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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
TRIDENT INTERNATIONAL, INC.
(NAME OF SUBJECT COMPANY)
TRIDENT INTERNATIONAL, INC.
(NAME OF PERSON(s) FILING STATEMENT)
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COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
895934 10 7
(CUSIP NUMBER OF CLASS OF SECURITIES)
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ELAINE A. PULLEN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TRIDENT INTERNATIONAL, INC.
1114 FEDERAL ROAD
BROOKFIELD, CONNECTICUT 06804-1140
(203) 740-9333
(NAME AND ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICE
AND COMMUNICATIONS ON BEHALF OF THE PERSON(s) FILING STATEMENT)
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WITH COPIES TO:
JOHN J. EGAN III, P.C.
JOSEPH L. JOHNSON III, P.C.
GOODWIN, PROCTER & HOAR LLP
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
(617) 570-1000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Trident International, Inc., a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is 1114 Federal Road, Brookfield, Connecticut 06804-1140. The
title of the class of equity securities to which this statement relates is the
common stock, par value $.01 per share, of the Company (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Solicitation/Recommendation Statement relates to the tender offer by
ITW Acquisition Inc., a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of Illinois Tool Works Inc., a Delaware corporation
("Parent"), disclosed in a Tender Offer Statement on Schedule 14D-1, dated
January 13, 1999 (the "Schedule 14D-1"), to purchase all of the outstanding
Shares at a purchase price of $16.50 per Share, net to the seller in cash,
without interest thereon, less applicable withholding taxes, if any, and upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated January 13, 1999 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with the Offer to Purchase, constitute the
"Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 6, 1999 (the "Merger Agreement"), among Parent, the Purchaser and
the Company. The Merger Agreement provides, among other things, that as soon as
practicable after the consummation of the Offer and the satisfaction or waiver
of certain conditions, the Purchaser will be merged with and into the Company
(the "Merger"), with the Company as the surviving corporation. Certain terms of
the Merger Agreement are described below in Item 3(b)(2). A copy of the Merger
Agreement is attached hereto as Exhibit 3 and is incorporated herein by
reference.
Parent has formed the Purchaser in connection with the Offer and the Merger
Agreement. The principal executive offices of each of Parent and the Purchaser
are located at 3600 W. Lake Avenue, Glenview, Illinois 60025.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this statement, are set forth in Item 1 above.
(b)(1) The following describes material contracts, agreements, arrangements
and understandings and any actual or potential conflicts of interest between the
Company or its affiliates and the Company, its executive officers, directors or
affiliates:
Arrangements with President and Chief Executive Officer
The Company has an executive employment agreement with its President and
Chief Executive Officer Elaine A. Pullen, the term of which ends on November 1,
2000. The agreement may be terminated by the Company (i) if certain business
performance goals established by the Board of Directors are not attained; (ii)
if certain of Ms. Pullen's confidentiality obligations have not been met, or
(iii) if there are other grounds (as outlined in the agreement) for termination
of the agreement by the Company. The agreement provides that Ms. Pullen will
not, during or after the term of the agreement, disclose any confidential
information (as defined in the agreement) pertaining to the business of the
Company or to the business of any actual or potential client or customer of the
Company, to any third party. Ms. Pullen is also subject to certain restrictions
on competition with the Company both during the term of the agreement and for
one year after the termination of her employment for any reason. In
consideration for the confidentiality provisions and the restrictions on
competition, upon the expiration or termination of the agreement, or upon the
leaving of the employ of the Company by Ms. Pullen, Ms. Pullen is entitled to
one year's compensation (including base salary, bonus, the earned portion of any
interest in a profit sharing or other similar plan, and all benefits (as
outlined in the agreement)) to be paid within thirty days of the date of such
expiration or termination or leaving the employ of the Company.
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In addition, Ms. Pullen's executive employment agreement provides that in
the event of the Involuntary Termination (as defined below) of her employment
within two years following a change in control of the Company, Ms. Pullen is
entitled to the following severance benefits: (i) the present value equivalent
(on a 10% discounted basis) of salary continuation for three years (based on the
base salary in effect on the date of such Involuntary Termination together with
the ordinary and customary additional elements of compensation attendant to Ms.
Pullen's position (other than stock options)); (ii) coverage for three years
under all Company perquisites and benefit plans as if Ms. Pullen were still an
active employee; (iii) the acceleration of all unexercised stock options (unless
provision is made in connection with such change in control for the assumption
of existing options or the substitution for such options of new options of the
successor entity, with appropriate adjustments); and (iv) employment search
assistance through a professional out placement organization and office and
secretarial support for up to one year. The consummation of the transactions
contemplated by the Merger Agreement will constitute a change in control under
Ms. Pullen's executive employment agreement. In addition to actual termination
of employment, the following events, among others, are deemed "Involuntary
Terminations" under Ms. Pullen's executive employment agreement: (i) a reduction
in base salary or the ordinary and customary additional elements of compensation
(subject to certain exceptions based on performance or in connection with
broadly based compensation reduction programs); (ii) a material reduction in Ms.
Pullen's functions, duties or responsibilities; (iii) a geographic reassignment
(greater than 50 miles); and/or (iv) a breach of the executive employment
agreement by the Company; provided that if Ms. Pullen fails to object to a
change of the type specified in (i) through (iv) within 180 days of any such
change, she will be deemed to have waived her rights to severance with respect
to such change.
On January 6, 1999, the Company and Ms. Pullen amended certain provisions
of Ms. Pullen's executive employment agreement. The amendment to the agreement
provides that, in connection with a change in control occurring on or prior to
April 30, 1999, the period during which Ms. Pullen must object to an event she
believes constitutes an Involuntary Termination is extended until December 31,
1999 (rather than 180 days following the date of the alleged Involuntary
Termination). In addition, the amendment provides that, if any portion of the
payments to be received by Ms. Pullen in connection with an Involuntary
Termination following a change in control would constitute an "excess parachute
payment" under Section 280G of the Internal Revenue Code of 1986, as amended,
the Company will provide a "gross-up" payment to Ms. Pullen sufficient to
provide her with the same after-tax amount she would have received but for the
excise and income taxes due under said Section 280G (or any additional taxes on
such grossed-up amount). The amendment provides that the "gross-up" payment to
Ms. Pullen shall in no event exceed $160,000. The other provisions of Ms.
Pullen's executive employment agreement were not affected by the amendment.
In connection with entering into the Merger Agreement, the Company's Board
of Directors determined that Ms. Pullen will be entitled to receive an $80,000
bonus upon consummation of the Merger, so long as the Merger is consummated on
or before April 30, 1999. Ms. Pullen has acknowledged that this payment will
represent all bonus due to her during 1999 under her executive employment
agreement. Ms. Pullen will also be entitled to certain payments under the
Employee Retention Plan adopted by the Company in connection with the Merger
Agreement, as described in more detail under "--Arrangements with Other
Employees" below.
Copies of Ms. Pullen's executive employment agreement, a letter agreement
related thereto, the January 6, 1999 amendment, and the acknowledgment regarding
Ms. Pullen's $80,000 bonus for 1999 are attached hereto as Exhibits 4, 5, 6 and
7, respectively, and are incorporated herein by reference.
Arrangements with Chief Financial Officer
The Company also has an executive employment agreement with its Chief
Financial Officer J. Leo Gagne, the term of which ends on May 31, 2000. The
agreement may be terminated by the Company (i) if certain business performance
goals established by the Board of Directors are not attained; (ii) if certain of
Mr. Gagne's confidentiality obligations have not been met, or (iii) if there are
other grounds (as outlined in the agreement) for termination of the agreement by
the Company. The agreement provides that Mr. Gagne will not, during or after the
term of the agreement, disclose any confidential information (as defined in the
agreement) pertaining to the business of the Company or to the business of any
actual or potential client or customer of the Company, to any third party. Mr.
Gagne is also subject to certain restrictions on competition
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with the Company both during the term of the agreement and for one year after
the termination of his employment for any reason. In consideration for the
confidentiality provisions and the restrictions on competition, upon the
expiration or termination of the agreement, or upon the leaving of the employ of
the Company by Mr. Gagne, Mr. Gagne is entitled to one year's compensation
(including base salary, bonus, the earned portion of any interest in a profit
sharing or other similar plan, and all benefits (as outlined in the agreement))
to be paid within thirty days of the date of such expiration or termination or
leaving the employ of the Company.
In addition, Mr. Gagne's executive employment agreement provides that in
the event of the Involuntary Termination of his employment within two years
following a change in control of the Company, Mr. Gagne is entitled to the
following severance benefits: (i) salary continuation for two years (based on
the base salary in effect on the date of such Involuntary Termination together
with ordinary and customary additional elements of compensation attendant to Mr.
Gagne's position (other than stock options)) (subject to the limitation of the
foregoing salary and customary additional elements of compensation continuation
during the second year following his Involuntary Termination by the amount of
equivalent base salary, fees, and other compensation elements Mr. Gagne may
receive from any employment, consultancy, board services or other similar
business arrangement secured with another party during the second year of the
two year continuation period, and the Company shall only be obligated to pay the
difference between the aggregate of such salary continuation and elements, and
the value of compensation received from another party, if less); (ii) coverage
for two years under all Company perquisites and benefit plans as if Mr. Gagne
were still an active employee (subject to mitigation during the second year
following an Involuntary Termination); (iii) the acceleration of all unexercised
stock options (unless provision is made in connection with such change in
control for the assumption of existing options or the substitution for such
options or new options of the successor entity, with appropriate adjustments);
and (iv) employment search assistance through a professional outplacement
organization and office and secretarial support for up to one year. The
consummation of the transactions contemplated by the Merger Agreement will
constitute a change in control under Mr. Gagne's executive employment agreement.
The definition of the term "Involuntary Termination" in Mr. Gagne's executive
employment agreement is the same as that contained in Ms. Pullen's executive
employment agreement, as described above in "--Arrangements with President and
Chief Executive Officer."
On January 6, 1999, the Company and Mr. Gagne amended Mr. Gagne's executive
employment agreement. The amendment clarified Mr. Gagne's obligations to
mitigate the payments to which he would be entitled in connection with an
Involuntary Termination following a change in control, but did not affect the
other provisions of Mr. Gagne's executive employment agreement.
In connection with entering into the Merger Agreement, the Company's Board
of Directors determined that Mr. Gagne will be entitled to receive a $48,000
bonus upon consummation of the Merger, so long as the Merger is consummated
prior to April 30, 1999. Mr. Gagne has acknowledged that this payment will
represent all bonus due to him during 1999 under his executive employment
agreement. Mr. Gagne will also be entitled to certain payments under the
Employee Retention Plan adopted by the Company in connection with the Merger
Agreement, as described in more detail under "--Arrangements with Other
Employees" below.
Copies of Mr. Gagne's executive employment agreement, the January 6, 1999
amendment thereto and the acknowledgment regarding Mr. Gagne's $48,000 bonus for
1999 are attached hereto as Exhibits 8, 9 and 10, respectively, and are
incorporated herein by reference.
Arrangements with Other Employees
On January 6, 1999, in connection with entering into the Merger Agreement,
the Company adopted an Employee Retention Plan (the "Retention Plan") for the
benefit of the Company's officers and employees. As soon as practicable, the
Company will, in consultation with Parent, designate those officers and
employees of the Company who will be eligible to receive payments under the
Retention Plan. The total amount which officers and employees will be eligible
to receive under the Retention Plan is $475,000. Ms. Pullen and Mr. Gagne will
be entitled to $137,750 and $37,750, respectively, under the Retention Plan. The
remaining
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$300,000 under the Retention Plan will be allocated as soon as practicable among
the Company's other officers and employees.
In the event that the employment of any designated officer or employee
under the Retention Plan is terminated (other than voluntarily by the officer or
employee) between the closing of the Merger and the close of business on
December 31, 1999 for any reason other than for good cause, such officer or
employee will receive a payment in the amount designated under the Retention
Plan. In addition, each designated officer and employee who is still employed by
the Company or a successor to the Company on January 1, 2000 shall receive a
payment in the amount designated under the Retention Plan.
For purposes of the Retention Plan, a reduction in an officer's or an
employee's (other than Ms. Pullen and Mr. Gagne) base salary, benefits,
compensation plan or commission rate will be deemed to constitute a termination
of such officer or employee. In the case of Mr. Gagne, any action which would
constitute an Involuntary Termination under his executive employment agreement
will be deemed to constitute a termination of his employment for purposes of the
Retention Plan. Ms. Pullen will not be entitled to any payment under the
Retention Plan in the case of an event that would constitute an Involuntary
Termination (other than an actual termination) under her executive employment
agreement. A copy of the Retention Plan is attached hereto as Exhibit 11 and is
incorporated herein by reference.
The Company also maintains a severance policy pursuant to which any
employee of the Company whose employment is terminated without cause is entitled
to severance in the amount of one week's compensation for each fully completed
six month period that such employee has been employed by the Company or one of
its predecessors. Pursuant to the Merger Agreement, Parent has agreed to
maintain this severance policy at least until December 31, 1999.
(b)(2) The following describes material contracts, agreements, arrangements
and understandings and any actual or potential conflicts of interest between the
Company or its affiliates and the Purchaser and Parent and their respective
executive officers, directors or affiliates.
The Merger Agreement
In connection with the Offer, the Company has entered into the Merger
Agreement with the Purchaser and Parent. A summary of the Merger Agreement is
set forth below. A copy of the Merger Agreement is attached hereto as Exhibit 3,
and the following summary is qualified in its entirety by reference to the text
of the Merger Agreement, which is incorporated herein by reference.
The Offer. The Merger Agreement provides for the commencement of the Offer
by the Purchaser as promptly as practicable after the date of the Merger
Agreement, but in any event not later than five business days following the
public announcement of the Offer or the Merger Agreement. The obligation of the
Purchaser to accept for payment and pay for any Shares tendered pursuant to the
Offer is subject to the satisfaction of certain conditions, which are described
below in "--Conditions to the Offer." Subject to the conditions to the Offer
(and the other terms and conditions of the Merger Agreement), the Purchaser
shall accept for payment and pay for all Shares validly tendered and not
withdrawn pursuant to the Offer as soon as practicable after the expiration of
the Offer. Unless it is extended on the terms described below, the Offer will
expire at 12:00 midnight, New York City time, on Wednesday, February 10, 1999.
The Merger Agreement provides that neither the Purchaser nor Parent will,
without the consent of the Company, (i) amend the Offer to decrease the offer
price or change the form of consideration to be paid in the Offer or (ii) except
as required by law or any rule, regulation or interpretation in an opinion of
counsel to Parent, or required by any position of the Securities and Exchange
Commission (the "Commission") or the staff thereof, extend the expiration date
of the Offer; provided that if the conditions to the Offer have not been
satisfied, the Purchaser may (without the consent of the Company) extend the
Offer for up to an aggregate of ten additional business days. In addition, if,
immediately prior to the initial or any subsequent expiration date of the Offer,
the Shares tendered and not withdrawn pursuant to the Offer equal less than
ninety percent (90%) of the Shares then outstanding on a fully diluted basis,
the Purchaser may, in its sole discretion, extend the Offer notwithstanding that
all conditions to the Offer are satisfied as of such expiration date of the
Offer; provided that, without the consent of the Company, under no circumstances
shall the Offer be extended, whether pursuant to the terms outlined
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in this sentence or the terms outlined in the preceding sentence or any
combination of the two, for more than ten business days.
The Merger. The Merger Agreement provides that, as soon as practicable
following the Offer and the fulfillment or waiver of the conditions described
below in "--Conditions to the Merger," the Purchaser will be merged with and
into the Company, with the Company being the surviving corporation, and each
then outstanding Share (other than Shares owned by Parent, the Purchaser or any
other direct or indirect subsidiary of Parent, Shares owned by the Company or
any direct or indirect subsidiary of the Company (including treasury shares) and
Shares held by holders who perfect any appraisal rights that they may have under
the Delaware General Corporation Law (the "DGCL")) will, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into the
right to receive $16.50 in cash or such higher price, if any, as may be offered
and paid in the Offer (the "Merger Consideration"). All Shares owned by the
Company or any direct or indirect subsidiary of the Company (including treasury
shares) and all Shares owned by Parent, the Purchaser or any other direct or
indirect subsidiary of Parent will be canceled and retired without the payment
of any consideration.
Conditions to the Offer. The Merger Agreement provides that, subject to
any applicable rules and regulations of the Commission (including Rule 14e-1(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), and
in addition to the conditions that (A) at least of a majority of the Shares
outstanding on a fully diluted basis are validly tendered and not withdrawn
prior to the expiration date of the Offer (the "Minimum Share Condition") and
(B) all applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), having expired or been
terminated, Parent and the Purchaser shall not be required to accept for
payment, purchase, or (subject to any applicable rules and regulations of the
Commission) pay for any Shares tendered, and may postpone the purchase of, or,
subject to the restrictions set forth above, payment for Shares tendered and to
be purchased by it, if at any time prior to the time of acceptance for payment
of any such Shares, any of the following events shall occur:
(i) there shall be any statute, rule, regulation or order promulgated,
enacted, entered or enforced that is applicable to the Offer or the Merger
by any United States federal or state court, legislative body or
governmental agency or other regulatory administrative agency or commission
of competent jurisdiction (each a "Governmental Authority") (A) restraining
or prohibiting the making or consummation of the Offer or the transactions
contemplated by the Merger Agreement, (B) prohibiting or restricting the
Purchaser's (or any of its affiliates') ownership or operation of all or
any material portion of the Company's business or assets, (C) imposing
material limitations on the ability of the Purchaser effectively to acquire
or to hold or to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by
the Purchaser on all matters properly presented to the stockholders of the
Company, (D) requiring divestiture by the Purchaser of any assets or of any
Shares, or (E) making the acceptance for payment or payment for the Shares
or consummation of the Merger illegal or prohibiting consummation of the
Offer or the Merger;
(ii) any action or proceeding is instituted and pending by a
Governmental Authority seeking to effect any of the activities described in
clause (i) above;
(iii) there shall have occurred any change concerning the Company and
its subsidiaries taken as a whole which, in the good faith judgment of the
Purchaser, has had, or is reasonably expected to have prior to December 31,
1999, a material adverse effect on the business, financial condition or
results of operations ("Condition") of the Company and its subsidiaries
taken as a whole (other than any changes generally affecting the industries
in which the Company operates, including changes due to actual or proposed
changes in law or regulations, or changes relating to or arising from the
transactions contemplated by the Merger Agreement, including the change in
control contemplated thereby);
(iv) there shall have occurred (A) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
the Nasdaq Stock Market, the American Stock Exchange or in the United
States over-the-counter market which shall continue for at least three
business days; or (B) the declaration of a banking moratorium or any
suspension of payments by United States
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governmental authorities in respect of banks in the United States which
shall continue for at least three business days;
(v) there shall have occurred the commencement or escalation of a war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States, and having a material adverse
effect on the Offer or the Merger or the Condition of the Company and its
subsidiaries taken as a whole;
(vi) any representation or warranty of the Company in the Merger
Agreement shall have been untrue as of the date of the Merger Agreement or
shall have become untrue prior to acceptance for payment or payment for
Shares which untrue representations or warranties, if accurately stated,
would have revealed matters materially adverse to the Condition of the
Company and its subsidiaries, taken as a whole, or the Company shall have
failed to perform or breached any of its covenants or agreements contained
in the Merger Agreement, which failure, breach or breaches, would
materially impair or delay the ability of the Purchaser to consummate the
Offer or the ability of Parent, the Purchaser and the Company to effect the
Merger;
(vii) one or more of the following events shall have occurred after
the date of the Merger Agreement or the Purchaser shall have for the first
time become aware after the date of the Merger Agreement of the occurrence
of any of the following on or prior to the date of the Merger Agreement:
(A) any person, corporation, partnership or other entity or group (a
"Person"), other than the Purchaser or its affiliates, acquires or becomes
the beneficial owner of more than twenty percent (20%) of the outstanding
Shares (other than acquisitions for bona fide arbitrage purposes and
acquisitions by Persons who are parties to any agreement with the Purchaser
with respect to their Shares); (B) any Person (other than the Purchaser or
its affiliates) shall have commenced a tender or exchange offer for more
than twenty percent (20%) of the outstanding Shares or publicly proposed a
Third Party Acquisition (as defined below in "--Certain Definitions"); (C)
the Company enters into, or announces that it proposes to enter into, an
agreement, including, without limitation, an agreement in principle,
providing for a merger or other business combination involving the Company
or a material portion of the assets, business or operations of the Company
and its subsidiaries taken as a whole (other than the transactions
contemplated by the Merger Agreement), and the Company withdraws its
recommendation of the Offer or the Merger; (D) any Person (other than the
Purchaser or its affiliates) is granted any option or right, conditional or
otherwise, to acquire or otherwise become the beneficial owner of Shares
which, together with all Shares beneficially owned by such Person, results
or would result in such Person being the beneficial owner of more than
twenty percent (20%) of the outstanding Shares; or (E) subsequent to the
commencement of the Offer there is a public announcement with respect to a
plan or intention by the Company or any Person, other than the Purchaser or
its affiliates, to effect any of the foregoing transactions; or
(viii) the Merger Agreement shall have been terminated in accordance
with its terms.
The Purchaser may, in its discretion, waive any of the foregoing
conditions. If the Offer is terminated due to the occurrence of any of the
foregoing events or otherwise, all tendered Shares not theretofore accepted for
payment shall forthwith be returned to the tendering stockholders.
Conditions to the Merger. The Merger Agreement provides that the
obligations of the Company, Parent and the Purchaser to effect the Merger are
subject to the fulfillment, at or before the effective time of the Merger (the
"Effective Time"), of the following conditions: (i) if necessary to effect the
Merger, the Merger Agreement and the Merger shall have been duly approved by the
holders of Shares in accordance with applicable law and the certificate of
incorporation and by-laws of the Company; (ii) all governmental consents, orders
and approvals legally required for the consummation of the Merger and the
transactions contemplated by the Merger Agreement shall have been obtained and
be in effect at the Effective Time, except where the failure to obtain any such
consent would not reasonably be expected to have a material adverse effect on
Parent (assuming the Merger had taken place), and the waiting periods under the
HSR Act shall have expired or been terminated; (iii) the Purchaser shall have
accepted for payment and purchased Shares pursuant to the Offer; provided that
this condition is not a condition to the obligations of Parent or the Purchaser
if the Purchaser shall have failed to purchase Shares in violation of the terms
of the Merger
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Agreement or of the Offer; and (iv) no preliminary injunction or permanent
injunction or other order issued by any federal or state court of competent
jurisdiction in the United States prohibiting the consummation of the Merger
shall be in effect.
Treatment of Stock Options. The Merger Agreement provides that,
immediately prior to the acceptance of Shares pursuant to the Offer, each
outstanding stock option under the Company's Third Amended and Restated 1994
Stock Option and Grant Plan (the "Stock Option Plan"), whether or not then
exercisable, shall become fully exercisable and vested, and each stock option
shall be canceled and each holder of a stock option shall be entitled to receive
a cash payment from the Company equal to the product of (a) the excess, if any,
of the offer price over the per Share exercise price of such stock option and
(b) the number of Shares subject to such stock option, which cash payment shall
be treated as compensation and shall be net of any applicable federal or state
withholding tax. All Company stock options shall thereafter be deemed canceled
and of no force or effect.
Treatment of Warrants. The Merger Agreement provides that, at the
Effective Time, each outstanding warrant to purchase Shares shall no longer
entitle the holder thereof to purchase Shares, but instead shall entitle the
holder thereof to purchase, upon exercise of the warrant, the Merger
Consideration which the holder of the warrant would have been entitled to
receive pursuant to the Merger if the warrant had been exercised immediately
prior to the Effective Time.
Termination of Employee Stock Purchase Plan. The Merger Agreement provides
that (i) the offering period then pending under the Company's Employee Stock
Purchase Plan (the "Stock Purchase Plan") was terminated as of January 6, 1999,
(ii) each participant in the Stock Purchase Plan on January 6, 1999 was deemed
to have exercised his or her Option (as defined in the Stock Purchase Plan) on
such date and acquired from the Company (A) such number of whole Shares as his
or her accumulated payroll deductions on such date could purchase at the Option
Price (as defined in the Stock Purchase Plan) (treating January 5, 1999 as the
"Exercise Date" for all purposes of the Stock Purchase Plan) and (B) cash in the
amount of any remaining balance in such participant's account without interest,
and (iii) the Stock Purchase Plan was then terminated.
Stockholder Approval of the Merger. The Company has agreed, if the Minimum
Share Condition has been satisfied and the Purchaser has purchased and paid for
all duly tendered Shares pursuant to the Offer and if necessary to effect the
Merger, to take all action necessary in accordance with applicable law and the
Company's Third Amended and Restated Certificate of Incorporation and Amended
and Restated Bylaws to convene a meeting of holders of Shares as promptly as
practicable after consummation of the Offer to consider and vote upon the
approval and adoption of the Merger Agreement. The Company has agreed to
recommend to stockholders the approval and adoption of the Merger Agreement and
to take all lawful action to solicit such approval and adoption. Parent and the
Purchaser have agreed to vote all Shares owned by them or their respective
direct or indirect subsidiaries and affiliates in favor of the approval and
adoption of the Merger Agreement. In the event that Parent or the Purchaser
shall have acquired at least 90% of the Shares, pursuant to the Offer or
otherwise, the Company, Parent and the Purchaser have agreed (subject to the
satisfaction of the conditions to the Merger discussed above) to take all
necessary and appropriate action to cause the Merger to become effective as soon
as possible after such acquisition, without a meeting of the Company's
stockholders, in accordance with Section 253 of the DGCL.
Prohibition of Solicitations. The Company, its affiliates and their
respective officers, directors, employees, representatives and agents have
agreed to immediately cease any existing discussions or negotiations, if any,
with any parties conducted prior to the date of the Merger Agreement with
respect to any Third Party Acquisition. The Company, its subsidiaries and
affiliates and their respective officers, directors, employees, representatives
and agents may, directly or indirectly, furnish information and access to any
Third Party (as defined below in "--Certain Definitions") (in each case only in
response to a request for such information or access made after the date of the
Merger Agreement and with respect to confidential information, only pursuant to
an appropriate confidentiality agreement) only if, and may participate in
discussions and negotiate with such Third Party concerning any Third Party
Acquisition, only if (i) such Third Party has submitted a bona fide proposal to
the Board of Directors of the Company relating to any such transaction, and (ii)
a
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majority of the Board of Directors of the Company determines, in its good faith
judgment after receiving advice from its outside counsel, that failing to take
such action could reasonably be expected to be a breach of the directors'
fiduciary duties under applicable law. The Company has agreed to promptly notify
Parent if any proposal or offer, or any inquiry or contact with any person with
respect thereto, is made and the Company has agreed, in any such notice to
Parent, to indicate in reasonable detail the identity of the offeror and the
terms and conditions of the proposal or offer, or any such inquiry or contact.
The Company has agreed to keep Parent promptly advised of all developments which
could reasonably be expected to culminate in the Board of Directors withdrawing,
modifying or amending its recommendation of the Offer, the Merger and the other
transactions contemplated by the Merger Agreement, unless with respect to a
specific development the Board of Directors of the Company by a majority vote
determines in its good faith judgment, after receiving advice from outside
counsel, that notifying Parent of such development could reasonably be expected
to be a breach of the Board's fiduciary duties under applicable law. Except as
described above, the Company has agreed that neither it or any of its
affiliates, nor any of its or their respective officers, directors, employees,
representatives or agents, will, directly or indirectly, knowingly encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any Third Party concerning any Third Party Acquisition;
provided that no provision of the Merger Agreement will prevent the Company or
its Board of Directors from taking, and disclosing to the Company's
stockholders, a position contemplated by Rules 14d-9 and 14e-2 promulgated under
the Exchange Act with regard to any tender offer or from making such disclosure
to the Company's stockholders which, in the good faith judgment of its Board of
Directors after receiving advice from outside counsel, is required under
applicable law; provided further, that the Board of Directors of the Company has
agreed not to recommend that the stockholders of the Company tender their Shares
in connection with any such third party tender offer unless the Board of
Directors by a majority vote determines in its good faith judgment, after
receiving advice from outside counsel, that failing to take such action could
reasonably be expected to be a breach of the Board's fiduciary duties under
applicable law.
Interim Operations of the Company. The Merger Agreement provides that,
except as otherwise contemplated by the Merger Agreement and without the written
consent of Parent or the Purchaser, during the period from the date of the
Merger Agreement to the earlier of the New Board Date (as defined below in
"--Directors") or the Effective Time, the Company shall, and shall cause its
subsidiaries to, conduct its and their business only in the ordinary course,
will make no material changes in the operations of the Company or its
subsidiaries and shall use its reasonable efforts to (i) preserve intact the
business organization of the Company and its subsidiaries, (ii) keep available
the services of its and their present officers and key employees, and (iii)
preserve the good will of those having business relationships with the Company
and its subsidiaries. The Merger Agreement further provides that, except as
contemplated by the Merger Agreement or with the consent of Parent or the
Purchaser, during the period from the date of the Merger Agreement to the
earlier of the New Board Date (as defined below in "--Directors") or the
Effective Time, neither the Company nor any of its subsidiaries will: (a) amend
or otherwise change its certificate of incorporation or by-laws; (b) issue or
sell, or authorize for issuance or sale, additional shares of any class of
capital stock, including Shares or any securities convertible into capital
stock, or grant any warrants, options, or other rights to acquire, or incur any
obligation or make any commitment for issuance of, capital stock or any
securities convertible into capital stock; (c) in the case of the Company,
declare, set aside, make or pay any dividend or other distribution with respect
to its capital stock other than if requested by Parent; (d) redeem, purchase or
otherwise acquire, or agree to redeem, purchase or otherwise acquire, directly
or indirectly, any of its capital stock, other than if requested by Parent; (e)
except in the ordinary course of business, sell, pledge, dispose of or encumber,
or agree to sell, pledge, dispose of or encumber, any material assets of the
Company or any of its subsidiaries other than in connection with discontinued
operations; (f) acquire (by merger, consolidation, or acquisition of stock or
assets) any significant corporation, partnership or other business organization
or division thereof for cash consideration of $100,000 or more with respect to
an acquisition, merge or consolidate with any corporation, or enter into or
modify any contract, agreement, commitment or arrangement with respect to any of
the foregoing; (g) other than in connection with the refinancing of outstanding
indebtedness, incur any indebtedness for borrowed money or issue any debt
securities except in the ordinary course of business and consistent with past
practice or enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing; (h) take any action with
respect to the grant of any severance or
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<PAGE> 10
termination pay other than pursuant to policies or agree ments of the Company or
any of its subsidiaries in effect on the date hereof; (i) make any loans,
advances or capital contributions to, or investments (other than intercompany
accounts and short-term investments pursuant to customary cash management
systems of the Company in the ordinary course and consistent with past
practices) in, any other person other than such of the foregoing as are made by
the Company to or in a subsidiary of the Company; (j) except for salary
increases or other employee benefit arrangements made in the ordinary course of
business consistent with past practice, or heretofore described in writing to
Parent, adopt or (with certain exceptions) amend any bonus, profit sharing,
compensation, incentive, stock option, restricted stock, pension, retirement,
deferred compensation, employment or other employee benefit plan, agreement,
trust, fund or arrangement for the benefit or welfare of any empl oyee; or (k)
enter into any agreement to do any of the foregoing.
Directors. The Merger Agreement provides that, promptly upon the
acquisition of a majority of the outstanding Shares pursuant to the Offer, or
otherwise, so long as Parent and the Purchaser own a majority of the outstanding
Shares Parent shall be entitled upon written request to the Company, subject to
applicable law, to designate such number of directors, rounded down to the
nearest whole number, to the Board of Directors of the Company as will give
Parent (or its affiliates) representation on such Board of Directors equal to at
least that number of directors which equals the product of the total number of
directors on the Company's Board of Directors (giving effect to the directors
elected pursuant to this sentence) multiplied by the percentage that the sum of
the number of Shares so owned by Parent and the Purchaser bears to the number of
such Shares outstanding, and the Company has agreed, at such time, to promptly
use its best efforts to cause the designees of Parent to be so elected, subject
in all cases to Section 14(f) of the Exchange Act (with the Company being under
no obligation to comply with Section 14(f) of the Exchange Act until after the
Offer is completed). In order to effect the foregoing, the Company has agreed,
if necessary, to obtain any amendments to its Bylaws regarding the number of
directors, to secure the resignation of directors, or both. The date, if any, on
which a majority of the Board of Directors consist of directors designated by
Parent pursuant to these provisions of the Merger Agreement is referred to as
the "New Board Date." In the event that Parent's designees are elected to the
Company's Board of Directors, until the Effective Time, the Company's Board of
Directors shall have at least three directors who were directors on the date of
the Merger Agreement (the "Independent Directors"), provided that, in such
event, if the number of Independent Directors shall be reduced below three for
any reason whatsoever, any remaining Independent Directors (or Independent
Director, if there be only one remaining) shall be entitled to designate persons
to fill such vacancies who shall be deemed to be Independent Directors for
purposes of the Merger Agreement or, if no Independent Director then remains,
the other directors shall designate three persons to fill such vacancies who
shall not be stockholders, affiliates or associates of Parent or the Purchaser
and such persons shall be deemed to be Independent Directors for purposes of the
Merger Agreement. The affirmative vote of a majority of the Independent
Directors will be required to (a) amend or terminate the Merger Agreement by the
Company, (b) exercise or waive any of the Company's rights, benefits or remedies
under the Merger Agreement, or (c) extend the time for performance of Parent's
and the Purchaser's respective obligations under the Merger Agreement.
Indemnification and Insurance. The Merger Agreement provides that Parent
shall cause the surviving corporation in the Merger to indemnify and hold
harmless each person who is or who was at any time prior to the date of the
Merger Agreement an officer or director of the Company or any of its
subsidiaries (an "Indemnified Party") against any losses, claims, damages,
judgments, settlements, liabilities, costs or expenses (including, without
limitation, reasonable attorneys' fees and expenses) incurred in connection with
any threatened or actual claim, action, suit, proceeding or investigation
arising out of or pertaining to acts or omissions, or alleged acts or omissions
(including, without limitation, in connection with the transactions contemplated
by the Merger Agreement), to the fullest extent that the Company or such
subsidiaries would have been permitted, under applicable provisions of the DGCL
and the Company's Third Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws as in effect on the date of the Merger Agreement, to
provide such indemnification. The Merger Agreement provides that, unless
otherwise required by law, (i) at the Effective Time, the certificate of
incorporation and bylaws of the surviving corporation shall contain provisions
providing for exculpation of director and officer liability and indemnification
by the surviving corporation of the Indemnified Parties not less favorable to
the Indemnified Parties than
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<PAGE> 11
those provisions providing for exculpation of director and officer liability and
indemnification by the Company of the Indemnified Parties contained in the
certificate of incorporation and bylaws of the Company as in effect on the date
of the Merger Agreement, and (ii) for a period of six years from the Effective
Time, the surviving corporation and its subsidiaries shall not amend, repeal or
modify any such provisions contained in their respective certificates of
incorporation and bylaws, or other organizational documents of such
subsidiaries, to reduce or adversely affect the rights of the Indemnified
Parties thereunder in respect of actions or omissions by them occurring at or
prior to the Effective Time. Prior to the execution of the Merger Agreement, the
Company made arrangements to purchase, as of the earlier of the New Board Date
or the Effective Time, a six-year extended reporting period endorsement under
the Company's existing directors' and officers' liability insurance coverage to
extend the director and officer liability coverage in force as of the date of
the Merger Agreement from the Effective Time to the end of such six year period.
Certain Employee Benefits. The Merger Agreement provides that, commencing
on the consummation of the Offer and continuing until December 31, 1999, Parent
shall cause the Company and the surviving corporation to continue to provide to
employees of the Company and its subsidiaries, as a whole, benefits which, in
the aggregate, are no less favorable to such employees than the benefits
provided to such employees as of the date of the Merger Agreement. The Merger
Agreement contains Parent's agreement that, for all employee benefit plans of
Parent and its affiliates after the Effective Time, all service with the Company
or any of its subsidiaries prior to the Effective Time of employees shall be
treated as service with Parent and its affiliates for eligibility and vesting
purposes and for benefit accruals for purposes of severance and vacation pay to
the same extent that such service is taken into account by the Company and its
subsidiaries as of the date of the Merger Agreement, except to the extent such
treatment will result in duplication of benefits. The Merger Agreement also
provides that from and after the Effective Time, Parent shall, and shall cause
the surviving corporation to, cause any pre-existing condition or limitation and
any eligibility waiting periods (to the extent such conditions, limitations or
waiting periods did not apply to the employees of the Company under the
Company's employee benefit plans in existence as of the date of the Merger
Agreement) under any group health plans of Parent or any of its subsidiaries to
be waived with respect to employees of the Company and their eligible
dependents.
Termination of the Merger Agreement. The Merger Agreement may be
terminated at any time prior to the Effective Time, whether before or after
approval by the stockholders of the Company: (i) by mutual consent of the Board
of Directors of Parent and the Board of Directors of the Company; (ii) by action
of the Board of Directors of Parent or action of the Board of Directors of the
Company if at least that number of Shares required by the Minimum Share
Condition shall not have been purchased in the Offer on or before April 30,
1999; provided, however, that the Board of Directors of Parent shall have no
such right to terminate the Merger Agreement after the purchase of Shares
pursuant to the Offer; and provided, further, that this right to terminate the
Merger Agreement shall not be available to any party whose failure to fulfill
any obligation under the Merger Agreement has been the cause of, or resulted in,
the failure of the Offer to occur on or before the aforesaid date; (iii) by the
Company if the Purchaser shall not have commenced the Offer within five business
days of the date of the initial public announcement of the Offer or the Merger
Agreement; (iv) by either Parent or the Company if the Offer shall expire or
terminate in accordance with its terms without any Shares having been purchased
thereunder and, in the case of termination by Parent, the Purchaser under the
Offer shall not have been required by the terms of the Offer or the Merger
Agreement to purchase any Shares pursuant to the Offer; (v) by the Company if
Parent or the Purchaser shall fail to comply in any material respect with any of
its covenants or agreements required to be performed by it before the date of
such termination and such failure to comply shall not be cured within seven
business days following receipt by Parent from the Company of written notice of
such failure and demand for cure; or by Parent or the Purchaser if the Company
shall fail to comply in any material respect with any of its covenants or
agreements required to be performed by it before the date of such termination,
and such failure to comply shall not be cured within seven business days
following receipt by the Company from Parent or the Purchaser of written notice
of such failure and demand for cure; (vi) by either Parent, the Purchaser or the
Company, if any court of competent jurisdiction in the United States or other
governmental agency of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restraining, permanently enjoining or
otherwise prohibiting the consummation of the Offer or the Merger, and such
order, decree, ruling or other action shall have become
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<PAGE> 12
final and non-appealable; or (vii) by the Company if the Company is prepared to
enter into a binding agreement to effect a transaction on the terms specified in
a Superior Proposal (as defined below in "--Certain Definitions") and has given
Parent written notice to that effect; provided, however, that a termination as
described in this clause (vii) shall not be effective until the Company has made
payment to Parent of the Break-up Fee (as defined below in "--Break-up Fee and
Expense Reimbursement") and has paid to Parent $750,000 for Expenses (as defined
below in "--Certain Definitions"). Parent has agreed to refund any excess of
such $750,000 over actual Expenses.
Break-up Fee and Expense Reimbursement. In the event that: (i) any person
(including, without limitation, the Company or any affiliate thereof) or group,
other than Parent or any affiliate of Parent, shall have become the beneficial
owner of more than twenty percent (20%) of the then outstanding Shares and
thereafter the Merger Agreement shall have been terminated pursuant to the
provisions described in clause (ii) or clause (iv) of "--Termination of the
Merger Agreement" above and within twelve months of such termination a Third
Party Acquisition for a per Share consideration having a value greater than
$16.50 shall occur with such person or group, or an affiliate of any of them;
(ii) any person or group shall have commenced, publicly proposed or communicated
to the Company a proposal that is publicly disclosed for a tender or exchange
offer for more than twenty percent (20%) (or which, assuming the maximum amount
of securities which could be purchased, would result in any person or group
beneficially owning more than twenty percent (20%)) of the then outstanding
Shares or otherwise for the direct or indirect acquisition of the Company or all
or substantially all of its assets for per Share consideration having a value
greater than $16.50 and (A) the Offer shall have remained open for at least
twenty (20) business days, (B) the Minimum Share Condition shall not have been
satisfied and (C) the Merger Agreement shall have been terminated pursuant to
the provisions described in clause (ii) or (iv) of "--Termination of the Merger
Agreement" above; or (iii) the Merger Agreement is terminated by the Company if
the Company is prepared to enter into a binding agreement to effect a
transaction on the terms specified in a Superior Proposal and has given Parent
written notice to that effect; then the Company shall pay to Parent promptly
(but in no event later than one business day after the first of such events
shall have occurred) a fee of $3,455,000 (the "Break-up Fee"), plus all
Expenses; provided that, in the case described in clause (ii) of this paragraph,
if the Board of Directors of the Company (A) shall not have withdrawn or
modified in a manner adverse to the Purchaser or Parent its approval or
recommendation of the Offer, the Merger Agreement or the Merger, (B) shall not
have approved or recommended the proposal of the person or group referred to in
clause (ii) of this paragraph and (C) shall not have resolved to do any of the
foregoing, the Company shall pay to Parent on such termination all Expenses and
shall pay the Break-up Fee only if, within twelve (12) months of such
termination, a Third Party Acquisition with such person or group referred to in
clause (ii), or an affiliate of any of them, shall occur.
Certain Definitions. For purposes of the preceding paragraphs, the Merger
Agreement provides the following definitions of the indicated terms:
"Expenses" means all out-of-pocket expenses and fees up to a maximum
of $750,000 in the aggregate (including, without limitation, fees and
expenses payable to all banks, investment banking firms, other financial
institutions and other persons and their respective agents and counsel for
arranging, committing to provide or providing any financing or services for
the Offer, the Merger and any transactions contemplated thereby or
structuring the transactions and all fees of counsel, accountants, experts,
consultants and soliciting or information firms to Parent and the
Purchaser, and all printing and advertising expenses) actually incurred or
accrued by either of them or on their behalf in connection with the
transactions, including, without limitation, litigation related thereto and
the financing thereof, and actually incurred or accrued by banks,
investment banking firms, other financial institutions and other persons
and assumed by Parent or the Purchaser in connection with the negotiation,
preparation, execution and performance of the Merger Agreement, the
structuring and financing of the Offer, the Merger and any transactions
contemplated thereby and any litigation and any financing commitments or
agreements relating thereto.
"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger, consolidation or
other business combination transaction by any person other
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than Parent, the Purchaser or any affiliate of either of them (a "Third
Party"); (ii) the acquisition by any Third Party of, or any divestiture or
other transaction resulting in the Company owning less than, fifty percent
(50%) or more (in book value or market value) of the total assets of the
Company and its subsidiaries, taken as a whole; (iii) the acquisition by a
Third Party of fifty percent (50%) or more of the outstanding Shares
whether by tender offer, exchange offer or otherwise; (iv) the adoption by
the Company of a plan of liquidation or a plan of recapitalization or the
declaration or payment of an extraordinary dividend; (v) the repurchase by
the Company or any of its subsidiaries of fifty percent (50%) or more of
the outstanding Shares; or (vi) a letter of intent or similar instrument or
other agreement between the Company and a Third Party, or the public
announcement by the Company of the Company's intention or plans to effect,
any of the events referred to in the foregoing clauses (i), (ii), (iii),
(iv) or (v).
"Superior Proposal" means a bona fide proposal made by a Third Party
to acquire a majority or more of the outstanding Shares pursuant to a
tender offer or a merger, or to purchase all or substantially all of the
assets of the Company, on terms which a majority of the Board of Directors
of the Company determines in its good faith judgment (based on advice from
its financial and legal advisors) to be more favorable to the Company and
its stockholders from a financial point of view than the transactions
contemplated by the Merger Agreement.
Miscellaneous. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company may
have certain rights under Delaware law to demand appraisal of, and seek the
payment in cash of the fair value of, their Shares. Such rights, if the
statutory procedures are complied with, could lead to a judicial determination
of the fair value (which, under Delaware law, excludes any element of value
arising from the accomplishment or expectation of the Merger) required to be
paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than or in addition to the price paid in the Offer and the market value of
the Shares. The value so determined could be more or less than the purchase
price per Share pursuant to the Offer or the consideration per Share to be paid
in the Merger. The foregoing summary of the rights of dissenting stockholders
does not purport to be a complete statement of the procedures to be followed by
stockholders desiring to exercise their dissenters' rights. The preservation and
exercise of appraisal rights are conditioned on strict adherence to the
applicable provisions of Delaware law. A more complete description of appraisal
rights under Delaware law will be sent to stockholders if a proxy solicitation
is required to effect the Merger.
The Merger will have to comply with any federal law applicable at the time.
In the event that the Merger is consummated more than one year after termination
of the Offer and the Purchaser has become an affiliate of the Company as a
result of the Offer, or the Merger provides for the payment of consideration
less than that paid pursuant to the Offer, and in certain other circumstances,
the Purchaser may be required to comply with Rule 13e-3 under the Exchange Act.
If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of such transaction and the consideration offered to minority
stockholders be filed with the Commission and distributed to minority
stockholders prior to the consummation of such transaction. The Purchaser does
not believe that Rule 13e-3 will be applicable to the Merger.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Board of Directors. At a meeting of the
Company's Board of Directors held on January 5, 1999, the Company's Board of
Directors, by a unanimous vote, determined that the Offer and the Merger are
fair to and in the best interests of the Company and its stockholders,
unanimously approved and declared the advisability of the Merger Agreement and
the transactions contemplated thereby and unanimously resolved to recommend that
all holders of Shares tender their Shares pursuant to the Offer.
(b) Background; Reasons for the Recommendation. On February 19, 1998, a
meeting attended by Hugh Zentmyer, an Executive Vice President of Parent,
Valerie A. Lapinski, President of ITW Dynatec (an ITW company), Norman L.
Norris, a director of, and patent counsel to, the Company, and other parties,
was
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held at Parent's corporate office for purposes unrelated to the Offer and the
Merger. During the course of this meeting, Mr. Norris mentioned that he was a
director of the Company and suggested that Parent consider initiating
discussions with the Company regarding a possible acquisition.
In April of 1998, in response to an expression of interest by Mr. Zentmyer
in the Company, Mr. Norris left a message with Mr. Zentmyer suggesting that he
contact Elaine A. Pullen, the Company's President and Chief Executive Officer,
if Parent was interested in conducting a further investigation into the
potential acquisition of the Company.
In early May, Ms. Lapinski contacted Ms. Pullen by telephone and expressed
Parent's interest in exploring a possible acquisition of the Company. Subsequent
to this conversation, the Company and Parent had preliminary discussions
regarding a potential acquisition transaction and entered into a confidentiality
agreement.
In June, Ms. Lapinski contacted Ms. Pullen in an attempt to arrange a
meeting. Ms. Lapinski was informed by Ms. Pullen that The Robinson-Humphrey
Company, LLC ("Robinson-Humphrey") had been engaged by the Company to act as the
Company's financial advisor. Subsequently, Ms. Lapinski had a telephone
conversation with Joseph H. Estes of Robinson-Humphrey and received from
Robinson-Humphrey certain public information regarding the Company, including
copies of the Company's then most recent Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, proxy statement and product brochures and a research
analyst's report on the Company by Robinson-Humphrey.
On July 13, 1998, Ms. Lapinski and Kristie Ochampaugh, Controller for the
business units of Parent reporting to Mr. Zentmyer, met at the Company's
headquarters in Brookfield, Connecticut with Ms. Pullen, J. Leo Gagne, Vice
President and Chief Financial Officer of the Company, and Douglas J. McCartney
of Robinson-Humphrey. The parties discussed the Company's business and Ms.
Lapinski and Ms. Ochampaugh were given a tour of the Company's production
facilities. The parties also discussed the possible acquisition of the Company
by Parent and the alternative transaction structures that could be used to
effect an acquisition. During this visit, Mr. McCartney commented to Ms.
Lapinski that if the Company were interested in a transaction it would seek a
per Share price significantly in excess of its current market price. During June
and early July of 1998, the Shares were generally trading between $14.50 and
$15.25 per Share.
Throughout July and during early August, the parties continued to hold
periodic discussions regarding a possible business combination and the amount of
consideration to be paid in such a transaction. The trading price of the Shares,
which ranged from $14.75 to $17.63 during July of 1998, had dropped during the
first week of August and on August 7, 1998, the Shares closed at $12.63 per
Share. On August 7, 1998, Ms. Lapinski informed Mr. Estes by telephone that,
based on Parent's evaluation of the Company's business to date, Parent was
interested in a purchase price in the low to mid teens.
The trading price of the Shares continued to decline throughout August and
the early part of September, ranging from $7.50 to $13.00 between August 10 and
September 11. The discussions between the parties slowed during this period and
on September 14, Ms. Lapinski called Mr. Estes to inquire as to whether
continued exploratory discussions between the parties would be worthwhile. Mr.
Estes indicated that the Company would be interested in entertaining further
proposals and conducting further discussions.
During October of 1998, in connection with Parent's investigation of the
Company, Parent was provided with certain information regarding patent
infringement litigation in which the Company is involved as well as a copy of
the Company's strategic business plan (containing, among other information, a
business and industry overview, the Company's goals for fiscal years 1999 and
2000 and certain internal financial projections).
On October 14, 1998, Parent sent a letter to Robinson-Humphrey expressing
Parent's interest in a possible acquisition for cash consideration of
approximately $14 per Share (subject to further due diligence and the
requirement that any transaction would need the approval of Parent's Board of
Directors). Between September 14 and October 14, the trading price of the Shares
ranged from $7.75 to $10.00 per Share.
On November 12, 1998, Mr. Norris, Ms. Pullen and Mr. McCartney met at
Parent's headquarter offices in Glenview, Illinois with Mr. Zentmyer, Ms.
Ochampaugh and Ms. Lapinski to further discuss the
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Company's business. At this meeting on November 12, the Company's
representatives indicated that the Company considered the proposed $14 per Share
price to be too low, but that it would be willing to further discuss the
transaction if the proposed price were increased to approximately $18 per Share.
On November 16, 1998, Ms. Lapinski, during a telephone conversation with
Mr. McCartney, indicated that Parent was not inclined to raise its proposed
price to $18 per Share but would be willing to discuss raising it above the $14
per Share previously discussed. Ms. Lapinski also indicated at this time that
Parent would also consider raising its price higher in the event that the
Company would be willing to accept Parent's stock as consideration in a
transaction which could be accounted for as a pooling of interests.
On November 19, 1998, further discussions were held between Mr. Zentmyer
and Ms. Lapinski on behalf of Parent and Messrs. Estes and McCartney on behalf
of the Company regarding the price range for the potential acquisition of the
Company. Also on November 19, 1998, the Company's Board of Directors, which had
been updated on the status of the proposed transaction by management and
Robinson-Humphrey throughout the summer and autumn through periodic conference
calls, held a regularly scheduled meeting at which the members of the Board were
further updated by the Company's management and Messrs. Estes and McCartney
regarding the status of the negotiations with Parent. The Company's Board of
Directors, in conjunction with Robinson-Humphrey and the Company's legal
counsel, discussed at this meeting the relative merits of the proposed
transaction structures (cash or stock) and deliberated regarding the appropriate
per Share price.
Discussions were held between the parties in late November regarding the
price and structure of the transaction. Representatives of Parent indicated
during this period that, subject to satisfactory completion of Parent's due
diligence review and negotiation of appropriate legal documentation, they might
be interested in a transaction at a per Share price in excess of $16 per Share.
The Company's Board of Directors conducted a conference call on November 29 and
was brought up to date regarding the late November negotiations between Parent
and the Company.
Ms. Lapinski sent to Mr. Estes on November 24, 1998 a customary due
diligence acquisition checklist. During the period from December 1, 1998 through
December 15, 1998, Parent, through its representatives, conducted a formal due
diligence inquiry by phone with representatives of the Company and by on-site
visits at the office of the Company's independent accounting firm in Hartford,
Connecticut and at the office of the Company's patent counsel in Philadelphia,
Pennsylvania.
On December 15, 1998, Parent's legal counsel sent to the Company's legal
counsel the first draft of the Merger Agreement. During the period from December
21, 1998 to January 6, 1999, legal counsel for Parent and legal counsel for the
Company engaged in negotiations on the terms of the Merger Agreement.
On December 22, 1998, the Company's Board of Directors met with its
financial and legal advisors to discuss the price and the terms of the proposed
transaction. At this meeting, Messrs. Estes and McCartney gave a presentation
concerning Robinson-Humphrey's analysis of the proposed transaction and
delivered a preliminary oral opinion that the consideration to be received by
the stockholders of the Company was fair to such stockholders from a financial
point of view. The Board of Directors considered the projections of the
Company's future results of operations contained in Robinson-Humphrey's analysis
and asked that, following the meeting, management review these assumptions to
ensure that they reflected management's current good faith estimates and
judgments as to the future financial performance of the Company. Also at this
meeting, the Company's legal counsel provided an update regarding the status of
the negotiations with Parent's representatives on the Merger Agreement. The
Company's legal counsel also described the legal ramifications of the proposed
terms and structure of the transaction to the Company. The Board of Directors
instructed its advisors and the Company's management to continue pursuing the
transaction.
Subsequent to the December 22, 1998 meeting of the Company's Board of
Directors, the Company's management conducted an analysis of the Company's
internal business models and projections and compared the applicable information
to the assumptions made in Robinson-Humphrey's analysis. Management then
presented the results of its review to the Board of Directors and to
Robinson-Humphrey. Robinson-Humphrey
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made certain minor modifications to its analyses based on the information
provided by management and presented the resulting analysis to the Board of
Directors on January 5 (as further discussed below).
In late December, representatives of Parent and representatives of the
Company had several discussions regarding creating incentives for the Company's
employees to remain with the Company following the potential acquisition by
Parent. After various discussions regarding the appropriate types of incentive
packages, the parties ultimately agreed during a conference call on December 30,
1998 that the Company would establish an Employee Retention Plan. See Item 3
"Identity and Background -- Arrangements with Other Employees" for a discussion
of the Employee Retention Plan.
On January 5, 1999, at a telephonic meeting of the Company's Board of
Directors, Mr. McCartney made an additional presentation analyzing the proposed
transaction and discussing the updated financial analysis that had been
delivered to the members of the Board prior to the meeting. Mr. McCartney then
delivered Robinson-Humphrey's oral opinion that the consideration to be received
by the stockholders of the Company in the transaction was fair to such
stockholders from a financial point of view. This opinion was subsequently
confirmed in writing. The Company's legal counsel then provided further
discussion of the legal ramifications of the proposed terms and structure of the
transaction to the Company. After considering such legal aspects and after
discussing and considering the opinion of Robinson-Humphrey, the Company's Board
of Directors determined that the Offer and the Merger are in the best interests
of the Company and its stockholders, approved and declared the advisability of
the Merger Agreement and recommended that all stockholders tender their Shares
pursuant to the Offer.
The Company's Board of Directors convened by teleconference again on
January 6, 1999 to check on the status of the final negotiations between the
parties regarding the proposed transaction. The Company's legal counsel informed
the Board that negotiations were proceeding as anticipated and that the
execution of the Merger Agreement was imminent. Shortly after this conference
call on January 6, 1999, Parent, the Purchaser and the Company signed the Merger
Agreement. On the morning of January 7, 1999, Parent and the Company jointly
announced the Merger Agreement.
In reaching its determination regarding the transaction, the Company's
Board of Directors considered a number of factors, including, without
limitation, the following:
(i) The Company's and Parent's respective businesses, assets,
managements, strategic objectives, competitive positions, prospects and
complementary strengths.
(ii) Presentations by management of the Company regarding the
Company's business and prospects and discussing the Company's ability to
capitalize on the goals outlined in the Company's strategic business plan.
(iii) The decline in the market price of the Shares during the
calendar year 1998 from a high of $18.37 to a low of $8.00.
(iv) The fact that the $16.50 per Share price to be paid in the Offer
and the Merger represents (A) a premium of 73.7% over $9.50, the closing
price of the Shares on the Nasdaq National Market on January 4, 1999, (B) a
premium of 93.4% over $8.53, the closing price of the Shares on December
28, 1998, and (C) a premium of 80.7% over $9.13, the closing price of the
Shares on December 7, 1998, and the fact that these premiums compare
favorably to premiums paid in other recent acquisition transactions of
sizes comparable to those of the Merger.
(v) The terms and conditions of the Merger Agreement, including the
"all cash" nature of the transaction.
(vi) The requirement under the Merger Agreement that Shares not
tendered will receive the same form and amount of consideration as Shares
purchased in the Offer.
(vii) The fact that the Offer and the Merger are not conditioned on
the ability of Parent to obtain financing.
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(viii) The fact that while the Merger Agreement contains constraints
that may hinder a third party from making an alternative acquisition
proposal, the Company's Board of Directors may, under certain circumstances
and subject to certain conditions (including the payment of the Break-up
Fee and the reimbursement of Expenses) terminate the Merger Agreement in
order to execute an agreement with a third party providing for the
acquisition of the Company on terms more favorable to the Company's
stockholders than the Offer and Merger.
(ix) Potential alternatives to the Merger and the Offer that might be
available to the Company and its stockholders.
(x) The opinion of Robinson-Humphrey that the consideration to be
received by the Company's stockholders in the Offer and the Merger is fair,
from a financial point of view, to the Company's stockholders.
In view of the wide variety of factors considered by the Company's Board of
Directors, the Board did not find it practicable to, and did not, assign
relative weights to the factors set forth above. Rather, the Company's Board of
Directors reached its determination based on the totality of the circumstances
and the advice presented to it by its strategic and legal advisors.
In analyzing the Offer and the Merger, the Company's management and Board
of Directors were assisted and advised by representatives of Robinson-Humphrey
and the Company's counsel, Goodwin, Procter & Hoar LLP, who reviewed various
financial, legal and other considerations in addition to the terms of the Merger
Agreement. A copy of the fairness opinion of Robinson-Humphrey dated January 6,
1999 with respect to the Offer and the Merger is attached hereto as Exhibit 12
and is incorporated herein by reference.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Robinson-Humphrey is acting as the Company's financial advisor in
connection with the Offer and the Merger. The Company entered into an agreement
with Robinson-Humphrey, dated May 15, 1998 (the "Robinson-Humphrey Agreement"),
pursuant to which the Company engaged Robinson-Humphrey as a financial advisor
to review and analyze proposed transactions, and, if requested by the Company's
Board of Directors, to render a written fairness opinion to the Company in
connection with a potential sale or merger of the Company. Pursuant to the
Robinson-Humphrey Agreement, the Company agreed to pay to Robinson-Humphrey (i)
an initial retainer fee of $25,000 and an additional retainer fee of $25,000 on
November 15, 1998 (collectively, the "Retainer") and (ii) a fee (the "Fairness
Opinion Fee") of $200,000 upon the delivery of a fairness opinion by
Robinson-Humphrey related to a merger or sale of the Company. The Company also
agreed to pay to Robinson-Humphrey a transaction fee in an amount equal to 1.00%
of the total Consideration (as defined in the Robinson-Humphrey Agreement) upon
the consummation of a merger or sale of the Company, less the Retainer and
Fairness Opinion Fee. In addition, the Company has agreed (x) to reimburse
Robinson-Humphrey for its reasonable expenses incurred during its engagement
(subject to a $35,000 maximum without the written approval of the Company) and
(y) to indemnify Robinson-Humphrey against certain liabilities incurred in
connection with its engagement, including liabilities under federal securities
laws.
Except as set forth above, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to stockholders on its behalf with respect
to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) No transaction in the Shares has been effected during the past sixty
(60) days by the Company, or to the best of the Company's knowledge, by any
executive officer, director, affiliate or subsidiary of the Company.
(b) To the best of the Company's knowledge, each executive officer,
director, affiliate and subsidiary of the Company currently intends to tender
all Shares which he or she owns beneficially or of record to the Purchaser.
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ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in Items 3(b) and 4 above, the Company is not
engaged in any negotiation in response to the Offer which relates to or would
result in (i) an extraordinary transaction such as a merger or reorganization
involving the Company or any subsidiary of the Company; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary of the
Company; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as set forth in Items 3(b) and 4 above, there are no
transactions, board resolutions, agreements in principle or signed contracts in
response to the Offer which relate to or would result in one or more of the
events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Section 203 of the DGCL. As a Delaware corporation, the Company is subject
to Section 203 of the DGCL ("Section 203"). Subject to certain exceptions
outlined in Section 203, Section 203 prohibits an "interested stockholder"
(generally defined as a person beneficially owning fifteen percent (15%) or more
of a corporation's voting stock) from engaging in a "business combination" (as
defined in Section 203) with a Delaware corporation for three years following
the date such person became an interested stockholder unless (i) prior to the
date such person became an interested stockholder, the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding stock held by directors who are also officers of the
corporation and employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer) or (iii) on or subsequent to the
date such person became an interested stockholder, the business combination is
approved by the board of directors and authorized at a meeting of stockholders,
and not by written consent, by the affirmative vote of the holders of at least
66 2/3% of the outstanding voting stock of the corporation which is not owned by
the interested stockholder. In accordance with the provisions of Section 203,
the Company's Board of Directors has approved and declared advisable the Merger
Agreement and the transactions contemplated thereby and, therefore, Section 203
is inapplicable to the Merger Agreement and the transactions contemplated
thereby.
The Offer and Merger are subject to the HSR Act, which provides that
certain acquisition transactions may not be consummated unless certain
information has been furnished to the Federal Trade Commission ("FTC") and the
Antitrust Division of the Department of Justice ("Antitrust Division") and
certain waiting period requirements have been satisfied. Each of Parent and the
Company intends to file a Notification and Report Form under the HSR Act with
respect to the Offer as soon as practicable.
Under the provisions of the HSR Act applicable to the Offer, the purchase
of Shares pursuant to the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by Parent and the Company.
Accordingly, assuming the filing is in substantial compliance with the HSR Act,
the waiting period will expire at 11:59 p.m., New York City time, on January 27,
1999 (assuming a January 13 filing), unless earlier terminated by the FTC and
the Antitrust Division. However, if either the FTC or the Antitrust Division
requests additional information or documents from Parent or the Company within
such initial waiting period, the initial waiting period would be extended for an
additional ten days from the date of substantial compliance by Parent or the
Company, as the case may be with such request. Thereafter, the waiting period
may be extended only by a court order or with the consent of Parent or the
Company, as the case may be. Each of the parties has requested that the FTC and
the Antitrust Division grant early termination of the applicable waiting period,
but there can be no assurance that such request will be granted.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer. At any time before or after the Purchaser's acceptance
for payment of Shares, the FTC or the Antitrust Division could take such action
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under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the acquisition of Shares pursuant to the
Offer or otherwise or seeking divestiture of Shares acquired by Purchaser or
divestiture of substantial assets of Purchaser or its subsidiaries. Private
parties and state attorneys general may also bring legal action under the
antitrust laws under certain circumstances. Based upon the Purchaser's
discussions with the Company and its examination of publicly available
information with respect to the Company, Purchaser believes that the acquisition
by Purchaser of the Shares will not violate the antitrust laws. Nevertheless,
there can be no assurance that a challenge to the Offer on antitrust grounds
will not be made, or, if such a challenge is made, of the result.
Information Statement. The Information Statement attached as Schedule I
hereto is being furnished in connection with the possible designation by the
Purchaser, pursuant to the Merger Agreement, of certain persons to be appointed
to the Company's Board of Directors other than at a meeting of the Company's
stockholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
Exhibit 1* Letter to Stockholders of Trident International, Inc. dated
January 13, 1999 from Elaine A. Pullen, President and Chief
Executive Officer of Trident International, Inc.*
Exhibit 2 Joint Press Release issued by Trident International, Inc.
and Illinois Tool Works Inc., dated January 7, 1999
Exhibit 3 Agreement and Plan of Merger dated as of January 6, 1999
among Illinois Tool Works Inc., ITW Acquisition Inc. and
Trident International, Inc.
Exhibit 4 Executive Employment Agreement, dated as of November 1,
1997, by and between Trident International, Inc. and Elaine
A. Pullen
Exhibit 5 Letter Agreement, dated May 28, 1998, by and between Trident
International, Inc. and Elaine A. Pullen clarifying certain
provisions of the November 1, 1997 Executive Employment
Agreement between the parties
Exhibit 6 Amendment to Executive Employment Agreement between Trident
International, Inc. and Elaine A. Pullen, dated as of
January 6, 1999
Exhibit 7 Acknowledgment of Elaine A. Pullen dated January 6, 1999
regarding 1999 bonus payment
Exhibit 8 Executive Employment Agreement, dated as of June 1, 1998, by
and between Trident International, Inc. and J. Leo Gagne
Exhibit 9 Amendment to Executive Employment Agreement between Trident
International, Inc. and J. Leo Gagne, dated as of January 6,
1999
Exhibit 10 Acknowledgment of J. Leo Gagne dated January 6, 1999
regarding 1999 bonus payment
Exhibit 11 Trident International, Inc. Employee Retention Plan
Exhibit 12* Opinion dated January 6, 1999 of The Robinson-Humphrey
Company, LLC*
</TABLE>
- ---------------
* Included in copies mailed to stockholders by Trident International, Inc. and
Illinois Tool Works Inc.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
TRIDENT INTERNATIONAL, INC.
By: /s/ ELAINE A. PULLEN
---------------------------------
Elaine A. Pullen
President and Chief Executive
Officer
Dated: January 13, 1999
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SCHEDULE I
TRIDENT INTERNATIONAL, INC.
1114 FEDERAL ROAD
BROOKFIELD, CONNECTICUT 06804-1140
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about January 13, 1999 as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Trident International, Inc., a Delaware corporation (the
"Company"), to the holders of shares of common stock, par value $.01 per share,
of the Company (the "Shares"). You are receiving this Information Statement in
connection with the possible election of the Purchaser Designees (as hereinafter
defined) to seats on the Board of Directors of the Company (the "Company
Board").
The Company, Illinois Tool Works Inc., a Delaware corporation ("Parent"),
and ITW Acquisition Inc., a Delaware corporation and a wholly-owned subsidiary
of Parent (the "Purchaser"), entered into an Agreement and Plan of Merger dated
as of January 6, 1999 (the "Merger Agreement"), pursuant to which (i) Parent has
caused the Purchaser to commence a tender offer (the "Offer") for all
outstanding Shares at a price of $16.50 per Share, net to the seller in cash,
without interest, and (ii) the Purchaser will be merged with and into the
Company (the "Merger"). As a result of the Offer and the Merger, the Company
will become a wholly-owned subsidiary of Parent.
The Merger Agreement requires the Company to take action to cause the
Purchaser Designees to be elected to the Company Board under the circumstances
described therein. See "Right to Designate Directors; Purchaser Designees"
below.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action.
Pursuant to the Merger Agreement, the Purchaser commenced the Offer on
January 13, 1999. The Offer is scheduled to expire at 12:00 midnight, New York
City time, on Wednesday, February 10, 1999. In certain circumstances, the Offer
may be extended.
The information contained in this Information Statement concerning Parent,
the Purchaser and the Purchaser Designees has been furnished to the Company by
Parent, and the Company assumes no responsibility for the accuracy or
completeness of such information.
RIGHT TO DESIGNATE DIRECTORS; PURCHASER DESIGNEES
The Merger Agreement provides that, promptly upon the acquisition of a
majority of the outstanding Shares pursuant to the Offer, or otherwise, so long
as Parent and the Purchaser own a majority of the outstanding Shares Parent
shall be entitled upon written request to the Company, subject to applicable
law, to designate such number of directors, rounded down to the nearest whole
number, to the Board of Directors of the Company as will give Parent (or its
affiliates) representation on such Board of Directors equal to at least that
number of directors which equals the product of the total number of directors on
the Company's Board of Directors (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the sum of the
number of Shares so owned by Parent and the Purchaser bears to the number of
such Shares outstanding, and the Company has agreed, at such time, to promptly
use its best efforts to cause the designees of Parent to be so elected. In order
to effect the foregoing, the Company has agreed, if necessary, to obtain any
amendments to its Bylaws regarding the number of directors, to secure the
resignation of directors, or both. In the event that Parent's designees (the
"Purchaser Designees") are elected to the Company's Board of Directors, until
the Effective Time, the Company's Board of Directors shall have at least three
directors who were directors on the date of the Merger Agreement (the
"Independent Directors"), provided that, in such event, if the number of
Independent Directors shall be reduced below three for any reason whatsoever,
any
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remaining Independent Directors (or Independent Director, if there be only one
remaining) shall be entitled to designate persons to fill such vacancies who
shall be deemed to be Independent Directors for purposes of the Merger Agreement
or, if no Independent Director then remains, the other directors shall designate
three persons to fill such vacancies who shall not be stockholders, affiliates
or associates of Parent or the Purchaser and such persons shall be deemed to be
Independent Directors for purposes of the Merger Agreement. The affirmative vote
of a majority of the Independent Directors will be required to (a) amend or
terminate the Merger Agreement by the Company, (b) exercise or waive any of the
Company's rights, benefits or remedies under the Merger Agreement, or (c) extend
the time for performance of Parent's and the Purchaser's respective obligations
under the Merger Agreement.
As of the date of this Information Statement, Parent has not determined the
identity of the Purchaser Designees. However, the Purchaser Designees are
expected to be selected from among the directors and executive officers of
Parent. Certain information regarding the directors and executive officers of
Parent is contained in Annex I hereto. The Company also has not yet determined
the identity of the Independent Directors, although the Independent Directors
will be selected from among the current directors of the Company. Certain
information regarding the Company's directors is set forth below in "Information
Regarding Directors and Executive Officers of the Company."
None of the Purchaser Designees (i) is currently a director of, or holds
any position with, the Company, (ii) has a familial relationship with any
directors or executive officers of the Company or (iii) to the best knowledge of
Parent, beneficially owns any securities (or rights to acquire securities) of
the Company. The Company has been advised by Parent that, to the best of
Parent's knowledge, none of the Purchaser Designees has been involved in any
transactions with the Company or any of its directors, executive officers or
affiliates which are required to be disclosed pursuant to the rules and
regulations of the Securities and Exchange Commission (the "Commission"), except
as may be disclosed herein or in the Schedule 14D-9.
It is expected that the Purchaser Designees may assume office at any time
following the purchase by the Purchaser of such number of shares which satisfies
the Minimum Share Condition (as defined in the Merger Agreement), and that, upon
assuming office, the Purchaser Designees will thereafter constitute at least a
majority of the Company Board.
SHARE INFORMATION
The Shares are the only class of voting securities of the Company
outstanding. Each Share is entitled to one vote on each matter properly brought
before an annual or special meeting of stockholders of the Company. As of
January 12, 1999, there were 6,468,532 Shares outstanding.
INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
BOARD OF DIRECTORS OF THE COMPANY AND COMMITTEES THEREOF
The Board of Directors of the Company currently consists of seven members
and is divided into two classes. The members of each class of Directors serve
for staggered two-year terms. The Board is composed of four Class I Directors
(R. Hugh Van Brimer, Robert S. Anderson, Russell J. Greenberg and Norman L.
Norris), and three Class II Directors (Elaine A. Pullen, Michael K. Lorelli and
John R. Webb). In connection with the June 1994 acquisition by the Company of
all of the capital stock of Trident, Inc., the Company's predecessor, the
stockholders of the Company entered into an agreement (the "Stockholders'
Agreement") pursuant to which, among other things, they agreed to elect as
directors the respective nominees of certain groups of stockholders. Messrs.
Greenberg, Van Brimer, Norris and Anderson were elected directors of the Company
pursuant to these provisions of the Stockholders' Agreement as the nominees of
certain of the stockholder groups. The Stockholders' Agreement was terminated
upon consummation of the Company's initial public offering (the "IPO") in March
of 1996.
During the fiscal year ended September 30, 1998 ("Fiscal 1998"), the Board
of Directors met 13 times. During Fiscal 1998, each director attended at least
75% of the aggregate of (i) the total number of meetings of
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the Board of Directors (held during the period for which such director served on
the Board of Directors) and (ii) the total number of meetings of all committees
of the Board of Directors on which such director served (during the periods for
which such director served on such committee or committees).
Audit Committee. The Board of Directors has established an Audit Committee
currently consisting of Messrs. Greenberg and Webb (the "Audit Committee"). The
Audit Committee recommends the firm to be appointed as independent accountants
to audit the Company's financial statements and to perform services related to
the audit, reviews the scope and results of the audit with the independent
accountants, reviews with management and the independent accountants the
Company's year-end operating results and considers the adequacy of the Company's
internal accounting procedures. The Audit Committee met once during Fiscal 1998.
Compensation Committee. The Board of Directors has also established a
Compensation Committee currently consisting of Messrs. Van Brimer, Anderson and
Lorelli (the "Compensation Committee"). The Compensation Committee reviews and
recommends the compensation arrangements for all directors and officers and
approves such arrangements for other senior level employees. The Compensation
Committee also administers and takes such other action as may be required in
connection with the incentive plans of the Company and its subsidiaries,
including the Company's Senior Management Bonus Plan (the "Bonus Plan") and the
Company's Third Amended and Restated 1994 Stock Option and Grant Plan (the
"Stock Option Plan"). In administering the Bonus Plan, the Compensation
Committee determines those managers and key executives of the Company who will
be eligible for cash bonuses if certain financial goals (such as specified
revenue levels, maintenance of positive cash flow or addition of economic value)
and business objectives are met. The Compensation Committee, in its discretion,
may change the bonus formulae and designate additional employees as participants
in the Bonus Plan from time to time. In administering the Stock Option Plan, the
Compensation Committee determines the options to be issued to eligible persons
under the Stock Option Plan and prescribes the terms and provisions of such
options. In addition, the Compensation Committee construes and interprets the
Stock Option Plan and issuances thereunder, and establishes, amends and revokes
rules and regulations for administration of the Stock Option Plan. All actions
taken by the Compensation Committee with respect to the Stock Option Plan are
subject to the approval of the full Board of Directors. The Compensation
Committee met twice during Fiscal 1998.
The Board of Directors does not have a standing nominating committee. The
full Board of Directors performs the function of such a committee.
BIOGRAPHICAL INFORMATION REGARDING DIRECTORS
The following biographical descriptions set forth certain information with
respect to the members of the Company Board, based on information furnished to
the Company by each director.
R. Hugh Van Brimer founded Trident, Inc., the Company's predecessor, in
1989 and served as President and Chief Executive Officer of the predecessor and,
subsequently, the Company, until 1995. Mr. Van Brimer currently serves as
Chairman of the Board of Directors of the Company, a position he has held since
the Company's inception. Mr. Van Brimer is also Chairman of the Board of SEFE
Overseas Limited, an international investment consortium. Mr. Van Brimer holds a
B.S. in Physics from Western Michigan University and is a graduate of the
Advanced Management Program of the Harvard Business School. He is 68 years old.
Robert S. Anderson has served as a director of the Company since October
27, 1994. Since 1988, Mr. Anderson has served as Senior Vice President of Brean
Murray & Co., Inc. ("Brean Murray," formerly Brean Murray, Foster Securities,
Inc.) and as Vice President of BMI Capital, a registered investment adviser and
an affiliate of Brean Murray. He is 57 years old.
Russell J. Greenberg was named a director of the Company on June 24, 1994
and served as a director until October 27, 1994. He was then re-elected to the
Board of Directors on May 18, 1995. Mr. Greenberg was a founder and is currently
the President of MaxCapital, LLC, a private equity firm specializing in buyouts
and financial advisory work. Previously, Mr. Greenberg served as an Executive
Vice President of Chatfield Dean &
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<PAGE> 24
Co., Inc. from August 1994 to December 1996 and as a Managing Director of
Corporate Finance at Brean Murray from November 1992 to July 1994. Prior to
that, Mr. Greenberg was head of Mergers and Acquisitions at Daiwa Securities of
America, Inc. from 1990 to 1992. He is 41 years old.
Norman L. Norris has been a director of the Company since June 24, 1994.
Mr. Norris is a partner at the law firm of Woodcock, Washburn, Kurtz, Mackiewicz
& Norris in Philadelphia, Pennsylvania, where he has practiced since 1968. Mr.
Norris' law firm represents the Company on an ongoing basis as intellectual
property counsel. He is 56 years old.
Elaine A. Pullen joined the Company as President and Chief Operating
Officer in August 1994. She has been President since that time and, in addition,
has served as a director and Chief Executive Officer since April 1, 1995. Prior
to joining the Company, Ms. Pullen served as a director of Linx Printing
Technologies, PLC ("Linx") from September 1992 to August 1994, where she also
served as Business Operations Director from February 1994 to August 1994 and as
Engineering Director from September 1992 to February 1994. Prior to that, Ms.
Pullen served as President of Linx USA from 1991 to 1992, and as Vice President
of Applied Research and Engineering of Videojet Systems International, Inc. from
1988 to 1991. Ms. Pullen holds a B.S. in Applied Physics from the British
Institute of Physics. She has 25 years of experience in research and
development, marketing and operations management in the ink jet printing field.
She is 44 years old.
John R. Webb has been a director of the Company since February 3, 1997.
From 1994 to 1996, Mr. Webb served as president of Exxon Chemical Americas, and
in 1995 also served as Assistant to the Chairman of Exxon Corporation. Prior to
that, Mr. Webb served as president of Exxon Chemical Company's Performance
Products Business Group and the Polymers Business Group and as Executive Vice
President of Exxon Enterprises. He is 57 years old.
Michael K. Lorelli has been a director of the Company since November 29,
1995. Mr. Lorelli currently serves as a Partner of Treacy & Company, LLC. From
September 1996 to December 1996, Mr. Lorelli served as Chief Executive Officer
and President of MobileMedia Corporation, which operates under the name
"MobileComm," from October 1994 to August 1996, he was President for North
America and Latin America of Tambrands, Inc., and from November 1992 to
September 1994, he was President of Pizza Hut International. Prior to that, Mr.
Lorelli served as President of Pepsi Cola East, a division of Pepsico, Inc.,
from August 1989 to October 1992. Mr. Lorelli also serves on the Board of
Directors of Tri-Point Medical Corporation. He is 47 years old.
BIOGRAPHICAL INFORMATION REGARDING EXECUTIVE OFFICERS OF THE COMPANY
The following biographical descriptions set forth certain information with
respect to the executive officers of the Company, based on information furnished
to the Company by each executive officer.
Elaine A. Pullen is the Company's President and Chief Executive Officer.
For biographical information regarding Ms. Pullen, see "--Biographical
Information Regarding Directors" above.
J. Leo Gagne joined the Company in February 1996 as Vice President and
Chief Financial Officer. Prior to joining the Company, Mr. Gagne served as
Director--Enterprise Group of Arthur Andersen LLP in Hartford, Connecticut,
where he was employed since 1977. Mr. Gagne, a Certified Public Accountant,
holds a B.S. in Accounting from the University of Connecticut. He is 42 years
old.
Andrew S. Borg joined the Company in May 1998. Prior to joining the
Company, Mr. Borg served as Director of Corporate Communications Worldwide, and
Director of Marketing for Electronics For Imaging, Inc. from June 1996 to April
1998. Mr. Borg served as Industry Marketing Manager, Digital Trade Services for
Scitex America Corporation from March 1995 to June 1996. He was the Senior
Director, Strategic and Product Marketing, for Splash Technologies Inc.
(formerly ColorAge Inc.) from January 1993 to February 1995. Prior to that, Mr.
Borg held a variety of marketing positions at DuPont Printing and Publishing,
E.I. DuPont de Nemours and Co., and Crossfield Electronics, Inc. Mr. Borg holds
a Bachelor of Arts degree with honors from Harvard College and a Master of
Communication Arts from the New York Institute of Technology. He is 44 years
old.
S-4
<PAGE> 25
Robert L. Rogers joined the Company in 1989 as Director of Engineering,
served as Director of Research and Development from January 1995 to August 1996
and has served as Vice President of Research since August 1996. Prior to that,
Mr. Rogers was involved in ink jet research at Exxon Enterprises Printing
Systems, Inc. and Dataproducts Corporation. Mr. Rogers holds a B.S. in
Mechanical Engineering from Cornell University. He is 44 years old.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Directors. Directors of the Company who are also employees receive no
additional compensation for their services as a director. Non-employee directors
are entitled to receive $10,000 per year for their services as a director.
Non-employee directors are entitled to convert this $10,000 cash payment into
stock options which will not qualify as incentive stock options under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code")
("Non-Qualified Options"), on a three-for-one basis (as more fully described
below). Non-employee directors are entitled to be paid $1,500 for attendance at
each regularly scheduled quarterly Board of Directors meeting, $333 per interim
telephonic Board of Directors meeting attended and $500 per committee meeting
attended. The Company also has a stock ownership policy for non-employee
directors pursuant to which each non-employee director is required to own Common
Stock with a value of no less than $75,000 (valued at the higher of cost or fair
market value) by the end of the thirty-sixth month after such director was
elected to the Board of Directors.
Under the Stock Option Plan, non-employee directors receive upon their
initial election to the Board a Non-Qualified Option to purchase up to 5,000
shares of Common Stock, which option vests on the first anniversary of the date
of grant. Also under the Stock Option Plan, each non-employee director receives
on the first business day following January 1 of each year a Non-Qualified
Option to purchase up to 8,000 additional shares of Common Stock, which option
vests on the first anniversary of the date of grant (no such option is granted,
however, to any person first elected or appointed to the Board of Directors
within six months prior to any such grant date). Non-employee directors are also
entitled to convert their $10,000 annual cash retainer into Non-Qualified
Options on a three-for-one basis such that, upon such a conversion, a non-
employee director will be granted a Non-Qualified Option to purchase three times
the number of shares of Common Stock that an investment of $10,000 would
purchase on the Nasdaq National Market as of such date, which options shall vest
on the first anniversary of the date of grant. Elections to so convert must be
made by non-employee directors on the first business date following January 1 of
each year and, once made, shall be irrevocable. All Non-Qualified Options
granted to non-employee directors are granted with exercise prices equal to the
fair market value of shares of Common Stock on the date of grant and have
ten-year terms. During calendar 1998 and 1999, all non-employee directors
elected to receive options in lieu of their cash retainer.
All directors of the Company are reimbursed for travel expenses incurred in
attending meetings of the Board of Directors and its committees.
S-5
<PAGE> 26
Executive Officers. The following table sets forth the compensation
awarded to the Company's Chief Executive Officer and the three (3) other most
highly compensated executive officers of the Company whose total salary and
bonus exceeded $100,000 during Fiscal 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION ---------------------------
----------------- ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) # $
- --------------------------- ---- ------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Elaine A. Pullen......................... 1998 173,719 26,494 10,000 4,608(1)
Chief Executive Officer 1997 157,306 53,548 10,000 4,909(1)
1996 135,065 39,340 -- 3,743(1)
J. Leo Gagne............................. 1998 148,003 9,494 10,000 4,725(1)
Chief Financial Officer 1997 143,577 1,360 10,000 2,123(1)
1996(2) 80,772 11,707 10,000 --
Robert L. Rogers......................... 1998 99,441 6,539 10,000 3,179(1)
Vice President of Research 1997 95,261 17,211 -- 3,374(1)
1996 81,420 19,621 -- 3,031(1)
Richard A. Cutting....................... 1998(3) 120,001 7,144 10,000 2,706(1)
Vice President of Engineering 1997 109,847 11,093 10,000 --
</TABLE>
- ---------------
(1) Represents contributions by the Company under its 401(k) Plan on behalf of
Ms. Pullen and Messrs. Gagne and Rogers.
(2) Mr. Gagne's employment with the Company commenced on February 26, 1996.
(3) Mr. Cutting's employment with the Company terminated on December 31, 1998.
OPTION GRANTS IN FISCAL YEAR 1998
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES PERCENT OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS EXERCISE PRICE APPRECIATION FOR
OPTIONS GRANTED TO OR OPTION TERM(1)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME # FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ---------- ---------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Elaine A. Pullen....... 10,000(2) 9.6% $13.00 1/02/08 $ 81,756 $207,187
J. Leo Gagne........... 10,000(2) 9.6% $13.00 1/02/08 $ 81,756 $207,187
Robert L. Rogers....... 10,000(2) 9.6% $13.00 1/02/08 $ 81,756 $207,187
Richard A. Cutting..... 10,000(2) 9.6% $13.00 1/02/08 $ 81,756 $207,187
</TABLE>
- ---------------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based upon assumed rates of stock appreciation set by the Securities and
Exchange Commission ("SEC") of five percent and ten percent compounded
annually from the date the respective options were granted. Actual gains, if
any, are dependent on the performance of the Common Stock. There can be no
assurance that the amounts reflected will be achieved.
(2) These options vest ratably on each of the first four anniversaries of
January 2, 1998, the date of grant of such options.
S-6
<PAGE> 27
Option Exercises and Year-End Holdings. The following table sets forth the
aggregate number of options exercised in Fiscal 1998 and the value of options
held at the end of Fiscal 1998 by the Company's Chief Executive Officer and the
three (3) other most highly compensated executive officers of the Company whose
total salary and bonus exceeded $100,000 during Fiscal 1998.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998 AND FISCAL YEAR-END 1998 OPTION
VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES YEAR-END (#) YEAR-END ($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED(#) UNEXERCISABLE UNEXERCISABLE(1)
- ---- ----------- ----------- ---------------------- -----------------
<S> <C> <C> <C> <C>
Elaine A. Pullen................. 5,000 $ 76,000 25,500/27,500 $192,740/$83,800
J. Leo Gagne..................... -- -- 7,500/22,500 $0/$0
Robert L. Rogers................. -- -- 6,000/14,000 $22,995/$7,665
Richard A. Cutting............... -- -- 2,500/17,500 $0/$0
</TABLE>
- ---------------
(1) Based on $9.38 per share, the price of the last reported trade of the Common
Stock on the Nasdaq National Market on September 30, 1998.
EMPLOYMENT ARRANGEMENTS WITH EXECUTIVE OFFICERS
The Company has an executive employment agreement with its President and
Chief Executive Officer Elaine A. Pullen, the term of which ends on November 1,
2000. The agreement may be terminated by the Company (i) if certain business
performance goals established by the Board of Directors are not attained; (ii)
if certain of Ms. Pullen's confidentiality obligations have not been met, or
(iii) if there are other grounds (as outlined in the agreement) for termination
of the agreement by the Company. The agreement provides that Ms. Pullen will
not, during or after the term of the agreement, disclose any confidential
information (as defined in the agreement) pertaining to the business of the
Company or to the business of any actual or potential client or customer of the
Company, to any third party. Ms. Pullen is also subject to certain restrictions
on competition with the Company both during the term of the agreement and for
one year after the termination of her employment for any reason. In
consideration for the confidentiality provisions and the restrictions on
competition, upon the expiration or termination of the agreement, or upon the
leaving of the employ of the Company by Ms. Pullen, Ms. Pullen is entitled to
one year's compensation (including base salary, bonus, the earned portion of any
interest in a profit sharing or other similar plan, and all benefits (as
outlined in the agreement)) to be paid within thirty days of the date of such
expiration or termination or leaving the employ of the Company.
In addition, Ms. Pullen's executive employment agreement provides that in
the event of the Involuntary Termination (as defined below) of her employment
within two years following a change in control of the Company, Ms. Pullen is
entitled to the following severance benefits: (i) the present value equivalent
(on a 10% discounted basis) of salary continuation for three years (based on the
base salary in effect on the date of such Involuntary Termination together with
the ordinary and customary additional elements of compensation attendant to Ms.
Pullen's position (other than stock options)); (ii) coverage for three years
under all Company perquisites and benefit plans as if Ms. Pullen were still an
active employee; (iii) the acceleration of all unexercised stock options (unless
provision is made in connection with such change in control for the assumption
of existing options or the substitution for such options of new options of the
successor entity, with appropriate adjustments); and (iv) employment search
assistance through a professional outplacement organization and office and
secretarial support for up to one year. In addition to actual termination of
employment, the following events, among others, are deemed "Involuntary
Terminations" under Ms. Pullen's executive employment agreement: (i) a reduction
in base salary or the ordinary and customary additional elements of compensation
(subject to certain exceptions based on performance or in connection with
broadly based compensation reduction programs); (ii) a material reduction in Ms.
Pullen's functions, duties or
S-7
<PAGE> 28
responsibilities; (iii) a geographic reassignment (greater than 50 miles);
and/or (iv) a breach of the executive employment agreement by the Company;
provided that if Ms. Pullen fails to object to a change of the type specified in
(i) through (iv) within 180 days of any such change, she will be deemed to have
waived her rights to severance with respect to such change.
On January 6, 1999, the Company and Ms. Pullen amended certain provisions
of Ms. Pullen's executive employment agreement. The amendment to the agreement
provides that, in connection with a change in control occurring on or prior to
April 30, 1999, the period during which Ms. Pullen must object to an event she
believes constitutes an Involuntary Termination is extended until December 31,
1999 (rather than 180 days following the date of the alleged Involuntary
Termination). In addition, the amendment provides that, if any portion of the
payments to be received by Ms. Pullen in connection with an Involuntary
Termination following a change in control would constitute an "excess parachute
payment" under Section 280G of the Internal Revenue Code of 1986, as amended,
the Company will provide a "gross-up" payment to Ms. Pullen sufficient to
provide her with the same after-tax amount she would have received but for the
excise and income taxes due under said Section 280G (or any additional taxes on
such grossed-up amount). The amendment provides that the "gross-up" payment to
Ms. Pullen shall in no event exceed $160,000. The other provisions of Ms.
Pullen's executive employment agreement were not affected by the amendment.
In connection with entering into the Merger Agreement, the Company's Board
of Directors determined that Ms. Pullen will be entitled to receive an $80,000
bonus upon consummation of the Merger, so long as the Merger is consummated on
or before April 30, 1999. Ms. Pullen has acknowledged that this payment will
represent all bonus due to her during 1999 under her executive employment
agreement. Ms. Pullen will also be entitled to certain payments under the
Employee Retention Plan adopted by the Company in connection with the Merger
Agreement.
The Company also has an executive employment agreement with its Chief
Financial Officer J. Leo Gagne, the term of which ends on May 31, 2000. The
agreement may be terminated by the Company (i) if certain business performance
goals established by the Board of Directors are not attained; (ii) if certain of
Mr. Gagne's confidentiality obligations have not been met, or (iii) if there are
other grounds (as outlined in the agreement) for termination of the agreement by
the Company. The agreement provides that Mr. Gagne will not, during or after the
term of the agreement, disclose any confidential information (as defined in the
agreement) pertaining to the business of the Company or to the business of any
actual or potential client or customer of the Company, to any third party. Mr.
Gagne is also subject to certain restrictions on competition with the Company
both during the term of the agreement and for one year after the termination of
his employment for any reason. In consideration for the confidentiality
provisions and the restrictions on competition, upon the expiration or
termination of the agreement, or upon the leaving of the employ of the Company
by Mr. Gagne, Mr. Gagne is entitled to one year's compensation (including base
salary, bonus, the earned portion of any interest in a profit sharing or other
similar plan, and all benefits (as outlined in the agreement)) to be paid within
thirty days of the date of such expiration or termination or leaving the employ
of the Company.
In addition, Mr. Gagne's executive employment agreement provides that in
the event of the Involuntary Termination of his employment within two years
following a change in control of the Company, Mr. Gagne is entitled to the
following severance benefits: (i) salary continuation for two years (based on
the base salary in effect on the date of such Involuntary Termination together
with ordinary and customary additional elements of compensation attendant to Mr.
Gagne's position (other than stock options)) (subject to the limitation of the
foregoing salary and customary additional elements of compensation continuation
during the second year following his Involuntary Termination by the amount of
equivalent base salary, fees, and other compensation elements Mr. Gagne may
receive from any employment, consultancy, board services or other similar
business arrangement secured with another party during the second year of the
two year continuation period, and the Company shall only be obligated to pay the
difference between the aggregate of such salary continuation and elements, and
the value of compensation received from another party, if less); (ii) coverage
for two years under all Company perquisites and benefit plans as if Mr. Gagne
were still an active employee (subject to mitigation during the second year
following an Involuntary Termination); (iii) the acceleration of all unexercised
stock options (unless provision is made in connection with such change in
control for the
S-8
<PAGE> 29
assumption of existing options or the substitution for such options or new
options of the successor entity, with appropriate adjustments); and (iv)
employment search assistance through a professional out placement organization
and office and secretarial support for up to one year. The definition of the
term "Involuntary Termination" in Mr. Gagne's executive employment agreement is
the same as that contained in Ms. Pullen's executive employment agreement, as
described above.
On January 6, 1999, the Company and Mr. Gagne amended Mr. Gagne's executive
employment agreement. The amendment clarified Mr. Gagne's obligations to
mitigate the payments to which he would be entitled in connection with an
Involuntary Termination following a change in control, but did not affect the
other provisions of Mr. Gagne's executive employment agreement.
In connection with entering into the Merger Agreement, the Company's Board
of Directors determined that Mr. Gagne will be entitled to receive a $48,000
bonus upon consummation of the Merger, so long as the Merger is consummated
prior to April 30, 1999. Mr. Gagne has acknowledged that this payment will
represent all bonus due to him during 1999 under his executive employment
agreement. Mr. Gagne will also be entitled to certain payments under the
Employee Retention Plan adopted by the Company in connection with the Merger
Agreement.
MANAGEMENT BONUS PLAN
The Company has established a Bonus Plan for its key managers and
executives. Under the Bonus Plan, the Compensation Committee has the discretion
to determine those key managers and executives of the Company who will be
eligible for cash bonuses if certain financial and business objectives are
achieved. Key managers and executives must have one year of service at the
Company in order to qualify for bonuses under the Bonus Plan. The formula for
determining each participant's bonus is established annually by the Compensation
Committee and is based upon the achievement of financial goals (such as
specified revenue levels, maintenance of positive cash flow or addition of
economic value) and business objectives specified in the Bonus Plan. The
Compensation Committee may change the bonus formulae and designate additional
employees as participants in the Bonus Plan from time to time.
EMPLOYEE RETENTION PLAN
On January 6, 1999, in connection with entering into the Merger Agreement,
the Company adopted an Employee Retention Plan (the "Retention Plan") for the
benefit of the Company's officers and employees. As soon as practicable, the
Company will, in consultation with Parent, designate those officers and
employees of the Company who will be eligible to receive payments under the
Retention Plan. The total amount which officers and employees will be eligible
to receive under the Retention Plan is $475,000. Ms. Pullen and Mr. Gagne will
be entitled to $137,750 and $37,750, respectively, under the Retention Plan. The
remaining $300,000 under the Retention Plan will be allocated as soon as
practicable among the Company's other officers and employees.
In the event that the employment of any designated officer or employee
under the Retention Plan is terminated (other than voluntarily by the officer or
employee) between the closing of the Merger and the close of business on
December 31, 1999 for any reason other than for good cause, such officer or
employee will receive a payment in the amount designated under the Retention
Plan. In addition, each designated officer and employee who is still employed by
the Company or a successor to the Company on January 1, 2000 shall receive a
payment in the amount designated under the Retention Plan.
For purposes of the Retention Plan, a reduction in an officer's or an
employee's (other than Ms. Pullen and Mr. Gagne) base salary, benefits,
compensation plan or commission rate will be deemed to constitute a termination
of such officer or employee. In the case of Mr. Gagne, any action which would
constitute an Involuntary Termination under his executive employment agreement
will be deemed to constitute a termination of his employment for purposes of the
Retention Plan. Ms. Pullen will not be entitled to any payment under the
Retention Plan in the case of an event that would constitute an Involuntary
Termination (other than an actual termination) under her executive employment
agreement. A copy of the Retention Plan is attached to the Schedule 14D-9 as
Exhibit 11 thereto and is incorporated herein by reference.
S-9
<PAGE> 30
SEVERANCE POLICY
The Company also maintains a severance policy pursuant to which any
employee of the Company whose employment is terminated without cause is entitled
to severance in the amount of one week's compensation for each fully completed
six month period that such employee has been employed by the Company or one of
its predecessors. Pursuant to the Merger Agreement, Parent has agreed to
maintain this severance policy at least until December 31, 1999.
STOCK PERFORMANCE GRAPH
The following graph provides a comparison of cumulative total stockholder
return for the period from February 27, 1996 (the date on which the Common Stock
was first registered under Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and publicly traded) through September 30, 1998,
among the Company, the Nasdaq Stock Market US Companies Index (the "Nasdaq-US
Index") and the Center for Research in Security Prices ("CRSP") Computer
Manufacturers Index (the "Peer Group Index," an index of Nasdaq Stock Market
traded companies (both domestic and foreign) with Standard Industrial
Classification Code Numbers from 3570 to 3579). The Stock Performance Graph
assumes an investment of $100 in each of the Company and the two indices, and
the reinvestment of any dividends. The historical information set forth below is
not necessarily indicative of future performance. Data for the Nasdaq-US Index
and the Peer Group Index was provided to the Company by CRSP.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Nasdaq Stock Nasdaq Computer
'Trident Market (US Manufacturers
International, Inc. Companies) Stocks
<S> <C> <C> <C>
2/27/96 $100.00 $100.00 $100.00
9/30/96 93.20 111.70 114.20
9/30/97 92.50 153.40 163.50
9/30/98 51.00 156.70 232.30
</TABLE>
S-10
<PAGE> 31
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors consists of R. Hugh
Van Brimer, Chairman, Robert S. Anderson and Michael K. Lorelli. None of the
members of the Compensation Committee are employees of the Company.
The Compensation Committee is responsible for (1) reviewing and approving
the Company's compensation and retirement practices and plans, (2) reviewing and
approving remuneration programs for its officers, directors and most highly paid
executives, (3) reviewing and approving stock option grants (subject to the
approval of the full Board of Directors), (4) reviewing and approving the
performances of and compensation for the Company's Chief Executive Officer and
the executive officers reporting directly to the Chief Executive Officer, and
(5) the review and submission to the full Board of Directors for approval of the
succession plans for the Chief Executive Officer and other executive officers.
COMPENSATION PHILOSOPHY AND PRACTICE
The Compensation Committee believes that leadership and motivation of the
Company's employees is critical to the continued success of the Company and that
pay for performance is the foundation of any remunerated enterprise. In support
of these philosophies, the Compensation Committee structures its compensation
program to achieve the following objectives:
1. Offer compensation opportunities that attract and retain
exceptionally talented individuals, motivate individuals to perform at
their highest levels and reward achievements that further the business
strategy of the Company.
2. Link a significant portion of the executive's total compensation to
the annual and long-term financial performance of the Company as well as to
the creation of stockholder value.
3. Encourage executives to manage from the perspective of ownership of
the Company.
Each year the Compensation Committee conducts a full review of the
Company's executive and employee compensation program. In Fiscal 1998, the
Company utilized information provided by the Connecticut Business and Industry
Association, the American Electronics Association and the National Institute of
Business Management and a review of compensation paid to executives in companies
in related industries to assist in a review of the current compensation
practices of the Company, to assess the competitive level of compensation and to
approve specific objective performance measures consistent with the approved
business plan for use in awarding bonus compensation.
Based upon its own deliberations and the consideration of data indicating
the level of compensation of companies of similar size, complexity, revenues and
growth potential and recognizing the caliber, level of experience and
performance of the Company's management, the Compensation Committee believes
that the Company's executive compensation practices maintain an overall level of
compensation that is competitive.
The executive and management compensation consists of base pay, capped
profit incentive, a discretionary bonus and an incentive stock option plan. This
total compensation program is intended to provide executive officers and senior
management with a competitive salary while at the same time emphasizing the
bonus and long-term components of total compensation. In keeping with recent
compensation trends in industry, the Compensation Committee has increasingly
strengthened emphasis on the "at risk" portion of executive pay to drive
business results to plan and to assure stockholder return. All management
employees at the Company have been placed in one of sixteen pay grades, each
grade being commensurate with the duties and responsibilities undertaken by each
such employee. Each pay grade is assigned a minimum, mid-point and maximum
salary range. The dollar amounts comprising the minimum, mid-point and maximum
ranges were established by Company personnel working with executive compensation
consultants from comparisons to companies of similar size and similar lines of
business with the Company as published in compensation surveys. The
determination of the base pay of the executive officers who report to the Chief
Executive Officer is made by reviewing the performance of each individual
executive officer and recommendations of Ms. Pullen, the Company's Chief
Executive Officer. The Compensation Committee determines the base
S-11
<PAGE> 32
compensation of the Chief Executive Officer without her participation. The
determination of the base compensation of the Chief Executive Officer is made by
weighing the performance of the Chief Executive Officer against predetermined
specific objectives as well as variable objectives such as unplanned activities,
intra-period modifications, changes of priorities and new opportunities.
Performance is judged by comparing specific objectives determined at the
beginning of the year. A review and approval of the salaries being paid to the
executive officers and managers reporting to the Chief Executive Officer was
conducted at a meeting of the Compensation Committee held on November 19, 1998.
Ms. Pullen, the Company's Chief Executive Officer, made recommendations premised
on keeping salaries of the Company's executive officers competitive with those
of other companies in similar lines of business.
MANAGEMENT BONUS PLAN
Additional compensation is awarded to the Company's executives by the
Compensation Committee pursuant to the Bonus Plan. If earned, annual awards can
be 10% to 50% of an employee's base pay (subject to adjustment in the discretion
of the Compensation Committee). Awards made pursuant to the Bonus Plan are based
on fiscal year performance of the Company and completion of specific assignments
and goals. The award is then be pro-rated for the length of service within the
qualifying fiscal year. Of the total amount of an award, 50% is based on
achievement of financial goals and 50% is based on achievement of specific non-
financial objectives. Twenty-one executives are presently eligible to
participate in the Bonus Plan.
PROFIT INCENTIVE PLAN
The Company's Profit Incentive Plan is available to all regular employees
who were employed as of the beginning of the applicable fiscal quarter. Awards
are computed quarterly and are based 40% on financial goals and 60% on
non-financial objectives as selected by the Chief Executive Officer. No award
with respect to non-financial objectives will be made unless the Company's
financial goals are 90% achieved. An additional annual bonus may be awarded if
annual financial goals are achieved. The maximum annual salary which can be used
as a basis of the bonus computation under the Profit Incentive Plan is $80,000.
R. HUGH VAN BRIMER
ROBERT S. ANDERSON
MICHAEL K. LORELLI
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION; CERTAIN TRANSACTIONS
Since the IPO, the Company's executive compensation has been determined by
the Compensation Committee of the Company's Board of Directors, which currently
consists of Messrs. Van Brimer, Anderson and Lorelli. Mr. Van Brimer served as
Chief Executive Officer of the Company from its founding until April 1995, and
currently acts as a consultant to the Company.
S-12
<PAGE> 33
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth as of January 1, 1999 (except as otherwise
indicated) certain information regarding the beneficial ownership of Common
Stock by (i) each person or "group" (as that term is defined in Section 13(d)(3)
of the Exchange Act) known by the Company to be the beneficial owner of more
than 5% of the Company's Common Stock, (ii) the Company's Chief Executive
officer and the other most highly compensated executive officers whose total
salary and bonus exceeded $100,000 during Fiscal 1998 and who continue to be
employed by the Company, (iii) each director and nominee for director of the
Company and (iv) all directors and executive officers as a group (ten(10)
persons). Except as otherwise indicated, each person listed below has sole
voting and investment power over the shares of Common Stock shown as
beneficially owned.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME BENEFICIALLY OWNED COMMON STOCK(1)
- ---- ------------------ ---------------
<S> <C> <C>
Eagle Asset Management, Inc................................. 555,900(2) 8.6%
800 Carillon Parkway
St. Petersburg, FL 33716
Wellington Management Co., LLP.............................. 680,000(2) 10.5%
75 State Street
Boston, MA 02109
T. Rowe Price Associates, Inc............................... 790,168(2) 12.2%
100 East Pratt St.
Baltimore, MD 21202
Elaine A. Pullen............................................ 95,000(3) 1.5%
J. Leo Gagne................................................ 15,691(4) *
Robert L. Rogers............................................ 25,232(5) *
R. Hugh Van Brimer.......................................... 200,003(6) 3.1%
Robert S. Anderson.......................................... 69,032(7) 1.1%
Russell J. Greenberg........................................ 102,774(8) 1.6%
Norman L. Norris............................................ 259,566(9) 4.0%
Michael K. Lorelli.......................................... 21,558(10) *
John R. Webb................................................ 16,808(11) *
All directors and executive officers as a group
(10 persons)................................................ 805,664 12.2%
</TABLE>
- ---------------
* Less than one percent
(1) The number of shares of Common Stock outstanding used in calculating the
percentage for each listed person includes the shares of Common Stock
underlying the options or warrants held by such person or entity that are
exercisable within 60 days of January 1, 1999 but excludes shares of Common
Stock underlying options or warrants held by any other person.
(2) Based on information contained in filings by this entity with the
Securities and Exchange Commission.
(3) Includes 50,000 shares owned by The Robinson-Humphrey Company, LLC as IRA
Custodian for Ms. Pullen and 40,500 options underlying options that are
currently exercisable or that become exercisable within 60 days.
(4) Includes 15,000 shares underlying options that are currently exercisable or
that become exercisable within 60 days.
(5) Includes 9,250 shares underlying options that are currently exercisable or
that become exercisable within 60 days.
(6) Includes 19,526 shares beneficially owned by Mr. Van Brimer's wife, Jane W.
Van Brimer. Mr. Van Brimer disclaims beneficial ownership of the shares
beneficially owned by Mrs. Van Brimer. Also includes 12,808 shares
underlying options that are currently exercisable or that become
exercisable within 60 days.
S-13
<PAGE> 34
(7) Includes 37,483 shares owned by the Delaware Charter Retirement Plan as
Custodian for Mr. Anderson and 12,808 shares underlying options that are
currently exercisable or that become exercisable within 60 days.
(8) Includes 12,808 shares underlying options that are currently exercisable or
that become exercisable within 60 days.
(9) Includes 122,667 shares beneficially owned by Mr. Norris' wife, Nancy
Norris. Mr. Norris disclaims beneficial ownership of the shares
beneficially owned by Mrs. Norris. Also includes 13,808 shares underlying
options and warrants that are currently exercisable or that become
exercisable within 60 days.
(10) Includes 16,558 shares underlying options that are currently exercisable or
that become exercisable within 60 days.
(11) Includes 12,808 shares underlying options that are currently exercisable or
that become exercisable within 60 days.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC") and Nasdaq.
Officers, directors and greater than 10% stockholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on a review of the copies of such
reports and amendments thereto furnished to the Company and written
representations that no other reports were required during, or with respect to,
Fiscal 1998, all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than 10% beneficial owners were satisfied except
that Mr. Borg inadvertently failed to file a timely report relating to becoming
an officer of the Company in May 1998.
S-14
<PAGE> 35
ANNEX I
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER AND PARENT
The following table sets forth the name, business address, principal
occupation or employment at the present time and during the last five years, and
the name, principal business and address of any corporation or other
organization in which such occupation or employment is or was conducted, of the
executive officers and directors of the Purchaser and Parent, all of whom are
citizens of the United States. The business address of such persons is in care
of Illinois Tool Works Inc., 3600 West Lake Avenue, Glenview, Illinois
60025-5811. Each person has had the principal occupation or employment listed
for more than the past five years, except as otherwise noted or, with respect to
an officer of Parent, prior to the position indicated may have held some other
executive position with Parent during the five year period. Directors of Parent
are indicated with an asterisk. Directors of the Purchaser are indicated with a
cross; unless otherwise indicated, the office is that of Parent.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME (AGE) FIVE-YEAR EMPLOYMENT HISTORY
---------- ----------------------------------------------
<S> <C>
William F. Aldinger III* (51)........ Chairman and Chief Executive Officer of Household
International, Inc. since 1994. Mr. Aldinger served in
senior officer positions at Wells Fargo Bank during the
period from 1986 to 1994. Mr. Aldinger is a director of
Household International, Inc., SunAmerica, Inc. and
MasterCard International, Inc.
Michael J. Birck* (60)............... Founder, and President and Chief Executive Officer since
1975, of Tellabs, Inc. Mr. Birck is a director of USF&G
Corporation and Molex, Inc.
Marvin D. Brailsford* (60)........... Vice President of Kaiser Hill Company LLC since 1996;
founder and President of the Brailsford Group from 1995 to
1996; and President of Metters Industries from 1992 to 1995.
Thomas W. Buckman (61)............... Vice President Patents and Technology. Mr. Buckman is a Vice
President of Purchaser.
Susan Crown* (40).................... Vice President, Henry Crown and Company since 1984. Henry
Crown and Company is a family owned and operated company
with investments in securities, real estate, resort
properties and manufacturing operations. Ms. Crown is a
director of Baxter International Inc. and Northern Trust
Corporation and its subsidiary, The Northern Trust Company.
H. Richard Crowther* (66)............ Former Vice Chairman. He is a director of Applied Power Inc.
W. James Farrell* (56)............... Chairman since 1996 and Chief Executive Officer since 1995.
Mr. Farrell served as President from 1994 until 1996 and as
Executive Vice President from 1983 to 1994. Mr. Farrell is a
director of Morton International, Inc., Premark
International, Inc. and the Quaker Oats Company.
Russell M. Flaum (48)................ Executive Vice President.
L. Richard Flury* (51)............... Executive Vice President, Amoco Corporation (energy and
chemicals) since 1996, formerly Senior Vice President for
Shared Services from 1994 through 1995 and Executive Vice
President, Amoco Chemical Co., from 1991 to 1994.
Thomas J. Hansen (50)................ Executive Vice President.
Stewart S. Hudnut+ (59).............. Senior Vice President, General Counsel and Secretary. Mr.
Hudnut is a director, a Vice President and the Secretary of
the Purchaser.
John Karpan (58)..................... Senior Vice President, Human Resources.
</TABLE>
A-1
<PAGE> 36
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME (AGE) FIVE-YEAR EMPLOYMENT HISTORY
---------- ----------------------------------------------
<S> <C>
Jon C. Kinney (56)................... Senior Vice President and Chief Financial Officer.
Valerie Lapinski (44)................ President of ITW Dynatec (a Parent company) and a Vice
President of Purchaser.
Dennis J. Martin (48)................ Executive Vice President.
Robert C. McCormack* (59)............ Partner, Trident Capital LP (venture capital) since January
1993; Assistant Secretary of the Navy from 1990 to 1993.
Robert V. McGrath (58)............... Vice President, Tax. Mr. McGrath is Vice President, Tax of
Purchaser.
Frank S. Ptak (55)................... Vice Chairman since 1998 and Executive Vice President prior
thereto.
Michael J. Robinson+ (52)............ Vice President and Treasurer. Mr. Robinson is a director, a
Vice President and the Treasurer of the Purchaser.
Philip B. Rooney* (54)............... Vice Chairman of The ServiceMaster Company (a network of
quality service companies). Former President of WMX
Technologies, Inc. (waste management) from 1985 until 1997.
Mr. Rooney is a director of The ServiceMaster Company, Urban
Shopping Centers, Inc., and Stone Container Corporation and
a Trustee of the Van Kampen American Capital Open-End Funds.
F. Ronald Seager (58)................ Executive Vice President.
Harold B. Smith* (65)................ Chairman of the Executive Committee. Mr. Smith is a director
of W.W. Grainger, Inc. and Northern Trust Corporation and
its subsidiary, The Northern Trust Company, and a trustee of
The Northwestern Mutual Life Insurance Company.
David B. Speer (47).................. Executive Vice President.
Allan C. Sutherland (35)............. Senior Vice President, Leasing and Investments. Mr.
Sutherland is a Vice President of Purchaser.
Ormond J. Wade* (59)................. Former Vice Chairman, Ameritech Corp. (telecommunications
products and services) from 1987 to 1993 and President and
Chief Executive Officer, Illinois Bell Telephone Company
from 1982 through 1986. Mr. Wade is a director of Andrew
Corporation and Westall Inc.
Hugh J. Zentmyer+ (52)............... Executive Vice President. Mr. Zentmyer is a director and
President of Purchaser.
</TABLE>
A-2
<PAGE> 1
TRIDENT INTERNATIONAL, INC.
1114 FEDERAL ROAD
BROOKFIELD, CONNECTICUT 06804
(203) 740-9333
January 13, 1999
Dear Stockholder:
I am pleased to inform you that, on January 6, 1999, Trident International,
Inc. (the "Company") and Illinois Tool Works Inc. ("ITW") entered into a Merger
Agreement. Pursuant to the terms of the Merger Agreement, ITW Acquisition Inc.,
a wholly owned subsidiary of ITW, is commencing a cash tender offer for all of
the outstanding shares of common stock of the Company at a price of $16.50 per
share. Promptly following the completion of the tender offer, ITW Acquisition
Inc. will be merged into the Company, and all outstanding shares of the
Company's common stock (other than those owned by the Company or ITW or any of
their respective affiliates, and other than those owned by dissenting
stockholders) will be converted into the right to receive $16.50 in cash. Your
Board of Directors has unanimously approved the tender offer and the merger and
declared each of them advisable and unanimously recommends that the Company's
stockholders tender their shares of common stock in the tender offer. In
arriving at this decision, the Board gave careful consideration to a number of
factors described in the attached Schedule 14D-9 that is being filed today with
the Securities and Exchange Commission. Among other factors, the Board
considered the opinion dated January 6, 1999 of The Robinson-Humphrey Company,
LLC, the Company's financial advisor, which provides that, based upon and
subject to the matters set forth in the opinion, the cash consideration to be
received by stockholders of the Company pursuant to the tender offer and the
merger is fair to the Company's stockholders from a financial point of view.
Accompanying this letter, in addition to the attached Schedule 14D-9
relating to the tender offer, is ITW's Offer to Purchase, dated January 13,
1999, together with related materials, including a Letter of Transmittal to be
used for tendering your shares. These documents set forth the terms and
conditions of the tender offer and the merger and provide instructions regarding
how to tender your shares. I urge you to read the enclosed materials carefully.
Your Board of Directors believes that the proposed acquisition of the
Company by ITW is fair to and in the best interests of the Company's
stockholders.
Sincerely,
/s/ ELAINE A. PULLEN
------------------------------
ELAINE A. PULLEN
President and Chief Executive
Officer
<PAGE> 1
Exhibit 99.2
ITW TO ACQUIRE TRIDENT
Glenview, IL and Brookfield, CT, January 7, 1999. Illinois Tool Works
Inc. (NYSE: ITW) and Trident International, Inc. (NASDAQ: TRDT), today announced
a definitive merger agreement under which ITW will acquire Trident
International, Inc.
Under the terms of the merger agreement, unanimously approved by
Trident's Board of Directors, ITW through a subsidiary, will commence a cash
tender offer to purchase all outstanding shares of common stock of Trident for
$16.50 per share. The transaction is subject to customary conditions, including
the valid tender of at least a majority of Trident's outstanding shares (on a
fully diluted basis). Following completion of the tender offer, any shares not
purchased in the tender offer will be acquired for the same price in cash in a
second-step merger.
Trident International, Inc. designs, manufacturers and markets
proprietary impulse ink jet technology to industrial original equipment
manufacturers (OEM's) worldwide. Trident International Inc.'s product line
includes patented impulse ink jet printheads, ink delivery systems, a range of
inks and electronic interface circuits.
Illinois Tool Works Inc. Is a multinational manufacturer of highly
engineered components and industrial systems. The company has approximately 365
operations in 34 countries and approximately 25,700 employees.
<PAGE> 1
Exhibit 99.3
AGREEMENT AND PLAN OF MERGER
TRIDENT INTERNATIONAL, INC.
ILLINOIS TOOL WORKS INC.
AND
ITW ACQUISITION INC.
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I.
The Offer..........................................................................................-2-
Section 1.1 The Offer.............................................................................-2-
Section 1.2 Company Actions.......................................................................-4-
Section 1.3 Stockholder Mailings..................................................................-6-
ARTICLE II.
The Merger.........................................................................................-7-
Section 2.1 The Merger............................................................................-7-
Section 2.2 Closing...............................................................................-7-
Section 2.3 Effective Time........................................................................-8-
Section 2.4 Further Assurances....................................................................-8-
ARTICLE III.
Certificate of Incorporation and By-Laws; Officers and Directors
of the Surviving Corporation...................................................................-9-
Section 3.1 Certificate of Incorporation..........................................................-9-
Section 3.2 By-Laws...............................................................................-9-
Section 3.3 Officers and Directors................................................................-9-
ARTICLE IV.
Conversion of Common Shares in the Merger..........................................................-9-
Section 4.1 Conversion............................................................................-9-
(a) Common Shares Generally..........................................................-9-
(b) Common Shares Held by the Parent Companies
or the Company..................................................................-10-
(c) Subsidiary Stock................................................................-10-
Section 4.2 Payment..............................................................................-11-
Section 4.3 Dissenting Shares....................................................................-13-
Section 4.4 Closing of Transfer Records..........................................................-15-
Section 4.5 Employee and Other Stock Options.....................................................-15-
Section 4.6 Warrants..............................................................................-16-
Section 4.7 Employee Stock Purchase Plan..........................................................-17-
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE V.
Representations and Warranties....................................................................-17-
Section 5.1 Representations and Warranties of Parent and Subsidiary..............................-17-
(a) Corporate Organization..........................................................-18-
(b) Corporate Authorization.........................................................-18-
(c) No Conflicts....................................................................-19-
(d) Financing.......................................................................-20-
(e) Filings and Consents............................................................-20-
(f) Litigation......................................................................-21-
(g) Offer Documents.................................................................-21-
(h) Merger Proxy Statement..........................................................-22-
(j) Common Shares...................................................................-22-
Section 5.2 Representations and Warranties of the Company........................................-22-
(a) Corporate Organization..........................................................-23-
(b) Capitalization..................................................................-23-
(c) Corporate Authorization and Certain Corporate Action............................-25-
(d) Financial Statements and Reports................................................-26-
(e) Absence of Other Liabilities....................................................-27-
(f) Absence of Certain Changes or Events............................................-27-
(g) Offer Documents.................................................................-28-
(h) Schedule 14D-9..................................................................-29-
(i) Merger Proxy Statement..........................................................-29-
(j) Certain Agreements..............................................................-30-
(k) No Conflicts....................................................................-31-
(l) Filings and Consents............................................................-31-
(m) Compliance With Laws............................................................-32-
(n) Litigation......................................................................-32-
(o) Employee Benefit Plans..........................................................-32-
(p) Taxes...........................................................................-33-
(q) Health, Safety and Environmental Laws and Regulations...........................-34-
(r) Intellectual Property...........................................................-36-
(s) Brokers and Finders.............................................................-36-
(t) Year 2000 Compliance............................................................-37-
(u) Contracts.......................................................................-37-
(v) Labor Relations.................................................................-38-
(w) Affiliate Transactions..........................................................-38-
(x) Vote Required...................................................................-39-
(y) Knowledge Definition............................................................-39-
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE VI.
Covenants.........................................................................................-39-
Section 6.1 No Solicitation of Transactions......................................................-39-
Section 6.2 Postponement of Annual Meeting.......................................................-41-
Section 6.3 Interim Operations of the Company....................................................-42-
Section 6.4 Meetings of the Company's Stockholders...............................................-44-
Section 6.5 Filings; Other Action................................................................-45-
Section 6.6 Reasonable Best Efforts...............................................................-45-
Section 6.7 Access...............................................................................-46-
Section 6.8 Publicity............................................................................-47-
Section 6.9 Directors' and Officers' Indemnification; Insurance..................................-47-
Section 6.10 Registration Rights Agreement........................................................-52-
Section 6.11 Fair Price Statute..................................................................-52-
Section 6.12 Directors...........................................................................-53-
Section 6.13 Employee Benefits Matters...........................................................-54-
ARTICLE VII.
Conditions........................................................................................-56-
Section 7.1 Conditions to each Party's Obligations to Effect the Merger..........................-56-
(a) Stockholder Approval............................................................-57-
(b) Governmental Filings and Consents...............................................-57-
(c) Purchase of Common Shares.......................................................-57-
(d) Injunction......................................................................-57-
ARTICLE VIII.
Termination and Abandonment.......................................................................-58-
Section 8.1 Termination..........................................................................-58-
Section 8.2. Procedure and Effect of Termination.................................................-60-
Section 8.3. Fees and Expenses...................................................................-60-
ARTICLE IX.
Miscellaneous.....................................................................................-64-
Section 9.1 Amendment............................................................................-64-
Section 9.2 Waiver...............................................................................-65-
Section 9.3 Special Fees of the Company..........................................................-65-
Section 9.4 Counterparts.........................................................................-65-
Section 9.5 Governing Law........................................................................-66-
Section 9.6 Notices..............................................................................-66-
Section 9.7 Entire Agreement, etc................................................................-67-
Section 9.8 Definition of "Subsidiary"...........................................................-67-
Section 9.9 Obligation of Parent.................................................................-67-
Section 9.10 Captions............................................................................-68-
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C>
Section 9.11 Survival............................................................................-68-
Section 9.12 Parties in Interest; Assignment.....................................................-68-
Section 9.13 Enforcement of the Agreement........................................................-69-
Section 9.14 Severability........................................................................-69-
</TABLE>
-iv-
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT is made as of January 6, 1999 among Trident
International, Inc., a Delaware corporation (the "Company"), Illinois Tool Works
Inc., a Delaware corporation ("Parent"), and ITW Acquisition Inc., a Delaware
corporation and a direct wholly-owned subsidiary of Parent ("Subsidiary").
WHEREAS, the Company and Subsidiary (the Company and
Subsidiary being referred to in this Agreement as the "Constituent
Corporations") desire for Parent to acquire the Company through a merger of
Subsidiary with and into the Company (the "Surviving Corporation") upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of the acquisition contemplated by
this Agreement, Subsidiary will make an offer to purchase for cash all of the
Company's issued and outstanding shares of common stock, par value $.01 per
share ("Common Shares"), on the terms and subject to the conditions set forth in
this Agreement; and
WHEREAS, the Company, Parent and Subsidiary desire to make
certain representations, warranties and agreements in connection with the merger
of the Company and Subsidiary;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
<PAGE> 7
ARTICLE I.
The Offer
Section 1.1 The Offer.
(a) As promptly as practicable (but in no event later than
five business days from and including the date of the initial public
announcement of the Offer or this Agreement), Parent shall cause Subsidiary to
commence (within the meaning of Rule 14d- 2(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) an offer to purchase for cash (the
"Offer") all of the Company's issued and outstanding Common Shares at a purchase
price of $16.50 per Common Share net to the tendering stockholder in cash (the
"Per Share Amount") (without interest and less any withholding taxes required
under applicable law). The obligation of Subsidiary to accept for payment and to
pay for any Common Shares tendered shall be subject only to the conditions set
forth in Exhibit A hereto (the "Offer Conditions"), including without
limitation, the condition that the number of Common Shares validly tendered and
not withdrawn prior to the expiration date provided in the Offer (the
"Expiration Date") will represent not less than a majority of the Common Shares
outstanding on a fully diluted basis (the "Minimum Share Condition"). Any such
condition may be waived by Parent and Subsidiary.
(b) As soon as practicable on the date of commencement of the
Offer, Parent and Subsidiary shall file with the Securities and Exchange
Commission (the "SEC") a Schedule 14D-1 (the "Schedule 14D-1") with respect to
the Offer, which Schedule 14D-1 shall include an offer to purchase and related
letter of transmittal and summary advertisement (which letter of transmittal and
summary advertisement and offer to purchase, together with
-2-
<PAGE> 8
any amendments or supplements thereto are referred to collectively herein as the
"Offer Documents"). The Company and its counsel shall be given a reasonable
opportunity to review and comment upon the Offer Documents and all amendments
and supplements thereto prior to the filing thereof with the SEC or the
dissemination thereof to the holders of Common Shares. The Company hereby
consents to the inclusion or reference in the Offer Documents of the
recommendations and other actions of the Company's Board of Directors described
in Section 1.2.
(c) Neither Parent nor Subsidiary will, without the consent
of the Company, (i) amend the Offer to decrease the Per Share Amount or change
the form of consideration to be paid in the Offer or (ii) except as required by
law or any rule, regulation or interpretation in the opinion of counsel to
Parent, or required by any position of the SEC or the staff thereof, extend the
expiration date of the Offer (which shall initially be 20 business days after
the date the Offer is commenced); provided that if the Offer Conditions have not
been satisfied, Subsidiary, without the consent of the Company, may extend the
Offer, from time to time for up to an aggregate of 10 additional business days.
Notwithstanding the foregoing, if, immediately prior to the Expiration Date of
the Offer (as it may be extended), the Common Shares tendered and not withdrawn
pursuant to the Offer equal less than 90% of the Common Shares then outstanding
on a fully diluted basis, Subsidiary may, in its sole discretion, extend the
Offer notwithstanding that all conditions to the Offer are satisfied as of such
Expiration Date of the Offer; provided, however, that under no circumstances
shall any such extension, when aggregated with any extensions made
-3-
<PAGE> 9
pursuant to the immediately preceding sentence, exceed 10 business days without
the approval of the Company.
(d) Subject to the terms and conditions of this Agreement,
Subsidiary shall, and Parent shall cause Subsidiary to, accept for payment, and
pay for, all Common Shares validly tendered and not withdrawn pursuant to the
Offer as soon as practicable after the expiration of the Offer. Immediately
following Parent's acceptance for payment of Common Shares pursuant to the
Offer, Parent or Subsidiary will provide to the depositary for the Offer amounts
sufficient in the aggregate to provide all funds necessary for such depositary
to make payments pursuant to this Section 1.1 to all tendering stockholders.
Section 1.2 Company Actions.
(a) The Company represents and warrants that:
(i) its Board of Directors (at a meeting duly called
and held) has, in light of and subject to the terms and conditions set
forth herein, unanimously approved this Agreement, the Offer and the
Merger (as defined in Section 2.1) and has resolved to recommend
acceptance of the Offer and approval and adoption of this Agreement
and the Merger by the holders of Common Shares;
(ii) the transactions contemplated by this
Agreement, including without limitation, the Offer, the Merger and the
acquisition of Common Shares by Parent and/or Subsidiary, have been
duly approved by appropriate action of the Company's Board of
Directors with the result that (A) Section 203 DGCL does not require
that any "business combination" (as that term is defined in said
Section 203) involving the Company and Parent or Subsidiary be delayed
for the three-year period
-4-
<PAGE> 10
specified therein, and (B) no right of the Company's stockholders to
acquire securities pursuant to any rights agreement will be triggered,
created or otherwise arise as a result of the Offer, the Merger or
transactions contemplated by this Agreement; and
(iii) The Robinson-Humphrey Company, LLC
("Robinson-Humphrey") has delivered to the Board of Directors of the
Company its opinion that the consideration to be received by the
Company's stockholders pursuant to the Offer and the Merger is fair
from a financial point of view to the public stockholders (other than
Parent and Subsidiary) of the Company (the "Fairness Opinion").
(b) The Company hereby agrees to file, as soon as practicable
after the commencement of the Offer, with the SEC a solicitation/recommendation
statement on Schedule 14D-9 (the "Schedule 14D-9") containing the recommendation
of the Company's Board of Directors that the stockholders of the Company accept
the Offer and containing a copy of the Fairness Opinion. Parent and Subsidiary
and their counsel shall be given a reasonable opportunity to review and comment
upon the Schedule 14D-9 and all amendments and supplements thereto prior to the
filing thereof with the SEC or the dissemination thereof to the holders of
Common Shares. Promptly after filing the Schedule 14D-9 with the SEC, the
Company shall deliver to Parent a copy of the Fairness Opinion, which Parent may
provide to Parent's lenders. The Company has been authorized by
Robinson-Humphrey to permit the inclusion of the Fairness Opinion (or any
reference thereto that is reasonably acceptable to Robinson-Humphrey) in the
Offer Documents, the Schedule 14D-9 and in any proxy statement relating to the
Merger.
-5-
<PAGE> 11
(c) Notwithstanding anything contained in this Section 1.2 or
elsewhere in this Agreement, if the Company's Board of Directors shall have
determined, in good faith, to withdraw, modify or amend its recommendations to
stockholders of the Company, after receiving advice from its outside counsel
that the failure to do so could reasonably be expected to be a breach of the
directors' fiduciary duties under applicable law, such withdrawal, modification
or amendment shall not constitute a breach of this Agreement.
Section 1.3 Stockholder Mailings. In connection with the
Offer, the Company (i) shall cause its transfer agent as promptly as possible to
furnish Parent and Subsidiary with mailing labels, security position listings
and any available listings or computer tapes or files containing the names and
addresses of record holders of the Common Shares as of the most recent
practicable date, (ii) shall furnish Subsidiary with such additional information
(including, but not limited to, updated lists of holders of Common Shares and
their addresses, mailing labels and lists of security positions and
non-objecting beneficial owner lists) and such other assistance as Subsidiary or
its agents may reasonably request in communicating the Offer to the Company's
record and beneficial stockholders, and (iii) shall furnish Parent and
Subsidiary with such other assistance as Parent and Subsidiary or their agents
may reasonably request in connection with the dissemination of the Offer
Documents to participants in the Company's employee benefit plans, if any, which
permit or require the participants to make a determination as to the Offer.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent, Subsidiary and their affiliates, associates,
agents and advisors, shall use the information
-6-
<PAGE> 12
contained in any such labels, listings and files only in connection with the
Offer and the Merger and, if this Agreement is terminated for any reason, shall
return to the Company, or destroy, the originals and all copies in their
possession.
ARTICLE II.
The Merger
Section 2.1 The Merger. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined in Section 2.3),
Subsidiary shall be merged with and into the Company, and the separate corporate
existence of Subsidiary shall thereupon cease (the "Merger"). The Company shall
be the Surviving Corporation in the Merger and shall continue to be governed by
the laws of the State of Delaware, and the separate corporate existence of the
Company with all its rights, privileges, powers and franchises shall continue
unaffected by the Merger. The Merger shall have the effects specified in the
DGCL.
Section 2.2 Closing. The closing of the Merger (the
"Closing") shall take place (a) at the offices of Jenner & Block, One IBM Plaza,
Chicago, Illinois 60611, at 10:00 A.M., local time, as soon as practicable
following the later to occur of (i) the day of the receipt of approval of the
Merger by the Company's stockholders if such approval is required, or as soon as
practicable after completion of the Offer if such approval by stockholders is
not required, and (ii) the day on which the last of the conditions set forth in
Article VII hereof is satisfied or duly waived, or (b) at such other time and
place and/or on such other date as the Company and Parent may agree. The date on
which the Closing occurs is hereinafter referred to as the "Closing Date."
-7-
<PAGE> 13
Section 2.3 Effective Time. If all the conditions to the
Merger set forth in Article VII shall have been fulfilled or waived in
accordance herewith and this Agreement shall not have been terminated in
accordance with Article VIII, the parties hereto shall, on the Closing Date,
file and record an appropriate agreement of merger, certificate of merger or
certificate of ownership and merger meeting the requirements of and executed in
accordance with the DGCL. The Merger shall become effective at the time (the
"Effective Time") at which such agreement or certificate is filed with the
Secretary of State of Delaware.
Section 2.4 Further Assurances. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Constituent Corporations acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out and effectuate the purposes of this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of each of the
Constituent Corporations or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of the Constituent Corporations or otherwise, all such other actions and things
as may be necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out and effectuate the purposes of
this Agreement.
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ARTICLE III.
Certificate of Incorporation and By-Laws;
Officers and Directors
of the Surviving Corporation
Section 3.1 Certificate of Incorporation. The certificate of
incorporation of the Company as amended and in effect immediately prior to the
Effective Time shall be the certificate of incorporation of the Surviving
Corporation, until duly amended in accordance with its terms and the DGCL.
Section 3.2 By-Laws. The by-laws of the Company in effect
immediately prior to the Effective Time shall be the by-laws of the Surviving
Corporation from and after the Effective Time, until duly amended in accordance
with their terms and the DGCL.
Section 3.3 Officers and Directors. The directors and
officers of Subsidiary immediately prior to the Effective Time shall, from and
after the Effective Time, be directors and officers, respectively, of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's certificate of incorporation and
by-laws.
ARTICLE IV.
Conversion of Common Shares in the Merger
Section 4.1 Conversion. The manner of converting shares of
the Company and Subsidiary in the Merger shall be as follows:
(a) Common Shares Generally. At the Effective Time, each
Common Share issued and outstanding immediately prior to the Effective
Time (other than Dissenting Shares (as defined in Section 4.3), Common
Shares owned by the
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Company or any direct or indirect subsidiary of the Company (including
treasury shares), and Common Shares owned by Parent, Subsidiary or any
other direct or indirect subsidiary of Parent (collectively, the
"Parent Companies")) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right
to receive $16.50 in cash, or such higher price, if any, as may be
offered and paid in the Offer (the "Merger Consideration"). All Common
Shares, by virtue of the Merger and without any action on the part of
the holders thereof, shall no longer be outstanding and shall be
canceled and retired and shall cease to exist, and each holder of a
certificate representing any Common Shares shall thereafter cease to
have any rights with respect to the Common Shares other than the right
to receive the Merger Consideration, except for Dissenting Shares.
(b) Common Shares Held by the Parent Companies or the
Company. At the Effective Time, each Common Share issued and
outstanding immediately prior to the Effective Time and owned by any
of the Parent Companies, and each Common Share issued and held in the
Company's treasury or held by any direct or indirect subsidiary of the
Company immediately prior to the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof, shall
no longer be outstanding, shall be canceled and retired without
payment of any consideration therefor and shall cease to exist.
(c) Subsidiary Stock. At the Effective Time, each share of
capital stock of Subsidiary issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger and without any
action on the part of Subsidiary or the
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holders of such shares, be converted into one share of common stock of
the Surviving Corporation.
Section 4.2 Payment. Prior to the Effective Time, Subsidiary
shall authorize the depositary for the Offer (or one or more commercial banks
organized under the laws of the United States or any state thereof each with
capital, surplus and undivided profits of at least $100,000,000) to act as
Paying Agent hereunder with respect to the Merger (the "Paying Agent").
Immediately prior to the Effective Time, Parent will provide to the Paying Agent
amounts sufficient in the aggregate to provide all funds necessary for the
Paying Agent to make payments pursuant to Section 4.1(a) to holders (other than
any of the Parent Companies, the Company or any direct or indirect subsidiary of
the Company or holders of Dissenting Shares) of Common Shares issued and
outstanding immediately prior to the Effective Time. Pending payment of such
funds to the holders of certificates for Common Shares, such funds will be held
and may be invested by the Paying Agent as Parent directs (so long as such
directions do not impair the rights of holders of Common Shares) in direct
obligations of the United States, obligations for which the full faith and
credit of the United States is pledged to provide for the payment of principal
and interest or commercial paper rated of the highest quality by Moody's
Investors Services, Inc. or Standard & Poor's Corporation. Any net profit
resulting from, or interest or income produced by, such investments will be
payable to the Surviving Corporation or Parent, as Parent directs. Parent will
promptly replace any monies lost through any investment made pursuant to this
Section 4.2. Promptly after the Effective Time, the Parent shall mail or cause
to be mailed, and shall make available at the offices of the Paying Agent, to
each person who was, immediately prior
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to the Effective Time, a holder of record (other than any of the Parent
Companies, the Company or any direct or indirect subsidiary of the Company or
holders of Dissenting Shares) of issued and outstanding Common Shares a letter
of transmittal and related instructions for use in effecting the surrender of
the certificates which, immediately prior to the Effective Time, represented any
of such Common Shares in exchange for the cash payment set forth in Section
4.1(a). Upon surrender to the Paying Agent of such certificates, together with
such letter of transmittal, duly executed and completed in accordance with the
instructions thereto, the Paying Agent shall promptly pay to the persons
entitled thereto the amount in cash to which such persons are entitled pursuant
to Section 4.1(a). No interest will be paid or will accrue on the cash payable
upon the surrender of any such certificate. If payment is to be made to a person
other than the registered holder of the certificate surrendered, it shall be a
condition of such payment that the certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the certificate
surrendered or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. One hundred eighty (180) days
following the Effective Time, Parent shall be entitled to require the Surviving
Corporation or the Paying Agent to deliver to it any funds (including any
interest received with respect thereto) which it has made available to the
Surviving Corporation or the Paying Agent and which have not been disbursed to
holders of certificates representing Common Shares outstanding immediately prior
to the Effective Time, and thereafter such holders shall be entitled to look to
the Surviving Corporation (subject to
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<PAGE> 18
abandoned property, escheat and other similar laws) only as general creditors
thereof with respect to the cash payable (without interest thereon) upon due
surrender of their certificates; provided that the Surviving Corporation shall
be obligated to pay, and Parent shall cause the Surviving Corporation to be
provided with, such cash to the extent the Surviving Corporation is required by
law and this Agreement to pay such cash. The Surviving Corporation shall pay all
charges and expenses, including those of the Paying Agent, in connection with
the exchange of cash for Common Shares, and Parent shall reimburse the Surviving
Corporation for such charges and expenses. In the event that any certificate
representing Common Shares shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such certificate to
be lost, stolen or destroyed and, if required by Parent or the Surviving
Corporation, upon the posting by such person of a bond in such amount as Parent
or the Surviving Corporation may reasonably direct as indemnity against any
claim that may be made against it with respect to such certificate, the Paying
Agent will issue in exchange for such lost, stolen or destroyed certificate the
cash representing the Merger Consideration deliverable in respect thereof
pursuant to this Agreement.
Section 4.3 Dissenting Shares. Notwithstanding anything in
this Agreement to the contrary but only to the extent required by the DGCL,
Common Shares that are issued and outstanding immediately prior to the Effective
Time and are held by holders who comply with all the provisions of Delaware law
concerning the right of holders of Common Shares to dissent from the Merger and
require appraisal of their Common Shares ("Dissenting Stockholders") shall not
be converted into the right to receive the Merger Consideration but
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<PAGE> 19
shall be entitled to receive such consideration as may be determined to be due
such Dissenting Stockholder pursuant to the law of the State of Delaware;
provided, however, that (i) if any Dissenting Stockholder shall subsequently
deliver a written withdrawal of the holder's demand for appraisal (with the
written approval of the Surviving Corporation, if such withdrawal is not
tendered within 60 days after the Effective Time), or (ii) if any Dissenting
Stockholder fails to establish and perfect the holder's entitlement to appraisal
rights as provided by applicable law, or (iii) if within 120 days of the
Effective Time neither any Dissenting Stockholder nor the Surviving Corporation
has filed a petition demanding a determination of the value of all Common Shares
outstanding at the Effective Time and held by Dissenting Stockholders in
accordance with applicable law, then such Dissenting Stockholder or
Stockholders, as the case may be, shall forfeit the right to appraisal of such
shares and such shares shall thereupon be deemed to have been converted into the
right to receive, as of the Effective Time, the Merger Consideration, without
interest. The Company shall give Parent and Subsidiary (A) prompt notice of any
written demands for appraisal, withdrawals of demands for appraisal and any
other related instruments received by the Company, and (B) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal.
The Company will not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisal or settle
or offer to settle any demand. The Common Shares described in this Section 4.3
held by Dissenting Stockholders who exercise and perfect their rights to
appraisal under applicable Delaware law and shall not have withdrawn, waived or
otherwise forfeited such appraisal rights are referred to herein as Dissenting
Shares.
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<PAGE> 20
Section 4.4 Closing of Transfer Records. At and after the
Effective Time, the stock transfer books of the Surviving Corporation and the
stock ledger of the Company shall be closed with respect to Common Shares of the
Company. If, after the Effective Time certificates representing Common Shares
are presented to the Surviving Corporation, they shall be canceled and exchanged
for cash as provided in this Article IV.
Section 4.5 Employee and Other Stock Options. Prior to the
signing hereof, the Company has delivered to Parent Schedule 4.5 hereto
containing a list of each employee stock option and each other stock option
outstanding on the date hereof, whether or not fully exercisable ("Stock
Options"), to purchase Common Shares heretofore granted under any Company option
plan or agreement, in each case as amended to the date of this Agreement
(collectively, the "Stock Option Plans"). The Company represents and warrants
that all such Stock Options are subject to the Company's Third Amended and
Restated 1994 Stock Option and Grant Plan (the "Company's Amended and Restated
Stock Option Plan") and consist of (i) non-qualified options granted to
non-employee directors of the Company to purchase Common Shares ("Non-Employee
Director Options"), (ii) non-qualified and incentive stock options granted to
employees of the Company ("Employee Stock Options"), and (iii) non-qualified
stock options for non-employee consultants ("Consultant Stock Options"). The
Company further represents and warrants that each of such Stock Options was
granted pursuant to either (i) the form of Incentive Stock Option Agreement for
Employees appended to Schedule 4.5; (ii) the form of Non-Qualified Stock Option
Agreement for Non-Employee Directors appended to Schedule 4.5; or (iii) the form
of Non-Qualified Stock Option Agreement for Non-Employee Consultants appended to
Schedule 4.5. The Company has
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<PAGE> 21
taken appropriate action to provide that, immediately prior to the acceptance of
Common Shares pursuant to the Offer, each outstanding Stock Option, whether or
not then exercisable, shall become fully exercisable and vested, and each Stock
Option shall be canceled and each holder of a Stock Option shall be entitled to
receive a cash payment from the Company equal to the product of (a) the excess,
if any, of the Per Share Amount over the per Common Share exercise price of such
Stock Option and (b) the number of Common Shares subject to such Stock Option,
which cash payment shall be treated as compensation and shall be net of any
applicable federal or state withholding tax. All Stock Options shall thereafter
be deemed canceled and of no force or effect. After the date hereof, the Company
shall not grant any additional stock options or other rights to acquire capital
stock of the Company.
Section 4.6 Warrants. Prior to the signing hereof, the
Company delivered to Parent Schedule 4.6 hereto containing a list of each
warrant outstanding on the date hereof, whether or not fully exercisable
("Warrants"), to purchase Common Shares heretofore granted by the Company. At
the Effective Time, each Warrant shall no longer entitle the holder thereof to
purchase Common Shares, but instead shall entitle the holder thereof to
purchase, upon exercise of the Warrant, the Merger Consideration which the
holder of the Warrant would have been entitled to receive pursuant to the Merger
if the Warrant had been exercised immediately prior to the Effective Time.
Promptly following the consummation of the Merger, the Surviving Corporation
shall execute and deliver to each holder of a Warrant and to the Warrant Agency,
if any, with respect to the Warrants an agreement as to the rights of the holder
in accordance with this Section 4.6. After the date
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hereof, the Company shall not grant any additional warrants or other rights to
acquire capital stock of the Company.
Section 4.7 Employee Stock Purchase Plan. The Company has
taken appropriate action to provide that, (i) the offering period pending on the
last business day prior to the date hereof under the Company's Employee Stock
Purchase Plan (the "Stock Purchase Plan") shall be terminated as of the date
hereof, (ii) each participant in the Stock Purchase Plan on the date hereof
shall be deemed to have exercised his or her Option (as defined in the Stock
Purchase Plan) on such date and shall acquire from the Company (A) such number
of whole Common Shares as his or her accumulated payroll deductions on such date
will purchase at the Option Price (as defined in the Stock Purchase Plan)
(treating the last business day prior to the date hereof as the "Exercise Date"
for all purposes of the Stock Purchase Plan) and (B) cash in the amount of any
remaining balance in such participant's account without interest, and (iii) the
Stock Purchase Plan shall be terminated effective as of the date hereof.
ARTICLE V.
Representations and Warranties
Section 5.1 Representations and Warranties of Parent and
Subsidiary. Parent and Subsidiary (which term, for purposes of this Article V,
includes Subsidiary and any other direct or indirect wholly-owned subsidiary or
subsidiaries of Parent that may, in accordance with this Agreement, participate
as a purchaser of Common Shares in the Offer or as a Constituent Corporation in
the Merger or that is otherwise an assignee of any rights or
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obligations of Parent or Subsidiary hereunder), jointly and severally, represent
and warrant to and agree with the Company that:
(a) Corporate Organization. Each of Parent and Subsidiary is
a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation with
all requisite corporate power and authority to own, lease, license and
use its properties and assets and to carry on the business in which it
is now engaged. Parent beneficially owns all of the outstanding
capital stock of Subsidiary.
(b) Corporate Authorization. Parent and Subsidiary each have
all requisite corporate power and authority to execute, deliver, and
perform the transactions contemplated by this Agreement. The execution
and delivery of this agreement and the consummation by Parent and
Subsidiary of the transactions contemplated hereby have been duly and
validly authorized by requisite corporate action of Parent and
Subsidiary, and no other corporate proceedings on the part of Parent
and Subsidiary are necessary to authorize this agreement or to
consummate the transactions contemplated hereby. This Agreement has
been duly authorized, executed, and delivered by Parent and
Subsidiary, is the legal, valid, and binding obligation of Parent and
Subsidiary, and is enforceable as to them in accordance with its terms
except as enforcement may be limited by applicable bankruptcy,
insolvency or other similar laws affecting the enforcement of
creditors' rights and remedies generally, and except that the
availability of equitable remedies, including specific performance,
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is subject to the discretion of the court before which any proceeding
therefor may be brought.
(c) No Conflicts. The execution and delivery of this
Agreement by Parent and Subsidiary do not, and the consummation of the
transactions contemplated hereby by Parent and Subsidiary will not (i)
violate or conflict with the certificate of incorporation or by-laws
of Parent or Subsidiary or (ii) constitute a breach or violation of,
or a default under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license to which Parent or any
of its subsidiaries is subject, assuming compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), the Exchange Act and the DGCL, or (iii) constitute a
breach or violation of, a default (or an event or condition which,
with notice or lapse of time, or both, would constitute a default)
under, or permit the termination of, or cause or permit the
acceleration of the maturity of, any agreement, indenture, mortgage,
bond, note or instrument to which Parent or any of its subsidiaries is
a party or by which Parent or any of its subsidiaries is bound, which
conflict, breach, violation, default, termination or acceleration
would have a material adverse effect on the assets, financial
condition or business of Parent, and its subsidiaries, taken as a
whole. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not require
the consent or approval of any other party to any agreement,
indenture, mortgage, bond, note or instrument to which Parent or any
of Parent's subsidiaries is a party or by which Parent or any of
Parent's subsidiaries is bound where the failure to obtain any
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<PAGE> 25
such consent or approval would result in a material adverse effect on
the assets, financial condition or business of Parent and its
subsidiaries, taken as a whole, or would prevent the consummation of
the transactions contemplated hereby. Subsidiary has not, since its
inception, and, prior to the Effective Time, Subsidiary shall not,
directly or indirectly, (i) conduct or engage in any business
activities of any kind or nature, (ii) incur any liability or
obligation, (iii) enter into or become bound by any mortgage, bond,
agreement, indenture, note or other instrument, or any arrangement
with any person or entity, or (iv) become subject to or bound by any
obligation or undertaking, except in connection with the negotiation,
execution, delivery and performance of this Agreement and the
transactions contemplated hereby and any financings in connection with
such transactions.
(d) Financing. Parent or Subsidiary (i) have available cash,
undrawn lines of credit and other resources sufficient to provide all
funds necessary for the purchase of Common Shares pursuant to the
Offer and the Merger in accordance with the terms of this Agreement
and to consummate the transactions contemplated hereby and (ii) will
have on the Expiration Date and the Effective Date sufficient funds to
purchase and pay for the Common Shares pursuant to the Offer and the
Merger, respectively.
(e) Filings and Consents. Other than the filings provided for
in Section 2.3 and filings pursuant to the HSR Act, the Exchange Act,
and under any applicable state, environmental, takeover, or securities
laws, there are no filings required to be made by Parent or Subsidiary
with, and there are no consents, approvals, permits
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<PAGE> 26
or authorizations required to be obtained by Parent or Subsidiary from
federal or state governmental and regulatory authorities in connection
with the execution and delivery of this Agreement by Parent or
Subsidiary and the consummation of the transactions contemplated
hereby by Parent and Subsidiary, other than such which the failure to
make or obtain would not, in the aggregate, have a material adverse
effect on the assets, financial condition or business of Parent, and
its subsidiaries, taken as a whole, or would prevent the consummation
of the transactions contemplated hereby.
(f) Litigation. No litigation is pending or threatened
against Parent or Subsidiary which in the reasonable opinion of Parent
would materially adversely affect their properties or business so as
to prevent them from consummating the transactions contemplated
hereby.
(g) Offer Documents. The Offer Documents pursuant to which
the Offer will be made, including the Schedule 14D-1, will comply as
to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder. The information
contained in the Offer Documents (other than information supplied in
writing by the Company expressly for inclusion in the Offer Documents)
will not, at the respective times the Schedule 14D-1 or any amendments
or supplements thereto are filed with the Commission, 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 made therein, in light of the circumstances under which
they were made, not misleading. Parent and Subsidiary will promptly
correct any statements in the Schedule 14D-1 and the Offer Documents
that have
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become false or misleading and take all steps necessary to cause such
Schedule 14D-1 as so corrected to be filed with the SEC and such Offer
Documents as so corrected to be disseminated to holders of Common
Shares, in each case as and to the extent required by applicable law.
(h) Merger Proxy Statement. None of the information to be
supplied by Parent or Subsidiary expressly for inclusion in a proxy or
information statement of the Company required to be mailed to the
Company's stockholders in connection with the Merger (the "Merger
Proxy Statement"), or in any amendments or supplements thereto will,
at the respective times of (a) the mailing thereof and (b) the
meeting, if any, of stockholders 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 were made, not misleading.
(i) Brokers and Finders. Parent has not employed any
investment banker, broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement which
would be entitled to any investment banking, brokerage, finder or
similar fee or commission in connection with this Agreement or the
transactions contemplated hereby.
(j) Common Shares. Neither Parent nor Subsidiary nor any of
their respective affiliates owns any Common Shares.
Section 5.2 Representations and Warranties of the Company.
The Company hereby represents and warrants to Parent and Subsidiary that:
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(a) Corporate Organization. Except as set forth in Schedule
5.2(a), each of the Company and its operating subsidiaries is a
corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation with
all requisite corporate power and authority to own, lease, license and
use its properties and assets and to carry on the business in which it
is now engaged. Each of the Company and its operating subsidiaries is
in good standing as a foreign corporation in each jurisdiction where
the properties owned, leased or operated, or the business conducted by
it require such qualification and where failure to so qualify or be in
good standing would, either singly or in the aggregate, have a
Material Adverse Effect (for purposes of Section 5.2 of this Agreement
"Material Adverse Effect" shall mean an adverse effect of $250,000 or
more on the business, assets, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole).
The Company has heretofore delivered to Parent complete and correct
copies of the Company's Certificate of Incorporation and By-Laws, each
as amended and in effect as of the date of this Agreement, and a list
of the Company's subsidiaries, each of which is wholly-owned directly
or indirectly by the Company, except as otherwise set forth therein.
All shares of capital stock of the Company's subsidiaries beneficially
owned by the Company have been validly issued and are fully paid and
nonassessable.
(b) Capitalization. The authorized capital stock of the
Company consists of 35,000,000 shares of capital stock, of which
30,000,000 shares are common stock, having a par value of $0.01 per
share (and which are herein referred to as the
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<PAGE> 29
Common Shares) and of which 5,000,000 shares are preferred stock, par
value $0.01 per share. As of the date hereof there are 6,466,692
Common Shares outstanding, 718,800 Common Shares held as treasury
shares and no shares of preferred stock issued and outstanding. All of
the outstanding Common Shares have been validly issued and are fully
paid and nonassessable. As of the date hereof, the Company has no
Common Shares reserved for issuance, except that (i) an aggregate of
265,135 Common Shares (at a weighted aggregate average exercise price
of $10.79) and an additional 82,000 Common Shares (at exercise prices
in excess of $16.50) are subject to, and are reserved for issuance
upon, the exercise of Employee Stock Options; (ii) an aggregate of
133,796 Common Shares are subject to Non-Employee Director Options (at
a weighted aggregate average exercise price of $11.21); (iii) an
aggregate of 5,000 Shares are subject to, and reserved for, issuance
upon the exercise of Consultant Stock Options (at a weighted aggregate
average exercise price of $8.50); (iv) 442 Common Shares are subject
to, and reserved for, issuance pursuant to the Stock Purchase Plan;
and (v) 23,820 Common Shares are reserved for issuance under the
Warrants, at an exercise price of $1.00 per share. There are no
subscriptions, options, warrants, rights, convertible securities or
other agreements or commitments of any character obligating the
Company or any operating subsidiary to issue, sell, or purchase
capital stock, warrants, convertible securities or other rights with
respect to capital stock, except for the obligations under the Stock
Option Plans, the Stock Purchase Plan and the Warrants. There are no
voting trusts or other agreements or understandings to which the
Company or any subsidiary of the
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Company is a party with respect to the voting of the capital stock of
the Company or any of its subsidiaries. From and after the date
hereof, the Company shall not grant or award, as the case may be, any
stock options and shall not issue any additional capital stock other
than issuances pursuant to the exercise of stock options under
presently outstanding Stock Options or the exercise of presently
outstanding rights under the Stock Purchase Plan or under the
Warrants.
(c) Corporate Authorization and Certain Corporate Action. The
Company has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby and, subject only to approval of this Agreement by the holders
of a majority of the Common Shares outstanding and entitled to vote if
such approval is required, no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has
been duly authorized, executed, and delivered by the Company, is the
legal, valid and binding obligation of the Company, and is enforceable
as to it in accordance with its terms except as enforcement may be
limited by applicable bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights and remedies generally,
and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before
which any proceeding therefor may be brought. The Company has taken
appropriate corporate action to satisfy the provisions of Section 203
of the DGCL so that the provisions thereof are not applicable to the
transactions contemplated by this Agreement.
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(d) Financial Statements and Reports. The Company has
previously furnished Parent true and complete copies (with exhibits)
of its (i) Annual Report on Form 10-K for the fiscal year ended
September 30, 1998 (the "1998 Annual Report"), as filed with the SEC,
(ii) proxy statements relating to all meetings of its stockholders
(whether annual or special) since January 1, 1998, and (iii) all other
schedules, reports and registration statements filed by the Company
with the SEC since September 30, 1998 (collectively, the "SEC
Filings"). As of their respective dates, the SEC Filings were prepared
and filed in accordance with the applicable rules and regulations of
the SEC and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Since
September 30, 1998, the Company has filed with the SEC all reports and
registration statements and all other filings required to be filed
with the SEC under the rules and regulations of the SEC. The audited
financial statements and unaudited interim financial statements of the
Company, together with the notes thereto, included or incorporated by
reference in the 1998 Annual Report and any other SEC Filings,
respectively, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto and subject, in the case of
unaudited financial statements, to normal year-end audit adjustments)
and fairly present the financial position of the Company and its
subsidiaries as at the dates thereof and the results of their
operations and changes in financial position for the periods then
ended.
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(e) Absence of Other Liabilities. Except as set forth in
Schedule 5.2(e) hereto and as and to the extent set forth on the
consolidated balance sheet of the Company and its subsidiaries at
September 30, 1998, including the notes thereto, contained in the 1998
Annual Report, neither the Company nor any of its subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) which would be required to be reflected on a
balance sheet or in the notes thereto prepared in accordance with
generally accepted accounting principles, except for liabilities or
obligations incurred in the ordinary course of business since
September 30, 1998, which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(f) Absence of Certain Changes or Events. Except as and to
the extent set forth in the SEC Filings or in Schedule 5.2(f) hereto,
since September 30, 1998, (i) there has not been any Material Adverse
Effect, (ii) the businesses of the Company and each of its
subsidiaries have been conducted only in the ordinary course and in a
manner consistent with past practices, (iii) neither the Company nor
any of its subsidiaries has incurred any material liabilities (direct,
contingent or otherwise) or engaged in any material transaction or
entered into any agreement, in each case, outside the ordinary course
of business, (iv) there has not been any damage, destruction or loss
(whether or not covered by insurance) with respect to any assets of
the Company or any of its subsidiaries which would reasonably be
expected to, individually or in the aggregate, have a Material Adverse
Effect, (v) there has not been any revaluation by the Company of any
of its material assets, including but not
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limited to writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business,
(vi) there has been no change by the Company in accounting principles,
practices or methods, (vii) there has been no declaration, setting
aside or payment of any dividend or other distribution in respect of
the shares or any direct or indirect redemption, purchase or other
acquisition by the Company of any of its shares of capital stock;
(viii) except for salary increases or other employee benefit
arrangements made in the ordinary course of business consistent with
past practice, or heretofore described in writing to Parent, there has
not been any increase in the compensation payable or to become payable
by the Company or its subsidiaries to any of their respective
officers, or any significant increase in the compensation payable to
other employees or agents of the Company or any of its subsidiaries or
any adoption of any bonus, pension, retirement, profit sharing, or
stock option plan, arrangement or agreement made to or with any of
such officers of employees; and (ix) there has not been any labor
strike or threat thereof or labor trouble or other business event or
condition which is likely to have a Material Adverse Effect.
(g) Offer Documents. None of the information supplied in
writing by the Company or its subsidiaries expressly for inclusion in
the Offer Documents, or in any amendments or supplements thereto will,
at the time supplied or upon the expiration of the Offer, 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
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statements therein, in light of the circumstances under which they
were made, not misleading.
(h) Schedule 14D-9. The Schedule 14D-9 will comply as to form
in all material respects with the applicable requirements of the
Exchange Act and the rules and regulations thereunder and the
information contained therein (other than information supplied in
writing by Parent or Subsidiary expressly for inclusion in the
Schedule 14D-9) will not at the respective times the Schedule 14D-9 or
any amendments or supplements thereto are filed with the SEC, contain
any untrue statement of a material fact or omit to state any material
fact either 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. The Company will promptly correct any
statements in the Schedule 14D-9 that have become false or misleading
and take all steps necessary to cause such Schedule 14D-9 as so
corrected to be filed with the SEC and to be disseminated to holders
of Common Shares, in each case as and to the extent required by
applicable law.
(i) Merger Proxy Statement. The Merger Proxy Statement and
all amendments and supplements thereto will comply as to form in all
material respects with the applicable requirements of the Exchange Act
and the rules and regulations thereunder and will not, at the time of
(a) the mailing thereof and (b) the meeting, if any, of stockholders
to be held in connection with the Merger, together with any amendments
and supplements thereto, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order
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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 supplied in writing by
Parent or any affiliates of Parent expressly for inclusion in the
Merger Proxy Statement.
(j) Certain Agreements. Except for the agreements disclosed
in the SEC Filings prior to the date hereof or as set forth in
Schedule 5.2(j) hereto, neither the Company nor any of its
subsidiaries is party to any (i) agreements with any executive officer
or other key employee of the Company or any of its subsidiaries (A)
the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving the
Company or any of its subsidiaries of the nature of any of the
transactions contemplated by this Agreement, (B) providing any term of
employment or compensation guarantee extending for a period longer
than one year, or (C) providing severance benefits or other benefits
(which are conditioned upon a change of control) after the termination
of employment of such employee regardless of the reason for such
termination of employment or (ii) agreement or plan, including,
without limitation, any incentive or bonus plan, stock option plan,
stock appreciation right plan or stock purchase plan, any of the
benefits of which will be materially increased, or the vesting of
benefits of which will be materially accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the value of
any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
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(k) No Conflicts. The execution and delivery of this
Agreement by the Company do not, and the consummation of the
transactions contemplated hereby by the Company will not, (i) violate
or conflict with the amended certificate of incorporation or by-laws
of the Company, or (ii) assuming compliance with the HSR Act, the
Exchange Act and the DGCL, constitute a breach or violation of, or a
default under, any United States law, rule or regulation or any
judgment, decree, order, governmental permit or license, to which the
Company or any of its subsidiaries is subject, or (iii) constitute a
breach or violation of, a default (or an event or condition which,
with notice or lapse of time, or both, would constitute a default)
under, permit the termination of, or cause or permit the acceleration
of the maturity of, any agreement, indenture, mortgage, bond, note or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound, which
conflict, breach, violation, default, termination or acceleration
would have a Material Adverse Effect.
(l) Filings and Consents. Other than the filings provided for
in Section 2.3 and filings pursuant to the HSR Act, the Exchange Act,
and under any applicable state takeover or securities laws, there are
no filings required to be made by the Company with, and there are no
consents, approvals, permits or authorizations required to be obtained
by the Company from, federal or state governmental and regulatory
authorities in connection with the execution and delivery of this
Agreement by the Company and the consummation of the transactions
contemplated hereby by the Company, other than such which the failure
to make or obtain would not, in the
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aggregate, have a Material Adverse Effect, or would prevent the
consummation of the transactions contemplated hereby.
(m) Compliance With Laws. Except as disclosed in the SEC
Filings or in Schedule 5.2(m) hereto, the Company and its subsidiaries
are in compliance with all applicable laws, regulations, orders,
judgments and decrees except where the failure to so comply would not
reasonably be expected to have a Material Adverse Effect.
(n) Litigation. Except as disclosed in the SEC Filings or in
Schedule 5.2(n), there is no action, suit, proceeding at law or in
equity, or any arbitration or any adversarial administrative or other
adversarial proceeding by or before (or to the best knowledge of the
Company any investigation by) any governmental or other
instrumentality or agency, pending, or, to the best knowledge of the
Company, threatened, against or affecting the Company or any of its
subsidiaries, or any of their properties or rights. Except as
disclosed in the SEC Filings or in Schedule 5.2(n), neither the
Company nor any of its subsidiaries is subject to any judgment, order,
award or decree entered in any lawsuit or proceeding which has, or is
reasonably expected to have, a Material Adverse Effect.
(o) Employee Benefit Plans. All "employee benefit plans"
("Employee Plans") as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained or contributed to by the Company and its subsidiaries are
in compliance with the applicable provisions of ERISA and the Internal
Revenue Code of 1986, as amended (the "Code"), except for instances of
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non-compliance that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect. All Employee
Plans are included in the exhibits to or incorporated by reference in
the 1998 Annual Report.
(p) Taxes. The Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for tax purposes of
which the Company or any of its subsidiaries is a member, has filed or
caused to be filed, or will file or cause to be filed on or prior to
the Closing Date (as defined in Section 2.2), all Tax returns and Tax
reports which are required to be filed by, or with respect to, it on
or prior to the Closing Date (taking into account any extension of
time to file granted to or on behalf of the Company or any subsidiary)
(collectively, the "Returns"). Such Returns reflect accurately all
liability for Taxes for the periods covered thereby. All Taxes payable
by, or due from, the Company or any of its subsidiaries have been
fully paid or adequately disclosed and provided for on the financial
statements of the Company and its subsidiaries in accordance with
generally accepted accounting principles. All Taxes (as defined below)
shown to be due and payable on the Returns by or with respect to the
Company or any of its subsidiaries have been, or prior to the Closing
Date will be, paid. Without limiting the generality of the foregoing,
(i) no claim for unpaid Taxes (x) to the best knowledge of the
Company, has become a lien or encumbrance of any kind against the
property of the Company or any of its subsidiaries or (y) is being
asserted against the Company or any of its subsidiaries; (ii) no audit
of any Return of the Company or any of its subsidiaries is being
conducted by a Tax authority; (iii) no extension of time is in
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effect with respect to the filing of any Return, the payment of taxes
by the Company or any of its subsidiaries or any limitations period on
the assessment of any Taxes of the Company or any of its subsidiaries;
(iv) there is no Tax deficiency or to the knowledge of the Company any
substantive basis on which any Tax deficiency might be asserted
against the Company or any of its subsidiaries in excess of the
reserve for Taxes set forth in the financial statements of the Company
and its subsidiaries as of the respective dates thereof, except for
amounts, if any, which in the aggregate would not reasonably be
expected to have a Material Adverse Effect; and (v) there are no
claims for refunds of Taxes of the Company or any of its subsidiaries
pending. As used herein, "Taxes" shall mean any taxes of any kind,
including but not limited to those on or measured by or referred to as
income, gross receipts, capital, sales, ad valorem, franchise,
profits, license, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts with respect to such taxes,
imposed by any governmental authority, domestic or foreign.
(q) Health, Safety and Environmental Laws and Regulations.
Except as disclosed in Schedule 5.2(q) hereto, the Company and its
subsidiaries are in material compliance with all applicable foreign,
federal and state laws and regulations, as in effect on the date
hereof, relating to the protection of health, safety and the
environment (collectively, "Environmental Laws"), except for
violations of
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Environmental Laws that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing sentence, except as set forth
on Schedule 5.2(q) hereto, to the best of the Company's knowledge (i)
the Company and each of its subsidiaries have obtained all applicable
permits, licenses and other authorizations which are required to be
obtained under all applicable Environmental Laws by the Company or its
subsidiaries, except where the failure to obtain such permits,
licenses and other authorizations in the aggregate would not
reasonably be expected to have a Material Adverse Effect; (ii) the
Company and each of its subsidiaries are in compliance with all terms
and conditions of such required permits, licenses and authorizations
and with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in applicable Environmental Laws, except where noncompliance
in the aggregate would not reasonably be expected to have a Material
Adverse Effect; (iii) there is no event which is reasonably likely to
prevent continued compliance with such Environmental Laws, or which
would give rise to any common law environmental liability, or which
would otherwise form the basis of any claim, action, suit or
proceeding against the Company or any of its subsidiaries based on or
resulting from the manufacture, processing, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge or
release into the environment, of any hazardous material, except where
such events in the aggregate would not reasonably be expected to have
a Material
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Adverse Effect, and (iv) the Company and its subsidiaries have no
reason to believe that any of the items listed above will be
forth-coming.
(r) Intellectual Property. To the best knowledge of the
Company, the Company or a subsidiary of the Company is the owner of,
or a licensee under a valid license for, all items of intangible
property which are material to the business of the Company and its
subsidiaries as currently conducted, taken as a whole, including,
without limitation, trade names, unregistered trademarks and service
marks, brand names, software, patents and copyrights. As of the date
of this Agreement, except as disclosed in the SEC Filings or Schedule
5.2(r), there are no claims pending or, to the Company's knowledge,
threatened, that the Company or any subsidiary is in violation of any
such intellectual property right of any third party which is
reasonably likely to have a Material Adverse Effect, and, to the
Company's best knowledge no third party is in violation of any
intellectual property rights of the Company or any subsidiary which is
reasonably likely to have a Material Adverse Effect.
(s) Brokers and Finders. Except for the fees and expenses
payable to Robinson-Humphrey, which fees and expenses are reflected in
their agreements with the Company, true and complete copies of which
have been furnished to Parent, the Company has not employed any
investment banker, broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement which
would be entitled to any investment banking, brokerage, finder's or
similar fee or commission in connection with this Agreement or the
transactions contemplated hereby.
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(t) Year 2000 Compliance. To the Company's best knowledge,
there is no impediment to the Company being year 2000 compliant by
June 30, 1999 (i.e., that products, hardware, software and other
date-sensitive equipment manufactured, sold, owned, licensed or used
by the Company will be capable of correctly processing date data
(including, but not limited to, calculating, comparing and sequencing)
accurately prior to, during and after the calendar year 2000 when
used, assuming that all third party products, hardware, software and
other date-sensitive equipment used in combination therewith are
capable of properly exchanging date data). The Company has submitted
inquiries to its vendors who supply products or services to the
Company in the amount of $100,000 or more on an annual basis and to
the best of the Company's knowledge such vendors are or will be 2000
compliant no later than December 31, 1999.
(u) Contracts. Schedule 5.2(u) sets forth a list of each
contract (other than contracts listed on other schedules to this
Agreement or in the SEC Filings) of the Company providing for payments
aggregating One Hundred Thousand ($100,000) or more during the term of
the respective contract (which contracts so listed on Schedule 5.2(u)
and other schedules to this Agreement are collectively referred to as
the "Company Contracts" or individually as "Company Contract"). Each
Company Contract is valid, binding and enforceable and in full force
and effect, and such Company Contracts will continue to be valid,
binding and enforceable and in full force and effect immediately
following the consummation of the transactions contemplated hereby,
except where failure to be valid, binding and enforceable and
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in full force and effect would not have a Material Adverse Effect, and
there are no material defaults thereunder by the Company or its
subsidiaries or, to the best knowledge of the Company, by any other
party thereto. No event has occurred which either entitles, or would,
on notice or lapse of time or both, entitle the holder of any
indebtedness for borrowed money of the Company or any of its
subsidiaries to accelerate such indebtedness except as set forth in
Section 5.2(u).
(v) Labor Relations. Neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement or
other labor union contract applicable to persons employed by the
Company or its subsidiaries. There is no labor strike, slowdown or
work stoppage or lockout pending or, to the best knowledge of the
Company, threatened against the Company or any of its subsidiaries.
There is no unfair labor practice charge or other employment related
complaint pending or, to the best knowledge of the Company, threatened
against the Company or any of its subsidiaries which if decided
adversely would be reasonably likely to have a Material Adverse
Effect. To the Company's best knowledge, there is no representation
claim or petition pending before the National Labor Relations Board
and no question concerning representation exists with respect to the
employees of the Company or its subsidiaries.
(w) Affiliate Transactions. Except as set forth in the SEC
Filings and as set forth in Schedule 5.2(w) hereto, from September 30,
1998, through the date of this Agreement there have been no
transactions, agreements, arrangements or understandings between the
Company or any of its subsidiaries, on the one hand, and
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any affiliates (other than wholly-owned subsidiaries) of the Company
or other persons, on the other hand, that would be required to be
disclosed under Item 404 of Regulation S-K under the Securities Act of
1933, as amended.
(x) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock of the Company
entitled to vote thereon is the only vote of the holders of any class
or series of the Company's capital stock necessary to approve the
Merger.
(y) Knowledge Definition. As used in this Agreement, the
phrase "to the Company's best knowledge" or any similar phrase when
modifying any representation and warranty of the Company means the
actual knowledge of those individuals identified in Schedule 5.2(y)
hereto and that (i) such person has made appropriate inquiries of the
Company's officers and responsible employees; and (ii) nothing has
come to the person's attention in the course of such investigation and
review or otherwise which would cause such person, in the exercise of
due diligence, to believe that such representation and warranty is not
true and correct in all material respects.
ARTICLE VI.
Covenants
Section 6.1 No Solicitation of Transactions. The Company, its
affiliates and their respective officers, directors, employees, representatives
and agents shall immediately cease any existing discussions or negotiations, if
any, with any parties conducted heretofore with respect to any Third Party
Acquisition (as defined in Section 8.3). The Company, its
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subsidiaries and affiliates and their respective officers, directors, employees,
representatives and agents may, directly or indirectly, furnish information and
access to any Third Party (as defined in Section 8.3) (in each case only in
response to a request for such information or access made after the date hereof
and with respect to confidential information, only pursuant to an appropriate
confidentiality agreement) only if, and may participate in discussions and
negotiate with such Third Party concerning any Third Party Acquisition, only if
(i) such Third Party has submitted a bona fide
proposal to the Board relating to any such transaction, and
(ii) a majority of the Board of Directors of the
Company determines, in its good faith judgment after receiving advice
from its outside counsel, that failing to take such action could
reasonably be expected to be a breach of the directors' fiduciary
duties under applicable law.
The Company shall promptly notify Parent, if any proposal or offer, or any
inquiry or contact with any person with respect thereto, is made and shall, in
any such notice to Parent, indicate in reasonable detail the identity of the
offeror and the terms and conditions of any proposal or offer, or any such
inquiry or contact. The Company shall keep Parent promptly advised of all
developments which could reasonably be expected to culminate in the Board of
Directors withdrawing, modifying or amending its recommendation of the Offer,
the Merger and the other transactions contemplated by this Agreement, unless
with respect to a specific development the Board of Directors of the Company by
a majority vote determines in its good faith judgment, after receiving advice
from outside counsel, that notifying Parent
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of such development could reasonably be expected to be a breach of the Board's
fiduciary duties under applicable law. Except as set forth in this Section 6.1,
neither the Company or any of its affiliates, nor any of its or their respective
officers, directors, employees, representatives or agents, shall, directly or
indirectly, knowingly encourage, solicit, participate in or initiate discussions
or negotiations with, or provide any information to, any Third Party concerning
any Third Party Acquisition; provided, that nothing in this Section 6.1 shall
prevent the Company or the Board from taking, and disclosing to the Company's
stockholders, a position contemplated by Rules 14d-9 and 14e-2 promulgated under
the Exchange Act with regard to any tender offer or from making such disclosure
to the Company's stockholders which, in the good faith judgment of its Board of
Directors after receiving advice from outside counsel, is required under
applicable law; provided further, that the Board shall not recommend that the
stockholders of the Company tender their Common Shares in connection with any
such tender offer unless the Board by a majority vote determines in its good
faith judgment, after receiving advice from outside counsel, that failing to
take such action could reasonably be expected to be a breach of the Board's
fiduciary duties under applicable law.
Section 6.2 Postponement of Annual Meeting. The Company shall
as soon as possible indefinitely postpone its 1999 annual meeting of
stockholders, and shall take no action unless compelled by legal process to
reschedule such annual meeting or to call a special meeting of stockholders of
the Company except in accordance with this Agreement unless and until this
Agreement has been terminated in accordance with its terms.
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Section 6.3 Interim Operations of the Company. Except as set
forth in Schedule 6.3 hereto, contemplated hereby or with the written consent of
Parent or Subsidiary, during the period from the date of this Agreement to the
earlier of the New Board Date (as defined in Section 6.12) or the Effective
Time, the Company shall, and shall cause its subsidiaries to, conduct (except as
otherwise permitted by Section 6.1) its and their business only in the ordinary
course, will make no material changes in the operations of the Company or its
subsidiaries and shall use its reasonable efforts to (i) preserve intact the
business organization of the Company and its subsidiaries, (ii) keep available
the services of its and their present officers and key employees, and (iii)
preserve the good will of those having business relationships with the Company
and its subsidiaries. Except as set forth in Schedule 6.3 hereto, contemplated
hereby or with the consent of Parent or Subsidiary, during the period from the
date of this Agreement to the earlier of the New Board Date or the Effective
Time, neither the Company nor any of its subsidiaries will: (a) amend or
otherwise change its certificate of incorporation or by-laws, as each such
document is in effect on the date hereof; (b) issue or sell, or authorize for
issuance or sale, additional shares of any class of capital stock, including
Common Shares or any securities convertible into capital stock, or grant any
warrants, options, or other rights to acquire, or incur any obligation or make
any commitment for issuance of, capital stock or any securities convertible into
capital stock; (c) in the case of the Company, declare, set aside, make or pay
any dividend or other distribution with respect to its capital stock other than
if requested by Parent; (d) redeem, purchase or otherwise acquire, or agree to
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock, other than if requested by Parent; (e) except in the
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ordinary course of business, sell, pledge, dispose of or encumber, or agree to
sell, pledge, dispose of or encumber, any material assets of the Company or any
of its subsidiaries other than in connection with discontinued operations; (f)
acquire (by merger, consolidation, or acquisition of stock or assets) any
significant corporation, partnership or other business organization or division
thereof for a cash consideration of $100,000 or more with respect to an
acquisition, merge or consolidate with any corporation, or enter into or modify
any contract, agreement, commitment or arrangement with respect to any of the
foregoing; (g) other than in connection with the refinancing of outstanding
indebtedness, incur any indebtedness for borrowed money or issue any debt
securities except in the ordinary course of business and consistent with past
practice or enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing; (h) take any action with
respect to the grant of any severance or termination pay other than pursuant to
policies or agreements of the Company or any of its subsidiaries in effect on
the date hereof; (i) make any loans, advances or capital contributions to, or
investments (other than intercompany accounts and short-term investments
pursuant to customary cash management systems of the Company in the ordinary
course and consistent with past practices) in, any other person other than such
of the foregoing as are made by the Company to or in a subsidiary of the
Company; (j) except for salary increases or other employee benefit arrangements
made in the ordinary course of business consistent with past practice, or
heretofore described in writing to the Parent, adopt or (except as provided in
Sections 4.5 and 4.7 hereof) amend any bonus, profit sharing, compensation,
incentive, stock option, restricted stock, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement,
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trust, fund or arrangement for the benefit or welfare of any employee; or (k)
enter into any agreement to do any of the foregoing.
Section 6.4 Meetings of the Company's Stockholders. If the
Minimum Share Condition has been satisfied and Subsidiary has purchased and paid
for all duly tendered Common Shares pursuant to the Offer and the terms and
conditions of this Agreement and if necessary to effect the Merger, the Company
will take all action necessary in accordance with applicable law and the
Company's certificate of incorporation and by-laws to convene a meeting of
holders of Common Shares as promptly as practicable after consummation of the
Offer to consider and vote upon the approval and adoption of this Agreement.
Parent and Subsidiary will provide to the Company the information with respect
to Parent and Subsidiary required by the Exchange Act to be set forth in the
proxy statement required with respect to such meeting. The Board of Directors of
the Company shall recommend such approval and adoption, and the Company shall
take all lawful action to solicit such approval and adoption. At any such
meeting of holders of Common Shares, all of the Common Shares then owned by the
Parent Companies will be voted in favor of approval and adoption of this
Agreement. Notwithstanding this Section 6.4, in the event that Parent or
Subsidiary shall acquire at least 90% of the outstanding Common Shares, pursuant
to the Offer or otherwise, the parties hereto shall, subject to Article VII
hereof, take all necessary and appropriate action to cause the Merger to become
effective as soon as possible after such acquisition, without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
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Section 6.5 Filings; Other Action. Subject to the terms and
conditions herein provided, the Company, Parent and Subsidiary shall promptly
make any required submissions or filings with any governmental entity, including
without limitation, preparation and filing of the Merger Proxy Statement with
the SEC.
Section 6.6 Reasonable Best Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable best 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, rules and regulations and otherwise to consummate and make effective the
transactions contemplated by this Agreement and shall use its reasonable best
efforts to obtain all necessary actions or non-actions, extensions, waivers,
permits, consents and approvals and to effect all registrations, filings and
notices with or to third parties or governmental or public bodies or authorities
that are necessary or desirable in connection with the transactions contemplated
by this Agreement except in each such case to the extent that the applicable
Board may determine in good faith, after receiving advice from its outside
counsel, that any such action could reasonably be expected to be a breach of the
directors' fiduciary duties under applicable law. The Company will cooperate
with Parent and Subsidiary in supplying all information reasonably requested in
connection with any due diligence investigation by Parent or its lenders.
Notwithstanding the foregoing, nothing in this Section 6.6 shall require, or be
construed to require, Parent, Subsidiary or the Company, in connection with the
receipt of any regulatory approval, to proffer or agree (i) to sell or hold
separate or agree to sell, divert or discontinue or to limit, before or after
the Effective Time any assets, businesses or interest in any assets or
businesses of Parent,
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the Company or any of their respective affiliates (or to consent to any sale or
agreement to sell or discontinuance or limitation by Parent or the Company, as
the case may be, of any of its assets or business) or (ii) to agree to any
conditions relating to, or changes or restriction in, the operations of any such
asset or business which, in either case, is reasonably likely to materially and
adversely impact the economic or business benefits to such party of the
transactions contemplated by this Agreement. In furtherance and not in
limitation of the covenants of the parties contained in this Section 6.6, if any
administrative or judicial action or proceeding, including any proceeding by a
private party, is instituted (or threatened to be instituted) challenging any
transaction contemplated by this Agreement as violative of any antitrust law,
each of the parties shall cooperate in all respects with each other and use its
reasonable best efforts to contest and resist any such action or proceeding, and
to have vacated, lifted, reversed or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent, that is in effect
and that prohibits, prevents or restricts any transaction contemplated by this
Agreement, and to resolve any challenge or objection raised by any governmental
authority or private party.
Section 6.7 Access. Upon reasonable notice and subject to
restrictions contained in confidentiality agreements by which the Company is
bound and except where such access to a contract or agreement would cause the
Company to be in breach of such contract or agreement, the Company shall (and
shall cause each of its subsidiaries to) afford reasonable access to Parent's
officers, employees, legal counsel, accountants, financing sources and other
authorized representatives, during normal business hours throughout the period
prior to the Effective Time, to all of its properties, books, contracts,
commitments
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and records and, during such period, the Company shall (and shall cause each of
its subsidiaries to) furnish promptly to Parent (a) a copy of each report,
schedule and other document filed or received by it pursuant to the requirements
of federal or state securities laws and (b) all other information concerning its
business, properties and personnel as Parent or any of its financing sources may
reasonably request. The rights and obligations of each of Parent, Subsidiary and
the Company pursuant to the Confidentiality Agreement dated May 14, 1998 as to
the Company and May 27, 1998 as to Parent (the "Confidentiality Agreement"),
between Parent and the Company, is superseded by this Agreement and is of no
further force and effect. In the event of the termination of this Agreement for
any reason Parent and Subsidiary (i) shall promptly return to the Company, or
destroy, all originals, copies, reports and analyses of such information in
their possession, and (ii) shall not use any such information for any purposes
that would be competitive with or cause material harm to the Company.
Section 6.8 Publicity. The initial press release with respect
to the execution of this Agreement shall be a joint press release, and
thereafter the Company and Parent shall consult with each other in issuing any
press releases or otherwise making public statements with respect to the
transactions contemplated hereby and in making any filings with any federal or
state governmental or regulatory agency or with any national securities exchange
with respect thereto, provided that nothing herein shall prevent any party
hereto from making any public statements or any filings deemed by such party in
good faith to be required by law based on the advice of counsel to the
respective party.
Section 6.9 Directors' and Officers' Indemnification;
Insurance.
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(a) From and after the Effective Time, Parent shall cause the
Surviving Corporation (the Parent and the Surviving Corporation individually, as
"Indemnifying Party" and collectively, the "Indemnifying Parties") to indemnify
and hold harmless each person who is now, or has been at any time prior to the
date hereof, an officer or director of the Company or any of its subsidiaries
(the "Indemnified Parties") against any losses, claims, damages, judgments,
settlements, liabilities, costs or expenses (including, without limitation,
reasonable attorneys' fees and out-of-pocket expenses) incurred in connection
with any threatened or actual claim, action, suit, proceeding or investigation
("Action") arising out of or pertaining to acts or omissions, or alleged acts or
omissions, (including, without limitation, in connection with the Offer, the
Merger and the other transactions contemplated by this Agreement), to the
fullest extent that the Company or such subsidiaries would have been permitted,
under applicable provisions of the DGCL and the certificate of incorporation or
by-laws of the Company or the charter or by-laws of such subsidiaries as in
effect as of the date of this Agreement, to provide such indemnification. The
Indemnifying Parties and the Indemnified Parties each agree to render to each
other such assistance as may reasonably be requested in order to insure the
proper and adequate defense of any Action.
(b) In connection with the foregoing provisions of Section
6.9(a), Parent shall cause the Surviving Corporation to advance expenses as
incurred to the fullest extent permitted under applicable law upon receipt from
the Indemnified Party to whom expenses are advanced of a written undertaking to
repay such advances as contemplated by Section 145(e) of the DGCL.
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(c) In the event of any Action;
(i) any Indemnified Party wishing to claim
indemnification under this Section 6.9 shall, upon becoming aware of
any such Action, promptly notify the Surviving Corporation and Parent
thereof (provided that the failure to provide such notice shall not
relieve the Parent or the Surviving Corporation of any liability or
obligation it may have to such Indemnified Party under this Section
6.9 unless such failure materially prejudices Parent or the Surviving
Corporation), and shall deliver to Parent and the Surviving
Corporation the undertaking contemplated by Section 145(e) of the
DGCL; and
(ii) Subject to receipt of the undertaking
contemplated by Section 145(e) of the DGCL, Parent shall cause the
Surviving Corporation to pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be
reasonably acceptable to Parent and the Surviving Corporation.
(d) Notwithstanding anything herein to the contrary, (A)
neither Parent nor the Surviving Corporation shall be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld); (B) neither Parent nor the Surviving Corporation shall
be liable under this Section 6.9 for the fees and expenses of more than one
counsel for all Indemnified Parties in any Action, except to the extent that, in
the opinion of counsel for the Indemnified Parties (a copy of which opinion
shall be delivered to Parent), two or more of such Indemnified Parties have
conflicting interests in the outcome of such Action such that additional counsel
is required to be retained by such Indemnified Parties under applicable
standards of professional conduct; (C) after notice from
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the Indemnifying Parties (or either of them) to the Indemnified Party of the
election by the Indemnifying Parties (or either of them) to assume the defense
of an Action, the Indemnifying Parties shall not be liable for any expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof; and (D) the Indemnifying Parties shall have the right to select their
own counsel with respect to any Action and shall have full control over the
defense of any Action the defense of which has been assumed by the Indemnifying
Parties (or either of them).
(e) Unless otherwise required by law, (i) at the Effective
Time, the certificate of incorporation and bylaws of the Surviving Corporation
shall contain provisions providing for exculpation of director and officer
liability and indemnification by the Surviving Corporation of the Indemnified
Parties not less favorable to the Indemnified Parties than those provisions
providing for exculpation of director and officer liability and indemnification
by the Company of the Indemnified Parties contained in the certificate of
incorporation and bylaws of the Company as in effect on the date of this
Agreement, and (ii) for a period of six years from the Effective Time, the
Surviving Corporation and its subsidiaries shall not amend, repeal or modify any
such provisions contained in their respective certificates of incorporation and
bylaws, or other organizational documents of such subsidiaries, to reduce or
adversely affect the rights of the Indemnified Parties thereunder in respect of
actions or omissions by them occurring at or prior to the Effective Time;
(f) The Company may purchase prior to the Effective Time, and
if not so purchased then after the Effective Time Parent shall cause the
Surviving Corporation to purchase, a six-year extended reporting period
endorsement ("reporting tail coverage") under
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the Company's existing directors' and officers' liability insurance coverage (or
as much coverage as can be obtained for a total not in excess of 175% of the
Current Premium), provided that such reporting tail coverage shall extend the
director and officer liability coverage in force as of the date hereof from the
Effective Time on terms, that in all material respects, are no less advantageous
to the intended beneficiaries thereof than the existing officers' and directors'
liability insurance. "Current Premium" shall mean the last annual premium paid
prior to the date hereof for the existing officers' and directors' liability
insurance, which the Company represents and warrants to be $162,500.
(g) Notwithstanding anything to the contrary set forth above,
with respect to Indemnified Parties who are officers and/or directors of former
subsidiaries or business units of the Company, (A) the provisions of this
Section 6.9 shall not apply to such officers and/or directors for any losses
incurred by any of them in any way arising out of, pertaining to or incurred in
connection with acts or omissions (or alleged acts or omissions) which acts or
omissions occurred after the date any such subsidiary or business unit was
disposed of by the Company and (B) in connection with actions arising out of,
pertaining to or incurred in connection with acts or omissions (or alleged acts
or omissions) which occurred prior to the date of any such subsidiary or
business unit was disposed of by the Company, any such Indemnified Party shall
first seek and exhaust all indemnification rights and remedies from the
subsidiary or the purchaser of such subsidiary or business unit (or any parent
of any of the foregoing) before such Indemnified Party may seek indemnification
from the Surviving Corporation under this Section 6.9; and
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(h) If during the six year period from and after the
Effective Time the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other entity and shall not be the
continuing or surviving entity of such consolidation or merger or (ii) transfers
or conveys all or substantially all of its properties and assets to any entity,
then, and in each such case, to the extent necessary, proper provision shall be
made so that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 6.9. The parties acknowledge and agree
that to the extent that the Surviving Corporation fails to comply with its
indemnification obligations pursuant to this Section 6.9, Parent shall indemnify
and hold harmless each of the Indemnified Parties to the same extent as the
Surviving Corporation was required to indemnify such indemnified Parties
hereunder.
(i) This covenant is intended to be for the benefit of, and
shall be enforceable by, each of the Indemnified Parties and their respective
heirs and legal representatives.
Section 6.10 Registration Rights Agreement. The Company
represents and warrants that there is no outstanding request for registration of
Common Shares pursuant to the Registration Rights Agreement filed or
incorporated by reference as Exhibit 4.3 to the 1998 Annual Report, or any other
agreement. In the event of receipt of any such request, the Company will
immediately notify Parent of such request.
Section 6.11 Fair Price Statute. If any "fair price" or
"control share acquisition" statute or other similar statute, regulation or
provision shall become applicable to the transactions contemplated hereby, the
Company and the members of the Board of
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Directors of the Company shall use their reasonable efforts to grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to minimize the effects of such statute,
regulation or provision on the transactions contemplated hereby unless the Board
of Directors of the Company shall have determined in good faith, after receiving
advice from its outside counsel, that any such action could reasonably be
expected to be a breach of the directors' fiduciary duties under applicable law.
Section 6.12 Directors. Promptly upon the acquisition of a
majority of the outstanding Common Shares pursuant to the Offer, or otherwise,
so long as Parent owns a majority of the outstanding Common Shares Parent shall
be entitled upon written request to the Company, subject to applicable law, to
designate such number of directors, rounded down to the nearest whole number, to
the Board of Directors of the Company as will give Parent (or its affiliates)
representation on such Board of Directors equal to at least that number of
directors which equals the product of the total number of directors on the
Company's Board of Directors (giving effect to the directors elected pursuant to
this sentence) multiplied by the percentage that the sum of the number of Common
Shares so owned by Parent and Subsidiary bears to the number of such Common
Shares outstanding, and the Company shall, at such time, promptly use its best
efforts to cause the designees of Parent to be so elected, subject in all cases
to Section 14(f) of the Exchange Act, it being understood that the Company shall
have no obligation to comply with Section 14(f) until after the Offer is
completed. These efforts shall, if necessary, include efforts to obtain any
amendments to the by-laws of the Company regarding the number of directors, or
securing
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the resignation of directors, or both. The date, if any, on which a majority of
the Board of Directors consist of directors designated by Parent pursuant to
this Section 6.12 shall be hereinafter referred to as the "New Board Date." In
the event that Parent's designees are elected to the Company's Board of
Directors, until the Effective Time, the Company's Board of Directors shall have
at least three directors who are directors on the date hereof (the "Independent
Directors"), provided that, in such event, if the number of Independent
Directors shall be reduced below three for any reason whatsoever, any remaining
Independent Directors (or Independent Director, if there be only one remaining)
shall be entitled to designate persons to fill such vacancies who shall be
deemed to be Independent Directors for purposes of this Agreement or, if no
Independent Director then remains, the other directors shall designate three
persons to fill such vacancies who shall not be stockholders, affiliates or
associates of Parent or Subsidiary and such persons shall be deemed to be
Independent Directors for purposes of this Agreement. Notwithstanding anything
in this Agreement to the contrary, in the event that Parent's designees are
elected to the Company's Board of Directors, after the acceptance for payment of
Common Shares pursuant to the Offer and prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors shall be required to
(a) amend or terminate this Agreement by the Company, (b) exercise or waive any
of the Company's rights, benefits or remedies hereunder, or (c) extend the time
for performance of Parent's and Subsidiary's respective obligations hereunder.
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Section 6.13 Employee Benefits Matters.
(a) Commencing on the consummation of the Offer and
continuing until December 31, 1999, Parent shall cause the Company and the
Surviving Corporation to continue to provide to employees of the Company and its
subsidiaries (excluding employees, if any, covered by collective bargaining
agreements), as a whole, Employee Benefits (defined below) which, in the
aggregate, are no less favorable to such employees than the Employee Benefits
provided to such employees as of the date hereof.
(b) Parent and the Company agree that the Company and the
Surviving Corporation shall pay promptly or provide when due all compensation
and benefits required to be paid pursuant to (i) the terms of the individual
employment agreements listed on Schedule 6.13(b)(i) hereto and (ii) the terms of
the employee retention plan set forth in Schedule 6.13(b)(ii) hereto.
(c) For all Employee Benefits and the employee benefit plans
of Parent and its affiliates after the Effective Time, all service with the
Company or any of its subsidiaries prior to the Effective Time of employees
(excluding employees, if any, covered by collective bargaining agreements) shall
be treated as service with Parent and its affiliates for eligibility and vesting
purposes and for benefit accruals for purposes of severance and vacation pay to
the same extent that such service is taken into account by the Company and its
subsidiaries as of the date hereof, except to the extent such treatment will
result in duplication of benefits.
(d) From and after the Effective Time, Parent shall, and
shall cause the Surviving Corporation to, cause any pre-existing condition or
limitation and any eligibility waiting periods (to the extent such conditions,
limitations or waiting periods did not apply
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to the employees of the Company under the Employee Plans in existence as of the
date hereof) under any group health plans of Parent or any of its subsidiaries
to be waived with respect to employees of the Company and their eligible
dependents.
(e) "Employee Benefits" shall mean Employee Plans plus the
following benefits: severance policy for involuntary termination (other than for
cause) and vacation policy in effect on the date hereof with respect to
employees of the Company set forth in Schedule 6.13(e) hereto. Employee Benefits
shall not include Stock Option Plans, the Stock Purchase Plan and any other
plans or program not specifically included in the definition in the preceding
sentence.
(f) Nothing herein shall require the continued employment of
any person or prevent the Company or any of its subsidiaries and/or the
Surviving Corporation from taking any action or refraining from taking any
action which the Company or any of its subsidiaries could take or refrain from
taking prior to or after the Effective Time, including, without limitation, any
action the Company or any of its subsidiaries or the Surviving Corporation could
take to terminate any plan or Employee Benefits under its terms as in effect as
of the date hereof; provided, however, that it is understood by the parties that
this subsection 6.13(f) shall not relieve Parent of its obligations under
subsection 6.13(a).
ARTICLE VII.
Conditions
Section 7.1 Conditions to each Party's Obligations to Effect
the Merger. The respective obligations of Parent and Subsidiary on the one hand,
and the Company on the
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other, to effect the Merger are subject to the fulfillment, at or before the
Effective Time, of each of the following conditions:
(a) Stockholder Approval. If necessary to effect the Merger,
this Agreement and the Merger shall have been duly approved by the
holders of Common Shares in accordance with applicable law and the
certificate of incorporation and by-laws of the Company.
(b) Governmental Filings and Consents. All governmental
consents, orders and approvals legally required for the consummation
of the Merger and the transactions contemplated hereby shall have been
obtained and be in effect at the Effective Time, except where the
failure to obtain any such consent would not reasonably be expected to
have a material adverse effect on Parent (assuming the Merger had
taken place), and the waiting periods under the HSR Act shall have
expired or been terminated.
(c) Purchase of Common Shares. Subsidiary shall have accepted
for payment and purchased Common Shares pursuant to the Offer;
provided that this condition shall not be a condition to the
obligations of Parent or Subsidiary if Subsidiary shall have failed to
purchase Common Shares in violation of the terms hereof or of the
Offer.
(d) Injunction. No preliminary injunction or permanent
injunction or other order issued by any federal or state court of
competent jurisdiction in the United States prohibiting the
consummation of the Merger shall be in effect.
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ARTICLE VIII.
Termination and Abandonment
Section 8.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval by the
stockholders of the Company:
(a) by mutual consent of the Board of Directors of the Parent
and the Board of Directors of the Company;
(b) by action of the Board of Directors of the Parent or
action of the Board of Directors of the Company if at least that number
of Common Shares required by the Minimum Share Condition shall not have
been purchased in the Offer on or before April 30, 1999; provided,
however, that the Board of Directors of the Parent shall have no right
pursuant to this Section 8.1(b) to terminate this Agreement after the
purchase of Common Shares pursuant to the Offer; and provided, further,
that the right to terminate this Agreement pursuant to this Section
8.1(b) 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 the Offer to occur on or before the aforesaid date;
(c) by the Company if Subsidiary shall not have commenced the
Offer within five business days of the date of the initial public
announcement of the Offer or this Agreement;
(d) by either Parent or the Company if the Offer shall expire
or terminate in accordance with its terms without any Common Shares
having been purchased
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thereunder and, in the case of termination by the Parent, the
Purchaser under the Offer shall not have been required by the terms of
the Offer or this Agreement to purchase any Common Shares pursuant to
the Offer;
(e) by the Company if Parent or Subsidiary shall fail to
comply in any material respect with any of its covenants or agreements
required to be performed by it before the date of such termination and
such failure to comply shall not be cured within seven business days
following receipt by Parent from the Company of written notice of such
failure and demand for cure; or by Parent or Subsidiary if the Company
shall fail to comply in any material respect with any of its covenants
or agreements required to be performed by it before the date of such
termination, and such failure to comply shall not be cured within
seven business days following receipt by the Company from Parent or
Subsidiary of written notice of such failure and demand for cure;
(f) by either Parent, Subsidiary or the Company, if any court
of competent jurisdiction in the United States or other governmental
agency of competent jurisdiction shall have issued an order, decree or
ruling or taken any other action restraining, permanently enjoining or
otherwise prohibiting the consummation of the Offer or the Merger, and
such order, decree, ruling or other action shall have become final and
non-appealable; or
(g) by the Company if the Company is prepared to enter into a
binding agreement to effect a transaction on the terms specified in a
Superior Proposal (defined below) and has given Parent written notice
to that effect; provided, however,
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that such termination under this Section 8.1(g) shall not be effective
until the Company has made payment to Parent of the Fee (as defined in
Section 8.3(a)) required to be paid pursuant to Section 8.3(a) and has
paid to Parent $750,000 for Expenses (as defined in Section 8.3(b)).
Parent hereby agrees to refund any excess of such $750,000 over actual
Expenses.
Section 8.2. Procedure and Effect of Termination. In the
event of termination and abandonment of the Merger by Parent, Subsidiary or the
Company pursuant to Section 8.1, written notice thereof shall forthwith be given
to the others, and this Agreement shall terminate and the Merger shall be
abandoned, without further action by any of the parties hereto. Subsidiary
agrees that any termination by Parent shall be conclusively binding upon
Subsidiary, whether given expressly on its behalf or not. If this Agreement is
terminated as provided herein, no party hereto shall have any liability or
further obligation to any other party to this Agreement, provided that any
termination shall be without prejudice to the rights of any party hereto arising
out of breach by any other party of any covenant or agreement contained in this
Agreement, and provided, further, that the obligations set forth in Section 8.3
shall in any event survive any termination.
Section 8.3. Fees and Expenses.
(a) In the event that:
(i) any person (including, without limitation, the
Company or any affiliate thereof) or group, other than the
Parent or any affiliate of the Parent, shall have become the
beneficial owner of more than 20% of the then outstanding
Common Shares and thereafter this Agreement shall have been
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terminated pursuant to Section 8.1(b) or 8.1(d) and within 12
months of such termination a Third Party Acquisition (as
hereinafter defined) for a per Common Share consideration
having a value greater than $16.50 shall occur with such
person or group, or an affiliate of any of them; or
(ii) any person or group shall have commenced,
publicly proposed or communicated to the Company a proposal
that is publicly disclosed for a tender or exchange offer for
more than 20% (or which, assuming the maximum amount of
securities which could be purchased, would result in any
person or group beneficially owning more than 20%) of the
then outstanding Common Shares or otherwise for the direct or
indirect acquisition of the Company or all or substantially
all of its assets for per Common Share consideration having a
value greater than $16.50 and (A) the Offer shall have
remained open for at least 20 business days, (B) the Minimum
Condition shall not have been satisfied and (C) this
Agreement shall have been terminated pursuant to Section
8.1(b) or 8.1(d); or
(iii) this Agreement is terminated pursuant to
Section 8.1(g); then the Company shall pay Parent promptly
(but in no event later than one business day after the first
of such events shall have occurred) a fee of $3,455,000 (the
"Fee"), which amount shall be payable in immediately
available funds, plus all Expenses; provided that, in the
case described in clause (ii) of this Section 8.3(a), if the
Board of Directors of the Company (A) shall not have
withdrawn or modified in a manner adverse to the Subsidiary
or the Parent its approval or recommendation
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of the Offer, this Agreement or the Merger, (B) shall not have
approved or recommended the proposal of the person or group referred
to in clause (ii) and (C) shall not have resolved to do any of the
foregoing, the Company shall pay to Parent on such termination all
Expenses and shall pay the Fee only if, within 12 months of such
termination, a Third Party Acquisition with such person or group
referred to in clause (ii), or an affiliate of any of them, shall
occur.
(b) "Expenses" means all out-of-pocket expenses and fees up
to a maximum of $750,000 in the aggregate (including, without
limitation, fees and expenses payable to all banks, investment banking
firms, other financial institutions and other persons and their
respective agents and counsel for arranging, committing to provide or
providing any financing or services for the Offer, the Merger and any
transactions contemplated thereby or structuring the transactions and
all fees of counsel, accountants, experts, consultants and soliciting
or information firms to Parent and Subsidiary, and all printing and
advertising expenses) actually incurred or accrued by either of them
or on their behalf in connection with the transactions, including,
without limitation, litigation related thereto and the financing
thereof, and actually incurred or accrued by banks, investment banking
firms, other financial institutions and other persons and assumed by
Parent or Subsidiary in connection with the negotiation, preparation,
execution and performance of this Agreement, the structuring and
financing of the Offer, the Merger and any transactions contemplated
thereby and any litigation and any financing commitments or agreements
relating thereto.
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(c) Except as set forth in this Section 8.3, all costs and
expenses incurred in connection with this Agreement and the Offer, the
Merger and any transactions contemplated hereby shall be paid by the
party incurring such expenses, whether or not any transaction is
consummated.
(d) In the event that the Company shall fail to pay the Fee
or any Expenses when due, the term "Expenses" shall be deemed to
include the costs and expenses actually incurred or accrued by Parent
and Subsidiary (including, without limitation, fees and expenses of
counsel) in connection with the collection under and enforcement of
this Section 8.3, together with interest on such unpaid Fee and
Expenses, commencing on the date that the Fee or such Expenses became
due, at a rate equal to the rate of interest publicly announced by The
First National Bank of Chicago, from time to time, in the City of
Chicago, as such bank's Prime Rate plus 1.00%.
(e) "Third Party Acquisition" means the occurrence of any of
the following events: (i) the acquisition of the Company by merger,
consolidation or other business combination transaction by any person
other than Parent, Subsidiary or any affiliate of either of them (a
"Third Party"); (ii) the acquisition by any Third Party of, or any
divestiture or other transaction resulting in the Company owning less
than, 50% or more (in book value or market value) of the total assets
of the Company and its subsidiaries, taken as a whole; (iii) the
acquisition by a Third Party of 50% or more of the outstanding Common
Shares whether by tender offer, exchange offer or otherwise; (iv) the
adoption by the Company of a plan of liquidation or a plan of
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recapitalization or the declaration or payment of an extraordinary
dividend; (v) the repurchase by the Company or any of its subsidiaries
of 50% or more of the outstanding Common Shares; or (vi) a letter of
intent or similar instrument or other agreement between the Company
and a Third Party, or the public announcement by the Company of the
Company's intention or plans, to effect any of the events referred to
in clauses (i), (ii), (iii), (iv) or (v).
(f) "Superior Proposal" shall mean a bona fide proposal made
by a Third Party to acquire a majority or more of the outstanding
Common Shares pursuant to a tender offer or a merger, or to purchase
all or substantially all of the assets of the Company, on terms which
a majority of the Board of Directors of the Company determines in its
good faith judgment (based on its financial and legal advisors) to be
more favorable to the Company and its stockholders from a financial
point of view than the transactions contemplated by this Agreement.
ARTICLE IX.
Miscellaneous
Section 9.1 Amendment. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto; provided, however, that after approval of the Merger by the stockholders
of the Company no amendment may be made which decreases the amount per Common
Share to be received pursuant to the Merger or otherwise adversely affects the
stockholders of the Company without the further approval of such stockholders.
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Section 9.2 Waiver. At any time prior to the Effective Time,
whether before or after any meeting of the Company's stockholders as referred to
herein, any party hereto may (a) in the case of Parent, extend the time for the
performance of any of the obligations or other acts of the Company or, subject
to the provisions contained in Section 9.1, waive compliance with any of the
agreements of the Company or with any conditions to the obligations of Parent,
or (b) in the case of the Company, extend the time for the performance of any of
the obligations or other acts of Parent or Subsidiary, or, subject to the
provisions contained in Section 9.1, waive compliance with any of the agreements
of Parent or Subsidiary or with any conditions to its own obligations. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party by a duly authorized officer.
Section 9.3 Special Fees of the Company. The Company's fee
arrangement with its investment bankers, in the form delivered previously to
Parent, shall not be modified or amended prior to the Effective Time, without
the consent of Parent. The Company represents and warrants that no potential
purchaser (other than Parent and Subsidiary) is entitled to expenses or any
"break-up," "topping" or other similar fee as a result of the execution and
delivery of this Agreement or the transactions contemplated hereby.
Section 9.4 Counterparts. For the convenience of the parties
hereto, this Agreement may be executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.
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Section 9.5 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware without
regard to its rules of conflict of laws. Each of the Company, Parent and
Subsidiary hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of Delaware and the United
States of America located in the State of Delaware (the "Delaware Courts") for
any litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any litigation relating thereto
except in such courts), waives any objection to the laying of venue of any such
litigation in the Delaware Courts and agrees not to plead or claim in any
Delaware Court that such litigation brought therein has been brought in an
inconvenient forum. Each of the parties hereto agrees, (a) to the extent such
party is not otherwise subject to service of process in the State of Delaware,
to appoint and maintain an agent in the State of Delaware as such party's agent
for acceptance of legal process, and (b) that service of process may also be
made on such party by prepaid certified mail with a proof of mailing receipt
validated by the United States Postal Service constituting evidence of valid
service. Service made pursuant to (a) or (b) above shall have the same legal
force and effect as if served upon such party personally within the State of
Delaware. For purposes of implementing the parties' agreement to appoint and
maintain an agent for service of process in the State of Delaware, each such
party does hereby appoint The Corporation Trust Company, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801, as such agent.
Section 9.6 Notices. Any notice, request, instruction or
other document to be given hereunder by any party to the others shall be in
writing and delivered personally
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or sent by telecopier or telefax or overnight courier or registered or certified
mail, postage and charges prepaid, (and deemed given on receipt) if to Parent or
Subsidiary, addressed to Parent or Subsidiary, as the case may be, at Illinois
Tool Works Inc., 3600 West Lake Avenue, Glenview, Illinois 60025-5811,
Attention: Corporate Secretary (with a copy to Jenner & Block, One IBM Plaza,
Chicago, Illinois 60611, Attention: Charles J. McCarthy, Ltd.), and if to the
Company, addressed to the Company at Trident International, Inc., Attention:
Elaine A. Pullen, President and Chief Executive Officer (with a copy to Goodwin,
Procter & Hoar LLP, Exchange Place, Boston, MA 02109, Attention: John J. Egan
III, P.C.), or to such other persons or addresses as may be designated in
writing by the party to receive such notice.
Section 9.7 Entire Agreement, etc. This Agreement constitutes
the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, with respect to the
subject matter hereof.
Section 9.8 Definition of "Subsidiary". When a reference is
made in this Agreement to a subsidiary of a party, the word "subsidiary" means
any corporation more than 50% of the outstanding voting securities of which are
directly or indirectly owned by such party or any joint venture or partnership
in which such party owns a 50% or more equity interest.
Section 9.9 Obligation of Parent. Whenever this Agreement
requires Subsidiary to take any action, such requirement shall be deemed to
include the undertaking on the part of Parent to cause Subsidiary to take such
action.
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<PAGE> 73
Section 9.10 Captions. The Article, section and paragraph
captions herein are for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to modify or otherwise affect any of the
provisions hereof.
Section 9.11 Survival. The representations and warranties and
agreements in this Agreement will terminate at the Effective Time or the earlier
termination of this Agreement pursuant to Section 8.1, as the case may be,
provided that if the Merger is consummated, the agreements of the Company,
Parent and Subsidiary contained in Sections 2.4, 4.2 (but only to the extent
that such section expressly relates to action to be taken after the Effective
Time), 4.3, 4.4, 4.6, 6.9, 6.12, 6.13 and 8.2 shall survive the consummation of
the Merger, and the provisions of Section 8.3 will in all events survive any
termination of this Agreement.
Section 9.12 Parties in Interest; Assignment. Except for
Section 6.9 (which is intended to be for the benefit of directors and officers
to the extent contemplated thereby), this Agreement is not intended to nor will
it confer upon any other person (other than the parties hereto) any rights or
remedies. Except as otherwise expressly provided herein, this Agreement is
binding upon and is solely for the benefit of the parties hereto and their
respective successors, legal representatives and assigns. Subsidiary shall have
the right (a) to assign to Parent or any direct or indirect wholly-owned
subsidiary of Parent any and all rights and obligations of Subsidiary under this
Agreement, including without limitation the right to substitute in its place
Parent or such a subsidiary as one of the constituent corporations in the Merger
(such subsidiary assuming all of the obligations of Subsidiary in connection
with the Merger), provided that any such assignment will not relieve Parent
-68-
<PAGE> 74
or Subsidiary from any of its obligations hereunder and (b) to transfer to
Parent or to any direct or indirect wholly-owned subsidiary of Parent the right
to purchase Common Shares tendered pursuant to the Offer, provided that any such
transfer will not relieve Parent or Subsidiary from any of its obligations
hereunder.
Section 9.13 Enforcement of the Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, the parties hereto will
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
Section 9.14 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party hereto. Upon any such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
will negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated by this Agreement are consummated to
the extent possible.
-69-
<PAGE> 75
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by a duly authorized officer of each of the parties hereto on the date
first hereinabove written.
TRIDENT INTERNATIONAL, INC.
By /s/ Elaine A. Pullen
---------------------------------------
Its President and Chief Executive Officer
--------------------------------------
ILLINOIS TOOL WORKS INC.
By /s/ W. James Farrell
---------------------------------------
Its Chief Executive Officer
--------------------------------------
ITW ACQUISITION INC.
By /s/ Valerie A. Lapinski
---------------------------------------
Its Vice President
--------------------------------------
-70-
<PAGE> 76
EXHIBIT A
TENDER OFFER CONDITIONS
The terms with initial capitals not otherwise defined in this
Exhibit A shall have the meanings set forth in the attached Agreement and Plan
of Merger (the "Agreement").
Notwithstanding any other provision of the Offer and subject
to the terms of the Agreement, and in addition to the conditions that (i) Common
Shares constituting not less than a majority of all Common Shares outstanding on
a fully diluted basis are validly tendered (and not withdrawn) prior to the
Expiration Date (the "Minimum Share Condition") and (ii) all applicable waiting
periods under the HSR Act having expired or been terminated, Parent and
Subsidiary (collectively referred to herein as the "Purchaser") shall not be
required to accept for payment, purchase, or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) (relating to the Purchaser's
obligation to pay for or return tendered Common Shares after termination of the
offer), to pay for any Common Shares tendered, and may postpone the purchase of,
or, subject to the restriction set forth above, payment for Common Shares
tendered and to be purchased by it, if at any time prior to the time of
acceptance for payment of any such Common Shares, any of the following events
shall occur:
(a) there shall be any statute, rule, regulation or order
promulgated, enacted, entered or enforced that is applicable to the
Offer or the Merger by any United States federal or state court,
legislative body or governmental agency or other regulatory
administrative agency or commission of competent jurisdiction (each a
A-1-
<PAGE> 77
"Governmental Authority"), (i) restraining or prohibiting the making
or consummation of the Offer or the transactions contemplated by the
Agreement; (ii) prohibiting or restricting Purchaser's (or any of its
affiliates) ownership or operation of all or any material portion of
the Company's business or assets; (iii) imposing material limitations
on the ability of Purchaser effectively to acquire or to hold or to
exercise full rights of ownership of the Common Shares, including,
without limitation, the right to vote the Common Shares purchased by
Purchaser on all matters properly presented to the stockholders of the
Company; (iv) requiring divestiture by Purchaser of any assets or of
any Common Shares; or (v) making the acceptance for payment or payment
for the Common Shares or consummation of the Merger illegal or
prohibiting consummation of the Offer or the Merger.
(b) any action or proceeding instituted and pending by a
Governmental Authority seeking to effect any of the activity in clause
(a) above; or
(c) there shall have occurred any change concerning the
Company and its subsidiaries taken as a whole which, in the good faith
judgment of the Purchaser, has had, or is reasonably expected to have
prior to December 31, 1999, a material adverse effect on the business,
financial condition or results of operation ("Condition") of the
Company and its subsidiaries taken as a whole (other than any changes
generally affecting the industries in which the Company operates,
including changes due to actual or proposed changes in law or
regulations, or changes relating to or arising from the transactions
contemplated by this Agreement, including the change in control
contemplated hereby), it being expressly understood that the term
A-2-
<PAGE> 78
"material adverse effect" for purposes of the Offer Conditions shall
mean a material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries, taken as a
whole, with the parties expressly intending that the term "material
adverse effect" for purposes of the Offer Conditions be construed as
an effect which is greater than the definition of "Material Adverse
Effect" as set forth in Section 5.2(a) of the Agreement, based on the
applicable facts and circumstances; or
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York
Stock Exchange, the Nasdaq Stock Market, the American Stock Exchange
or in the United States over-the-counter market which shall continue
for at least three business days; or (ii) the declaration of a banking
moratorium or any suspension of payments by United States governmen
tal authorities in respect of banks in the United States which shall
continue for at least three business days; or
(e) there shall have occurred the commencement or escalation
of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, and
having a material adverse effect on the Offer or the Merger or the
Condition of the Company and its subsidiaries taken as a whole; or
(f) any representation or warranty of the Company in the
Agreement shall have been untrue as of the date of the Agreement or
shall have become untrue prior to acceptance for payment or payment
for Common Shares which untrue representations or warranties, if
accurately stated, would have revealed matters
A-3-
<PAGE> 79
materially adverse to the Condition of the Company and its
subsidiaries, taken as a whole, or the Company shall have failed to
perform or breached any of its covenants or agreements contained in
the Agreement, which failure, breach or breaches, would materially
impair or delay the ability of Subsidiary to consummate the Offer or
the ability of Parent, Subsidiary and the Company to effect the
Merger; or
(g) one or more of the following events shall have occurred
after the date of the Agreement or the Purchaser shall have for the
first time become aware after the date of the Agreement of the
occurrence of any of the following on or prior to the date of the
Agreement: (1) any person, corporation, partnership or other entity or
group (a "Person"), other than the Purchaser or its affiliates,
acquires or becomes the beneficial owner of more than 20% of the
outstanding Common Shares (other than acquisitions for bona fide
arbitrage purposes and acquisitions by Persons who are parties to any
agreement with the Purchaser with respect to their Common Shares); (2)
any Person (other than the Purchaser or its affiliates) shall have
commenced a tender or exchange offer for more than 20% of the
outstanding Common Shares or publicly proposed a Third Party
Acquisition; (3) the Company enters into, or announces that it
proposes to enter into, an agreement, including, without limitation,
an agreement in principle, providing for a merger or other business
combination involving the Company or a material portion of the assets,
business or operations of the Company and its subsidiaries taken as a
whole (other than the transactions contemplated by the Agreement), and
the Company withdraws its recommendation of the Offer or Merger; (4)
any Person (other than the Purchaser
A-4-
<PAGE> 80
or its affiliates) is granted any option or right, conditional or
otherwise, to acquire or otherwise become the beneficial owner of
Common Shares which, together with all Common Shares beneficially
owned by such Person, results or would result in such Person being the
beneficial owner of more than 20% of the outstanding Common Shares; or
(5) subsequent to the commencement of the Offer there is a public
announcement with respect to a plan or intention by the Company or any
Person, other than the Purchaser or its affiliates, to effect any of
the foregoing transactions. For purposes of this subparagraph (g), the
terms "group" and "beneficial owner" shall be defined by reference to
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder; or
(h) the Agreement shall have been terminated in accordance
with its terms.
The foregoing conditions other than the Minimum Share
Condition are for the sole benefit of the Purchaser and may be asserted by the
Purchaser or may be waived by the Purchaser in whole or in part at any time and
from time to time in its sole discretion. The failure by 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 and may be
asserted at any time and from time to time. Should the Offer be terminated due
to any of the foregoing provisions, all tendered Common Shares not theretofore
accepted for payment shall forthwith be returned to the tendering stockholders.
A-5-
<PAGE> 1
Exhibit 99.4
EXECUTIVE EMPLOYMENT AGREEMENT
between
TRIDENT INTERNATIONAL, INC.
and
ELAINE A. PULLEN
<PAGE> 2
AGREEMENT made as of and effective on November 1, 1997 by and between TRIDENT
INTERNATIONAL, INC., a Delaware corporation with its principal offices at 1114
Federal Road, Brookfield, Connecticut ("the Company") and ELAINE A. PULLEN
residing at 62 Cobbler Lane, Southbury, Connecticut ("the Executive")
W I T N E S S E T H:
WHEREAS, the Company and the Executive signed an Agreement made as of
August 22, 1994 ("the Original Agreement") defining the relationship between
them; and
WHEREAS, the Executive now holds the position of President and Chief
Executive Officer ("the Position") of the Company; and
WHEREAS, the Original Agreement terminated on November 1, 1997; and
WHEREAS, the Company and the Executive wish to extend the term of the
Original Agreement and to provide for contingencies and other eventualities
specified herein, by entering into this Agreement ("this Agreement");
NOW, THEREFORE, the parties agree as follows:
1. For performance of the Services during the Calendar Year 1997, the Executive
shall be granted Present Options to purchase Ten Thousand Shares of the common
stock of the Company. All terms of the prior options, copies of which were
attached or were to be attached to the Original Agreement as Schedule B-1 and
Schedule B-2 respectively ( the "Prior Options"), shall remain in full force and
effect and shall be incorporated in this Agreement.
2. The Company will retain the Executive in the Position for a period of three
(3) years
<PAGE> 3
from November 1, 1997, except as otherwise specified in this Agreement, provided
that: (a) A commercially satisfactory number of business performance goals, if
any, established by the Board of Directors of the Company ("the Board"),
(whether in consultation with the Executive or not), in connection with
performance of the Services have, in the Board's judgment, been attained; (b)
the obligations of Confidentiality set forth in Schedule C of this Agreement
have been maintained by the Executive; and (c) notwithstanding the attainment of
goals set forth in subparagraph (a) of this paragraph 2, there are no grounds
for termination of this Agreement by the Company due to the Executive's breach
of the Agreement, or conduct by the Executive demonstrably detrimental to the
Company, its employees or to the full, faithful, and proper performance of the
Services.
3. The Executive will perform the Services subject to the provisions for
compensation set forth in Schedule A attached to and made a part of this
Agreement. It shall be the responsibility of the Chairman and the Board (as may
be allocated between them from time to time in the sole discretion of the Board)
to further define the nature of the Position and Services, and to modify any
such definition, as they deem appropriate. Absent any such further definition,
the Services shall encompass the planning, development, and implementation of
corporate strategy for the Company, in consultation with the Chairman and the
Board, and the management of employees to further such strategies on a
day-to-day basis. No further definition of the Services which is within the
general concept of corporate strategy as set forth in the preceding sentence, or
which includes the function of Chief Executive Officer as that term is
customarily understood, shall be considered to be a revision, modification,
extension, or termination of this Agreement entitling the Executive to greater
or lesser benefits, except as expressly agreed in writing between the Executive
and the Company and attached to this Agreement.
4. During the performance of the Services, and thereafter if the Executive
vacates the Position for any reason (or for no stated reason), the Executive
will not compete against the Company as further defined in Schedule B attached
to and made a part of this Agreement for the periods specified in that Schedule.
If the Executive leaves the Company
<PAGE> 4
and finds a consulting or employment opportunity during the non-competition
period which may not, in business fact, be competitive with the products or
business of the Company, even though it is so under the definitions in Schedule
B, the Executive may request waiver from the Company of the definitions for that
opportunity. The Company will not unreasonably withhold such a waiver.
5. The Executive shall be entitled to all other benefits generally available to
employees of the Company upon the completion of customary formalities involved
in the application of and for such benefits. The Executive shall further be
entitled to a four week's paid vacation period each year during the term of this
Agreement. The period may be utilized in segments as well as in sequence, but
unused vacation time may not be carried forward. The Executive shall continue to
have the right to participate in the 401(k) Plan of the Company as Plan rules
and applicable law permit.
6. The Board has determined that it is in the best interests of the Company and
its shareholders, in order to assure continuity in the management of the
Company's administration and operations, to enter into this Agreement with the
Executive which is intended to encourage the Executive to continue a career with
the Company and to enable the Executive to work free from distraction in the
face of uncertainty and unsettling circumstances that arise from the possibility
of a Change in Control of the Company.
A. In consideration of the Company's agreement to provide the Executive
with the severance benefits set forth herein, the Executive hereby agrees that,
in the event the Board determines that a potential change in control of the
Company has occurred (such determination to be based upon the provisions set
forth below in this paragraph 6, and constituting a "Change in Control" for
purposes of this Agreement), the Executive will continue in the employ of the
Company with continuing responsibility for the business operations for which the
Services are presently rendered by the Executive (the "Position"), at a
compensation level at least equivalent to that received by the Executive at the
time of Change in Control.
<PAGE> 5
B. In consideration thereof, the Company agrees, that in the event of
Involuntary Termination, it shall provide the following severance benefits:
(i) The present value equivalent (on a ten percent discounted basis)
of: (a) salary continuation for 3 years in an annual amount equal to the Base
Salary in effect on the date of Involuntary Termination; (b) the ordinary and
customary additional elements of Compensation (except for options contemplated
in subparagraph 6.B. (iii)) attendant to the Position as set forth in Schedule
A.
(ii) Coverage for 3 years under all Company perquisites and benefit
plans including: 401k savings plan; medical, life and disability insurance
plans; use of a Company automobile or a leased vehicle equivalent to such
automobile; and the like, in the same manner as if the Executive were an active
employee.
(iii) An immediate right to exercise any outstanding and unexercised
stock options previously granted under any Company stock option plans, including
any such options not otherwise vested under the terms of the plan or grant,
unless provision is made in connection with such transaction for the assumption
of options theretofore granted, or the substitution for such options or new
options of the successor entity or parent thereof, with appropriate adjustment
as to the number and kind of shares and the per share exercise prices,
specifically including but not limited to the Present Options and the Prior
Options.
(iv) Employment search assistance through a professional out placement
organization and office and secretarial support for up to one year.
C. As used herein, Involuntary Termination shall mean any termination
of the Executive's employment by the Company, its successor or one of its
subsidiaries, within two years following a Change in Control of the Company;
provided, however, such term shall not include a termination for serious,
willful misconduct in respect of the Executive's
<PAGE> 6
obligations to the Company, its successors or its subsidiaries, including
commission of a felony or perpetration of a common law fraud which has or is
likely to result in material economic damage to the Company or any of its
subsidiaries, or failure to comply with a specific directive given to the
Executive by the Board.
D. In addition to actual termination of employment, the following shall
be deemed an Involuntary Termination:
(i) A reduction in Base Salary, or the ordinary and customary
additional elements of Compensation attendant to the Position as set forth in
Schedule A, or both, other than in connection with an across-the-board reduction
similarly affecting all executives of the Company, or a material and objectively
demonstrable failure of the Executive to meet the performance goals contemplated
by paragraph 2 as in effect immediately prior to a Change in Control of the
Company;
(ii) A material reduction in the functions, duties or responsibilities
of the Position;
(iii) A reassignment to another geographic location more than 50 miles
from the Executive's current place of employment;
(iv) A liquidation, dissolution, consolidation or merger of the
Company, or transfer of all or substantially all of its assets, unless a
successor assumes the Company's obligations under this Agreement; or
(v) A breach of this Agreement by the Company.
E. Notwithstanding the foregoing, failure to object in writing to the
changes listed above within 180 days of any such change following a Change in
Control of the Company shall constitute a waiver of such change being deemed an
Involuntary Termination.
<PAGE> 7
F. For the purposes of this Agreement, the term "Change of Control of
the Company" shall mean the happening of any one of the following:
(i) The acquisition by any party or related or affiliated parties or
parties acting as a group of the beneficial ownership of 50 percent or more of
the voting shares of the Company;
(ii) The occurrence of a transaction requiring shareholders' approval
for the acquisition of the Company through purchase of stock or assets; or by
merger or pooling of interests; or by any other lawful means customary at the
time to effect a substantial change in the controlling ownership of the Company;
(iii) The election, during any period of 24 months or less, of 30
percent or more of members of the Board of Directors without the approval of a
majority of the Board members as constituted at the beginning of the period.
(iv) The assignment by the Company of its rights under this Agreement
in a manner which substantially alters the provisions of this Agreement for the
benefit the Executive in case of a Change of Control.
G. The Executive shall not be required to mitigate the amount of any
payment or benefit provided for in this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Agreement be reduced by any compensation earned by the Executive as a result of
employment by another employer or by retirement benefits after termination, or
otherwise.
7. The provisions of this Agreement shall be enforceable notwithstanding the
existence of any claim or cause of action of the Executive against The Company
whether predicated on this Agreement or otherwise.
<PAGE> 8
8. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or three (3) days after
mailing if mailed by registered or certified mail with postage and fees prepaid,
addressed to the other party at the address first recited in this Agreement, or
at such other address as such party may designate.
9. This Agreement is entered into by the Company in The State of Connecticut and
shall be governed by and construed in accordance with the internal laws and
decisions of Connecticut. All provisions of this Agreement are intended to be
interpreted and construed in a manner to make such provisions valid, legal, and
enforceable. The invalidity or unenforceability of any phrase or provision shall
in no way affect the validity or enforceability of any other portion of this
Agreement, which shall be deemed modified, restricted, or omitted to the extent
necessary to make the Agreement enforceable.
10. The Company may assign its rights under this Agreement and this Agreement
shall inure to the benefit of the successors and assigns of the Company and,
subject to the restrictions on transfer herein set forth, be binding upon the
Executive, and the heirs, executors, administrators, guardians, and successors
of the Executive, except that, in the case of the death of the executive, the
Executive's estate shall only be entitled to the amount which would be due the
Executive pursuant to paragraph 3 of Schedule A of this Agreement, together with
the right to immediate exercise of any Options (whether Present Options or Prior
Options) as if such Options had vested in the Executive at death, and any
vacation pay rights accrued during the year of death. Since the Services are
personal to the Executive, the Executive may not assign rights or obligations
under this Agreement.
11. Any dispute or controversy with respect to this Agreement shall be settled
by arbitration in accordance with the rules of the American Arbitration
Association then in effect. In the event of any such dispute, a party prevailing
with respect to a claim shall be reimbursed by the other party for all legal
fees and expenses with respect such claim, as delineated by the arbitrator or
arbitrators.
<PAGE> 9
12. This Agreement represents the entire understanding of the parties with
respect to the specific subject matter of this Agreement and supersedes all
previous understandings, written or oral between the parties with respect to
that subject matter. This Agreement may only be amended with the written consent
of the parties or their successors or, where permitted, assigns, and no oral
waiver or amendment shall be effective under any circumstances whatsoever.
Failure by The Company to insist upon The Executive's compliance with any
provision in this Agreement shall not be deemed a waiver of such provision.
13. The Company may, upon termination of this Agreement, notify any person,
natural or legal, engaging the services of the Executive after such termination
of the existence, provisions, and binding nature of the confidentiality and
non-competition schedules of the Agreement.
IN WITNESS WHEREOF, the Company and the Executive have signed this Agreement
as indicated.
TRIDENT INTERNATIONAL, INC.
By /s/ R. Hugh Van Brimer By /s/ Elaine A. Pullen
- ---------------------------- -----------------------------------
R. Hugh van Brimer, Chairman Elaine A. Pullen, President and CEO
Date: January 8, 1998 Date: January 5, 1998
---------------------- -----------------
Witness: /s/ Marcia McLaughlin Witness: /s/ Barbara Koger
--------------------- -----------------
<PAGE> 10
SCHEDULE A
1. Base Salary shall be $160,000 per annum beginning with the January 1, 1998
Calendar Year of the Company.
2. As adjusted from year to year by the Chairman and the Compensation Committee
of the Board, Compensation shall include, in addition to Base Salary, the
following ordinary and customary elements:
(a) all exercisable options, including maintenance of Prior Options and Present
Options;
(b) bonus shall be deemed to equal fifty percent (50%) of Base Salary.
(c) earned component of any system then in effect for the pertinent class of
employee which provides such employee with an interest in a share of profit or
incremental gain in sales, income, or profit of the Company.
(d) any other benefits contemplated by paragraph 5 of this Agreement to which
the Executive is entitled.
3. In consideration for the Executive's continuing adherence to the obligations
of confidentiality and non-competition contained in the Agreement upon the
expiry or termination of such Agreement, or upon the leaving by the Executive of
the employ of the Company, the Company will pay to the Executive an amount
equivalent to one year of Compensation, determined at the time of expiry,
termination, or leaving, within thirty (30) days of the date of such expiry,
termination, or leaving.
<PAGE> 11
SCHEDULE B
NON-COMPETITION
A. Both during performance of the Services and for a period of one (1) year
after such performance terminates for any reason (with or without the statement
or expression of a reason), the Executive shall not, either directly or
indirectly: (1) solicit, service, obtain, or accept orders for products or
services competitive with those of the Company from any of the Company's actual
or prospective customers; (2) commence, engage in, or participate in any
business competitive with that of the Company within the geographic area in
which the Company does business, or engage in or provide technical or marketing
consulting with or to such a competitive business; (3) solicit, divert, take
away, interfere with, or attempt to induce any employee or agent of the Company
to leave such person's employ or other relationship with the Company in order to
participate in any business competitive with the Company; or (4) use any
Confidential Information or Invention in connection with such competitive
business. During performance of the Services for the Company, the Executive
shall not take any steps or make any plans whatsoever to commence or join any
person or entity in any activity in competition with the Company.
B. A product competitive with those of the Company shall mean any device, part,
or unit involved in the printing on a surface of text, number, character,
design, symbol, word, or other image involving ink or colorant in any form which
is expelled or extracted from an orifice or an aperture and propelled to a
receiving surface without contact between the device and the receiving surface.
A business or activity competitive or in competition with that of the Company or
the Services shall be the design, manufacture, assembly, use, sale, marketing,
purchase, installation, or repair of such a product and any management of such
business or activity.
C. The Executive acknowledges that disclosure of Confidential Information or
breach of the provisions contained in section A of this Schedule B may give rise
to irreparable injury to the Company or to the owner of such Confidential
Information which may be inadequately compensable in damages. Accordingly, the
Company or such owner may seek and obtain injunctive relief against the breach
or threatened breach of the foregoing undertakings, in addition to any other
legal remedies which may be available. The Executive expressly acknowledges
that, if this Agreement is terminated: the provisions of Schedule A will protect
the ability of the Executive to maintain a suitable standard of living while
refraining from competitive activity; the covenants contained herein are
necessary for the protection of the Company's legitimate business interests; and
such covenants are reasonable in scope and content.
<PAGE> 12
SCHEDULE C
CONFIDENTIAL INFORMATION
A. The Executive recognizes that the Company is engaged in a continuous program
of research, development, and production respecting its business, present and
future, including fields generally related to its business and that the
Executive and/or the Company possess and will possess in the future confidential
information that has been created, discovered, or developed by the Executive or
by the Company (including, without limitation, information created by,
discovered or developed by the Executive, or made known to the Executive by the
Company during the period of or arising out of the Executive's performance of
the Services) and/or confidential information which has been assigned or
otherwise conveyed to the Company and is of commercial or other value to the
business in which the Company is engaged ("Confidential Information"). By way of
illustration, but not limitation, Confidential Information includes trade
secrets, processes, formulae, data and know-how, software, documentation,
program files, flow/charts, drawings, techniques, source and object code,
standards, specifications improvements, inventions, techniques, customer
information, accounting data, statistical data, research projects, development
and marketing plans, strategies, forecasts, computer programs, and customer
lists.
B. The Executive understands that acceptance of the Position and the performance
of the Services creates a relationship of confidence and trust between the
Executive and the Company with respect to any Confidential Information which
pertains to the business of the Company, or to the business of any actual or
potential client or customer of the Company, and which may be made known to the
Executive by the Company, or by any client or customer of the Company, or
learned or developed by the Executive during the period of performance of the
Services.
C. The Executive, except as directed by the Company or as to the subordinates of
the Executive in the ordinary course of business, will not at any time during or
after the term of this Agreement disclose any Confidential Information to any
person whatsoever, or permit any person whatsoever to examine, make copies of,
electronically store, or otherwise reproduce any reports, source code, or
documents prepared by, in the possession of, under the control of, or otherwise
available to the Executive by reason of the performance of the duties of the
Position, or otherwise. In the case of subordinates, any disclosure as
contemplated by this paragraph C shall be made in confidence and the Executive
shall use best efforts to assure that such subordinates are bound under and will
maintain an obligation of confidentiality substantially the same as that
contained in this Agreement.
D. (1) All Confidential Information shall be the sole and exclusive property of
the Company and its assigns, and the Company and its assigns shall be the sole
owner of all trademarks, trade names, service marks, trade dress, copyrights,
patents, and other rights ("Intellectual Property Rights") developed from or
used in connection with such Confidential
<PAGE> 13
Information. The Executive hereby assigns to the Company any rights, including
Intellectual Property Rights, that the Executive may have or acquire in such
Confidential Information. At all times, both during the Executive's performance
of the Services and after the termination of the services represented by such
performance, the Executive will keep in confidence and trust all Confidential
Information, and the Executive will not use or disclose any Confidential
Information or anything relating to it without the written consent of the
Company, except as may be necessary in the ordinary course of performing the
Services.
(2) All documents, records, apparatus, equipment, and other physical
property, whether or not pertaining to Confidential Information, furnished to
the Executive by the Company or produced by the Executive or others in
connection with the Executive's performance of the Services shall be and remain
the sole property of the Company and shall be returned to the Company
immediately as and when requested by the Company. Even if the Company does not
so request, the Executive shall return and deliver all such property upon
termination of the Executive's services for the Company for any reason, and the
Executive will not retain any such property or any reproduction of such
property, regardless of the manner by which such reproduction is effected, upon
such termination. This paragraph shall not be deemed to apply to any physical
property which is clearly and unambiguously a gift to the Executive and is
expressly so stated to be a gift at the time it is furnished to the Executive.
(3) The Executive will promptly disclose to the Company or any persons
designated by it, all improvements, inventions, formulas, ideas, designs,
concepts, processes, techniques, know-how, software programs, information, and
data ("Inventions"), whether or not perfectable as an Intellectual Property
Right, made or conceived or reduced to practice or learned by the Executive,
either alone or jointly with others, during the term of the Executive's
performance of the Services. The Company shall receive such disclosures in
confidence, and the disclosure, regardless of how made and whether or not so
identified, shall be deemed to be Confidential Information and the creation of
Confidential Information under the terms of this Agreement.
(4) All Inventions that the Executive develops (in whole or in part,
either alone or jointly with others) and (i) which arise out of use of
equipment, supplies, facilities, or Confidential Information of the Company or
(ii) were developed in whole or in part during the performance of the Services
for which the Executive was compensated by the Company or (iii) which relate to
the business of the Company or to its actual or demonstrably anticipated
research and development or (iv) which result, in whole or in part, from work
performed by the Executive for the Company shall be the sole property of the
Company and its assigns, and the Company and its assigns shall be the sole
owner(s) of all Intellectual Property Rights and other rights in connection with
those Inventions.
(5) The Executive by execution of this Agreement hereby expressly
assigns to the Company any rights, including Intellectual Property Rights, the
Executive may have or acquire in such Inventions. The Executive will, regarding
all such Inventions, assist The
<PAGE> 14
Company in every proper way (but at the Company's expense) to obtain and from
time to time enforce Intellectual Property Rights on said Inventions in any and
all countries. To that end the Executive will execute all documents for use in
applying for and obtaining and enforcing such Intellectual Property Rights as
the Company may desire, together with any assignments of Intellectual Property
Rights to the Company or persons designated by it.
(6) The Executive's obligation to assist the Company in obtaining and
enforcing Intellectual Property Rights for such Inventions in any and all
countries shall continue beyond the termination of The Executive's performance
of the Services. The Company shall, however, compensate the Executive at a
reasonable rate, which shall in no case be less than that calculated by
reference to the Executive's Base Salary as defined in Schedule D of this
Agreement, after such termination for time actually spent by the Executive at
the Company's request on such assistance. In the event that the Company is
unable for any reason whatsoever to secure the Executive's signature to any
lawful and necessary document required to apply for or execute any Intellectual
Property Rights or other application with respect to such an Invention
(including renewals, extensions, continuations, divisions, or continuations in
part of the Invention), the Executive hereby irrevocably designates and appoints
Norman Norris, Esquire of Woodcock, Washburn, Kurtz, MacKiewicz, Norris, One
Liberty Place, Philadelphia, PA 19103 as the Executive's agents and
attorneys-in-fact to act for and in the Executive's behalf and to execute and
file any such application and to do all other lawfully permitted acts to further
the prosecution of the application with the same legal force and effect as if
executed by the Executive.
(7) As a matter of record, the Executive attaches to this Agreement a
complete list of all inventions or improvements relevant to the subject matter
of the Executive's performance of Services that have been made or conceived or
first reduced to practice by the Executive alone or jointly with others prior to
the date of this Agreement or outside its scope and that the Executive desires
to remove from the operation of this Agreement.
(8) The Executive represents that performance of all the terms of this
Agreement will not breach any agreement to keep in confidence proprietary
information acquired by the Executive in confidence or in trust prior to
performance of the Services. The Executive has not entered into, and will not
enter into, any agreement whether written or oral in conflict with this
Agreement.
(9) Nothing contained in this Schedule is intended to limit the
Executive's professional development, either during or subsequent to employment
by the Company or to prohibit the Executive the normal application of skills
acquired or improved during employment consistent with the protection of the
Confidential Information.
<PAGE> 1
Exhibit 99.5
[TRIDENT INTERNATIONAL, INC. LETTERHEAD]
May 28, 1998
Elaine Pullen
President and CEO
Trident International, Inc.
1114 Federal Road
Brookfield, CT 06804
Dear Ms. Pullen:
Following development of details for employment arrangements with Leo Gagne, a
few minor clarifications were found desirable for his formal agreement, a number
of which apply to the text of your own 11/1/97 agreement. This letter will
confirm these clarifications and related discussions with you.
1. Any reassignment under paragraph 6.D.(iii) must not be in the ordinary
course of temporary and customary relocation for management tasks similar to
those presently performed by you, and must be for a period of more than four (4)
continuous months, in order to be considered Involuntary Termination.
2. The assignment of Trident's rights under your agreement as provided
for in paragraph 6.F.(iv) must substantially alter, impair, or otherwise
negatively affect its provisions customarily considered beneficial to you, to
constitute a Change of Control.
3, Payment to you upon your voluntary leaving the Company, or upon the
expiry or termination of your agreement in the ordinary course where there has
been no Change in Control, is limited to the one-year's Compensation payable
pursuant to Schedule A, paragraph 3, except where there has been a Change in
Control then any and all unexercised Options held by you shall become fully
vested.
4. You will not ordinarily serve on the Board of Directors of any
for-profit organization during your term of employment or your one year
non-compete period, without the consent of the Trident Board of Directors. This
would be evidenced by an additional clause (5) in Schedule B, paragraph A, and
inclusion of reference to a board position in paragraph 4 of the main text of
your agreement, which allows the Trident Board to give you a waiver of your
non-compete obligation under appropriate circumstances.
<PAGE> 2
If this reflects your understanding of the appropriate clarifications as
discussed with you, please countersign the enclosed copy of this letter and
return it to me.
Sincerely,
/s/ Michael K. Lorelli 5/30/98
- ----------------------------------
Michael K. Lorelli
Director
Accepted by:
/s/ Elaine A. Pullen 6/1/98
- ----------------------------------
Elaine A. Pullen
President
<PAGE> 1
Exhibit 99.6
AMENDMENT
TO
EXECUTIVE EMPLOYMENT AGREEMENT
BETWEEN
TRIDENT INTERNATIONAL, INC.
AND
ELAINE A. PULLEN
This Amendment (the "Amendment") to the Executive Employment Agreement
between Trident International, Inc. (the "Company") and Elaine A. Pullen (the
"Executive") dated as of November 1, 1997 (the "Agreement"), is dated as of
January 6, 1999.
WHEREAS, in order to clarify certain provisions of the Agreement as
they relate to a potential change in control of the Company, the undersigned
parties to the Agreement wish to amend the Agreement as described herein; and
WHEREAS, capitalized terms used and not otherwise defined herein shall
have the meanings given to them in the Agreement.
NOW THEREFORE, the undersigned parties to the Agreement hereby agree as
follows:
1. Section 6.E of the Agreement is hereby amended and restated in
its entirety to provide as follows:
"E. Notwithstanding the foregoing, failure to object in writing to the
changes listed above within 180 days of any such change following a Change in
Control of the Company shall constitute a waiver of such change being deemed an
Involuntary Termination; provided, however, that in connection with any change
(or alleged change) following a Change in Control consummated on or prior to
April 30, 1999, the period for objecting to any such change (or alleged change)
shall be extended to December 31, 1999, and in no event shall the Executive be
deemed to have waived any rights under this Section 6 prior to December 31,
1999."
2. Section 6 of the Agreement is hereby amended to add the
following Section 6.H.:
"H. The Company and the Executive acknowledge and agree that the
payments provided for hereunder represent reasonable compensation for personal
services provided hereunder. In furtherance of the foregoing, the Company
further agrees that, if any portion of the payments to be received by you
hereunder, when considered together with all other amounts to be received by you
from the Company or any successor entity, would constitute an "excess parachute
payment" (within the meaning of ss.280G of the Internal Revenue Code of
<PAGE> 2
1986, as amended), then the Company shall gross-up that portion of such payment
by an amount (the "Gross-up Amount") sufficient to provide you with the same
after-tax amount you would have received but for any excise taxes due under
ss.280G or any additional income taxes due on such grossed-up amount; provided,
however, that in no event shall the Gross-up Amount exceed $160,000."
3. Except as expressly provided herein, the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the undersigned parties have executed this
Amendment as of the date first set forth above.
TRIDENT INTERNATIONAL, INC.
By: /s/ R. Hugh Van Brimer
-----------------------------------------
Name: R. Hugh Van Brimer
Title: Chairman of the Board of Directors
EXECUTIVE
/s/ Elaine A. Pullen
-----------------------------------------
Elaine A. Pullen
<PAGE> 1
Exhibit 99.7
ACKNOWLEDGMENT OF RECEIPT OF 1999 BONUS
The undersigned hereby acknowledges that the bonus payment of $80,000
to be received upon consummation of the Tender Offer, Merger and the
transactions contemplated thereby with Illinois Tool Works Inc. satisfies the
bonus payment the undersigned is due under the Executive Employment Agreement
between Trident International, Inc. and Elaine A. Pullen and the Amendment to
the Executive Employment Agreement between Trident International, Inc. and
Elaine A. Pullen for 1999. The payment of such bonus shall not be deemed to be
limited by or to eliminate any payments due the undersigned under the Employee
Retention Plan or any severance payments due the undersigned under the Executive
Employment Agreement between Trident International, Inc. and Elaine A. Pullen
and the Amendment to the Executive Employment Agreement between Trident
International, Inc. and Elaine A. Pullen.
/s/ Elaine A. Pullen
----------------------------------
Elaine A. Pullen
<PAGE> 1
Exhibit 99.8
EXECUTIVE EMPLOYMENT AGREEMENT
between
TRIDENT INTERNATIONAL, INC.
and
J. LEO GAGNE
<PAGE> 2
AGREEMENT made as of and effective on June 1, 1998 by and between TRIDENT
INTERNATIONAL, INC., a Delaware corporation with its principal offices at 1114
Federal Road, Brookfield, Connecticut ("the Company") and J. LEO GAGNE residing
at 125 Stockings Brook Road, Kensington, Connecticut ("the Executive")
WITNESSETH:
WHEREAS, by letter dated February 5, 1996 (the "Letter"), the Company
offered the Executive a position with the Company as Vice President and Chief
Financial Officer, and the Executive accepted that offer; and
WHEREAS, the Executive continues to hold the position of Vice
President and Chief Financial Officer (here and in paragraph 6.A.,"the
Position") of the Company, while also acting as Secretary and Treasurer of the
Company; and
WHEREAS, the Company granted to the Executive certain Incentive
Options pursuant to the Company's Amended and Restated 1994 Stock Option and
Grant Plan under dates of February 26, 1996, January 29, 1997, and January 2,
1998 (the "Options"); and
WHEREAS, the Company and the Executive wish to further formalize the
relationship between them and provide for contingencies and other eventualities
specified herein, by entering into this Agreement ("this Agreement");
NOW, THEREFORE, the parties agree as follows:
<PAGE> 3
1. All terms of the Letter not inconsistent with this Agreement, and of the
Options, copies of which are attached hereto as Schedule A-1 and A-2
respectively, shall remain in full force and effect and shall be incorporated in
this Agreement.
2. The Company will retain the Executive in the Position for a period of two (2)
years from June 1, 1998, except as otherwise specified in this Agreement,
provided that: (a) A commercially satisfactory number of business performance
goals, if any, established by the President and CEO, or the Board of Directors
of the Company ("the Board"), or both (whether in consultation with the
Executive or not), in connection with performance of the Services have, in the
judgment of the President and CEO, been attained; (b) the obligations of
Confidentiality set forth in Schedule C of this Agreement have been maintained
by the Executive; and (c) notwithstanding the attainment of goals set forth in
subparagraph (a) of this paragraph 2, there are no grounds for termination of
this Agreement by the Company due to the Executive's breach of the Agreement, or
conduct by the Executive demonstrably detrimental to the Company, its employees
or to the full, faithful, and proper performance of the Services.
3. The Executive will perform the Services subject to the provisions for
compensation set forth in Schedule D attached to and made a part of this
Agreement. It shall be the responsibility of the President and CEO, and the
Board (as may be allocated between them from time to time in the sole discretion
of the Board), to further define the nature of the Position and Services, and to
modify any such definition, as they deem appropriate. Absent any such further
definition, the Services shall encompass the planning, development, and
implementation of financial strategy
<PAGE> 4
for the Company, in consultation with the President and CEO, and the Board;
direction and supervision of appropriate staff with respect to the keeping and
administration of records and accounts of the Company; and counsel to the
President and CEO concerning management of employees to further such strategies
and recordkeeping on a day-to-day basis. No further definition of the Services
which is within the general concept of financial strategy or administration as
set forth in the preceding sentence, or which includes the function of Chief
Financial Officer as that term is customarily understood, shall be considered to
be a revision, modification, extension, or termination of this Agreement
entitling the Executive to greater or lesser benefits, except as expressly
agreed in writing between the Executive and the Company and attached to this
Agreement.
4. During the performance of the Services, and thereafter if the Executive
vacates the Position for any reason (or for no stated reason), the Executive
will not compete against the Company as further defined in Schedule B attached
to and made a part of this Agreement for the periods specified in that Schedule.
If the Executive leaves the Company and finds a consulting or employment
opportunity or a board position during the non-competition period which may not,
in business fact, be competitive with the products or business of the Company,
even though it is so under the definitions in Schedule B, the Executive may
request waiver from the Company of the definitions for that opportunity. The
Company will not unreasonably withhold such a waiver.
5. The Executive shall be entitled to all other benefits generally available to
employees of the Company upon the completion of customary formalities involved
<PAGE> 5
in the application of and for such benefits. The Executive shall further be
entitled to a three (3) week's paid vacation period each year during the term of
this Agreement. The period may be utilized in segments as well as in sequence,
but unused vacation time may not be carried forward. The Executive shall
continue to have the right to participate in the 401(k) Plan of the Company as
Plan rules and applicable law permit.
6. The President and CEO, and Board, have determined that it is in the best
interests of the Company and its shareholders, in order to assure continuity in
the management of the Company's administration and operations, to enter into
this Agreement with the Executive which is intended to encourage the Executive
to continue a career with the Company and to enable the Executive to work free
from distraction in the face of uncertainty and unsettling circumstances that
arise from the possibility of a Change in Control of the Company.
A. In consideration of the Company's agreement to provide the Executive
with the severance benefits set forth herein, the Executive hereby agrees that,
in the event the Board determines that a potential change in control of the
Company has occurred (such determination to be based upon the provisions set
forth below in this paragraph 6, and constituting a "Change in Control" for
purposes of this Agreement), the Executive will continue in the employ of the
Company with continuing responsibility for the business operations for which the
Services are presently rendered by the Executive (the "Position"), at a
compensation level at least equivalent to that received by the Executive at the
time of Change in Control.
<PAGE> 6
B. In consideration of the Executive's agreement to continue in the
employ of the Company after a Change in Control, the Company agrees that, in the
event of Involuntary Termination, it shall provide the following severance
benefits:
(i) (a) Salary continuation for two (2) years in an annual amount
equal to the Base Salary in effect on the date of Involuntary Termination; and
(b) the ordinary and customary additional elements of Compensation (except for
options contemplated in subparagraph 6.B. (iii)) attendant to the Position as
set forth in Schedule D. The foregoing salary continuation and customary
additional elements shall be limited by the amount of equivalent base salary,
fees, and other compensation elements the Executive may receive from -any
employment, consultancy, board services or other similar business arrangement
secured with another party during the two year continuation period, and the
Company shall only be obligated to pay the difference between the aggregate of
such salary continuation and elements, and the value of compensation received
from another party, if less. If the value of such compensation shall exceed such
amount of equivalent base salary and other compensation elements payable by the
Company hereunder, the Company shall have no obligation to Executive under this
paragraph 6.B.(i).
(ii) Coverage for two (2) years under all Company perquisites and
benefit plans including: 401k savings plan; medical, life and disability
insurance plans; and the like, in the same manner as if the Executive were an
active employee, subject to the same limitation with respect to comparable
benefits offered by another party in paragraph 6.B.(i).
(iii) An immediate right to exercise any outstanding and unexercised
stock
<PAGE> 7
options previously granted under any Company stock option plans, including any
such options not otherwise vested under the terms of the plan or grant, unless
provision is made in connection with such transaction for the assumption of
options theretofore granted, or the substitution for such options or new options
of the successor entity or parent thereof, with appropriate adjustment as to the
number and kind of shares and the per share exercise prices, specifically
including but not limited to the Options.
(iv) Employment search assistance through a professional out placement
organization and office and secretarial support for up to one year.
C. As used herein, Involuntary Termination shall mean any termination
of the Executive's employment by the Company, its successor or one of its
subsidiaries, within two years following a Change in Control of the Company;
provided, however, such term shall not include a termination for serious,
willful misconduct in respect of the Executive's obligations to the Company, its
successors or its subsidiaries, including commission of a felony or perpetration
of a common law fraud which has or is likely to result in material economic
damage to the Company or any of its subsidiaries, or failure to comply with a
specific directive given to the Executive by the Board
D. In addition to actual termination of employment, the following shall
be deemed an Involuntary Termination:
<PAGE> 8
(i) A reduction in Base Salary, or the ordinary and customary
additional elements of Compensation attendant to the Position as set forth in
Schedule D, or both, other than in connection with an across-the-board reduction
similarly affecting all executives of the Company, or a material and objectively
demonstrable failure of the Executive to meet the performance goals contemplated
by paragraph 2 as in effect immediately prior to a Change in Control of the
Company;
(ii) A material reduction in the functions, duties or responsibilities
of the Position;
(iii) A reassignment to another geographic location more than 50 miles
from the Executive's current place of employment, not in the ordinary course of
temporary and customary relocation for audit, supervisory, training, or similar
purposes, for a period of more than four (4) continuous months;
(iv) A liquidation, dissolution, consolidation or merger of the
Company, or transfer of all or substantially all of its assets, unless a
successor assumes the Company's obligations under this Agreement; or
(v) A breach of this Agreement by the Company.
E. Notwithstanding the foregoing, failure to object in writing to the
changes listed above within 180 days of any such change following a Change in
Control of the Company shall constitute a waiver of such change being deemed an
Involuntary Termination.
<PAGE> 9
F. For the purposes of this Agreement, the term "Change of Control of
the Company" shall mean the happening of any one of the following:
(i) The acquisition by any party or related or affiliated parties. or
parties acting as a group of the beneficial ownership of 50 percent or more of
the voting shares of the Company;
(ii) The occurrence of a transaction requiring shareholders' approval
for the acquisition of the Company through purchase of stock or assets; or by
merger or pooling of interests; or by any other lawful means customary at the
time to effect a substantial change in the controlling ownership of the Company;
(iii) The election, during any period of 24 months or less, of 30
percent or more of members of the Board of Directors without the approval of a
majority of the Board members as constituted at the beginning of the period.
(iv) The assignment by the Company, in case of a Change of Control, of
its rights under this Agreement in a manner which substantially alters, impairs,
or otherwise negatively affects the provisions of this Agreement customarily
considered beneficial to the Executive.
G. The Executive shall use his best efforts to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or equivalent consulting opportunities or arrangements.
<PAGE> 10
7. The provisions of this Agreement shall be enforceable notwithstanding the
existence of any claim or cause of action of the Executive against The Company
whether predicated on this Agreement or otherwise.
8. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or three (3) days after
mailing if mailed by registered or certified mail with postage and fees prepaid,
addressed to the other party at the address first recited in this Agreement, or
at such other address as such party may designate.
9. This Agreement is entered into by the Company in The State of Connecticut and
shall be governed by and construed in accordance with the internal laws and
decisions of Connecticut. All provisions of this Agreement are intended to be
interpreted and construed in a manner to make such provisions valid, legal, and
enforceable. The invalidity or unenforceability of any phrase or provision shall
in no way affect the validity or enforceability of any other portion of this
Agreement, which shall be deemed modified, restricted, or omitted to the extent
necessary to make the Agreement enforceable.
10. The Company may assign its rights under this Agreement and this Agreement
shall inure to the benefit of the successors and assigns of the Company and,
subject
<PAGE> 11
to the restrictions on transfer herein set forth, be binding upon the Executive,
and the heirs, executors, administrators, guardians, and successors of the
Executive, except that, in the case of the death of the executive, the
Executive's estate shall only be entitled to the amount which would be due the
Executive pursuant to paragraph 3 of Schedule D of this Agreement, together with
the right to immediate exercise of any options, including the Options, as if
such options had vested in the Executive at death, and any vacation pay rights
accrued during the year of death. Since the Services are personal to the
Executive, the Executive may not assign rights or obligations under this
Agreement.
11. Any dispute or controversy with respect to this Agreement shall be settled
by arbitration in accordance with the rules of the American Arbitration
Association then in effect. In the event of any such dispute, a party prevailing
with respect to a claim shall be reimbursed by the other party for all legal
fees and expenses with respect such claim, as delineated by the arbitrator or
arbitrators.
12. This Agreement represents the entire understanding of the parties with
respect to the specific subject matter of this Agreement and supersedes all
previous understandings, written or oral between the parties with respect to
that subject matter. This Agreement may only be amended with the written consent
of the parties or their successors or, where permitted, assigns, and no oral
waiver or amendment shall be effective under any circumstances whatsoever.
Failure by The Company to insist upon The Executive's compliance with any
provision in this Agreement shall not be
<PAGE> 12
deemed a waiver of such provision.
13. The Company may, upon termination of this Agreement, notify any person,
natural or legal, engaging the services of the Executive after such termination
of the existence, provisions, and binding nature of the confidentiality and
non-competition schedules of the Agreement.
IN WITNESS WHEREOF, the Company and the Executive have signed this Agreement as
indicated.
TRIDENT INTERNATIONAL, INC.
By /s/ Elaine A. Pullen By /s/ J. Leo Gagne
Elaine A. Pullen, President and CEO J. Leo Gagne, Vice President and CFO
Date: May 29, 1997 Date: June 1, 1998
Witness: /s/ Barbara S. Koger Witness: /s/ Dianne R. Veley
<PAGE> 13
SCHEDULE A
<PAGE> 14
Schedule A-1
TRIDENT INC.
1114 Federal Road
Brookfield, CT 06804-1140
Telephone: (203)740-9333
Fax: (203) 775-9660
February 5, 1996
Mr. Leo Gagne
125 Stocking Brook Road
Kensington, CT 06037
Dear Leo:
It is with a great deal of pleasure that I offer you the position of Vice
President and Chief Financial Officer at Trident, Inc., with a starting date of
February 26, 1996. This position reports directly to me. Your annual salary will
be $140,000. As with all Trident employees, you will be eligible to participate
in the profit incentive program which can also provide some additional income on
a quarterly basis depending on the profitability of the company. Your
eligibility for this program will begin April 1, 1996. You will be eligible for
participation in the discretionary management bonus plan beginning October 1,
1996 with the potential of a 20% (of base pay) bonus if earned. In addition, a
sign on bonus of $10,000 will be paid to you after six months of employment
based upon satisfactory performance and achievement of selected goals. You will
be granted 10,000 stock options on the date you join Trident with vesting at 25%
ratably over four years. Your employment with Trident is "at will" , meaning
that you will be able to resign at any time for any reason and the Company may
terminate your employment at any time for any reason.
Please review the summary of benefits and feel free to call if you have any
questions. You will be awarded three (3) weeks of vacation upon your hire date.
You will be scheduled for a physical and drug screening during your first week
of employment at our company physician in Danbury.
This offer is contingent upon your signing a confidentiality and non-compete
agreement.
Leo, I am confident that you will make a great contribution to the Trident
management team and personally look forward to a strong working partnership. I
look forward to your acceptance of this offer by signing below and returning to
me as soon as possible.
Sincerely,
/s/ Elaine A. Pullen
Elaine A. Pullen
President and CEO Accepted by:
/s/ J. Leo Gagne 2/9/96
J. Leo Gagne
<PAGE> 15
SCHEDULE A-2
TRIDENT INTERNATIONAL, INC.
AMENDED AND RESTATED 1994 STOCK OPTION AND GRANT PLAN
INCENTIVE STOCK OPTION AGREEMENT
10,000 Shares February 26, 1996
Pursuant to its Amended and Restated 1994 Stock Option and Grant Plan
(the "1994 Plan"), Trident International, Inc. (the "Company") hereby grants to
J. Leo Gagne (the "Optionee") an Option to purchase on or prior to February 26,
2006 (the "Expiration Date") all or any part of 10,000 shares of Common Stock of
the Company, par value $0.01 per share ("Option Shares") at a price of $12.00
per share in accordance with the schedule set forth in Section 1 hereof and
subject to the terms and conditions set forth hereinafter and in the 1994 Plan.
This Option shall be construed in a manner to qualify it as an incentive stock
option under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and shall be governed by the laws of Delaware.
1. Vesting Schedule. Subject to the provisions of Section 4, hereof
and Section 4 of the 1994 Plan, this Option shall become vested and exercisable
with respect to the following whole number of Option Shares according to the
timetable set forth below:
<TABLE>
<CAPTION>
Percentage of Cumulative
Number of Years Shares Becoming Percentage
After Date of Grant Available for Exercise Available
------------------- ---------------------- ---------
<S> <C> <C>
Less than 1 year 0% 0%
At least 1 year 25% 25%
At least 2 years 25% 50%
At least 3 years 25% 75%
At least 4 years 25% 100%
</TABLE>
2. Manner of Exercise. The Optionee may exercise this Option only in
the following manner: from time to time on or prior to the Expiration Date of
this Option, the Optionee may give written notice to the Company's Option
Committee (the "Committee") of his election to purchase some or all of the
vested Option Shares purchasable at the time of such notice. This notice shall
specify the number of shares to be purchased.
Payment of the purchase price for the Option Shares may be made by one or more
of the following methods: (a) in cash, by certified or bank check or other
instrument acceptable to the Committee; (b) in the form of shares of Common
Stock, par value $0.01 per share, of the Company ("Common Stock") that are not
then subject to restrictions under any Company plan and that have been held by
the Optionee for at least six (6) months; (c) by the Optionee
<PAGE> 16
delivering to the Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company cash or
a check payable and acceptable to the Company to pay the option purchase price,
provided that in the event the Optionee chooses to pay the option purchase price
as so provided, the Optionee and the broker shall comply with such procedures
and enter into such agreements of indemnity and other agreements as the
Committee shall prescribe as a condition of such payment procedure; or (d) a
combination of (a), (b) and (c) above. Payment instruments will be received
subject to collection.
The delivery of certificates representing the Option Shares will be
contingent upon the Company's receipt from the Optionee of full payment for the
Option Shares, as set forth above, and any agreement, statement or other
evidence that the Company may require to satisfy itself that the issuance of
Option Shares to be purchased pursuant to the exercise of Options under the 1994
Plan and any subsequent resale of the shares will be in compliance with
applicable laws and regulations.
If requested upon the exercise of this Option, certificates for shares
may be issued in the name of the Optionee jointly with another person or in the
name of the executor or administrator of the Optionee's estate.
Notwithstanding any other provision hereof or of the 1994 Plan, no
portion of this Option shall be exercisable after the Expiration Date hereof.
3. Non-transferability of Option. This Option shall not be
transferable by the Optionee otherwise than by will or by the laws of descent
and distribution and this Option shall be exercisable, during the Optionee's
lifetime, only by the Optionee.
4. Termination of Employment. If the Optionee's employment by the
Company or any corporation or other entity (other than the Company) in any
unbroken chain of corporations or other entities, beginning with the Company if
each of the corporations or entities (other than the last corporation or entity
in the unbroken chain) owns stock or other interests possessing 50 % or more of
the economic interest or the total combined voting power of all classes of stock
or other interests in one of the other corporations or entities in the chain (a
"Subsidiary") is terminated, the extent to which and the period within which the
Option may be exercised shall be as set forth below.
(a) Termination Due to Death. If the Optionee's employment
terminates by reason of death, any Option held by the
Optionee may be exercised, to the extent exercisable at the
date of death, by the Optionee's legal representative or
legatee for a period of one (1) year from the date of death
or until the Expiration Date, if earlier.
<PAGE> 17
(b) Termination Due to Disability. If the Optionee's
employment terminates by reason of Disability (as defined in
Section 22(e)(3) of the Code), any Option held by the
Optionee may be exercised, to the extent exercisable on the
date of termination, for a period of one (1) year from the
date of termination or until the Expiration Date, if
earlier. The death of the Optionee during the twelve (12)
month period provided in this Section 4(b) shall extend such
period for six (6) months from the date of death or until
the Expiration Date, if earlier.
(c) Termination for Cause. If the Optionee's employment
terminates for Cause (defined as a vote of the Board of
Directors of the Company resolving that the Optionee should
be dismissed as a result of (i) any material breach by the
Optionee of any agreement to which the Optionee and the
Company are parties, (ii) any act (other than retirement) or
omission to act by the Optionee which may have a material
and adverse effect on the business of the Company or any
Subsidiary or on the Optionee's ability to perform services
for the Company or any Subsidiary, including, without
limitation, the commission of any crime (other than ordinary
traffic violations), or (iii) any material misconduct or
neglect of duties by the Optionee in connection with the
business or affairs of the Company or any Subsidiary), any
Option held by the Optionee shall immediately terminate and
be of no further force and effect.
(d) Other Termination. If the Optionee's employment
terminates for any reason other than death, Disability or
Cause, any Option held by the Optionee may be exercised, to
the extent exercisable on the date of termination, for a
period of three (3) months from the date of termination or
until the Expiration Date, if earlier.
For this purpose, neither a transfer of employment from the Company to a
Subsidiary (or from a Subsidiary to the Company) nor an approved leave of
absence shall be deemed a "termination of employment."
5. Option Shares. The Option Shares are shares of Common Stock as
constituted on the date of this Option, subject to adjustment as provided in
Section 7 of the 1994 Plan.
6. No Special Employment Rights. This Option will not confer upon the
Optionee any right with respect to continuance of employment by the Company or a
Subsidiary, nor will it interfere in any way with any right of the Optionee's
employer to terminate the optionee's employment at any time.
7. Rights as a Shareholder . The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock that may be purchased by
exercise of this Option unless and until a certificate or certificates
representing such shares are duly issued and delivered to the Optionee. Except
as otherwise expressly provided in the 1994 Plan, no
<PAGE> 18
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such share certificate is issued.
8. Qualification under Section 422. It is understood and intended that
the Option granted hereunder SHALL qualify as an "incentive stock option" as
defined in Section 422 of the Code. Accordingly, the Employee understands that
in order to obtain the benefits of an incentive stock option under Section 422
of the Code, no sale or other disposition may be made of any Option Shares
acquired upon exercise of the Option within the one-year period beginning on the
day after the day of the transfer of such Option Shares to him or her, nor
within the two-year period beginning on the day after the grant of the Option.
If the Employee intends to dispose or does dispose (whether by sale, gift,
transfer or otherwise) of any such Option Shares within these periods, he or she
will notify the Company within thirty (30) days after such disposition.
Share Options which become exercisable for the first time by the
Optionee during any calendar year will only qualify as incentive stock options
under Section 422 of the Code to the extent that the aggregate fair market value
of the Option Shares underlying such Share Options as of the date of grant does
not exceed $100,000. Any such Share Options relating to Option Shares in excess
of $100,000 will be treated as nonqualified stock options under the Code.
9. Tax Withholding. No later than the date as of which part or all of
the value of any shares of Common Stock received under the 1994 Plan first
becomes includible in the Optionee's gross income for Federal tax purposes, the
Optionee shall make arrangements with the Company in accordance with Section 9
of the 1994 Plan regarding the payment of any federal, state or local taxes
required to be withheld with respect to such income.
10. The 1994 Plan. In the event of any discrepancy or inconsistency
between this Agreement and the 1994 Plan, the terms and conditions of the 1994
Plan shall control.
11. Miscellaneous. Notices hereunder shall be mailed or delivered to
the Company at its principal place of business and shall be mailed or delivered
to Optionee at the address set forth below or, in either case, at such other
address as one party may subsequently furnish to the other party in writing.
TRIDENT INTERNATIONAL, INC.
By /s/ David Hundt
Name
<PAGE> 19
Receipt of the foregoing Option is acknowledged and its terms and
conditions are hereby agreed to:
Date: 2/94
/s/ J. Leo Gagne
J. Leo Gagne, Optionee
<PAGE> 20
TRIDENT INTERNATIONAL, INC.
AMENDED AND RESTATED 1994 STOCK OPTION AND GRANT PLAN
INCENTIVE STOCK OPTION AGREEMENT
10,000 Shares January 29, 1997
Pursuant to its Amended and Restated 1994 Stock Option and Grant Plan
(the "1994 Plan"), Trident International, Inc. (the "Company") hereby grants to
J. Leo Gagne (the "Optionee") an Option to purchase on or prior to January 29,
2007 (the "Expiration Date") all or any part of 10,000 shares of Common Stock of
the Company, par value $0.01 per share ("Option Shares") at a price of $20.125
per share in accordance with the schedule set forth in Section I hereof and
subject to the terms and conditions set forth hereinafter and in the 1994 Plan.
This Option shall be-construed in a manner to qualify it-as an incentive stock
option under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and shall be governed by the laws of Delaware.
1. Vesting Schedule. Subject to the provisions of Section 4 hereof and
Section 4 of the 1994 Plan , this Option shall become vested and exercisable
with respect to the following whole number of Option Shares according to the
timetable set forth below:
<TABLE>
<CAPTION>
Percentage of Cumulative
Number of Years Shares Becoming Percentage
After Date of Grant Available for Exercise Available
------------------- ---------------------- ---------
<S> <C> <C>
Less than 1 year 0% 0%
At least 1 year 25% 25%
At least 2 years 25% 50%
At least 3 years 25% 75%
At least 4 years 25% 100%
</TABLE>
2. Manner of Exercise. The Optionee may exercise this Option only in
the following Manner: from time to time on or prior to the Expiration Date of
this Option, the Optionee may give written notice to the Company's Option
Committee (the "Committee") of his election to purchase some or all of the
vested Option Shares purchasable at the time of such notice. This notice shall
specify the number of shares to be purchased.
Payment of the purchase price for the Option Shares may be made by one
or more Of the following methods: (a) in cash, by certified or bank check or
other instrument acceptable to the Committee; (b) in the form of shares of
Common Stock, par value $0.01 per share, of the Company ("Common Stock") that
are not then subject to restrictions under any Company plan and that have been
held by the Optionee for at least six (6) months; (c) by the Optionee
<PAGE> 21
delivering to the Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company cash or
a check payable and acceptable to the Company to pay the option purchase price,
provided that in the event the Optionee chooses to pay the option purchase price
as so provided, the Optionee and the broker shall comply with such procedures
and enter into such agreements of indemnity and other agreements as the
Committee shall prescribe as a condition of such payment procedure; or (d) a
combination of (a), (b) and (c) above. Payment instruments win be received
subject to collection.
The delivery of certificates representing the Option Shares will be
contingent upon the Company's receipt from the Optionee of full payment for the
Option Shares, as set forth above, and any agreement, statement or other
evidence that the Company may require to satisfy itself that the issuance of
Option Shares to be purchased pursuant to the exercise of Options under the 1994
Plan and any subsequent resale of the shares will be in compliance with
applicable laws and regulations.
If requested upon the exercise of this Option, certificates for shares
may be issued in the name of the Optionee jointly with another person or in the
name of the executor or administrator of the Optionee's estate.
Notwithstanding any other provision hereof or of the 1994 Plan, no
portion of this Option shall be exercisable after the Expiration Date hereof.
3. Non-transferability of Option. This Option shall not be
transferable by the Optionee otherwise than by will or by the laws of descent
and distribution and this Option shall be exercisable, during the Optionee's
lifetime, only by the Optionee.
4. Termination of Employment. If the Optionee's employment by the
Company or any corporation or other entity (other than the Company) in any
unbroken chain of corporations or other entities, beginning with the Company if
each of the corporations or entities (other than the last corporation or entity
in the unbroken chain) owns stock or other interests possessing 50% or more of
the economic interest or the total combined voting power of all classes of stock
or other interests in one of the other corporations or entities in the chain (a
"Subsidiary") is terminated, the extent to which and the period within which the
Option may be exercised shall be as set forth below.
(a) Termination Due to Death. If the Optionee's employment terminates
by reason of death, any Option held by the Optionee may be exercised,
to the extent exercisable at the date of death, by the Optionee's legal
representative or legatee for a period of one (1) year from the date of
death or until the Expiration Date, if earlier.
<PAGE> 22
(b) Termination Due to Disability. If the Optionee's employment
terminates by reason of Disability (as defined in Section 22(e)(3) of
the Code), any option held by the Optionee may be exercised, to the
extent exercisable on the date of termination, for a period of one (1)
year from the date of termination or until the Expiration Date, if
earlier. The death of the Optionee during the twelve (12) month period
provided in this Section 4(b) shall extend such period for six (6)
months from the date of death or until the Expiration Date, if earlier.
(c) Termination for Cause. If the Optionee's employment terminates for
Cause (defined as a vote of the Board of Directors of the Company
resolving that the Optionee should be dismissed as a result of (i) any
material breach by the Optionee of any agreement to which the Optionee
and the Company are parties, (ii) any act (other than retirement) or
omission to act by the Optionee which may have a material and adverse
effect on the business of the Company or any Subsidiary or on the
Optionee's ability to perform services for the Company or any
Subsidiary, including, without limitation, the commission of any crime
(other than ordinary traffic violations), or (iii) any material
misconduct or neglect of duties by the Optionee in connection with the
business or affairs of the Company or any Subsidiary), any Option held
by the Optionee shall immediately terminate and be of no further force
and effect.
(d) Other Termination. If the Optionee's employment terminates for any
reason other than death, Disability or Cause, any Option held by the
Optionee may be exercised, to the extent exercisable on the date of
termination, for a period of three (3) months from the date of
termination or until the Expiration Date, if earlier.
For this purpose, neither a transfer of employment from the Company to a
Subsidiary (or from a Subsidiary to the Company) nor an approved leave of
absence shall be deemed a "termination of employment."
5. Option Shares. The Option Shares are shares of Common Stock as
constituted on the date of this Option, subject to adjustment as provided in
Section 7 of the 1994 Plan.
6. No Special Employment Right . This Option will not confer upon the
Optionee any right with respect to continuance of employment by the Company or a
Subsidiary, nor will it interfere in any way with any right of the Optionee's
employer to terminate the Optionee's employment at any time.
7. Rights as a Shareholder. The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock that may be purchased by
exercise of this Option unless and until a certificate or certificates
representing such shares are duly issued and delivered to the Optionee. Except
as otherwise expressly provided in the 1994 Plan, no
<PAGE> 23
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such share certificate is issued.
8. Qualification under Section 422. It is understood -and intended
that the Option granted hereunder shall qualify as an "incentive stock option"
as defined in Section 422 of the Code. Accordingly, the Employee understands
that in order to obtain the benefits of an incentive stock option under Section
422 of the Code, no sale or other disposition may be made of any Option Shares
acquired upon exercise of the Option within the one-year period beginning on the
day after the day of the transfer of such Option Shares to him or her, nor
within the two-year period beginning on the day after the grant of the Option.
If the Employee intends to dispose or does dispose (whether by sale, gift,
transfer or otherwise) of any such Option Shares within these periods, he or she
will notify the Company within thirty (30) days after such disposition.
Share Options which become exercisable for the first time by the
Optionee during any calendar year will only qualify as incentive stock options
under Section 422 of the Code to the extent that the aggregate fair market value
of the Option Shares underlying such Share Options as of the date of grant does
not exceed $100,000. Any such Share Options relating to Option Shares in excess
of $100,000 will be treated as nonqualified stock options under the Code.
9. Tax Withholding. No later than the date as of which part or all of
the value of any shares of Common Stock received under the 1994 Plan first
becomes includible in the Optionee's gross income for Federal tax purposes, the
Optionee shall make arrangements with the Company in accordance with Section 9
of the 1994 Plan regarding the payment of any federal, state or local taxes
required to be withheld with respect to such income.
10. The 1994 Plan. In the event of any discrepancy or inconsistency
between this Agreement and the 1994 Plan, the terms and conditions of the 1994
Plan shall control.
11. Miscellaneous. Notices hereunder shall be mailed or delivered to
the Company at its principal place of business and shall be mailed or delivered
to Optionee at the address set forth below or, in either case, at such other
address as one party may subsequently furnish to the other party in writing.
TRIDENT INTERNATIONAL, INC.
By/s/ David A. Hundt
<PAGE> 24
Receipt of the foregoing Option is acknowledged and its terms and
conditions are hereby agreed to:
/s/ J. Leo Gagne
J. Leo Gagne
Date: 1/30/98
<PAGE> 25
TRIDENT INTERNATIONAL, INC.
AMENDED AND RESTATED 1994 STOCK OPTION AND GRANT PLAN
INCENTIVE STOCK OPTION AGREEMENT
10,000 Shares January 2, 1998
Pursuant to its Amended and Restated 1994 Stock Option and Grant Plan
(the "1994 Plan"), Trident International, Inc. (the "Company") hereby grants to
J. LEO GAGNE (the "Optionee") an Option to purchase on or prior to January 2,
2008 (the "Expiration Date") all or any part of 10,000 shares of Common Stock of
the Company, par value $0.01 per share ("Option Shares") at a price of $13.00
per share in accordance with the schedule set forth in Section I hereof and
subject to the terms and conditions set forth hereinafter and in the 1994 Plan.
This Option shall be construed in a manner to qualify it as an incentive stock
option under Section 422 of the Internal Revenue Code Of 1986, as amended (the
!Code"), and shall be governed by the laws of Delaware.
1. Vesting Schedule. Subject to the provisions of Section 4 hereof
and Section 4 of the 1994 Plan, this Option shall become vested and exercisable
with respect to the following whole number of Option Shares according to the
timetable set forth below:
<TABLE>
<CAPTION>
Percentage of Cumulative
Number of Years Shares Becoming Percentage
After Date of Grant Available for Exercise Available
- ------------------- ---------------------- ---------
<S> <C> <C>
Less than 1 year 0% 0%
At least 1 year 25% 25%
At least 2 years 25% 50%
At least 3 years 25% 75%
At least 4 years 25% 100%
</TABLE>
2. Manner of Exercise . The Optionee may exercise this Option only in
the following manner: from time to time on or prior to the Expiration Date of
this Option, the Optionee may give written notice to the Company's Option
Committee (the "Committee") of his election to purchase some or all of the
vested Option Shares purchasable at the time of such notice. This notice shall
specify the number of shares to be purchased
Payment of the purchase price for the option Shares may be made by one
or more of the following methods: (a) in cash, by certified or bank check or
other instrument acceptable to the Committee; (b) in the form of shares of
Common Stock, par value $0.01 per share, of the Company ("Co n Stock") that are
not then subject to restrictions under any Company Plan and that have been held
by the Optionee for at least six (6) months; (c) by the Optionee delivering to
the Company a properly executed exercise notice together with irrevocable
instructions to a
<PAGE> 26
broker to promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the option purchase price, provided that in the event the
Optionee chooses to pay the option purchase price as so provided, the Optionee
and the broker shall comply with such procedures and enter into such agreements
of indemnity and other agreements as the Committee shall prescribe as a
condition of such payment procedure; or (d) a combination of (a), (b) and (c)
above. Payment instruments will be received subject to collection.
The delivery of certificates representing the Option Shares will be
contingent upon the Company's receipt from the Optionee of full payment for the
Option Shares, as set forth above, and any agreement, statement or other
evidence that the Company may require to satisfy itself that the issuance of
Option Shares to be purchased pursuant to the exercise of Options under the 1994
Plan and any subsequent resale of the shares will be in compliance with
applicable laws and regulations.
If requested upon the exercise of this Option, certificates for shares
may be issued in the name of the Optionee jointly with another person or in the
name of the executor or administrator of the Optionee's estate.
Notwithstanding any other provision hereof or of the 1994 Plan, no
portion of this Option shall be exercisable after the Expiration Date hereof
3. Non-transferability of Option . This Option shall not be
transferable by the Optionee otherwise than by will or by the laws of descent
and distribution and this Option shall be exercisable, during the Optionee's
lifetime, only by the Optionee.
4. Termination of Employment. If the Optionee's employment by the
Company or any corporation or other entity (other than the Company) in any
unbroken chain of corporations or other entities, beginning with the Company if
each of the corporations or entities (other than the last corporation or entity
in the unbroken chain) owns stock or other interests possessing 50% or more of
the economic interest or the total combined voting power of all classes of stock
or other interests in one of the other corporations or entities in the chain (a
"Subsidiary") is terminated, the extent to which and the period within which the
Option may be exercised shall be as set forth below.
(a) Termination Due to Death. If the Optionee's employment
terminates by reason of death, any Option held by the Optionee
may be exercised, to the extent exercisable at the date of
death, by the Optionee's legal representative or legatee for a
period of one (1) year from the date of death or until the
Expiration Date, if earlier.
(b)Termination Due to Disability. If the Optionee's employment
terminates by reason of Disability (as defined in Section
22(e)(3) of the Code), any Option held by the Optionee may be
exercised, to the extent exercisable on the date of
termination, for a period of one (1) year from the date of
termination or until the
<PAGE> 27
Expiration Date, if earlier. The death of the Optionee during
the twelve (12) month period provided in this Section 4(b)
shall extend such period for six (6) months from the date of
death or until the Expiration Date, if earlier.
(c) Termination for Cause. If the Optionee's employment
terminates for Cause (defined as a vote of the Board of
Directors of the Company resolving that the Optionee should be
dismissed as a result of (1) any material breach by the
Optionee of any agreement to which the Optionee and the
Company are parties, (ii) any act (other than retirement) or
omission to act by the Optionee which may have a material and
adverse effect on the business of the Company or any
Subsidiary or on the Optionee's ability to perform services
for the Company or any Subsidiary, including, without
limitation, the commission of any crime (other than ordinary
traffic violations), or (iii) any material misconduct or
neglect of duties by the Optionee in connection with the
business or affairs of the Company or any Subsidiary), any
Option held by the Optionee shall immediately terminate and be
of no further force and effect.
(d) Other Termination. If the Optionee's employment terminates
for any reason other than death, Disability or Cause, any
Option held by the Optionee may be exercised, to the extent
exercisable on the date of termination, for a period of three
(3) months from the date of termination or until the
Expiration Date, if earlier.
For this purpose, neither a transfer of employment from the Company to a
Subsidiary (or from a Subsidiary to the Company) nor an approved leave of
absence shall be deemed a "termination of employment."
5. Option Shares. The. Option Shares are shares of Common Stock as
constituted on the date of this option, subject to adjustment as provided in
Section 7 of the 1994 Plan.
6. No Special Employment Rights. This Option will not confer upon the
Optionee any right with respect to continuance of employment by the Company or a
Subsidiary, nor will it interfere in any way with any right of the Optionee's
employer to terminate the Optionee's employment at any time.
7. Rights as a Shareholder . The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock that may be purchased by
exercise of this Option unless and until a certificate or certificates
representing such shares are duly issued and delivered to the Optionee. Except
as otherwise expressly provided in the 1994 Plan, no adjustment shall be made
for dividends or other rights for which the record date is prior to the date
such share certificate is issued.
8. Qualification under Section 422. It is understood and intended that
the Option granted hereunder shall qualify as an "incentive stock option" as
defined in Section 422 of the
<PAGE> 28
Code. Accordingly, the Employee understands that in order to obtain the benefits
of an incentive stock option under Section 422 of the Code, no sale or other
disposition may be made of any Option Shares acquired upon exercise of the
Option within the one-year period beginning on the day after the day of the
transfer of such Option Shares to him or her, nor within the two-year period
beginning on the day after the grant of the Option. If the Employee intends to
dispose or does dispose (whether by sale, gift, transfer or otherwise) of any
such Option Shares within these periods, he or she will notify the Company
within thirty (30) days after such disposition.
Share Options which become exercisable for the first time by the
Optionee during any calendar year will only qualify as incentive stock options
under Section 422 of the Code to the extent that the aggregate fair market value
of the Option Shares underlying such Share Options as of the date of grant does
not exceed $ 100,000. Any such Share Options relating to Option Shares in excess
of $ 100,000 will be treated as nonqualified stock options under the Code.
9. Tax Withholding No later than the date as of which part or all of
the value of any shares of Common Stock received under the 1994 Plan first
becomes includible in the Optionee's gross income for Federal tax purposes, the
Optionee shall make arrangements with the Company in accordance with Section 9
of the 1994 Plan regarding the payment of any federal, 'state or local taxes
required to be withheld with respect to such income.
10. The 1994 Plan. In the event of any discrepancy or inconsistency
between this Agreement and the 1994 Plan, the terms and conditions of the 1994
Plan shall control.
11. Miscellaneous. Notices hereunder shall be mailed or delivered to
the Company at its principal place of business and shall be mailed or delivered
to Optionee at the address set forth below or, in either case, at such other
address as one party may subsequently furnish to the other party in writing.
TRIDENT INTERNATIONAL, INC.
By: /s/ Elaine A. Pullen
Name
<PAGE> 29
Receipt of the foregoing Option is acknowledged and its terms and
conditions are hereby agreed to:
/s/ J. Leo Gagne
J. Leo Gagne,
Optionee
Date 2/9/98
<PAGE> 30
SCHEDULE B
NON-COMPETITION
A. Both during performance of the Services and for a period of one (1) year
after such performance terminates for any reason (with or without the statement
or expression of a reason), the Executive shall not, either directly or
indirectly: (1) solicit, service, obtain, or accept orders for products or
services competitive with those of the Company from any of the Company's actual
or prospective customers; (2) commence, engage in, or participate in any
business competitive with that of the Company within the geographic area in
which the Company does business, or engage in or provide technical or marketing
consulting with or to such a competitive business; (3) solicit, divert, take
away, interfere with, or attempt to induce any employee or agent of the Company
to leave such person's employ or other relationship with the Company in order to
participate in any business competitive with the Company; (4) use any
Confidential Information or Invention in connection with such competitive
business; or (5) serve on the Board of Directors of any other for-profit company
or organization, whether or not directly competitive with the Company. During
performance of the Services for the Company, the Executive shall not take any
steps or make any plans to commence or join any person or entity in any activity
in competition with the Company.
B. A product competitive with those of the Company shall mean any device, part,
or unit involved in the printing on a surface of text, number, character,
design, symbol, word, or other image involving ink or colorant in any form which
is expelled or extracted from an orifice or an aperture and propelled to a
receiving surface without contact between the device and the receiving surface.
A business or activity competitive or in competition with that of the Company or
the Services shall be the design, manufacture, assembly, use, sale, marketing,
purchase, installation, or repair of such a product and any management of such
business or activity.
C. The Executive acknowledges that disclosure of Confidential Information or
breach of the provisions contained in section A of this Schedule B may give rise
to irreparable injury to the Company or to the owner of such Confidential
Information which may be inadequately compensable in damages. Accordingly, the
Company or such owner may seek and obtain injunctive relief against the breach
or threatened breach of the foregoing undertakings, in addition to any other
legal remedies which may be available. The Executive expressly acknowledges
that, if this Agreement is terminated: the provisions of Schedule D will protect
the ability of the Executive to maintain a suitable standard of living while
refraining from competitive activity; the covenants contained herein are
necessary for the protection of the Company's legitimate business interests; and
such covenants are reasonable in scope and content.
<PAGE> 31
SCHEDULE C
CONFIDENTIAL INFORMATION
A. The Executive recognizes that the Company is engaged in a continuous program
of research, development, and production respecting its business, present and
future, including fields generally related to its business and that the
Executive and/or the Company possess and will possess in the future confidential
information that has been created, discovered, or developed by the Executive or
by the Company (including, without limitation, information created by,
discovered or developed by the Executive, or made known to the Executive by the
Company during the period of or arising out of the Executive's performance of
the Services) and/or confidential information which has been assigned or
otherwise conveyed to the Company and is of commercial or other value to the
business in which the Company is engaged ("Confidential Information"). By way of
illustration, but not limitation, Confidential Information includes trade
secrets, processes, formulae, data and know-how, software, documentation,
program files, flow/charts, drawings, techniques, source and object code,
standards, specifications improvements, inventions, techniques, customer
information, financial and accounting data, statistical data, research projects,
development and marketing plans, strategies, forecasts, computer programs, and
customer lists.
B. The Executive understands that acceptance of the Position and the performance
of the Services creates a relationship of confidence and trust between the
Executive and the Company with respect to any Confidential Information which
pertains to the business of the Company, or to the business of any actual or
potential client or customer of the Company, and which may be made known to the
Executive by the Company, or by any client or customer of the Company, or
learned or developed by the Executive during the period of performance of the
Services.
C. The Executive, except as directed by the Company or as to the subordinates of
the Executive in the ordinary course of business, will not at any time during or
after the term of this Agreement disclose any Confidential Information to any
person whatsoever, or permit any person whatsoever to examine, make copies of,
electronically store, or otherwise reproduce any reports, source code, or
documents prepared by, in the possession of, under the control of, or otherwise
available to the Executive by reason of the performance of the duties of the
Position, or otherwise. In the case of subordinates, any disclosure as
contemplated by this paragraph C shall be made in confidence and the Executive
shall use best efforts to assure that such subordinates are bound under and will
<PAGE> 32
maintain an obligation of confidentiality substantially the same as that
contained in this Agreement.
D. (1) All Confidential Information shall be the sole and exclusive property of
the Company and its assigns, and the Company and its assigns shall be the sole
owner of all trademarks, trade names, service marks, trade dress, copyrights,
patents, and other rights ("Intellectual Property Rights") developed from or
used in connection with such Confidential Information. The Executive hereby
assigns to the Company any rights, including Intellectual Property Rights, that
the Executive may have or acquire in such Confidential Information. At all
times, both during the Executive's performance of the Services and after the
termination of the services represented by such performance, the Executive will
keep in confidence and trust all Confidential Information, and the Executive
will not use or disclose any Confidential Information or anything relating to it
without the written consent of the Company, except as may be necessary in the
ordinary course of performing the Services.
(2) All documents, records, apparatus, equipment, and other physical
property, whether or not pertaining to Confidential Information, famished to the
Executive by the Company or produced by the Executive or others in connection
with the Executive's performance of the Services shall be and remain the sole
property of the Company and shall be returned to the Company immediately as and
when requested by the Company. Even if the Company does not so request, the
Executive shall return and deliver all such property upon termination of the
Executive's services for the Company for any reason, and the Executive will not
retain any such property or any reproduction of such property, regardless of the
manner by which such reproduction is effected, upon such termination. This
paragraph shall not be deemed to apply to any physical property which is clearly
and unambiguously a gift to the Executive and is expressly so stated to be a
gift at the time it is famished to the Executive.
(3) The Executive will promptly disclose to the Company or any persons
designated by it, all improvements, inventions, formulas, ideas, designs,
concepts, processes, techniques, know-how, software programs, information, and
data ("Inventions"), whether or not perfectible as an Intellectual Property
Right, made or conceived or reduced to practice or learned by the Executive,
either alone or jointly with others, during the term of the Executive's
performance of the Services. The Company shall receive such disclosures in
confidence, and the disclosure, regardless of how made and whether or not so
identified, shall be deemed to be Confidential Information and the creation of
Confidential Information under the terms of this Agreement.
<PAGE> 33
(4) All Inventions that the Executive develops (in whole or in part,
either alone or jointly with others) and (1) which arise out of use of
equipment, supplies, facilities, or Confidential Information of the Company or
(ii) were developed in whole or in part during the performance of the Services
for which the Executive was compensated by the Company or (iii) which relate to
the business of the Company or to its actual or demonstrably anticipated
research and development or (iv) which result, in whole or in part, from work
performed by the Executive for the Company shall be the sole property of the
Company and its assigns, and the Company and its assigns shall be the sole
owner(s) of all Intellectual Property Rights and other rights in connection with
those Inventions.
(5) The Executive by execution of this Agreement hereby expressly
assigns to the Company any rights, including Intellectual Property Rights, the
Executive may have or acquire in such Inventions. The Executive will, regarding
all such Inventions, assist The Company in every proper way (but at the
Company's expense) to obtain and from time to time enforce Intellectual Property
Rights on said Inventions in any and all countries. To that end the Executive
will execute all documents for use in applying for and obtaining and enforcing
such Intellectual Property Rights as the Company may desire, together with any
assignments of Intellectual Property Rights to the Company or persons designated
by it.
(6) The Executive's obligation to assist the Company in obtaining and
enforcing Intellectual Property Rights for such Inventions in any and all
countries shall continue beyond the termination of The Executive's performance
of the Services. The Company shall, however, compensate the Executive at a
reasonable rate, which shall in no case be less than that calculated by
reference to the Executive's Base Salary as defined in Schedule D of this
Agreement, after such termination for time actually spent by the Executive at
the Company's request on such assistance. In the event that the Company is
unable for any reason whatsoever to secure the Executive's signature to any
lawful and necessary document required to apply for or execute any Intellectual
Property Rights or other application with respect to such an Invention
(including renewals, extensions, continuations, divisions, or continuations in
part of the Invention), the Executive hereby irrevocably designates and appoints
Norman Norris, Esquire of Woodcock, Washburn, Kurtz, MacKiewicz, Norris, One
Liberty Place, Philadelphia, PA 19103 as the Executive's agents and
attorneys-in-fact to act for and in the Executive's behalf and to execute and
file any such application and to do all other lawfully permitted acts to further
the prosecution of the application with the same legal force and effect as if
executed by the Executive.
<PAGE> 34
(7) As a matter of record, the Executive attaches to this Agreement a
complete list of all inventions or improvements relevant to the subject matter
of the Executive's performance of Services that have been made or conceived or
first reduced to practice by the Executive alone or jointly with others prior to
the date of this Agreement or outside its scope and that the Executive desires
to remove from the operation of this Agreement.
(8) The Executive represents that performance of all the terms of this
Agreement will not breach any agreement to keep in confidence proprietary
information acquired by the Executive in confidence or in trust prior to
performance of the Services. The Executive has not entered into, and will not
enter into, any agreement whether written or oral in conflict with this
Agreement.
(9) Nothing contained in this Schedule is intended to limit the
Executive's professional development, either during or subsequent to employment
by the Company or to prohibit the Executive the normal application of skills
acquired or improved during employment consistent with the protection of the
Confidential Information.
<PAGE> 35
SCHEDULE D
1. Base Salary shall be $155,000 per annum beginning June 1, 1998.
2. As adjusted from year to year by the President and the Compensation Committee
of the Board, Compensation shall include, in addition to Base Salary, the
following ordinary and customary elements:
(a) all exercisable options, including maintenance of the Options;
(b) bonus of thirty percent (30%) of Base Salary;
(c) earned component of any system then in effect for the pertinent class of
employee which provides such employee with an interest in a share of profit or
incremental gain in sales, income, or profit of the Company, also subject to the
aforesaid limitation;
(d) any other benefits contemplated by paragraph 5 of this Agreement to which
the Executive is entitled.
3. In consideration for the Executive's continuing adherence to the obligations
of confidentiality and non-competition contained in the Agreement upon the
expiry or termination of such Agreement (except in cases of a Change of
Control), or upon the voluntary leaving by the Executive of the employ of the
Company, the Company will pay to the Executive an amount equivalent to one year
of Compensation, determined at the time of expiry, termination, or leaving,
within thirty (30) days of the date of such expiry, termination, or leaving, in
lieu of any and all other termination rights and benefits provided to the
Executive hereunder.
<PAGE> 1
Exhibit 99.9
AMENDMENT
TO
EXECUTIVE EMPLOYMENT AGREEMENT
BETWEEN
TRIDENT INTERNATIONAL, INC.
AND
J. LEO GAGNE
This Amendment (the "Amendment") to the Executive Employment Agreement
between Trident International, Inc. (the "Company") and J. Leo Gagne (the
"Executive") dated as of June 1, 1998 (the "Agreement"), is dated as of January
6, 1999.
WHEREAS, in order to clarify certain provisions of the Agreement as
they relate to a potential change in control of the Company, the undersigned
parties to the Agreement wish to amend the Agreement as described herein; and
WHEREAS, capitalized terms used and not otherwise defined herein shall
have the meanings given to them in the Agreement.
NOW THEREFORE, the undersigned parties to the Agreement hereby agree as
follows:
1. Section 6.B of the Agreement is hereby amended and restated in
its entirety to provide as follows:
"B. In consideration of the Executive's agreement to continue in the
employ of the Company after a Change in Control, the Company agrees that, in the
event of Involuntary Termination, it shall provide the following severance
benefits:
(i)(a) Salary continuation for two (2) years in an annual
amount equal to the Base Salary in effect on the date of Involuntary
Termination; and (b) the ordinary and customary additional elements of
Compensation (except for options contemplated in subparagraph
6.B.(iii)) attendant to the Position as set forth in Schedule D for two
(2) years. The salary continuation and customary additional elements
shall be limited during the second year following the Involuntary
Termination by the amount of equivalent base salary, fees, and other
compensation elements the Executive may receive from any employment,
consultancy, board services or other similar business arrangement
secured with another party during the second year of the two year
continuation period, and the Company shall only be obligated to pay
during such second year the difference between the aggregate of such
salary continuation and elements, and the value of compensation
received from another party, if less. If the value of such compensation
during such second year shall exceed such amount of equivalent base
salary and other compensation elements payable by the Company
<PAGE> 2
hereunder, the Company shall have no obligation to Executive during
such second year under this paragraph 6.B.(i).
(ii) Coverage for two (2) years under all Company
perquisites and benefit plans including: 401(k) savings plan; medical,
life and disability insurance plans; and the like, in the same manner
as if the Executive were an active employee; provided that such
coverage shall be terminated on the earliest date after the first
anniversary of the date of Executive's termination that Executive shall
be employed by, serve as a consultant to, or make a similar business
arrangement with, another party.
(iii) An immediate right to exercise any outstanding and
unexercised stock options previously granted under any Company stock
option plans, including any such options not otherwise vested under the
terms of the plan or grant, unless provision is made in connection with
such transaction for the assumption of options theretofore granted, or
the substitution for such options or new options of the successor
entity or parent thereof, with appropriate adjustment as to the number
and kind of shares and the per share exercise prices, specifically
including but not limited to the Options.
(iv) Employment search assistance through a professional
out placement organization and office and secretarial support for up to
one year.
(v) Notwithstanding any other provision of this
Agreement, the Executive shall only be entitled to the severance
benefits under this Section 6.B. so long as he shall adhere to the
obligations of confidentiality and non-competition contained in this
Agreement."
2. Section 6.G of the Agreement is hereby amended and restated in
its entirety to provide as follows:
"G. During the period beginning on the first anniversary of the
Involuntary Termination of the Executive, the Executive shall use his best
efforts to mitigate the amount of any payment or benefit provided for in this
Agreement by seeking other employment or equivalent consulting opportunities or
arrangements. The Executive shall not be required to mitigate the amount of any
payment or benefit provided during the first year following an Involuntary
Termination by seeking other employment or otherwise, nor shall the amount of
any payment or benefit provided during the first year following an Involuntary
Termination be reduced by any compensation earned by the Executive as a result
of employment by another employer or by retirement benefits after termination,
or otherwise."
3. Except as expressly provided herein, the Agreement shall
remain in full force and effect.
2
<PAGE> 3
IN WITNESS WHEREOF, the undersigned parties have executed this
Amendment as of the date first set forth above.
TRIDENT INTERNATIONAL, INC.
By: /s/ R. Hugh Van Brimer
-----------------------------------------
Name: R. Hugh Van Brimer
Title: Chairman of the Board of Directors
EXECUTIVE
/s/ J. Leo Gagne
-----------------------------------------
J. Leo Gagne
3
<PAGE> 1
Exhibit 99.10
ACKNOWLEDGMENT OF RECEIPT OF 1999 BONUS
The undersigned hereby acknowledges that the bonus payment of $48,000
to be received upon consummation of the Tender Offer, Merger and the
transactions contemplated thereby with Illinois Tool Works Inc. satisfies the
bonus payment the undersigned is due under the Executive Employment Agreement
between Trident International, Inc. and J. Leo Gagne and the Amendment to the
Executive Employment Agreement between Trident International, Inc. and J. Leo
Gagne for 1999. The payment of such bonus shall not be deemed to be limited by
or to eliminate any payments due the undersigned under the Employee Retention
Plan or any severance payments due under the Executive Employment Agreement
between Trident International, Inc. and J. Leo Gagne and the Amendment to the
Executive Employment Agreement between Trident International, Inc. and J. Leo
Gagne.
/s/ J. Leo Gagne
-----------------------------
J. Leo Gagne
<PAGE> 1
Exhibit 99.11
TRIDENT INTERNATIONAL, INC.
EMPLOYEE RETENTION PLAN
1. INTRODUCTION. This Employee Retention Plan (the "Plan") was
adopted by the Board of Directors of Trident International, Inc. (the "Company")
on January 5, 1999 for the benefit of the Company's officers and employees
(collectively, the "Employees") in connection with the Board of Directors'
consideration of the potential merger (the "Merger") of the Company with
Illinois Tool Works Inc. ("ITW") or a subsidiary of ITW. The Plan is intended to
(i) promote continuity in the Company's workforce in the event that the Merger
is consummated; (ii) alleviate the concerns of Employees regarding their future
employment with the Company and/or its successor pending the Merger; and (iii)
provide an incentive for the Employees to continue their employment with the
Company's successor following the Merger. The Board of Directors adopted the
Plan with the express intention that the Company's obligations under the Plan
would be assumed by the successor to the Company (if any) in the Merger (the
"Successor").
2. ALLOCATION OF PAYMENTS UNDER THE PLAN. As soon as practicable
after the date of the execution of the definitive agreement relating to the
Merger, the Company's Chief Executive Officer and Board of Directors shall,
after consultation with ITW, designate those Employees who will be eligible to
receive payments under the Plan, and the list of such Employees (including the
amount to which each such Employee will be eligible under the Plan) shall be
attached hereto as APPENDIX A. The total amount to which Employees shall be
eligible under the Plan shall be $475,500, $300,000 of which shall be allocated
among Employees other than Elaine A. Pullen and J. Leo Gagne and the remainder
of which shall be allocated between Elaine A. Pullen and J. Leo Gagne ($137,750
to Ms. Pullen and $37,750 to Mr. Gagne). The Company shall provide APPENDIX A to
ITW promptly upon its completion.
3. TERMINATION PAYMENTS.
(a) In the event that the Merger is consummated and the
employment of any Employee identified on APPENDIX A hereto is
terminated by the Company or the Successor between the consummation of
the Merger and the close of business on December 31, 1999 for any
reason other than for good cause (as defined below), the Successor (or
ITW) shall make an unmitigated payment to such Employee in the amount
set forth opposite such Employee's name on APPENDIX A hereto, such
payment to be made in a lump sum (less applicable federal and state
withholding taxes) on or prior to the fifteenth day following such
termination.
<PAGE> 2
(b) Only the following shall be deemed to constitute
"good cause" for the purposes of the Plan:
(i) the commission by the Employee of (A) a
felony or (B) a misdemeanor involving moral
turpitude, deceit, dishonesty or fraud;
(ii) gross negligence or willful misconduct of
the Employee or, in the case of Ms. Pullen
and Mr. Gagne, any action that would
constitute grounds for termination under
Section 6 of their respective Executive
Employment Agreements;
(iii) a material violation by the Employee of the
published policies of the Successor; or
(iv) the failure by the Employee to perform any
substantial portion of such Employee's
duties of employment.
(c) For purposes of the Plan, except as provided in 3(d)
below, a reduction in an Employee's (other than Elaine A. Pullen and J.
Leo Gagne) base salary, benefits, compensation plan or commission rate
shall be deemed to be a termination of such Employee.
(d) In the case of J. Leo Gagne, any action which would
constitute an "Involuntary Termination" pursuant to Mr. Gagne's
Executive Employment Agreement, shall be deemed to be a termination of
such Employee. In the event of any action which would consitute an
"Involuntary Termination" to Ms. Pullen's Executive Employment
Agreement, she will not be entitled to receive any compensation under
this Employee Retention Plan.
4. RETENTION PAYMENTS. In the event that the Merger is
consummated, then on January 14, 2000, the Successor (or ITW) shall
make a lump sum payment (less applicable federal and state withholding
taxes) to each Employee identified on APPENDIX A hereto (other than
Employees who have been terminated by the Company or the Successor for
good cause on or prior to December 31, 1999, Employees who have
previously received payments pursuant to paragraph 3 above and
Employees who have voluntarily terminated their employment with the
Company or the Successor on or prior to December 31, 1999) in the
amount set forth opposite such Employee's name on APPENDIX A hereto.
<PAGE> 1
EXHIBIT 99.12
[ROBINSON-HUMPHREY LOGO]
<TABLE>
<C> <S> <C>
CORPORATION FINANCE INVESTMENT BANKERS
DEPARTMENT SINCE 1894
</TABLE>
January 6, 1999
Board of Directors
Trident International, Inc.
1114 Federal Road
Brookfield, CT 06804-1140
Attention: Ms. Elaine A. Pullen
President and Chief Executive Officer
Lady and Gentlemen:
We understand that Trident International, Inc. (the "Company") intends to
enter into an Agreement and Plan of Merger (the "Merger Agreement") by and among
Illinois Tool Works, Inc. ("Parent") and ITW Acquisition Inc., a direct
wholly-owned subsidiary of Parent ("Subsidiary"). We understand that under the
Merger Agreement, Parent will acquire the Company through a merger of Subsidiary
with and into the Company (the "Proposed Transaction"). As promptly as
practicable (but in no event later than five business days from and including
the date of the initial public announcement of the Merger Agreement), Parent
shall cause Subsidiary to commence an offer to purchase for cash (the "Offer")
all of the Company's issued and outstanding common shares at a purchase price of
$16.50 per common share to the tendering stockholder in cash. The terms and
conditions of the Proposed Transaction are set forth in more detail in the
Merger Agreement dated as of January 6, 1999.
We have been requested by the Company to render our opinion with respect to
the fairness, from a financial point of view, to the Company's stockholders of
the consideration to be received in the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the Merger
Agreement dated as of January 6, 1999, (2) publicly available information
concerning the Company which we believe to be relevant to our inquiry, (3)
financial and operating information with respect to the business, operations and
prospects of the Company furnished to us by the Company, (4) a trading history
of the Company's common stock from February 26, 1996 to the present and a
comparison of that trading history with those of other companies which we deemed
relevant, (5) a comparison of the historical financial results and present
financial condition of the Company with those of other companies which we deemed
relevant, (6) a comparison of the financial terms of the Proposed Transaction
with the terms of certain other recent transactions which we deemed relevant and
(7) certain historical data relating to acquisitions of publicly traded
companies, including percentage premiums and price to earnings ratios paid in
such acquisitions. In addition, we have had discussions with the management of
the Company concerning its business, operations, assets, present condition and
future prospects and undertook such other studies, analyses and investigations
as we deemed appropriate.
LOGO
Ex. 12-1
<PAGE> 2
We have assumed and relied upon the accuracy and completeness of the
financial and other information used by us in arriving at our opinion without
independent verification. With respect to the financial forecasts/projections of
the Company, we have assumed that such forecasts/projections have been
reasonably prepared on bases reflecting the current good faith estimates and
judgments of the management of the Company as to the future financial
performance of the Company. In arriving at our opinion, we have conducted only a
limited physical inspection of the properties and facilities of the Company and
have not made nor obtained any evaluations or appraisals of the assets or
liabilities of the Company. At your instruction, we have solicited indications
of interest from third parties with respect to the purchase of all or a part of
the Company's business. Our opinion is necessarily based upon market, economic
and other conditions as they exist on, and can be evaluated as of, the date of
this letter.
We have acted as financial advisor to the Company in connections with the
Proposed Transaction and will receive a fee for our services, the majority of
which is contingent upon the consummation of the Proposed Transaction. In
addition, the Company has agreed to indemnify us for certain liabilities arising
out of the rendering of this opinion. We have also performed various investment
banking services for the Company in the past (including acting as an underwriter
for the Company in its 1996 initial public offering) and have receive customary
fees for such services. In the ordinary course of our business, we actively
trade in the equity securities of the Company for our own account and for the
accounts of our customers and, accordingly, may at any time hold a long or short
position in such securities.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be
received by the stockholders of the Company in the Proposed Transaction is fair
to the stockholders of the Company.
Very truly yours,
THE ROBINSON-HUMPHREY COMPANY, LLC
[ROBINSON-HUMPHREY SIGNATURE]
Ex. 12-2
