreement, plan, contract or arrangement that could result, separately or in the
aggregate, in a payment of any "excess parachute payments" within the meaning of
section 280G of the Code.
(h) Neither the Company nor any of its Subsidiaries has filed a consent
pursuant to section 341(f) of the Code (or any predecessor provision) concerning
collapsible corporations, or agreed to have section 341(f)(2) of the Code apply
to any disposition of a "subsection (f) asset" (as such term is defined in
section 341(f)(4) of the Code) owned by the Company or any of its Subsidiaries.
(i) Neither the Company nor any of its Subsidiaries is a party to any tax
sharing, tax indemnity or other agreement or arrangement with any entity not
included in the Company's consolidated financial statements most recently filed
by the Company with the SEC.
(j) None of the Company or any of its Subsidiaries has been a member of any
affiliated group within the meaning of section 1504(a) of the Code, or any
similar affiliated or consolidated group for tax purposes under state, local or
foreign law (other than a group the common parent of which is the Company), or
has any liability for Taxes of any person (other than the Company and its
Subsidiaries) under Treasury Regulation Section 1.15026 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or otherwise.
(k) As used in this Agreement, the following terms shall have the following
meanings:
(i) "Tax" or "Taxes" shall mean all taxes, charges, fees, duties,
levies, penalties or other assessments imposed by any federal, state, local
or foreign governmental authority, including, but not limited to, income,
gross receipts, excise, property, sales, gain, use, license, custom duty,
unemployment, capital stock, transfer, franchise, payroll, withholding,
social security, minimum estimated, and other taxes, and shall include
interest, penalties or additions attributable thereto; and
(ii) "Tax Return" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
SECTION 3.11 INTELLECTUAL PROPERTY.
(a) The Company and its Subsidiaries own or have adequate rights to use the
items of Intellectual Property (as defined below and specifically listed in
Section 3.11(a) of the Company Disclosure Schedule) necessary to conduct the
business of the Company and its Subsidiaries as presently conducted or as
currently proposed to be conducted, free and clear of all Encumbrances (other
than Encumbrances which, individually or in the aggregate, would not have a
Company Material Adverse Effect).
(b) The conduct of the Company's and its Subsidiaries' business and the
Intellectual Property owned or used by the Company and its Subsidiaries, do not
infringe any Intellectual Property rights or any other proprietary right of any
person other than infringements which, individually or in the aggregate, would
not have a Company Material Adverse Effect. The Company and its Subsidiaries
have received no notice of any allegations or threats that the Company's and its
Subsidiaries' use of any of the Intellectual Property infringes upon or is in
conflict with any Intellectual Property or proprietary rights of any third party
other
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than infringements or conflicts which individually or in the aggregate would not
have a Company Material Adverse Effect.
(c) As used in this Agreement, "Intellectual Property" means all of the
following: (i) U.S. and foreign registered and unregistered trademarks, trade
dress, service marks, logos, trade names, corporate names and all registrations
and applications to register the same (the "Trademarks"); (ii) issued U.S. and
foreign patents and pending patent applications, patent disclosures, and any and
all divisions, continuations, continuations-in-part, re-issues, reexaminations,
and extension thereof, any counterparts claiming priority therefrom, utility
models, patents of importation/confirmation, certificates of invention and like
statutory rights (the "Patents"); (iii) U.S. and foreign registered and
unregistered copyrights (including, but not limited to, those in computer
software and databases), rights of publicity and all registrations and
applications to register the same (the "Copyrights"); (iv) all categories of
trade secrets as defined in the Uniform Trade Secrets Act including, but not
limited to, business information; and (v) all licenses and agreements pursuant
to which the Company has acquired rights in or to any Trademarks, Patents, or
Copyrights, or licenses and agreements pursuant to which the Company has
licensed or transferred the right to use any of the foregoing ("Licenses").
SECTION 3.12 EMPLOYMENT MATTERS. To the knowledge of the Company, no key
employee disclosed in Section 3.12 of the Company Disclosure Schedule has any
plans to terminate such employee's employment with the Company or any of its
Subsidiaries as a result of the Transactions or otherwise. Neither the Company
nor any of its Subsidiaries has experienced any strikes, collective labor
grievances, other collective bargaining disputes or claims of unfair labor
practices in the last five years. To the Company's knowledge, there is no
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company and its Subsidiaries.
SECTION 3.13 COMPLIANCE WITH LAWS. The Company and its Subsidiaries are in
compliance with, and have not violated any applicable law, rule or regulation of
any United States federal, state, local, or foreign government or agency thereof
which affects the business, properties or assets of the Company and its
Subsidiaries, and no notice, charge, claim, action or assertion has been
received by the Company or any of its Subsidiaries or has been filed, commenced
or, to the Company's knowledge, threatened against the Company or any of its
Subsidiaries alleging any such violation, except for any matter otherwise
covered by this sentence which would not have, individually or in the aggregate,
a Company Material Adverse Effect. All licenses, permits and approvals required
under such laws, rules and regulations are in full force and effect except where
the failure to be in full force and effect would not have a Company Material
Adverse Effect.
SECTION 3.14 VOTE REQUIRED. The affirmative vote of the holders of
two-thirds of the outstanding Shares in favor of the Merger is the only vote of
the holders of any class or series of the Company's capital stock which may be
necessary to approve this Agreement and the Transactions.
SECTION 3.15 ENVIRONMENTAL LAWS.
(a) The Company and its Subsidiaries are in compliance with all applicable
Environmental Laws (as defined below) (which compliance includes, without
limitation, the possession by the Company and its Subsidiaries of all permits
and other governmental authorizations required under applicable Environmental
Laws, and compliance with the terms and conditions thereof), except where
failure to be in compliance, either individually or in the aggregate, would not
have a Company Material Adverse Effect.
(b) There is no Environmental Claim (as defined below) pending or, to the
Company's knowledge, threatened against the Company or any of its Subsidiaries
or, to the Company's knowledge, against any person or entity whose liability for
any Environmental Claim the Company or any of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law which
Environmental Claim would have, either individually or in the aggregate, a
Company Material Adverse Effect.
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(c) There are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release or
presence of any Hazardous Material (as defined below), which could form the
basis of any Environmental Claim against the Company or any of its Subsidiaries,
or to the Company's knowledge, against any person or entity whose liability for
any Environmental Claim the Company or any of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law, which
Environmental Claim would have, either individually or in the aggregate, a
Company Material Adverse Effect.
(d) The Company and its Subsidiaries have not, and to the Company's
knowledge, no other person has, placed, stored, deposited, discharged, buried,
dumped or disposed of Hazardous Materials or any other wastes produced by, or
resulting from, any business, commercial or industrial activities, operations or
processes, on, beneath or adjacent to any property currently or formerly owned,
operated or leased by the Company or any of its Subsidiaries, except (x) for
inventories of such substances to be used, and wastes generated therefrom, in
the ordinary course of business of the Company and its Subsidiaries, or (y)
which would not, either individually or in the aggregate, have a Company
Material Adverse Effect.
(e) Without in any way limiting the generality of the foregoing, except as
disclosed in Section 3.15(e) of the Company Disclosure Schedule, none of the
properties owned, operated or leased by the Company or any of its Subsidiaries
contain any: underground storage tanks; asbestos; polychlorinated biphenyls
("PCBs"); underground injection wells; radioactive materials; or septic tanks or
waste disposal pits in which process wastewater or any Hazardous Materials have
been discharged or disposed the existence of which, individually or in the
aggregate, could reasonably be expected to have a Company Material Adverse
Effect.
(f) The Company has made available to Parent for review copies of all
environmental reports or studies in its possession.
(g) For purposes of this Agreement, (i) "Environmental Laws" means all
federal, state, local and foreign laws and regulations relating to pollution or
protection of human health or the environment, including, without limitation,
laws relating to releases or threatened releases of Hazardous Materials or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, release, disposal, transport or handling of Hazardous Materials and all
laws and regulations with regard to record keeping, notification, disclosure and
reporting requirements respecting Hazardous Materials; (ii) "Environmental
Claim" means any claim, action, cause of action, investigation or notice
(written or oral) by any person or entity alleging potential liability
(including, without limitation, potential liability for investigatory costs,
Cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (a) the presence, or Release, of any Hazardous Materials at any location,
whether or not owned, leased or operated by the Company or any of its
Subsidiaries, or (b) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law; (iii) "Hazardous Materials" means
all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants
in the National Oil and Hazardous Substances Pollution Contingency Plan, 40
C.F.R. Section 300.5, or defined as such by, or regulated as such under, any
Environmental Law.
SECTION 3.16 INFORMATION IN PROXY STATEMENT. The Proxy Statement, if any
(or any amendment thereof or supplement thereto), will not, at the date mailed
to Company shareholders and at the time of the meeting of Company shareholders
to be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information supplied in writing by Parent or the Purchaser for
inclusion in the Proxy Statement. The Proxy Statement will comply in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
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SECTION 3.17 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Scott-Macon Securities, Inc., dated the date hereof, to the effect
that, as of such date, the consideration to be received in the Offer and the
Merger by the Company's shareholders is fair to the Company's shareholders from
a financial point of view, a copy of which opinion has been delivered to Parent
and the Purchaser.
SECTION 3.18 BROKERS OR FINDERS. The Company represents, as to itself and
its Subsidiaries and affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any brokers'
or finder's fee or any other commission or similar fee from the Company or any
of its Subsidiaries in connection with any of the transactions contemplated by
this Agreement except for Scott-Macon, Ltd., whose fees are set forth in the
engagement letter attached as Section 3.18 of the Company Disclosure Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as set forth
below.
SECTION 4.1 ORGANIZATION. Parent is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and the Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware.
SECTION 4.2 AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION. Each of
Parent and the Purchaser has full corporate power and authority to execute and
deliver this Agreement and to consummate the Transactions. The execution,
delivery and performance by Parent and the Purchaser of this Agreement and the
consummation of the Transactions have been duly authorized by the Boards of
Directors of Parent and the Purchaser and by Parent as the sole shareholder of
the Purchaser and no other corporate action on the part of Parent and the
Purchaser is necessary to authorize the execution and delivery by Parent and the
Purchaser of this Agreement and the consummation of the Transactions. This
Agreement has been duly executed and delivered by Parent and the Purchaser and,
assuming due and valid authorization, execution and delivery hereof by the
Company, is a valid and binding obligation of each of Parent and the Purchaser
enforceable against each of them in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization, or other laws affecting creditors' rights generally or by the
availability of equitable remedies generally.
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for the filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act and the HSR Act, none of the
execution, delivery or performance of this Agreement by Parent or the Purchaser,
the consummation by Parent or the Purchaser of the Transactions or compliance by
Parent or the Purchaser with any of the provisions hereof will (i) conflict with
or result in any breach of any provision of the Articles of Incorporation or
Bylaws of Parent or the Articles of Incorporation or Bylaws of the Purchaser,
(ii) require any filing with, or permit, authorization, consent or approval of,
any Governmental Entity, (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Parent, or any of
its Subsidiaries or the Purchaser is a party or by which any of them or any of
their respective properties or assets may be bound, or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to Parent, any
of its Subsidiaries or any of their properties or assets, excluding from the
foregoing clauses (ii), (iii) and (iv) such violations, breaches or defaults
which would not, individually or in the aggregate, have a material adverse
effect on the ability of Parent and the Purchaser to consummate the
Transactions.
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SECTION 4.4 INFORMATION IN PROXY STATEMENT. None of the information
supplied by Parent or the Purchaser in writing specifically for inclusion or
incorporation by reference in the Proxy Statement, if any, will, at the date
mailed to shareholders and at the time of the meeting of shareholders to be held
in connection with the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
SECTION 4.5 FINANCING. Parent has the funds sufficient to finance the
transactions contemplated herein.
ARTICLE V
COVENANTS
SECTION 5.1 INTERIM OPERATIONS OF THE COMPANY. The Company covenants and
agrees that, except (i) as expressly contemplated by this Agreement or (ii) as
agreed in writing by Parent, after the date hereof, and prior to the time the
designees of Parent have been elected to, and shall constitute a majority of,
the Board of Directors of the Company pursuant to Section 1.3 hereof (the
"Appointment Date"):
(a) the business of the Company and its Subsidiaries shall be conducted only
in the ordinary and usual course (other than actions necessary to consummate the
transactions described herein) and, to the extent consistent therewith, each of
the Company and its Subsidiaries shall use its best efforts to preserve its
business organization intact and maintain its existing relations with customers,
suppliers, employees, creditors and business partners subject, however, to any
changes to such relationships necessitated or caused by the announcement of the
proposed transaction contemplated hereby;
(b) the Company will not, directly or indirectly, (i) except upon exercise
of Options or other rights to purchase shares of Common Stock outstanding on the
date hereof, issue, sell, transfer or pledge or agree to sell, transfer or
pledge any treasury stock of the Company or any capital stock of any of its
Subsidiaries beneficially owned by it, (ii) amend its Articles of Incorporation
or Bylaws or similar organizational documents; or (iii) split, combine or
reclassify the outstanding Shares or any outstanding capital stock of any of the
Subsidiaries of the Company;
(c) neither the Company nor any of its Subsidiaries shall: (i) declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock; (ii) issue, sell, pledge, dispose of
or encumber any additional shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of capital stock of any class of the Company or its
Subsidiaries, other than Shares reserved for issuance on the date hereof
pursuant to the exercise of Options outstanding on the date hereof; (iii)
transfer, lease, license, sell or dispose of any assets, or incur any
indebtedness or other liability other than in the ordinary course of business,
or mortgage, pledge or encumber any assets or modify any indebtedness; or (iv)
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(d) neither the Company nor any of its Subsidiaries shall: (i) grant any
increase in the compensation payable or to become payable by the Company or any
of its Subsidiaries to any of its executive officers or (ii)(A) adopt any new,
or (B) amend or otherwise increase, or accelerate the payment or vesting of the
amounts payable or to become payable under any existing bonus, incentive
compensation, deferred compensation, severance, profit sharing, stock option,
stock purchase, insurance, pension, retirement or other employee benefit plan,
agreement or arrangement; or (iii) enter into any employment or severance
agreement with or, except in accordance with the existing written policies of
the Company, grant any severance or termination pay to any officer, director or
employee of the Company or any of its Subsidiaries;
(e) neither the Company nor any of its Subsidiaries shall permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated without notice to Parent;
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(f) neither the Company nor any of its Subsidiaries shall enter into any
contract or transaction relating to the purchase of assets other than in the
ordinary course of business;
(g) neither the Company nor any of its Subsidiaries shall change any of the
accounting methods used by it unless required by GAAP, neither the Company nor
any of its Subsidiaries shall make any material Tax election, change any
material Tax election already made, adopt any material Tax accounting method,
change any material Tax accounting method unless required by GAAP, enter into
any closing agreement, settle any Tax claim or assessment or consent to any Tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment; and
(h) neither the Company nor any of its Subsidiaries will enter into any
agreement with respect to the foregoing or take any action with the intent of
causing any of the conditions to the Offer set forth in Annex A not to be
satisfied.
SECTION 5.2 ACCESS; CONFIDENTIALITY. (a) Upon reasonable notice, the
Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, access, during normal business hours during the
period prior to the Appointment Date, to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to Parent (x) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
and (y) all other information concerning its business, properties and personnel
as Parent may reasonably request, including without limitation, true and
complete copies of each Plan of the Company or of any of its Subsidiaries and
any amendments thereto (or if any Plan is not a written Plan, a description
thereof), any related trust or other funding vehicle, any summary plan
description under ERISA or the Code and the most recent determination letter
received from the Internal Revenue Service with respect to each such Plan
intended to qualify under Section 401 of the Code. Access shall include the
right to conduct such environmental studies and tests as Parent, in its
reasonable discretion, shall deem appropriate; provided, however, that such
studies and tests must be performed in such a way as not to disrupt materially
the Company's business. After the Appointment Date, the Company shall provide
Parent and such persons as Parent shall designate with all such information, at
such time as Parent shall request. Unless otherwise required by law and until
the Appointment Date, Parent and the Purchaser will hold any such information
which is non-public in confidence.
(b) Following the execution of this Agreement, Parent and the Company shall
cooperate with each other and make all reasonable efforts to minimize any
disruption to the business which may result from the announcement of the
Transactions.
SECTION 5.3 CONSENTS AND APPROVALS.
(a) Each of the Company, Parent and the Purchaser shall take all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on it with respect to this Agreement and the Transactions (which actions
shall include, without limitation, furnishing all information required under the
HSR Act and in connection with approvals of or filings with any other
Governmental Entity) and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed upon any of them or
any of their Subsidiaries in connection with this Agreement and the
Transactions. Each of the Company, Parent and the Purchaser shall, and shall
cause its Subsidiaries to, take all reasonable actions necessary to obtain (and
will cooperate with each other in obtaining) any consent, authorization, order
or approval of, or any exemption by, any Governmental Entity or other public or
private third party required to be obtained or made by Parent, the Purchaser,
the Company or any of their Subsidiaries in connection with the Transactions or
the taking of any action contemplated thereby or by this Agreement.
A-I-18
(b) The Company and Parent shall take all reasonable actions necessary to
file as soon as practicable notifications under the HSR Act and to respond as
promptly as practicable to any inquiries received from the Federal Trade
Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters.
SECTION 5.4 NO SOLICITATION.
(a) Neither the Company nor any of its Subsidiaries shall (and the Company
and its Subsidiaries shall cause their respective officers, directors,
employees, representatives and agents, including, but not limited to, investment
bankers, attorneys and accountants, not to), directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any corporation, partnership, person or other entity or
group (other than Parent or any of its affiliates or representatives) concerning
any proposal or offer to acquire all or a substantial part of the business and
properties of the Company or any of its Subsidiaries or any capital stock of the
Company or any of its Subsidiaries, whether by merger, tender offer, exchange
offer, sale of assets or similar transactions involving the Company or any
Subsidiary, division or operating or principal business unit of the Company (an
"Acquisition Proposal"), except that nothing contained in this Section 5.4 or
any other provision hereof shall prohibit the Company or the Company's Board of
Directors from (i) taking and disclosing to the Company's shareholders a
position with respect to a tender or exchange offer by a third party pursuant to
Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such
disclosure to the Company's shareholders as, in the good faith judgment of the
Board of Directors, after receiving advice from outside counsel, is required
under applicable law; provided that, except as permitted by this Section 5.4,
neither the Board of Directors of the Company nor any committee thereof shall
(x) approve or recommend or propose to approve or recommend any Acquisition
Proposal, (y) enter into any agreement with respect to any Acquisition Proposal,
or (z) withdraw or modify, or propose to withdraw or modify, in a manner adverse
to Parent or the Purchaser, the approval or recommendation by such Board of
Directors or any such committee of the Offer, this Agreement or the Merger. The
Company will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing.
(b) Notwithstanding the foregoing, prior to the acceptance of Shares
pursuant to the Offer constituting the Minimum Condition, the Company may
furnish information concerning its business, properties or assets to any
corporation, partnership, person or other entity or group pursuant to
appropriate confidentiality agreements, and may negotiate and participate in
discussions and negotiations with such entity or group concerning an Acquisition
Proposal if (x) such entity or group has on an unsolicited basis submitted a
bona fide written proposal to the Company relating to any such transaction which
the Board of Directors determines in good faith, after receiving advice from
Scott-Macon Securities, Inc. or a nationally recognized investment banking firm,
represents a superior transaction to the Offer and the Merger and which the
Board of Directors determines in good faith can be fully financed and (y) in the
opinion of the Board of Directors of the Company, only after receipt of advice
from outside legal counsel to the Company, the failure to provide such
information or access or to engage in such discussions or negotiations could
reasonably be expected to cause the Board of Directors to violate its fiduciary
duties to the Company's shareholders under applicable law (an Acquisition
Proposal which satisfies clauses (x) and (y) being referred to herein as a
"Superior Proposal"). The Company shall within one business day following
receipt of a Superior Proposal notify Parent of the receipt of the same. The
Company shall promptly provide to Parent any material non-public information
regarding the Company provided to any other party which was not previously
provided to Parent. At any time after two business days following notification
to Parent of the Company's intent to do so (which notification shall include the
identity of the bidder and a complete summary of the material terms and
conditions of the proposal) and if the Company has otherwise complied with the
terms of this Section 5.4(b), the Board of Directors may withdraw or modify its
approval or recommendation of the Offer.
A-I-19
(c) In the event of a Superior Proposal which (i) is to be paid entirely in
cash and (ii) is not subject to any financing condition or contingency, the
Company may enter into an agreement with respect to such Superior Proposal no
sooner than four days after giving Parent written notice of its intention to
enter into such agreement; provided that the Purchaser or Parent has not, prior
to the expiration of such four-day period, advised the Company of its intention
to raise the Offer Price to match such Superior Proposal. Upon expiration of
such four-day period without such action by the Purchaser or Parent, the Company
may enter into an agreement with respect to such Superior Proposal (with the
bidder and on terms no less favorable than those specified in such
notification), provided it shall concurrently with entering into such agreement
pay or cause to be paid to Parent the amount specified in Section 8.1(b) hereof.
SECTION 5.5 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto shall use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations, or
to remove any injunctions or other impediments or delays, legal or otherwise, to
achieve the satisfaction of the Minimum Condition and all conditions set forth
in Annex A attached hereto and Article VI hereof, and to consummate and make
effective the Merger and the other transactions contemplated by this Agreement.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the officers and
directors of the Company, Parent and the Purchaser shall use all reasonable
efforts to take, or cause to be taken, all such necessary actions.
SECTION 5.6 PUBLICITY. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to Parent
and the Company. Thereafter, so long as this Agreement is in effect, neither the
Company, Parent nor any of their respective affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, this Agreement or the other Transactions without the prior consultation
of the other party, except as such party believes, after receiving the advice of
outside counsel, may be required by law or by any listing agreement with a
national securities exchange or trading market.
SECTION 5.7 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Parent and Parent shall give prompt notice to the Company, of (i) the
occurrence or non-occurrence of any event the occurrence or non-occurrence of
which would cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at or prior to the Effective
Time and (ii) any material failure of the Company, Parent or the Purchaser, as
the case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.7 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
SECTION 5.8 DIRECTORS' AND OFFICERS' INDEMNIFICATION. For six years after
the Effective Time, the Surviving Corporation (or any successor to the Surviving
Corporation) and Parent shall jointly indemnify, defend and hold harmless the
present and former officers and directors of the Company and its Subsidiaries,
and persons who become any of the foregoing prior to the Effective Time (each an
"Indemnified Party") against all losses, claims, damages, liabilities, costs,
fees and expenses (including reasonable fees and disbursements of counsel and
judgments, fines, losses, claims, liabilities and amounts paid in settlement
(provided that any such settlement is effected with the written consent of the
Parent or the Surviving Corporation which consent shall not unreasonably be
withheld)) arising out of actions or omissions occurring at or prior to the
Effective Time to the full extent permissible under applicable Massachusetts
law, the terms of the Company's Articles of Incorporation or the Bylaws, as in
effect at the date hereof; provided that, in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until disposition of any and
all such claims.
SECTION 5.9 PURCHASER COMPLIANCE. Parent shall cause the Purchaser to
comply with all of its obligations under or related to this Agreement.
A-I-20
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions, any and all of which may be waived in whole or in part jointly by
the Company and Parent to the extent permitted by applicable law:
(a) Shareholder Approval. This Agreement shall have been approved and
adopted by the requisite vote of the holders of the Shares, if required by
applicable law in order to consummate the Merger;
(b) Statutes; Court Orders. No statute, rule or regulation shall have been
enacted or promulgated by any governmental authority which prohibits the
consummation of the Merger; and there shall be no order or injunction of a court
of competent jurisdiction in effect precluding consummation of the Merger;
(c) Purchase of Shares in Offer. Parent, the Purchaser or their affiliates
shall have purchased Shares pursuant to the Offer, except that this condition
shall not apply if Parent, the Purchaser or their affiliates shall have failed
to purchase Shares pursuant to the Offer in breach of their obligations under
this Agreement; and
(d) HSR Approval. The applicable waiting period under the HSR Act shall have
expired or been terminated.
SECTION 6.2 CONDITION TO PARENT'S AND THE PURCHASER'S OBLIGATIONS TO EFFECT
THE MERGER. The obligations of Parent and the Purchaser to consummate the
Merger are further subject to the fulfillment of the condition that all actions
contemplated by Section 2.4 hereof shall have been taken.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. This Agreement may be terminated and the
Transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after shareholder approval thereof:
(a) By the mutual written consent of Parent and the Company; or
(b) By either of the Company or Parent:
(i) if (x) the Offer shall have expired without any Shares being
purchased therein or (y) the Purchaser shall not have accepted for payment
all Shares tendered pursuant to the Offer by November 17, 1997; provided,
however, that the right to terminate this Agreement under this Section
7.1(b)(i) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of Parent or the Purchaser, as the case may be, to purchase the
Shares pursuant to the Offer on or prior to such date; or
(ii) if any Governmental Entity shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other
action the parties hereto shall use their reasonable efforts to lift), which
permanently restrains, enjoins or otherwise prohibits the acceptance for
payment of, or payment for, Shares pursuant to the Offer or the Merger and
such order, decree, ruling or other action shall have become final and
non-appealable; or
(c) By the Company:
(i) if Parent, the Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to five business days following the
date of the initial public announcement of the Offer; provided, that the
Company may not terminate this Agreement pursuant to this Section 7.1(c)(i)
if the
A-I-21
Company is at such time in breach of its obligations under this Agreement
such as to cause a Company Material Adverse Effect; or
(ii) if Parent or the Purchaser shall have breached in any material
respect any of their respective representations, warranties, covenants or
other agreements contained in this Agreement, which breach cannot be or has
not been cured, in all material respects, within 30 days after the giving of
written notice to Parent or the Purchaser, as applicable; or
(iii) in connection with entering into a definitive agreement in
accordance with Section 5.4(c) hereof, provided it has complied with all
provisions thereof, including the notice provisions therein, and that it
makes simultaneous payment of the amount specified in Section 8.1(b) hereof;
or
(d) By Parent:
(i) if, due to an occurrence, not involving a breach by Parent or the
Purchaser of their obligations hereunder, which makes it impossible to
satisfy any of the conditions set forth in Annex A hereto, Parent, the
Purchaser, or any of their affiliates shall have failed to commence the
Offer on or prior to five business days following the date of the initial
public announcement of the Offer;
(ii) if prior to the purchase of Shares pursuant to the Offer, the
Company shall have breached any representation, warranty, covenant or other
agreement contained in this Agreement which (A) would give rise to the
failure of a condition set forth in paragraph (f) or (g) of Annex A hereto
and (B) cannot be or has not been cured, in all material respects, within 30
days after the giving of written notice to the Company; or
(iii) upon the occurrence of any event set forth in paragraph (e) of
Annex A hereto.
SECTION 7.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to its terms, written notice thereof shall forthwith be given
to the other party or parties specifying the provision hereof pursuant to which
such termination is made, and this Agreement shall forthwith become null and
void, and there shall be no liability on the part of the Purchaser, Parent or
the Company except (A) for fraud or for breach of this Agreement prior to such
termination and (B) as set forth in the last sentence of Section 5.2(a) and
Section 8.1 hereof.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 FEES AND EXPENSES. (a) Except as contemplated by this
Agreement, including Sections 8.1(b) and (c) hereof, all costs and expenses
incurred in connection with this Agreement and the consummation of the
Transactions shall be paid by the party incurring such expenses. Parent
acknowledges and agrees that the Company has disclosed that it is obligated and
will become further obligated for fees and expenses (including fees and expenses
of Duffy & Sweeney and Roger Barzun, Esq., its counsel, Coopers & Lybrand,
L.L.P., its independent accountants, and Scott-Macon, Ltd., its financial
advisor) incurred by it in connection with the transactions contemplated hereby.
It is understood and agreed that certain of such fees and expenses may be paid
by the Company prior to the execution of this Agreement. Parent agrees to
refrain from taking any action which would prevent or delay the payment of
reasonable fees and expenses by the Company. Further, Parent agrees to take, and
cause the Purchaser to take, all action necessary to cause the Surviving
Corporation to pay promptly any of the foregoing reasonable fees and expenses
incurred, but not paid, by the Company prior to the Effective Time.
(b) If (i) Parent terminates this Agreement pursuant to Section 7.1(d)(iii)
hereof, (ii) the Company terminates this Agreement pursuant to Section
7.1(c)(iii) hereof, or (iii) either the Company or Parent terminates this
Agreement pursuant to Section 7.1(b)(i) and prior thereto there shall have been
publicly announced another Acquisition Proposal or an event set forth in
paragraph (h) of Annex A shall have occurred, the Company shall pay to Parent,
an amount equal to the greater of $750,000 (the "Termination
A-I-22
Fee"), or an amount equal to Parent's actual, reasonable and reasonably
documented out-of-pocket fees and expenses incurred by Parent and the Purchaser
in connection with the Offer, the Merger, this Agreement, the consummation of
the Transactions and the financing therefor, which shall be payable in same day
funds, provided that in no event shall the Company be obligated to pay any such
fees and expenses in excess of $1,000,000. The Termination Fee or Parent's good
faith estimate of its expenses, as the case may be, shall be paid concurrently
with any such termination, together with delivery of a written acknowledgment by
the Company of its obligation to reimburse Parent for its actual expenses in
excess of such estimated expenses payment.
(c) If the Company terminates this Agreement pursuant to (i) Section 7.1(b),
or (ii) Sections 7.1(c)(i) or 7.1(c)(ii) hereof, then Parent shall pay to the
Company an amount equal to the Company's reasonable legal fees and expenses
incurred, as of the date of such termination, with respect to this Agreement and
the Transactions.
SECTION 8.2 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the shareholders of the Company contemplated
hereby, by written agreement of the parties hereto, by action taken by their
respective Boards of Directors (which in the case of the Company shall include
approvals as contemplated in Section 1.2(a)), at any time prior to the Closing
Date with respect to any of the terms contained herein; provided, however, that
after the approval of this Agreement by the shareholders of the Company, no such
amendment, modification or supplement (i) shall reduce the amount or change the
form of the Merger Consideration or (ii) which under applicable law may not be
made without shareholder approval may be made without such approval.
SECTION 8.3 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time.
SECTION 8.4 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or sent by an overnight courier service, such as Federal
Express, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
Dover Technologies International, Inc.
One Marine Midland Plaza
East Tower, Sixth Floor
Binghamton, New York 13901
Attention: Robert A. Livingston
Telephone No.: (607) 773-2290
Telecopy No.: (607) 722-8612
with a copy to:
Coughlin & Gerhart, LLP
One Marine Midland Plaza
East Tower, Eighth Floor
Binghamton, New York 13901
Attention: Robert J. Smith, Esq.
Telephone No.: (607) 723-9511
Telecopy No.: (607) 772-6093
A-I-23
(b) and, if to the Company, to:
Vitronics Corporation
1 Forbes Road
Newmarket, New Hampshire 03857
Attention: President
Telephone No.: (603) 659-6550
Telecopy No.: (603) 659-6529
with a copy to:
Duffy & Sweeney
300 Turks Head Building
Providence, Rhode Island 02902
Attention: Michael F. Sweeney, Esq.
Telephone No.: (401) 455-0700
Telecopy No.: (401) 455-0701
SECTION 8.5 INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation." As used in this Agreement, the term "affiliates" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act.
SECTION 8.6 COUNTERPARTS. This Agreement may be executed simultaneously in
several counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by the parties and transmitted by facsimile transmission and if so
executed and transmitted this Agreement will be for all purposes as effective as
if the parties had delivered an executed original Agreement.
SECTION 8.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including the documents and the instruments referred to herein but excluding
the Confidentiality Agreement dated August 18, 1997) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof and
thereof. This Agreement is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
SECTION 8.8 SEVERABILITY. Any term or provision of this Agreement that is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction or other authority declares that any term or provision
hereof is invalid, void or unenforceable, the parties agree that the court
asking such determination shall have the power to reduce the scope, duration,
area or applicability of the term or provision, to delete specific words or
phrases, or to replace any invalid, void or unenforceable term or provision with
a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
SECTION 8.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
SECTION 8.10 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that the Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect
A-I-24
wholly owned Subsidiary of Parent. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
SECTION 8.11 KNOWLEDGE OF PARENT AND THE PURCHASER. Any fact or
circumstance known to Parent or the Purchaser prior to the execution and
delivery of this Agreement shall not, of itself, constitute a breach of any
representation or warranty by the Company. For purposes of this Section, a fact
or circumstance shall be deemed known by Parent or the Purchaser only if it is
known by an executive officer of Parent, regardless of whether such fact or
circumstance is known by any other employee, representative or agent of Parent
or the Purchaser.
SECTION 8.12 INTEGRATION OF EXHIBITS. All schedules and exhibits (including
the Company Disclosure Schedule) attached to this Plan of Merger are integral
parts of this Plan of Merger as if fully set forth herein and all statements
appearing therein shall be deemed disclosed for all purposes and not only in
connection with the specific representation in which they are explicitly
referenced.
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
DOVER TECHNOLOGIES
INTERNATIONAL, INC.
By: /s/ JOHN E. POMEROY
-----------------------------------------
Name: John E. Pomeroy
TITLE: PRESIDENT
DTI INTERMEDIATE, INC.
By: /s/ JOHN E. POMEROY
-----------------------------------------
Name: John E. Pomeroy
TITLE: PRESIDENT
VITRONICS CORPORATION
By: /s/ JAMES J. MANFIELD, JR.
-----------------------------------------
Name: James J. Manfield, Jr.
TITLE: PRESIDENT
A-I-25
ANNEX A
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provisions of
the Offer, and in addition to (and not in limitation of) the Purchaser's rights
to extend and amend the Offer at any time in its sole discretion (subject to the
provisions of the Merger Agreement), the Purchaser shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-l(c) under the Exchange Act (relating to the 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 applicable waiting period under the HSR Act 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 time of
acceptance for payment for any such Shares, any of the following events shall
occur or shall be determined by the Purchaser, in its judgment reasonably
exercised, to have occurred:
(a) there shall be threatened or pending any suit, action or proceeding by
any Governmental Entity against the Purchaser, Parent, the Company or any
Subsidiary of the Company (i) seeking to prohibit or impose any material
limitations on Parent's or the 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 to compel Parent or the
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 Parent
and their respective Subsidiaries, in each case taken as a whole, (ii)
challenging the acquisition by Parent or the Purchaser of any Shares under the
Offer, 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, Parent or the
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 the Purchaser, or render the 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 the
Purchaser or Parent 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 shareholders, or (v) which
otherwise is reasonably likely to have a Company Material Adverse Effect;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated, or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a Government
Entity, 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 HSR Act, 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;
(c) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange or the
American Stock Exchange for a period in excess of 24 hours (excluding
suspensions or limitations resulting solely from physical damage or interference
with such exchanges not related to market conditions), (ii) any decline in
either the Dow Jones Industrial Average or the Standard & Poor's Index of 400
Industrial Companies or in the New York Stock Exchange Composite Index in excess
of 15% measured from the close of business on the trading day next preceding the
date of the Merger Agreement, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether or not
mandatory), (iv) a commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States, (v) any limitation (whether or not mandatory) by any United States
governmental authority on the extension of credit generally by banks or other
financial institutions, (vi) a change in general financial, bank or capital
market conditions which materially and adversely affects the ability of
financial institutions
A-I-26
in the United States to extend credit or syndicate loans or (vii) in the case of
any of the foregoing existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof;
(d) there shall have occurred any events after the date of the Merger
Agreement which, either individually or in the aggregate, would have a Company
Material Adverse Effect;
(e) the Board of Directors of the Company or any committee thereof shall
have withdrawn or modified in a manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, the Merger or the Merger Agreement, or
approved or recommended any Acquisition Proposal;
(f) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct, in each case (i) as of the date
referred to in any representation or warranty which addresses matters as of a
particular date, or (ii) as to all other representations and warranties, as of
the date of the Merger Agreement and as of the scheduled expiration of the
Offer, unless the inaccuracies (without giving effect to any materiality or
material adverse effect qualifications or materiality exceptions contained
therein) under such representations and warranties, taking all the inaccuracies
under all such representations and warranties together in their entirety, would
not, individually or in the aggregate, result in a Company Material Adverse
Effect;
(g) the Company shall have failed to perform any obligation or to comply
with any agreement or covenant to be performed or complied with by it under the
Merger Agreement other than any failure which would not have, either
individually or in the aggregate, a Company Material Adverse Effect;
(h) any person acquires beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act), of at least 25% of the outstanding Common
Stock of the Company;
(i) the Merger Agreement shall have been terminated in accordance with its
terms; or
The foregoing conditions are for the sole benefit of Parent and the
Purchaser, may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to such condition (including any action or inaction by
Parent or the Purchaser not in violation of the Merger Agreement) and may be
waived by Parent or the Purchaser in whole or in part at any time and from time
to time in the sole discretion of Parent or the Purchaser, subject in each case
to the terms of the Merger Agreement. The failure by Parent or the 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.
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.1 (B)
Subsidiaries:
1. Vitronics Europe Limited--a United Kingdom company
2. Vitronics Foreign Sales Corporation--a Barbados company
A-I-27
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.2 (A)
STOCK OPTIONS OUTSTANDING
NAME VESTING BALANCE AMOUNT
DATE 1987 PLAN PRICE YEARS 8/26/97 PAID
- --------- ----------------------------------------------------------- --------- ------------- --------- ------------
Dec-92 CHANASYK, A 0.5625 5 13,000 17,387.50
Dec-92 CHANASYK, A 0.5625 5 10,000 13,375.00
Dec-92 CLAPP, R 0.5625 5 2,000 2,675.00
Dec-92 GIORDANO, L 0.5625 5 400 535.00
Dec-92 HALL, J 0.5625 5 2,000 2,675.00
Dec-92 KEOUGH, A* 0.5625 5 3,000 4,012.50
Dec-92 LABONVILLE, M 0.5625 5 1,000 1,337.50
Dec-92 MCKEEL, D 0.5625 5 1,000 1,337.50
Dec-92 MILLETTE, S 0.5625 5 2,000 2,675.00
Dec-92 PARADIS, F 0.5625 5 800 1,070.00
Dec-92 SULLIVAN, W 0.5625 5 2,000 2,675.00
Dec-92 WAITT, L 0.5625 5 200 267.50
Dec-93 CHANASYK, A 0.8400 5 10,000 10,600.00
Dec-93 GIORDANO, L 0.8400 5 400 424.00
Dec-93 WAITT, L 0.8400 5 800 848.00
Dec-93 DAROIS, J 0.8400 5 1,000 1,060.00
Dec-93 HALL, J 0.8400 5 2,000 2,120.00
Dec-93 SULLIVAN, W 0.8400 5 2,000 2,120.00
Dec-93 MCKEEL, D 0.8400 5 2,000 2,120.00
Dec-93 CLAPP, R 0.8400 5 3,000 3,180.00
Dec-93 LABONVILLE, M 0.8400 5 2,000 2,120.00
Dec-93 MILLETTE, S 0.8400 5 5,000 5,300.00
Dec-93 PARADIS, F 0.8400 5 1,800 1,908.00
Dec-93 HOWARD, S 0.8400 5 2,000 2,120.00
Dec-93 MARTIN, P 0.8400 5 2,500 2,650.00
Dec-94 KEOUGH, A* 1.3125 5 27,000 15,862.50
Dec-94 CHANASYK, A 1.3125 5 10,000 5,875.00
Dec-94 GIORDANO, L 1.3125 5 2,000 1,175.00
Dec-94 WAITT, L 1.3125 5 2,000 1,175.00
Dec-94 DAROIS, J 1.3125 5 1,000 587.50
Dec-94 HALL, J 1.3125 5 2,000 1,175.00
Dec-94 SULLIVAN, W 1.3125 5 1,000 587.50
Dec-94 MCKEEL, D 1.3125 5 2,000 1,175.00
Dec-94 CLAPP, R 1.3125 5 3,000 1,762.50
Dec-94 LABONVILLE, M 1.3125 5 2,000 1,175.00
Dec-94 MILLETTE, S 1.3125 5 2,500 1,468.75
Dec-94 PARADIS, F 1.3125 5 3,000 1,762.50
Dec-94 MARTIN, P 1.3125 5 2,500 1,468.75
Dec-94 BENNETT, D 1.3125 5 2,500 1,468.75
--------- ------------
TOTAL 134,400 123,311.25
- ------------------------
* Non-Qualified Option
A-I-28
NAME VESTING BALANCE AMOUNT
DATE 1995 PLAN PRICE YEARS 8/26/97 PAID
- --------- ----------------------------------------------------------- --------- ------------- --------- ------------
Dec-95 CHANASYK, A 2.3750 5 30,000 --
Dec-95 GIORDANO, L 2.3750 5 2,000 --
Dec-95 WAITT, L 2.3750 5 2,000 --
Dec-95 DAROIS, J 2.3750 5 1,000 --
Dec-95 HALL, J 2.3750 5 2,000 --
Dec-95 JEKA, D 2.3750 5 1,000 --
Dec-95 GAGNE, M 2.3750 5 2,000 --
Dec-95 SCHAEFFER, R 2.3750 5 1,000 --
Dec-95 SULLIVAN, W 2.3750 5 1,000 --
Dec-95 MCKEEL, D 2.3750 5 2,000 --
Dec-95 PIVARUNAS, J 2.3750 5 1,000 --
Dec-95 CLAPP, R 2.3750 5 2,500 --
Dec-95 LABONVILLE, M 2.3750 5 1,000 --
Dec-95 DAY, B 2.3750 5 5,000 --
Dec-95 MILLETTE, S 2.3750 5 7,500 --
Dec-95 WRIGHT, M 2.3750 5 1,000 --
Dec-95 JOHNSON, P 2.3750 5 1,000 --
Dec-95 RILEY, G 2.3750 5 1,000 --
Dec-95 GILBERT, R 2.3750 5 1,000 --
Dec-95 HENRY, J 2.3750 5 1,000 --
Dec-95 PARADIS, F 2.3750 5 3,000 --
Dec-95 MARTIN, P 2.3750 5 2,000 --
Dec-95 BENNETT, D 2.3750 5 5,000 --
Nov-96 NASH, T 1.0625 5 25,000 20,937.50
Dec-96 CHANASYK, A 1.0300 5 10,000 8,700.00
Dec-96 GIORDANO, L 1.0300 5 2,000 1,740.00
Dec-96 WAITT, L 1.0300 5 2,000 1,740.00
Dec-96 DAROIS, J 1.0300 5 1,000 870.00
Dec-96 HALL, J 1.0300 5 2,000 1,740.00
Dec-96 JEKA, D 1.0300 5 5,000 4,350.00
Dec-96 GAGNE, M 1.0300 5 2,000 1,740.00
Dec-96 SCHAEFFER, R 1.0300 5 1,000 870.00
Dec-96 SULLIVAN, W 1.0300 5 1,000 870.00
Dec-96 MCKEEL, D 1.0300 5 2,000 1,740.00
Dec-96 PIVARUNAS, J 1.0300 5 2,000 1,740.00
Dec-96 CLAPP, R 1.0300 5 2,000 1,740.00
Dec-96 LABONVILLE, M 1.0300 5 1,000 870.00
Dec-96 DAY, B 1.0300 5 5,000 4,350.00
Dec-96 MILLETTE, S 1.0300 5 5,000 4,350.00
Dec-96 WRIGHT, M 1.0300 5 1,000 870.00
Dec-96 JOHNSON, P 1.0300 5 1,000 870.00
Dec-96 RILEY, G 1.0300 5 1,000 870.00
Dec-96 GILBERT, R 1.0300 5 1,000 870.00
Dec-96 HENRY, J 1.0300 5 1,000 870.00
Dec-96 PARADIS, F 1.0300 5 3,000 2,610.00
Dec-96 MARTIN, P 1.0300 5 2,000 1,740.00
Dec-96 BENNETT, D 1.0300 5 5,000 4,350.00
May-97 LOCKYER, M 0.8400 5 10,000 10,600.00
Aug-97 LOCKYER, M 1.2900 5 5,000 3,050.00
Aug-97 SULLIVAN, D 1.0900 5 25,000 20,250.00
--------- ------------
TOTAL 199,000 105,298.00
--------- ------------
TOTAL QUALIFIED OPTIONS 333,400 228,608.75
A-I-29
VITRONICS CORPORATION
NONQUALIFIED STOCK OPTION PLANS
VESTING BALANCE AMOUNT
DATE NAME PRICE YEARS 8/26/97 PAID
- --------- ----------------------------------------------------------- --------- ------------- --------- ------------
May-92 STEADMAN, D 1.1250 5 10,000 7,750.00
Dec-92 MANFIELD, J 0.5625 5 28,000 37,450.00
Dec-92 MANFIELD, J 0.5625 5 22,000 29,425.00
Dec-92 STEADMAN, D 0.5625 5 20,000 26,750.00
Dec-92 STEADMAN, D 0.5625 5 15,000 20,062.50
Dec-93 MANFIELD, J 0.8400 5 25,000 26,500.00
Dec-94 MANFIELD, J 1.3125 5 50,000 29,375.00
Dec-94 STEADMAN, D 1.3125 5 20,000 11,750.00
Dec-95 KANELY, J 2.3438 5 20,000 --
--------- ------------
TOTAL 210,000 189,062.50
--------- ------------
TOTAL OPTIONS 543,400 417,671.25
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.4
1. Loan Agreement with First National Bank of Portsmouth(Bank of New
Hampshire)
2. Miscellaneous office equipment leases and software licenses
3. The Company is reviewing its real estate leases in Newmarket, NH and
Plymouth, England
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.6
None
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.7
None
A-I-30
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.8
VITRONICS V. CONCEPTRONICS (Docket Number C-91-696L)
CONCEPTRONICS V. VITRONICS AND MANFIELD ET AL (Docket Number 97-C-18)
Letters of counsel in response to auditors requests have previously been
provided to Parent during due diligence process.
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.9 (A)
Stock Option Plans:
1983 Stock Option Plan
1983 II Stock Option Plan
1987 Stock Option Plan
1995 Stock Option Plan
(Copies of the above Plans and a copy of the Qualified and Non-Qualified
Stock Option Agreements were previously provided to Parent during the due
diligence process) (See Section 3.2 (a) for a schedule of current stock options
outstanding under all option plans)
Employment Agreements:
James J. Manfield Jr.
Thomas Nash
Daniel J. Sullivan
Steven A. Millette
Michael Lockyer
(copies of the above Employment Agreements were previously provided to
Parent during the due diligence process)
Benefit Management of Maine Health Insurance Plan(Self insured)
Boston Mutual Officers Health Insurance Plan
Dental Plan
Life Insurance Plan
Additional Life Insurance for Officers
Short Term Disability Insurance
Long Term Disability Insurance
Additional Disability Insurance for Officers
Tuition Reimbursement
401K Plan, with 25% matching up to 6%
$70 per year towards purchase of safety shoes
Section 125 pre-tax medical reimbursement and dependent care
Employee Assistance Program
$100,000 Travel Accident Insurance
Employee Stock Purchase Plan
Employee Handbook
(copies of the above employee benefits were previously provided to Parent
during the due diligence process)
A-I-31
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.9 (I)
Employment Agreements:
James J. Manfield Jr.
Thomas Nash
Daniel J. Sullivan
Steven A. Millette
Michael Lockyer
Copies of the above employment agreement were provided to Parent as part of
the due diligence process.
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.10 (A)
The Company is current in its tax filings in those states in which it is
currently registered.
The Company is currently registered for Sales & Use tax in Massachusetts,
Illinois and California.
The Company presently is registered for VAT purposes in England.
The Company presently is registered for income tax purposes in California,
Massachusetts and New Hampshire and England.
The Company presently withholds income taxes for California, Massachusetts,
Connecticut, Maine, Illinois, federal and England.
There may be other locations in which the Company has nexus, and is
presently unaware of this fact.
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.10 (B)
None
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.10 (C)
None
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.10 (F)
The Company has granted Powers of attorney in the ordinary course of
business to various freight forwarders for the purpose of clearing freight
through customs and other freight forwarding functions.
A-I-32
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.11 (A)
Trademarks:
VITRONICS
UNITHERM
ENVIROCLEAN
Trademark VITRONICS
Common Law Trademarks:
IsoTherm
VITROSENSE
Natural Convection/Infrared
Controlled Convection/Infrared
VITRO-FOIL
VITRO-CLEAN
Acro-Therm
RadianTherm
MagnaTherm
Tops
Polar Cooling
SELECTSeries
AutoPurge
BGA Solutions
Patents:
4,833,301 Multi-Zone Thermal Process System Utilizing Nonfocused Infrared Panel Emitters
5,103,846 Apparatus for Cleaning Mechanical Devices Using Terpene Compounds
5,573,688 Convection/Infrared Solder Reflow Apparatus
4,565,917 Multi-Zone Thermal Process System Utilizing Nonfocused Infrared Panel Emitters
4,077,557 Dip Storage, Insertion and Ejection Tool
4,602,238 Infrared Panel Emitter and Method of Producing the Same
4,696,096 Reworking Methods and Apparatus for Surface Mounted Technology Circuit Boards
4,654,502 Method for Reflow Soldering of Surface Mounted Devices to Printed Circuit Boards
4,659,906 Infrared Panel Emitter and Method of Producing the Same
Foreign Patents continued on next page
Canadian Patent 1,234,429 Infrared Panel Emitter and Method of Producing the
Same
Canadian Patent 1,235,529 Multi-Zone Thermal Process System Utilizing
Nonfocused Infrared Panel Emitters
European Patent 0,181,341,B1 Infrared Panel Emitter and Method of Producing
the Same
European Patent 0,169,885,B1 Multi-Zone Thermal Process System Utilizing
Nonfocused Infrared Panel Emitters
Danish Patent 157,589 Multi-Zone Thermal Process System Utilizing Nonfocused
Infrared Panel Emitters
Taiwan Patent 49,283 Apparatus for Cleaning Mechanical Devices Using Terpene
Compounds
A-I-33
Taiwan Patent Rights 22,987 Multi-Zone Thermal Process System Utilizing
Nonfocused Infrared Panel Emitters
Taiwan Patent Rights 22,988 Infrared Panel Emitter and Method of Producing
the Same
Copies of the above referenced Patents and Trademarks were previously
provided to Parent during the due diligence process.
The Company's patents are currently subject to litigation as disclosed in
Section 3.8
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.12
Corporate Staff:
James Manfield
Thomas Nash
Steven Millette
Michael Lockyer
Daniel Sullivan
Albert Chanasyk
Lorraine Giordano
Brian Day
Given the absence of future written employment agreements for officers and
managers and the uncertainty generated during the due diligence process, the
Company has no ability to comment on the future plans of individuals.
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.15 (E)
None
VITRONICS CORPORATION
DISCLOSURE SCHEDULE
SECTION 3.18
Scott-Macon Agreement attached as Exhibit 3.18
A-I-34
SCOTT-MACON, LTD.
800 THIRD AVENUE
NEW YORK, N.Y. 10022-7604
212-755-8200
212-755-8255 (FAX)
July 30, 1997
Mr. James J. Manfield, Jr.
Chairman of the Board and
Chief Executive Officer
Vitronics Corporation
4 Forbes Road
Newmarket Industrial Park
Newmarket, New Hampshire 03857
Dear Jim:
This letter will confirm the understanding and agreement between
Scott-Macon, Ltd. ("Scott-Macon") and Vitronics Corporation ("Vitronics") with
respect to the investment banking services to be provided by Scott-Macon to
Vitronics and the fees to be paid to Scott-Macon by Vitronics.
Scott-Macon will provide investment banking services to Vitronics in
connection with a sale or merger of Vitronics with another entity or an
acquisition by Vitronics of another entity. To date, Scott-Macon has discussed
with Vitronics the potential acquisition by or merger with BTU International,
Inc., Cookson Group plc, Conceptronic, Inc. (a subsidiary of Arguss Holdings
Inc.), and Soltec Inc. (a subsidiary of Dover Technology which in turn is a
subsidiary of Dover Corporation). Additional companies that are actively
involved in reviewing Vitronics for a potential purchase or merger will also be
included. The four companies mentioned above, and these additional companies,
will be referred to as a target company ("Target Company").
In the event that prior to the date this letter agreement terminates or is
otherwise extended, Vitronics or any portion thereof is either sold or merged
with any Target Company or Vitronics acquires all or a portion of any Target
Company, Vitronics will pay to Scott-Macon a fee (the "Success Fee") equal to
the total of:
5% of the first $2,000,000 of Transaction Value,
4% of the second $2,000,000 of Transaction Value,
3% of the third $2,000,000 of Transaction Value,
2% of the fourth $2,000,000 of Transaction Value, and
1% of Transaction Value in excess of $8,000,000.
As used herein, "Transaction Value" shall be the fair market value of the
consideration paid, namely the amount of cash and/or assets and the value of any
equity and/or debt issued, raised, assumed or forgiven in completing the
transaction, plus any contingent payment used in the transaction when the
contingent payment is paid. Transaction Value shall exclude the value of any
employment agreement entered into by James J. Manfield, Jr. and any other
employment agreements as a result of a transaction. The Success Fee shall be
paid to Scott-Macon by bank wire or certified check at the time of Closing.
Should the Success Fee referred to above be paid to Scott-Macon by Vitronics
as a result of the completion of a partial (at least 40%) merger with or
acquisition of a Target Company, and Vitronics subsequently merges with or
acquires the remaining portion of the Target Company within twenty four months
of the initial partial merger or acquisition, Scott-Macon will be paid an
additional fee calculated by applying the Success Fee outlined above to a new
Transaction Value inclusive of the original and newly acquired portion, but
giving credit for the initial Success Fee paid to Scott-Macon.
A-I-35
Vitronics will pay for all reasonable out-of-pocket expenses incurred by
Scott-Macon in connection with its retention by Vitronics. Normal out-of-pocket
expenses include, but are not limited to, travel, hotel, meals, telephone and
telefax charges, postage, express mail and messenger charges, and copying and
printing charges. Any professionals such as legal or accounting retained by
Vitronics will be paid directly by Vitronics to the firms involved. Scott-Macon
will obtain from Vitronics prior approval on individual expenses which exceed
one thousand dollars ($1,000). In addition, Scott-Macon will obtain from
Vitronics prior approval on all expenses when the cumulative expenses reach
$5,000. Scott-Macon shall submit periodic invoices for reimbursable expenses.
This agreement shall continue for a period of eight months from the signing
of this agreement. However, if an agreement covering a specific transaction is
being actively negotiated at the expiration of the eight-month period, this
agreement will be extended after the expiration of the eight month period until
that transaction is completed or the negotiations cease.
In connection with engagements such as this, it is our firm's policy to
receive indemnification and contribution. Therefore:
1. The Company agrees to indemnify and hold harmless Scott-Macon, its
affiliates and their respective directors, officers, employees, owners,
agents and controlling persons (each an "Indemnified Party") from and
against any and all losses, claims, damages and liabilities, joint or
several, to which any Indemnified Party may become subject in connection
with or arising out of or relating to the engagement of Scott-Macon under
this letter agreement, or any actions taken or omitted, services
performed or matters contemplated by or in connection with this letter
agreement, and to reimburse each Indemnified Party promptly upon demand
for expenses (including fees and expenses of legal counsel) as they are
incurred in connection with the investigation of, preparation for or
defense of any pending or threatened claim, or any litigation proceeding
or other action in respect thereof, including any amount paid in
settlement of any litigation or other action (commenced or threatened) to
which the Company shall have consented in writing (such consent not to be
unreasonably withheld, considering, among other things, the best interest
of the Company), whether or not any Indemnified Party is a party and
whether or not liability resulted; provided, however, that the Company
shall not be liable under the foregoing indemnity agreement to an
Indemnified Party in respect of any loss, claim, damage or liability to
the extent that a court having competent jurisdiction shall have
determined by a final judgement (not subject to further appeal) that such
loss, claim, damage or liability resulted primarily from the willful
misfeasance or gross negligence of such Indemnified Party.
2. An Indemnified Party shall accept legal counsel of the Company, provided
that such counsel is reasonably satisfactory to the Indemnified party, to
conduct the defense and all related matters in connection with any such
litigation, proceeding or other action. The Company shall pay the
reasonable fees and expenses of such legal counsel and such counsel shall
to the fullest extent consistent with its professional responsibilities
cooperate with the Company and any legal counsel designated by the
Company.
3. In the event that the indemnity provided for in paragraphs 1 and 2
hereof is unavailable or insufficient to hold any Indemnified Party
harmless, then the Company shall contribute to amounts paid or payable by
an Indemnified Party in respect of such Indemnified Party's losses,
claims, damages and liabilities as to which the indemnity provided for in
paragraphs 1 and 2 hereof is unavailable (i) in such proportion as
appropriately reflects the relative benefits received by the Company, on
the one hand, and such Indemnified Party, on the other hand, in
connection with the matters as to which such losses, claims, damages or
liabilities relate, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as
appropriately reflects not only the relative benefits referred to in
clause (i) but also the relative fault of the Company, on the one hand,
and such Indemnified Party on the other hand as well as
A-I-36
any other equitable considerations. The amount paid or payable by the
party in respect of losses, claims, damages and liabilities referred to
above shall be deemed to include any reasonable legal or other fees and
expenses incurred in defending any litigation, proceeding or other action
or claim. Notwithstanding the provisions hereof, the Indemnified Parties
shall not be required to contribute any amount in excess of the amount of
fees actually received by Scott-Macon during the previous twelve months
under this letter agreement (excluding the amounts received as
reimbursement of expenses incurred by Scott-Macon).
4. It is understood and agreed that, in connection with Scott-Macon's
engagement by the Company, Scott-Macon or its affiliates may also be
engaged to act for the Company or it's affiliates in one or more
additional capacities, and that the terms of any such additional
engagement may be embodied in one or more separate written agreements.
These Indemnification Provisions shall apply to the engagement under this
letter agreement and to any such additional engagement and any
modification of such additional engagement.
5. These Indemnification Provisions shall remain in full force and effect
whether or not any of the transactions contemplated by the Letter
Agreement are consummated and shall survive the expiration of the period
of the Letter Agreement, and shall be in addition to any liability that
the Company might otherwise have to any Indemnified Party under the
Letter Agreement or otherwise.
This agreement may only be modified in writing.
If the foregoing correctly reflects our agreement, will you kindly indicate
your acceptance by signing, dating and returning the enclosed copy of this
agreement, retaining the original for your files.
Very truly yours,
SCOTT-MACON, LTD.
/s/ Robert B. Dimmitt
Managing Director
AGREED TO AND ACCEPTED:
VITRONICS CORPORATION
BY: /s/__James J. Manfield, Jr.
TITLE: Chairman and CEO
DATE: August 11, 1997
A-I-37
ANNEX II
[LOGO]
September 3, 1997
Board of Directors
Vitronics Corporation
4 Forbes Road
Newmarket Industrial Park
Newmarket, NH 03857
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, of the per share consideration to be received by the holders of common
stock, par value $0.01 per share (the "Common Stock") of Vitronics Corporation
(the "Company") in connection with the proposed tender offer for the Common
Stock and subsequent acquisition of the Company by Intermediate, Inc. (the
"Purchaser"), a wholly-owned subsidiary of Dover Technologies International,
Inc. (the "Parent").
The terms of the tender offer and acquisition are to be set forth in the
Agreement and Plan of Merger by and among the Company, the Purchaser and the
Parent (the "Agreement"). Our opinion is based on the terms of the latest draft
of the Agreement dated September 3, 1997 which, as of the date of this opinion,
has not yet been executed. Subject to the terms and conditions in the Agreement,
in the tender offer, each issued and outstanding share of Common Stock validly
tendered and not withdrawn will be purchased by the Purchaser for cash
consideration, without interest, of $1.90 net to the seller, and in the event
the acquisition is consummated, each issued and outstanding share of Common
Stock shall be converted into the right to receive cash, without interest, in
the amount of $1.90 net to the seller. The capitalized terms used herein but not
defined shall have the meanings ascribed to such terms in the Agreement.
In connection with this opinion, we have reviewed, among other things:
1. The Agreement;
2. Vitronics Corporation Annual Report for the years ended December 31,
1994, 1995 and 1996;
3. Vitronics Corporation Form 10-K for the years ended December 31, 1994,
1995, and 1996;
4. Vitronics Corporation Quarterly Report Form 10-Q for the quarters ended
September 30, 1996, March 31, 1997 and June 30, 1997;
5. Projections prepared by Vitronics Corporation management for five years
ending December 31, 2002;
We also have held discussions with members of the senior management of the
Company regarding past and current business operations, financial condition and
future prospects of the Company. In addition, we have reviewed the reported
price and trading activity for the Common Stock, compared certain financial and
stock market information for the Company with similar information for certain
other companies the securities of which are publicly traded and performed such
other studies and analyses as we considered appropriate.
In connection with our review, we relied without independent verification
upon the accuracy and completeness of all of the financial and other information
reviewed by us for the purposes of this opinion.
A-II-1
With respect to the financial forecasts, we assumed, with your consent, that
they have been reasonably prepared on a basis reflecting the best currently
available estimates and judgements of the management of the Company. We have
also assumed, without having responsibility for independent verification, that
the statements made to us by the management of the Company are true and correct.
We have not made an independent valuation or appraisal of the assets and
liabilities of the Company. We have been advised as to all legal and tax matters
by legal counsel and tax advisors to the Company upon whom we relied.
This opinion letter is for the information and benefit of the Board of
Directors of the Company in connection with its consideration of the Merger. A
description of this opinion may be included in the proxy statement and may be
referred to in other filings with the Securities and Exchange Commission
pertaining to this subject matter, but only if in each case a copy of the report
or opinion in its entirety is also included. Any such description will be
submitted to Scott-Macon Securities, Inc. ("Scott-Macon") for our review and
approval prior to its release. Our opinion may not be used for any other purpose
or otherwise reproduced, disseminated, quoted, or referred to at any time, in
any manner or for any purpose without our prior written consent. Our opinion is
not intended to be and will not constitute a recommendation to any holder of
Common Stock of the Company as to whether such stockholder should vote for the
proposed transaction.
Scott-Macon, Ltd., an affiliate of Scott-Macon, has acted as financial
advisor to the Company in connection with this transaction and will receive a
fee for its services. Scott-Macon has received a fee in connection with this
opinion. In the past, Scott-Macon, Ltd. and its affiliates have separately
performed certain investment banking services for the Company and received fees
customary for such services.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the consideration to be received by the holders of Common Stock is
fair from a financial point of view.
Very truly yours,
SCOTT-MACON SECURITIES, INC.
Jeffrey M. Tepper
Managing Director
A-II-2
ANNEX III
SECTIONS 86 TO 98 OF MASSACHUSETTS BUSINESS CORPORATION LAW
86 RIGHT OF APPRAISAL. If a corporation proposes to take a corporate
action as to which any section of this chapter provides that a stockholder who
objects to such action shall have the right to demand payment for his shares and
an appraisal thereof, sections eighty-seven to ninety-eight, inclusive, shall
apply except as otherwise specifically provided in any section of this chapter.
Except as provided in sections eighty-two and eighty-three, no stockholder shall
have such right unless (1) he files with the corporation BEFORE THE TAKING OF
THE VOTE OF THE SHAREHOLDERS ON SUCH CORPORATE ACTION, written objection to the
proposed action STATING THAT HE INTENDS TO DEMAND PAYMENT FOR HIS SHARES IF THE
ACTION IS TAKEN and (2) his shares are not voted in favor of the proposed
action.
87 NOTICE OF STOCKHOLDERS MEETING TO CONTAIN STATEMENT AS TO APPRAISAL
RIGHTS. The notice of the meeting of stockholders at which the approval of such
proposed action is to be considered shall contain a statement of the rights of
objecting stockholders. The giving of such notice shall not be deemed to create
any rights in any stockholder receiving the same to demand payment for his
stock, and the directors may authorize the inclusion in any such notice of a
statement of opinion by the management as to the existence or non-existence of
the right of the stockholders to demand payment for their stock on account of
the proposed corporate action. The notice may be in such form as the directors
or officers calling the meeting deem advisable, but the following form of notice
shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the
meeting and effected by the corporation, any stockholder (1) who
files with the corporation BEFORE THE TAKING OF THE VOTE ON THE
APPROVAL OF SUCH ACTION, WRITTEN OBJECTION TO THE PROPOSED ACTION
STATING THAT HE INTENDS TO DEMAND PAYMENT FOR HIS SHARES IF THE
ACTION IS TAKEN AND (2) WHOSE SHARES ARE NOT VOTED IN FAVOR OF SUCH
ACTION HAS OR MAY HAVE THE RIGHT TO DEMAND IN WRITING FROM THE
CORPORATION (OR, IN THE CASE OF A CONSOLIDATION OR MERGER, THE NAME
OF THE RESULTING OR SURVIVING CORPORATION SHALL BE INSERTED), WITHIN
TWENTY DAYS AFTER THE DATE OF MAILING TO HIM OF NOTICE IN WRITING
THAT THE CORPORATE ACTION HAS BECOME EFFECTIVE, PAYMENT FOR HIS
SHARES AND AN APPRAISAL OF THE VALUE THEREOF. Such corporation and
any such stockholder shall in such cases have the rights and duties
and shall follow the procedure set forth in sections 88 to 98,
inclusive, of chapter 156B of the General Laws of Massachusetts."
88 NOTICE TO OBJECTING STOCKHOLDER THAT CORPORATE ACTION HAS BECOME
EFFECTIVE. The corporation taking such action, or in the case of a merger or
consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became effective, notify each
stockholder who filed written objection MEETING THE REQUIREMENTS OF SECTION
EIGHTY-SIX AND WHOSE SHARES WERE NOT VOTED IN FAVOR OF THE APPROVAL OF SUCH
ACTION, THAT THE ACTION APPROVED AT THE MEETING OF THE CORPORATION OF WHICH HE
IS A STOCKHOLDER HAS BECOME EFFECTIVE. THE GIVING OF SUCH NOTICE SHALL NOT BE
DEEMED TO CREATE ANY RIGHTS IN ANY STOCKHOLDER RECEIVING THE SAME TO DEMAND
PAYMENT FOR HIS STOCK. The notice shall be sent by registered or certified mail,
addressed to the stockholder at his last known address as it appears in the
records of the corporation.
89 DEMAND FOR PAYMENT BY OBJECTING STOCKHOLDER. If within twenty days
after the date of mailing a notice under subsection (e) of section eighty-two,
subsection (f) of section eighty-three, or section eighty-eight ANY STOCKHOLDER
TO WHOM THE CORPORATION WAS REQUIRED TO GIVE SUCH NOTICE SHALL demand in writing
from the corporation taking such action, or in the case of a consolidation or
merger from the resulting or surviving corporation, payment for his stock, the
corporation upon which such demand is made shall pay to him the fair value of
his stock within thirty days after the expiration of the period during which
such demand may be made.
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90 DETERMINATION OF VALUE OF STOCK BY SUPERIOR COURT. If during the
period of thirty days provided for in section eighty-nine the corporation upon
which such demand is made and any such objecting stockholder fail to agree as to
the value of such stock, such corporation or any such stockholder may within
four months after the expiration of such thirty-day period demand a
determination of the value of the stock of all such objecting stockholders by a
bill in equity filed in the superior court in the county where the corporation
in which such objecting stockholder held stock had or has its principal office
in the commonwealth.
91 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS
ON FAILURE TO AGREE ON VALUE THEREOF , ETC.; PARTIES TO BILL ETC.; SERVICE OF
BILL ON CORPORATION; NOTICE TO STOCKHOLDER PARTIES, ETC. If the bill is filed by
the corporation, it shall name as parties respondent all stockholders who have
demanded payment for their shares and with whom the corporation has not reached
agreement as to the value thereof. If the bill is filed by a stockholder, he
shall bring the bill in his own behalf and in behalf of all other stockholders
who have demanded payment for their shares and with whom the corporation has not
reached agreement as to the value thereof, and service of the bill shall be made
upon the corporation by subpoena with a copy of the bill annexed. The
corporation shall file with its answer a duly verified list of all such other
stockholders, and such stockholders shall thereupon be deemed to have been added
as parties to the bill. The corporation shall give notice in such form and
returnable on such date as the court shall order to each stockholder party to
the bill by registered or certified mail, addressed to the last known address of
such stockholder as shown in the record of the corporation, and the court may
order such additional notice by publication or otherwise as it deems advisable.
Each stockholder who makes demand as provided in section eighty-nine shall be
deemed to have consented to the provisions of this section relating to notice,
and the giving of notice by the corporation to any such stockholder in
compliance with the order of the court shall be a sufficient service of process
on him. Failure to give notice to any stockholder making demand shall not
invalidate the proceedings as to other stockholders to whom notice was properly
given, and the court may at any time before the entry of a final decree make
supplementary orders of notice.
92 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS
ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; ENTRY OF DECREE DETERMINING VALUE OF
STOCK; DATE ON WHICH VALUE IS TO BE DETERMINED. After hearing the court shall
enter a decree determining the fair value of the stock of those stockholders who
have become entitled to the valuation of and payment for their shares, and shall
order the corporation to make payment of such value, together with interest, if
any, as hereinafter provided, to the stockholders entitled thereto upon the
transfer by them to the corporation of the certificates representing such stock
IF CERTIFICATED OR IF UNCERTIFICATED, UPON RECEIPT OF AN INSTRUCTION
TRANSFERRING SUCH STOCK TO THE CORPORATION. For this purpose, the value of the
shares shall be determined as of the day preceding the date of the vote
approving the proposed corporate action and shall be exclusive of any element of
value arising from the expectation or accomplishment of the proposed corporate
action.
93 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS
ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; COURT MAY REFER BILL, ETC., TO
SPECIAL MASTER TO HEAR PARTIES, ETC. The court in its discretion may refer the
bill or any question arising thereunder to a special master to hear the parties,
make findings and report the same to the court, all in accordance with the usual
practice in suits in equity in the superior court.
94 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS
ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; STOCKHOLDER PARTIES MAY BE REQUIRED
TO SUBMIT THEIR STOCK CERTIFICATES FOR NOTATION THEREON OF PENDENCY OF BILL,
ETC. On motion the court may order stockholder parties to the bill to submit
their certificates of stock to the corporation for notation thereon of the
pendency of the bill, and MAY ORDER THE CORPORATION TO NOTE SUCH PENDENCY IN ITS
RECORDS WITH RESPECT TO ANY UNCERTIFICATED SHARES HELD BY SUCH STOCKHOLDER
PARTIES, and may on motion dismiss the bill as to any stockholder who fails to
comply with such order.
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95 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS
ON FAILURE TO AGREE ON VALUE THEREOF, ETC.; TAXATION OF COSTS, ETC.; INTEREST ON
AWARD, ETC. The costs of the bill, including the reasonable compensation and
expenses of any master appointed by the court, but exclusive of fees of counsel
or of experts retained by any party, shall be determined by the court and taxed
upon the parties to the bill, or any of them, in such manner as appears to be
equitable, except that all costs of giving notice to stockholders as provided in
this chapter shall be paid by the corporation. Interest shall be paid upon any
award from the date of the vote approving the proposed corporate action, and the
court may on application of any interested party determine the amount of
interest to be paid in the case of any stockholder.
96 STOCKHOLDER DEMANDING PAYMENT FOR STOCK NOT ENTITLED TO NOTICE OF
STOCKHOLDERS' MEETINGS OR TO VOTE STOCK OR TO RECEIVE DIVIDENDS, ETC.;
EXCEPTIONS. Any stockholder who has demanded payment for his stock as provided
in this chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed within the time provided in section
ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the corporation,
or in the case of a consolidation or merger, the resulting or surviving
corporation, deliver to it a written withdrawal of his objections to and an
acceptance of such corporate action.
NOTWITHSTANDING THE PROVISIONS OF CLAUSES (1) TO (3), INCLUSIVE, SAID
STOCKHOLDER SHALL HAVE ONLY THE RIGHTS OF A STOCKHOLDER WHO DID NOT SO DEMAND
PAYMENT FOR HIS STOCK AS PROVIDED IN THIS CHAPTER.
97 CERTAIN SHARES PAID FOR BY CORPORATION TO HAVE STATUS OF TREASURY
STOCK, ETC. The shares of the corporation paid for by the corporation pursuant
to the provisions of this chapter shall have the status of treasury stock or in
the case of a consolidation or merger the shares or the securities of the
resulting or surviving corporation into which the shares of such objecting
stockholder would have been converted had he not objected to such consolidation
or merger shall have the status of treasury stock or securities.
98 ENFORCEMENT BY STOCKHOLDER OF RIGHT TO RECEIVE PAYMENT FOR HIS SHARES
TO BE EXCLUSIVE REMEDY; EXCEPTION. The enforcement by a stockholder of his
right to receive payment for his shares in the manner provided in this chapter
shall be an exclusive remedy except that this chapter shall not exclude the
right of such stockholder to bring or maintain an appropriate proceeding to
obtain relief on the ground that such corporate action will be or is illegal or
fraudulent as to him.
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