UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
June 30, 2016
American Science and Engineering, Inc.
(Exact name of registrant as specified in its charter)
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Massachusetts |
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1-6549 |
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04-2240991 |
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(State or other jurisdiction of |
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(Commission File Number) |
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(IRS Employer Identification No.) |
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829 Middlesex Turnpike |
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01821 |
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(Address of principal executive offices) |
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(Zip Code) |
(978) 262-8700
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
x Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 8.01 Other Events.
As previously disclosed in the Current Report on Form 8-K filed on June 21, 2016 by American Science and Engineering, Inc. (the “Company”), on June 20, 2016, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with OSI Systems, Inc., a Delaware corporation (“OSI”), and its newly formed, wholly owned subsidiary, Apple Merger Sub, Inc., a Massachusetts corporation (“Merger Sub”), providing for the merger of Merger Sub into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of OSI, subject to the terms and conditions set forth in the Merger Agreement.
On June 30, 2016, the Company sent notices to holders of stock options to purchase Company common stock in the form filed as Exhibit 99.1 hereto and incorporated herein by reference.
On June 30, 2016, the Company sent notices to holders of restricted stock awards of the Company in the form filed as Exhibit 99.2 hereto and incorporated herein by reference.
On June 30, 2016, the Company sent notices to holders of restricted stock unit awards and cash awards of the Company in the forms filed as Exhibits 99.3 and 99.4 hereto and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The Exhibits to this Current Report on Form 8-K are listed in the Exhibit Index attached hereto.
Additional Information and Where to Find It
The Company plans to file with the Securities and Exchange Commission (the “SEC”) and mail to its shareholders a Proxy Statement in connection with the Merger. Additionally, the Company will file other relevant materials with the SEC in connection with the Merger. The Proxy Statement will contain important information about the Company, Merger Sub, OSI, the Merger and related matters. Investors and security holders are urged to read the Proxy Statement carefully when it is available.
Investors and security holders will be able to obtain free copies of the Proxy Statement and other documents filed with the SEC by the Company and OSI through the web site maintained by the SEC at www.sec.gov.
In addition, investors and security holders will be able to download copies of the Proxy Statement from the Company’s website at http://ir.as-e.com/sec.cfm or by emailing ir@as-e.com.
The Company, and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the shareholders of the Company in respect of the transactions contemplated by the Merger Agreement. Information regarding the Company’s directors and executive officers is contained in the Company’s Form 10-K for the year ended March 31, 2016 and its proxy statement dated July 29, 2015, which are filed with the SEC. To the extent holdings of securities by such directors or executive officers have changed since the amounts printed in the 2015 proxy statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Additional information regarding the participants in the solicitation of proxies in respect of the transactions contemplated by the Merger Agreement and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement to be filed by the Company and other relevant materials to be filed with the SEC when they become available.
Forward-Looking Statements
Statements in this document concerning the proposed transaction between the Company and OSI, the ability to consummate the transaction, the expected benefits of the transactions and benefits and synergies of the transaction that may constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Forward-looking statements within the meaning of the Reform Act are
generally identified through the inclusion of terms such as “believes,” “anticipates,” “plans,” “expects,” “intends,” “may,” “should,” “estimates” or other similar expressions. Actual results might differ materially from those projected in any forward-looking statements. Factors which might cause actual results or events to differ materially from those projected in the forward-looking statements contained herein include the following: uncertainties regarding the timing of the closing of the transaction; uncertainties as to how many of the Company’s shareholders will vote in favor of the transaction; the possibility that various closing conditions to the merger may not be satisfied or waived, including that a governmental entity may prohibit, delay, or refuse to grant approval for the consummation of the transaction; that there is a material adverse change to the Company; the interference with business resulting from distraction of the Company’s employees; the integration of the Company’s business into OSI is not as successful as expected; the failure to realize anticipated synergies and cost savings; other business effects, including reductions, delays or cancellations of orders; disruption in the supply of any source component incorporated into Company’s products; the Company’s ability to protect and enforce its intellectual property; potential product liability claims against the Company; global political and economic trends and events which affect public perception of the threat presented by drugs, explosives and other contraband and influence the spending of governments and private organizations; future reductions in federal funding; the potential insufficiency of Company resources, including human resources, capital, plant and equipment and management systems, to accommodate any future growth; technical problems and other delays that could impact new product development and the Company’s ability to implement changes in technology and customer requirements; competitive pressures; the impact of lengthy sales cycles and customer delays both in United States government procurement and procurement abroad on the Company’s cash flows; changes in U.S. or foreign regulations that affect the use or export of our products; general economic conditions, and other factors discussed in the “Risk Factors” section of the Company’s periodic reports and registration statements filed with the SEC, including the Company’s most recent annual report on Form 10-K. These forward-looking statements speak only as of the date of this current report on Form 8-K, and the Company expressly disclaims any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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June 30, 2016 |
AMERICAN SCIENCE AND ENGINEERING, INC. | |
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By: |
/s/ Michael J. Muscatello |
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Michael J. Muscatello |
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Vice President, General Counsel, and Secretary |
EXHIBIT INDEX
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Exhibit Number |
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Description |
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99.1 |
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Notice to Holders of Options, sent by American Science and Engineering, Inc. on June 30, 2016. |
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99.2 |
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Notice to Holders of Restricted Stock Awards, sent by American Science and Engineering, Inc. on June 30, 2016. |
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99.3 |
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Notice to Holders of Restricted Stock Unit Awards and Cash Awards, sent by American Science and Engineering, Inc. on June 30, 2016. |
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99.4 |
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Notice to Holders of Restricted Stock Unit Awards and Cash Awards who are Covered by a Severance Benefits and Change in Control Agreement, sent by American Science and Engineering, Inc. on June 30, 2016. |
Exhibit 99.1
AMERICAN SCIENCE AND ENGINEERING, INC.
Notice to Holders of Options
June 30, 2016
Dear Option Holder:
On June 20, 2016, American Science and Engineering, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), with OSI Systems, Inc., a Delaware corporation (the “Buyer” or “OSI”) and Apple Merger Sub, Inc., a Massachusetts corporation and a wholly-owned subsidiary of Buyer (the “Transitory Subsidiary”) providing for the merger (the “Merger”) of Transitory Subsidiary with and into the Company, with the Company surviving the Merger as a wholly-owned subsidiary of Buyer.
We would like to inform you about how your options will be treated in connection with the Merger. For purposes of this notice, the term “Merger Effective Time” will mean the effective time of the Merger.
Pursuant to the Merger Agreement, all options for the stock of the Company that have exercise prices in excess of $37 (the merger consideration in connection with the Merger) will be cancelled immediately prior to the Merger Effective Time. Accordingly, this notice is provided to inform you that, pursuant to the equity plan under which your options were granted, all of your options will terminate immediately prior to, but subject to, the closing of the Merger without payment of consideration therefor. U.S. option holders will not recognize any taxable income in connection with the cancellation of their options. Please note that if the Merger is not completed for any reason, the options you hold will not be cancelled and the options will continue in accordance with their present terms.
Please submit any questions you have regarding this notice by e-mail to Mike Muscatello at Mike.Muscatello@as-e.com or Lanning Levine at LLevine@as-e.com.
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Sincerely, |
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Stock Administration |
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American Science and Engineering, Inc. |
Additional Information and Where to Find It
This communication is for informational purposes only and is not an offer to buy or the solicitation of an offer to sell any securities. The Company plans to file with the Securities and Exchange Commission (the “SEC”) and mail to its shareholders a Proxy Statement in connection with the Merger. Additionally, the Company will file other relevant materials with the SEC in connection with the Merger. The Proxy Statement will contain important information about the
Company, the Transitory Subsidiary, OSI, the Merger and related matters. Investors and security holders are urged to read the Proxy Statement carefully when it is available. Investors and security holders will be able to obtain free copies of the Proxy Statement and other documents filed with the SEC by the Company and OSI through the web site maintained by the SEC at www.sec.gov. In addition, investors and security holders will be able to download copies of the Proxy Statement from the Company’s website at http://ir.as-e.com/sec.cfm or by emailing ir@as-e.com.
The Company, and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the shareholders of the Company in respect of the transactions contemplated by the Merger Agreement. Information regarding the Company’s directors and executive officers is contained in the Company’s Form 10-K for the year ended March 31, 2016 and its proxy statement dated July 29, 2015, which are filed with the SEC. To the extent holdings of securities by such directors or executive officers have changed since the amounts printed in the 2015 proxy statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Additional information regarding the participants in the solicitation of proxies in respect of the transactions contemplated by the Merger Agreement and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement to be filed by the Company and other relevant materials to be filed with the SEC when they become available.
Exhibit 99.2
AMERICAN SCIENCE AND ENGINEERING, INC.
Notice to Holders of Restricted Stock Awards
June 30, 2016
Dear Restricted Stock Award Holder:
On June 20, 2016, American Science and Engineering, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), with OSI Systems, Inc., a Delaware corporation (the “Buyer” or “OSI”) and Apple Merger Sub, Inc., a Massachusetts corporation and a wholly-owned subsidiary of Buyer (the “Transitory Subsidiary”) providing for the merger (the “Merger”) of Transitory Subsidiary with and into the Company, with the Company surviving the Merger as a wholly-owned subsidiary of Buyer.
We would like to inform you about how your restricted stock awards (“RSAs”) issued pursuant to an equity plan of the Company will be treated in connection with the Merger. For purposes of this Notice, the term “Merger Effective Time” will mean the effective time of the Merger.
Please read this notice carefully. Note that the description in this notice applies to the treatment of RSAs held by U.S. persons and the resulting tax consequences.
Pursuant to the Merger Agreement and the terms of the RSAs, each RSA that is outstanding and unvested immediately prior to the Merger Effective Time will automatically become fully vested and the restrictions thereon will lapse (the “Vested RSAs”), and each such Vested RSA will be cancelled and converted automatically into the right to receive a cash payment following the Merger Effective Time equal to (i) $37.00 multiplied by (ii) the number of shares subject to the Vested RSAs (the “Cash Payment”).
U.S. Tax Implications
You should consult your own tax advisor as to the specific tax implications to you of the Merger with respect to your RSAs, including the applicability and effect of federal, state, local and foreign tax laws. Your federal, state, local and foreign tax consequences depend upon your unique circumstances.
Cash Payments to RSA Holders
U.S. taxpayers who receive a Cash Payment in connection with purchase of the shares under their Vested RSAs will recognize ordinary income in an amount equal to their Cash Payments at the time such payments are made. Such income generally will constitute compensation income. No taxes will be withheld because all holders of RSAs are non-employee directors.
Please submit any questions you have regarding this notice by e-mail to Mike Muscatello at Mike.Muscatello@as-e.com or Lanning Levine at LLevine@as-e.com.
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Sincerely, |
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Stock Administration |
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American Science and Engineering, Inc. |
Additional Information and Where to Find It
This communication is for informational purposes only and is not an offer to buy or the solicitation of an offer to sell any securities. The Company plans to file with the Securities and Exchange Commission (the “SEC”) and mailed to its shareholders a Proxy Statement in connection with the Merger. Additionally, the Company will file other relevant materials with the SEC in connection with the Merger. The Proxy Statement will contain important information about the Company, the Transitory Subsidiary, OSI, the Merger and related matters. Investors and security holders are urged to read the Proxy Statement carefully when it is available. Investors and security holders will be able to obtain free copies of the Proxy Statement and other documents filed with the SEC by the Company and OSI through the web site maintained by the SEC at www.sec.gov. In addition, investors and security holders will be able to download copies of the Proxy Statement from the Company’s website at http://ir.as-e.com/sec.cfm or by emailing ir@as-e.com.
The Company, and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the shareholders of the Company in respect of the transactions contemplated by the Merger Agreement. Information regarding the Company’s directors and executive officers is contained in the Company’s Form 10-K for the year ended March 31, 2016 and its proxy statement dated July 29, 2015, which are filed with the SEC. To the extent holdings of securities by such directors or executive officers have changed since the amounts printed in the 2015 proxy statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Additional information regarding the participants in the solicitation of proxies in respect of the transactions contemplated by the Merger Agreement and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement to be filed by the Company and other relevant materials to be filed with the SEC when they become available.
Exhibit 99.3
AMERICAN SCIENCE AND ENGINEERING, INC.
Notice to Holders of Restricted Stock Unit Awards and Cash Awards
June 30, 2016
Dear Restricted Stock Unit Award Holder:
On June 20, 2016, American Science and Engineering, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), with OSI Systems, Inc., a Delaware corporation (the “Buyer” or “OSI”) and Apple Merger Sub, Inc., a Massachusetts corporation and a wholly-owned subsidiary of Buyer (the “Transitory Subsidiary”) providing for the merger (the “Merger”) of Transitory Subsidiary with and into the Company, with the Company surviving the Merger as a wholly-owned subsidiary of Buyer.
We would like to inform you about how your restricted stock unit awards (“RSUs”) and, if applicable, cash awards (“Cash Awards”) will be treated in connection with the Merger. For purposes of this notice, the term “Merger Effective Time” will mean the effective time of the Merger.
Please read this notice carefully. Note that the description in this notice applies to the treatment of RSUs and Cash Awards held by U.S. persons and the resulting tax consequences, except as indicated below.
Unvested RSUs. Your outstanding RSUs that are unvested as of the Merger Effective Time (your “Unvested RSUs”) will be assumed by the Buyer (the “Assumed RSUs”). Each Assumed RSU will continue to be subject to the same terms and conditions, including vesting, set forth in the plan under which the RSU was issued and your individual RSU agreement, except that (i) references to the “Company” or “American Science and Engineering, Inc.” in the plan and your individual RSU agreements will be treated as references to OSI, (ii) the Assumed RSUs will become RSUs to acquire shares of OSI common stock, and (iii) the number of shares of OSI common stock subject to your Assumed RSUs will be adjusted to a number determined by multiplying the number of shares of Company common stock underlying your RSU awards immediately prior to the Merger Effective Time by an exchange ratio (the “Exchange Ratio”) and rounding down to the nearest whole share.
The Exchange Ratio is based on the per-share deal price divided by an average closing stock price of OSI shares shortly before the closing date. The Exchange Ratio will equal the “Merger Consideration” (as defined in the Merger Agreement) of $37 per share of Company common stock divided by the average closing sale price of one share of OSI common stock as reported on the Nasdaq Global Select Market for the ten consecutive trading days ending on the date that is two trading days immediately preceding the closing date.
By way of example:
If, as of the Merger Effective Time, you have 100 unvested RSUs, and the OSI stock price is $55, the calculation would be as follows:
Exchange Ratio = $37 divided by $55 = 0.67272728
100 RSUs multiplied by 0.67272728 = 67 RSUs with respect to OSI common stock
LTIP 9 and LTIP 10 RSUs. For performance-based Company RSUs granted in or before the fiscal year ended March 31, 2015 (“LTIP 9” and “LTIP 10”), the performance conditions will remain unchanged. Shares with respect to LTIP 9 and LTIP 10 will continue to be subject to vesting based on annual performance results and will be distributed after they are vested. The awards will continue to provide that award holders who remain employed until the date in 2018 and 2019, for LTIP 9 and LTIP 10 respectively, when the goals are certified through the performance period ending March 31, 2018 and March 31, 2019, for LTIP 9 and LTIP 10 respectively, will receive additional vesting, if the vesting earned by performance is less than 50% of the original grant, so that each RSU award will vest as to at least 50% of the original grant (minus whatever has vested by performance). If your employment ends for any reason before your LTIP 9 or LTIP 10 awards are vested (and you are not then eligible for retirement under the LTIP 9 or LTIP 10 awards), you will forfeit any unvested amounts, except as otherwise provided under any written agreement. If you are or become retirement eligible under the terms of your LTIP 9 or 10 awards and you actually retire (or are terminated without Cause), you will receive distribution shortly after such retirement (or termination) of the shares accrued with respect to such awards shortly after such retirement, subject to the terms of those awards and any delays required for compliance with Section 409A of the Internal Revenue Code of 1986 (“Section 409A”).
LTIP 9 and LTIP 10 Cash Awards. For Cash Awards granted in connection with LTIP 9 and LTIP 10, the performance conditions will remain unchanged, and they will operate in other respects as though described above under LTIP 9 and LTIP 10 RSUs, with the references to shares referring instead to cash.
LTIP 11. Company RSUs granted in the fiscal year ended March 31, 2016 (“LTIP 11”) that vest solely on the basis of continued service (the “LTIP 11 Time Based Awards”) will continue to vest in accordance with their pre-Merger schedule. With respect to Company RSUs under LTIP 11 that vest partly based on performance and partly based on service (the “LTIP 11 Performance Awards”), the first third of the awards has been vested as to the performance requirements or forfeited based on performance for the fiscal year ended March 31, 2016; the second third will vest as to the performance requirements or be forfeited based on (i) actual performance during the fiscal year ending March 31, 2017 (if the Merger Effective Time is after March 31, 2017 and if performance can be determined at such time) or (ii) target level performance if the Merger Effective Time occurs sooner or performance cannot be determined; and the final third will vest as to the performance requirements at target level performance. Any shares not so vested will be forfeited. Shares under the LTIP 11 Performance Awards will continue to be subject to the service vesting requirement that the award holder remain employed by the Company until March 31, 2018, after which the shares with respect to such LTIP 11
awards will be distributed. If your employment ends for any reason before LTIP 11 Time Based Awards or the LTIP 11 Performance Awards are vested (and you are not then eligible for retirement under the applicable awards), you will forfeit the unvested amounts at that time, except as otherwise provided under any written agreement. If you are retirement eligible under the terms of your LTIP 11 Performance Award as of the Merger Effective Time, such award will automatically satisfy the service conditions, will convert into shares of Company common stock immediately before the Merger Effective Time (with the performance adjustments described above), and the related shares of Company common stock will be canceled and automatically converted into the right to receive the Merger Consideration times the number of such shares shortly after the closing (the “Cash Payment”). If you are retirement eligible under the terms of your LTIP 11 Time Based Awards or become retirement eligible under the terms of your LTIP 11 Time Based Awards or LTIP 11 Performance Awards after the Merger Effective Time and you actually retire (or are terminated without Cause), you will receive distribution shortly after such retirement (or termination) of such portion of the shares as the award agreements provide, subject to the terms of those awards and, for the LTIP 11 Performance Awards, any delays required for compliance with Section 409A.
U.S. Tax Implications
You should consult your own tax advisor as to the specific tax implications to you of the Merger with respect to your RSUs, including the applicability and effect of federal, state, local and foreign tax laws. Your federal, state, local and foreign tax consequences depend upon your unique circumstances.
Assumed RSUs
U.S. taxpayers with RSUs will not recognize ordinary income at the time OSI assumes their RSU awards. Instead, such individuals will recognize ordinary income when such Assumed RSUs become vested and OSI delivers shares of OSI common stock in settlement of their vested Assumed RSUs. The amount of ordinary income recognized for U.S. tax purposes will equal the fair market value on the payment date of the shares of OSI common stock that the individual receives and will be subject to the collection of applicable U.S. federal and state income and employment tax withholdings.
Retirement Eligible Participants
A U.S. taxpayer who is retirement eligible at the Merger Effective Time and who receives a Cash Payment in connection with purchase of the shares under his or her LTIP 11 Performance Awards will recognize ordinary income in an amount equal to his or her Cash Payment at the time the payment is made. Such income generally will constitute compensation income and will be subject to the collection of applicable U.S. federal and state income and employment tax withholdings.
Cash Award Payments
A U.S. taxpayer who receives a payment under the Cash Awards will recognize ordinary income in an amount equal to his or her payment at the time the payment is made. Such income
generally will constitute compensation income and will be subject to the collection of applicable U.S. federal and state income and employment tax withholdings.
International Tax Implications
You should consult your own tax advisor as to the specific tax implications to you of the Merger with respect to your RSUs or Cash Awards.
Please submit any questions you have regarding this notice by e-mail to Mike Muscatello at Mike.Muscatello@as-e.com or Lanning Levine at LLevine@as-e.com.
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Sincerely, |
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Stock Administration |
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American Science and Engineering, Inc. |
Additional Information and Where to Find It
This communication is for informational purposes only and is not an offer to buy or the solicitation of an offer to sell any securities. The Company plans to file with the Securities and Exchange Commission (the “SEC”) and mail to its shareholders a Proxy Statement in connection with the Merger. Additionally, the Company will file other relevant materials with the SEC in connection with the Merger. The Proxy Statement will contain important information about the Company, the Transitory Subsidiary, OSI, the Merger and related matters. Investors and security holders are urged to read the Proxy Statement carefully when it is available. Investors and security holders will be able to obtain free copies of the Proxy Statement and other documents filed with the SEC by the Company and OSI through the web site maintained by the SEC at www.sec.gov. In addition, investors and security holders will be able to download copies of the Proxy Statement from the Company’s website at http://ir.as-e.com/sec.cfm or by emailing ir@as-e.com.
The Company, and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the shareholders of the Company in respect of the transactions contemplated by the Merger Agreement. Information regarding the Company’s directors and executive officers is contained in the Company’s Form 10-K for the year ended March 31, 2016 and its proxy statement dated July 29, 2015, which are filed with the SEC. To the extent holdings of securities by such directors or executive officers have changed since the amounts printed in the 2015 proxy statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Additional information regarding the participants in the solicitation of proxies in respect of the transactions contemplated by the Merger Agreement and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement to be filed by the Company and other relevant materials to be filed with the SEC when they become available.
Exhibit 99.4
AMERICAN SCIENCE AND ENGINEERING, INC.
Notice to Holders of Restricted Stock Unit Awards and Cash Awards who are
Covered by a Change in Control & Severance Benefit Agreement
June 30, 2016
Dear Restricted Stock Unit Award Holder:
On June 20, 2016, American Science and Engineering, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), with OSI Systems, Inc., a Delaware corporation (the “Buyer” or “OSI”) and Apple Merger Sub, Inc., a Massachusetts corporation and a wholly-owned subsidiary of Buyer (the “Transitory Subsidiary”) providing for the merger (the “Merger”) of Transitory Subsidiary with and into the Company, with the Company surviving the Merger as a wholly-owned subsidiary of Buyer.
We would like to inform you about how your restricted stock unit awards (“RSUs”) and, if applicable, cash awards (“Cash Awards”) will be treated in connection with the Merger. For purposes of this notice, the term “Merger Effective Time” will mean the effective time of the Merger.
Please read this notice carefully. Note that the description in this notice applies to the treatment of RSUs and Cash Awards held by U.S. persons and the resulting tax consequences.
Unvested RSUs. Your outstanding RSUs that are unvested as of the Merger Effective Time (your “Unvested RSUs”) will be assumed by the Buyer (the “Assumed RSUs”). Each Assumed RSU will continue to be subject to the same terms and conditions, including vesting, set forth in the plan under which the RSU was issued and your individual RSU agreement, except that (i) references to the “Company” or “American Science and Engineering, Inc.” in the plan and your individual RSU agreements will be treated as references to OSI, (ii) the Assumed RSUs will become RSUs to acquire shares of OSI common stock, and (iii) the number of shares of OSI common stock subject to your Assumed RSUs will be adjusted to a number determined by multiplying the number of shares of Company common stock underlying your RSU awards immediately prior to the Merger Effective Time by an exchange ratio (the “Exchange Ratio”) and rounding down to the nearest whole share.
The Exchange Ratio is based on the per-share deal price divided by an average closing stock price of OSI shares shortly before the closing date. The Exchange Ratio will equal the “Merger Consideration” (as defined in the Merger Agreement) of $37 per share of Company common stock divided by the average closing sale price of one share of OSI common stock as reported on the Nasdaq Global Select Market for the ten consecutive trading days ending on the date that is two trading days immediately preceding the closing date.
By way of example:
If, as of the Merger Effective Time, you have 100 unvested RSUs, and the OSI stock price is $55, the calculation would be as follows:
Exchange Ratio = $37 divided by $55 = 0.67272728
100 RSUs multiplied by 0.67272728 = 67 RSUs with respect to OSI common stock
The following description applies because you are covered by a Change in Control & Severance Benefit Agreement with the Company (your “CiC Agreement”):
LTIP 9 and LTIP 10 RSUs. For performance-based Company RSUs granted in or before the fiscal year ended March 31, 2015 (“LTIP 9” and “LTIP 10”), the performance conditions will remain unchanged. Shares with respect to LTIP 9 and LTIP 10 will continue to be subject to vesting based on annual performance results and will be distributed after they are vested. The awards will continue to provide that award holders who remain employed until the date in 2018 and 2019, for LTIP 9 and LTIP 10 respectively, when the goals are certified through the performance period ending March 31, 2018 and March 31, 2019, for LTIP 9 and LTIP 10 respectively, will receive additional vesting, if the vesting earned by performance is less than 50% of the original grant, so that each RSU award will vest as to at least 50% of the original grant (minus whatever has vested by performance).
If your employment ends with a “Qualifying Termination” (as defined in your CiC Agreement) and you comply with the terms of the CiC Agreement, you will vest at that time in full with respect to the remaining RSUs under LTIP 9 and LTIP 10 (i.e., the original grant minus shares distributed to you earlier), and the corresponding shares of common stock will be distributed to you shortly following the Qualifying Termination. If your employment ends on a basis other than a Qualifying Termination before your LTIP 9 or LTIP 10 awards are vested (and you are not then eligible for retirement under the LTIP 9 or LTIP 10 awards), you will forfeit any unvested amounts, except as otherwise provided under any written agreement. If you become retirement eligible under the terms of your LTIP 9 or 10 awards and you actually retire (or are terminated without Cause), you will receive distribution shortly after such retirement (or termination) of the shares accrued with respect to such awards shortly after such retirement, subject to the terms of those awards and any delays required for compliance with Section 409A of the Internal Revenue Code of 1986 (“Section 409A”).
LTIP 9 and LTIP 10 Cash Awards. For Cash Awards granted in connection with LTIP 9 and LTIP 10, the performance conditions will remain unchanged, and they will operate in other respects as though described above under LTIP 9 and LTIP 10 RSUs, with the references to shares referring instead to cash.
LTIP 11. Company RSUs granted in the fiscal year ended March 31, 2016 (“LTIP 11”) that vest solely on the basis of continued service (the “LTIP 11 Time Based Awards”) will continue to vest in accordance with their pre-Merger schedule. With respect to Company RSUs under LTIP 11 that vest partly based on performance and partly based on service (the “LTIP 11 Performance Awards”), the first third of the awards has been vested as to the performance requirements or forfeited based on performance for the fiscal year ended March 31, 2016; the second third will vest as to the performance requirements or be forfeited based on (i) actual performance during the fiscal year ending March 31, 2017 (if the Merger Effective Time is after March 31, 2017 and if performance can be determined at such time) or (ii) target level performance if the Merger Effective Time occurs sooner or performance cannot be determined;
and the final third will vest as to the performance requirements at target level performance. Any shares not so vested will be forfeited. Shares under the LTIP 11 Performance Awards will continue to be subject to the service vesting requirement that the award holder remain employed by the Company until March 31, 2018, after which the shares with respect to such LTIP 11 awards will be distributed.
If your employment ends with a Qualifying Termination and you comply with the terms of the CiC Agreement, you will vest at that time in full with respect to the remaining RSUs under the LTIP 11 Time Based Awards and the LTIP 11 Performance Awards (i.e., the original grant minus shares distributed to you earlier), and the corresponding shares of common stock will be distributed to you shortly following the Qualifying Termination. If your employment ends for any reason other than a Qualifying Termination before LTIP 11 Time Based Awards or the LTIP 11 Performance Awards are vested (and you are not then eligible for retirement under the applicable awards), you will forfeit the unvested amounts at that time, except as otherwise provided under any written agreement. If you become retirement eligible under the terms of your LTIP 11 Time Based Awards or LTIP 11 Performance Awards after the Merger Effective Time and you actually retire (or are terminated without Cause), you will receive distribution shortly after such retirement (or termination) of such portion of the shares as the award agreements provide, subject to the terms of those awards and, for the LTIP 11 Performance Awards, any delays required for compliance with Section 409A.
U.S. Tax Implications
You should consult your own tax advisor as to the specific tax implications to you of the Merger with respect to your RSUs, including the applicability and effect of federal, state, local and foreign tax laws. Your federal, state, local and foreign tax consequences depend upon your unique circumstances.
Assumed RSUs
U.S. taxpayers with RSUs will not recognize ordinary income at the time OSI assumes their RSU awards. Instead, such individuals will recognize ordinary income when such Assumed RSUs become vested and OSI delivers shares of OSI common stock in settlement of their vested Assumed RSUs. The amount of ordinary income recognized for U.S. tax purposes will equal the fair market value on the payment date of the shares of OSI common stock that the individual receives and will be subject to the collection of applicable U.S. federal and state income and employment tax withholdings.
Cash Award Payments
A U.S. taxpayer who receives a payment under the Cash Awards will recognize ordinary income in an amount equal to his or her payment at the time the payment is made. Such income generally will constitute compensation income and will be subject to the collection of applicable U.S. federal and state income and employment tax withholdings.
Please submit any questions you have regarding this notice by e-mail to Mike Muscatello at Mike.Muscatello@as-e.com or Lanning Levine at LLevine@as-e.com.
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Sincerely, |
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Stock Administration |
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American Science and Engineering, Inc. |
Additional Information and Where to Find It
This communication is for informational purposes only and is not an offer to buy or the solicitation of an offer to sell any securities. The Company plans to file with the Securities and Exchange Commission (the “SEC”) and mail to its shareholders a Proxy Statement in connection with the Merger. Additionally, the Company will file other relevant materials with the SEC in connection with the Merger. The Proxy Statement will contain important information about the Company, the Transitory Subsidiary, OSI, the Merger and related matters. Investors and security holders are urged to read the Proxy Statement carefully when it is available. Investors and security holders will be able to obtain free copies of the Proxy Statement and other documents filed with the SEC by the Company and OSI through the web site maintained by the SEC at www.sec.gov. In addition, investors and security holders will be able to download copies of the Proxy Statement from the Company’s website at http://ir.as-e.com/sec.cfm or by emailing ir@as-e.com.
The Company, and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the shareholders of the Company in respect of the transactions contemplated by the Merger Agreement. Information regarding the Company’s directors and executive officers is contained in the Company’s Form 10-K for the year ended March 31, 2016 and its proxy statement dated July 29, 2015, which are filed with the SEC. To the extent holdings of securities by such directors or executive officers have changed since the amounts printed in the 2015 proxy statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Additional information regarding the participants in the solicitation of proxies in respect of the transactions contemplated by the Merger Agreement and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement to be filed by the Company and other relevant materials to be filed with the SEC when they become available.