<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 10, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CRANE CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 3491 13-1952290
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
100 FIRST STAMFORD PLACE
STAMFORD, CT 06902
(203) 363-7300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
AUGUSTUS I. DUPONT
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
100 FIRST STAMFORD PLACE
STAMFORD, CT 06902
(203) 363-7300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
LAWRENCE LEDERMAN, ESQ. LINDA SCHOEMAKER, ESQ.
MILBANK, TWEED, HADLEY & MCCLOY PERKINS COIE
1 CHASE MANHATTAN PLAZA 1201 THIRD AVENUE, 40TH FLOOR
NEW YORK, NEW YORK 10005 SEATTLE, WASHINGTON 98101
TELEPHONE (212) 530-5000 TELEPHONE (206) 583-8888
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement is declared
effective and the effective time of the merger (the "Merger") of Interpoint
Corporation ("Interpoint") with Crane Acquisition Corp., a wholly owned
subsidiary ("Acquisition Sub") of Crane Co. ("Crane" or "Registrant"), pursuant
to the Agreement and Plan of Merger dated as of July 1, 1996 (the "Merger
Agreement") by and among Crane, Interpoint and Acquisition Sub, as described in
the enclosed Proxy Statement/Prospectus included as Part I of this Registration
Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED(1) REGISTERED PER UNIT PRICE(3) FEE(4)
- -------------------------------------------------------------------------------------------------------------------
Common Stock, par value $1.00 per share,
together with Preferred Share Purchase
Rights(2)................................... $92,555,430 $14,667
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement relates to securities of Crane issuable to
holders of shares of common stock, without par value, of Interpoint
("Interpoint Common Stock") in the Merger.
(2) Each share of Crane Common Stock includes one Preferred Share Purchase
Right. Preferred Share Purchase Rights are attached to and trade with the
Crane Common Stock. The value attributable to such rights, if any, is
reflected in the market price of Crane Common Stock.
(3) Pursuant to Rules 457(f)(1) and 457(c) of the Securities Act of 1933, as
amended, and solely for the purpose of calculating the registration fee, the
proposed maximum aggregate offering price is based on the product of (a)
8,414,130, the maximum number of shares of Interpoint Common Stock that will
be outstanding immediately prior to the Merger (assumes exercise of all
vested options) and (b) $11.00, the average of the high and low prices of
Interpoint Common Stock as reported on the Nasdaq National Market on
September 3, 1996.
(4) In accordance with Rule 457(b) of the Securities Act of 1933, as amended,
the amount of the registration fee was reduced by $17,249, which is the
amount of the fee paid to the Securities and Exchange Commission on July 23,
1996 in connection with the confidential filing of the Proxy
Statement/Prospectus that forms a part of this Registration Statement.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
CRANE CO.
CROSS-REFERENCE SHEET
FOR
REGISTRATION STATEMENT ON FORM S-4 AND PROXY STATEMENT/PROSPECTUS
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT/PROSPECTUS
- ---------------------------------------------------- ----------------------------------------
<S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and
Outside Front Cover Page of
Prospectus............................ Facing Page of the Registration
Statement; Cross-Reference Sheet; Cover
Page of Proxy Statement/Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus................... AVAILABLE INFORMATION; INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE; TABLE
OF CONTENTS
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information......... SUMMARY; COMPARATIVE PER SHARE MARKET
INFORMATION
4. Terms of the Transaction................ SUMMARY; BACKGROUND OF AND REASONS FOR
THE MERGER; THE MERGER; INTERESTS OF
CERTAIN PERSONS IN THE MERGER; CERTAIN
TRANSACTIONS; CERTAIN FEDERAL INCOME
TAX CONSEQUENCES; RIGHTS OF DISSENTING
INTERPOINT SHAREHOLDERS; DESCRIPTION
OF CRANE CAPITAL STOCK; COMPARISON OF
SHAREHOLDER RIGHTS
5. Pro Forma Financial Information......... SUMMARY; UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
6. Material Contacts With the Company Being
Acquired.............................. SUMMARY; BACKGROUND OF AND REASONS FOR
THE MERGER; INTERESTS OF CERTAIN
PERSONS IN THE MERGER; CERTAIN
TRANSACTIONS
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters............. Not Applicable
8. Interests of Named Experts and
Counsel............................... LEGAL OPINION; TAX OPINIONS; INDEPENDENT
ACCOUNTANTS
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................... Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3
Registrants........................... INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT/PROSPECTUS
- ---------------------------------------------------- ----------------------------------------
<S> <C>
11. Incorporation of Certain Information by
Reference............................. INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE; DESCRIPTION OF CRANE
CAPITAL STOCK
12. Information With Respect to S-2 or S-3
Registrants........................... Not Applicable
13. Incorporation of Certain Information by
Reference............................. Not Applicable
14. Information with Respect to Registrants
Other Than S-2 or S-3 Registrants..... Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information With Respect to S-3
Companies............................. INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE
16. Information With Respect to S-2 or S-3
Companies............................. Not Applicable
17. Information With Respect to Companies
Other Than S-2 or S-3 Companies....... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited.... INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE; SUMMARY; COMPANIES; SPECIAL
MEETING OF SHAREHOLDERS; INTERESTS OF
CERTAIN PERSONS IN THE MERGER; CERTAIN
TRANSACTIONS; RIGHTS OF DISSENTING
INTERPOINT SHAREHOLDERS; SHAREHOLDER
PROPOSALS FOR 1997 ANNUAL MEETING
19. Information if Proxies, Consents or
Authorizations are not to be Solicited
or in an Exchange Offer............... Not Applicable
</TABLE>
<PAGE> 4
[INTERPOINT CORPORATION LETTERHEAD]
SEPTEMBER 10, 1996
To Our Shareholders:
You are hereby cordially invited to attend a special meeting (the "Special
Meeting") of the shareholders of Interpoint Corporation ("Interpoint") to be
held at the offices of Perkins Coie, 1201 Third Avenue, 40th Floor, Seattle,
Washington, on Friday, October 11, 1996, commencing at 9:00 a.m., local time.
At the Special Meeting, you will be asked to consider and approve an
Agreement and Plan of Merger dated as of July 1, 1996 (the "Merger Agreement"),
pursuant to which Interpoint would become a wholly owned subsidiary of Crane Co.
("Crane") through a merger of Interpoint with a subsidiary of Crane (the
"Merger") immediately following a spinoff distribution by Interpoint of all the
capital stock of Advanced Digital Information Corporation ("ADIC"), its data
storage subsidiary, to existing Interpoint shareholders (the "Spinoff"). The
accompanying Proxy Statement/Prospectus provides a summary of the Merger
Agreement and a description of the Merger and the Spinoff, as well as additional
related information. A copy of the Merger Agreement is attached as Appendix I to
the Proxy Statement/Prospectus. The accompanying Information Statement contains
detailed information concerning ADIC's assets, business and financial
performance. Please give this information your prompt and careful attention.
The Merger is conditioned upon the completion of the Spinoff, and the
Spinoff will not occur unless all other conditions to the Merger have been
satisfied, including approval of the Merger Agreement by the requisite vote of
Interpoint shareholders. Accordingly, neither the Merger nor the Spinoff will
occur unless both occur. The Merger, in combination with the Spinoff, results in
Interpoint shareholders retaining their proportionate equity interest in ADIC
while receiving in the Merger, in exchange for Interpoint's microelectronics
business, common stock of Crane, a diversified manufacturer of engineered
industrial products and the largest American distributor of doors, windows and
millwork, whose shares are traded on the New York Stock Exchange.
Prior to the Spinoff, Interpoint will make contributions to ADIC's working
capital and transfer to ADIC certain other assets in accordance with provisions
of the Merger Agreement. The shares of ADIC common stock distributed to
Interpoint shareholders in the Spinoff will be listed for quotation on the
Nasdaq National Market under the symbol "ADIC."
In the Merger, each outstanding share of Interpoint common stock will be
converted into the right to receive a fraction of a share of Crane common stock,
the numerator of which is the Aggregate Share Distribution Amount (as defined in
the accompanying Proxy Statement/Prospectus) and the denominator of which is the
product of (i) the average closing sales price of the Crane common stock over a
specified period of time prior to the closing date of the Merger and (ii) the
number of shares of Interpoint common stock outstanding immediately prior to the
effective time of the Merger. Interpoint currently estimates that the Aggregate
Share Distribution Amount will be between $32 million and $36 million. Based on
the closing price of the Crane common stock on September 5, 1996 ($40.25 per
share) and the number of outstanding shares of Interpoint common stock on that
date, Interpoint estimates that each outstanding share of Interpoint common
stock will be converted into Crane common stock having a value of approximately
$4.00 to $4.50 per share, or approximately .10 to .11 of a share of Crane common
stock. You should be aware that the value of the Crane common stock (and the
fraction of a share that represents such value) actually received in the Merger
in exchange for a share of Interpoint common stock may vary from these estimates
in accordance with the formula set forth above (as more fully described in the
accompanying Proxy Statement/Prospectus).
THE BOARD OF DIRECTORS OF INTERPOINT, AFTER CAREFUL CONSIDERATION, HAS
DETERMINED THAT THE MERGER, IN COMBINATION WITH THE SPINOFF, IS FAIR TO AND IN
THE BEST INTERESTS OF INTERPOINT AND ITS SHAREHOLDERS, HAS UNANIMOUSLY APPROVED
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, AND RECOMMENDS
THAT HOLDERS OF INTERPOINT COMMON STOCK VOTE
<PAGE> 5
"FOR" APPROVAL OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SPECIAL MEETING. FOR
THE MERGER TO BECOME EFFECTIVE, THE MERGER AGREEMENT MUST BE APPROVED BY THE
AFFIRMATIVE VOTE OF AT LEAST TWO-THIRDS OF THE OUTSTANDING SHARES OF INTERPOINT
COMMON STOCK. THE SPINOFF OF ADIC WILL NOT BE EFFECTED UNLESS INTERPOINT
SHAREHOLDERS APPROVE THE MERGER AGREEMENT. YOUR VOTE IS IMPORTANT NO MATTER HOW
MANY SHARES YOU OWN. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, I
ENCOURAGE YOU TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AT YOUR
EARLIEST CONVENIENCE IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. Your shares of
Interpoint common stock will be voted in accordance with the instructions you
have given in your proxy. If you attend the Special Meeting, you may vote in
person, even though you previously have returned your proxy card. If you have
any questions or need assistance in completing your proxy, please call Karla
Olson, Interpoint Investor Relations, at (206) 882-3100.
Very truly yours,
Peter H. van Oppen
Chairman and Chief Executive Officer
2
<PAGE> 6
INTERPOINT CORPORATION
10301 WILLOWS ROAD, P.O. BOX 97005
REDMOND, WASHINGTON 98073-9705
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 11, 1996
TO THE SHAREHOLDERS:
A Special Meeting of Shareholders of Interpoint Corporation, a Washington
corporation ("Interpoint"), will be held on Friday, October 11, 1996,
commencing at 9:00 a.m., local time, at the offices of Perkins Coie, 1201 Third
Avenue, 40th Floor, Seattle, Washington, to consider and vote upon a proposal to
approve the Agreement and Plan of Merger dated as of July 1, 1996 (the "Merger
Agreement") and the transactions contemplated thereby. Pursuant to the Merger
Agreement, Crane Acquisition Corp., a Washington corporation and wholly owned
subsidiary of Crane Co., a Delaware corporation, will be merged with and into
Interpoint (the "Merger"). In the Merger, each outstanding share of Interpoint
common stock (the "Interpoint Common Stock") will be converted into the right to
receive a fraction of a share of Crane Co. common stock (the "Crane Common
Stock"), the numerator of which is the Aggregate Share Distribution Amount (as
defined in the accompanying Proxy Statement/Prospectus) and the denominator of
which is the product of (i) the average closing sales price of the Crane Common
Stock over a specified period of time prior to the closing date of the Merger
and (ii) the number of shares of Interpoint Common Stock outstanding immediately
prior to the effective time of the Merger.
Only holders of record of shares of Interpoint Common Stock at the close of
business on August 26, 1996, the record date for the Special Meeting, are
entitled to notice of and to vote at the Special Meeting and any adjournments or
postponements thereof.
The affirmative vote of holders of shares representing at least two-thirds
of the outstanding shares of Interpoint Common Stock is necessary to approve the
Merger Agreement and the transactions contemplated thereby. Pursuant to a
separate agreement, the beneficial owners of shares of Interpoint Common Stock
having an aggregate of approximately 13.1% of the voting power of the Interpoint
Common Stock have agreed to vote in favor of the Merger Agreement and the
transactions contemplated thereby.
The Merger is conditioned upon the spinoff of Advanced Digital Information
Corporation ("ADIC"), a wholly owned subsidiary of Interpoint, to existing
Interpoint shareholders immediately prior to the Merger (the "Spinoff "). The
Spinoff will not occur unless all other conditions to the Merger have been
satisfied, including approval of the Merger Agreement by the requisite vote of
Interpoint shareholders. In the Spinoff, existing Interpoint shareholders will
receive one share of ADIC common stock for each share of Interpoint Common Stock
held.
HOLDERS OF INTERPOINT COMMON STOCK SHOULD CAREFULLY REVIEW THE ACCOMPANYING
PROXY STATEMENT/ PROSPECTUS, WHICH MORE FULLY DESCRIBES THE TERMS OF THE MERGER
AND RELATED TRANSACTIONS. THE FULL TEXT OF THE MERGER AGREEMENT IS ATTACHED AS
APPENDIX I TO THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS.
Holders of Interpoint Common Stock have the right to dissent from the
Merger and, subject to certain conditions, receive payment for their shares.
These rights are described in greater detail in the accompanying Proxy
Statement/Prospectus under the caption "Rights of Dissenting Interpoint
Shareholders" and are set forth in Sections 23B.13.010 through 23B.13.310 of the
Washington Business Corporation Act, a copy of which is attached as Appendix II
to the accompanying Proxy Statement/Prospectus.
By Order of the Board of Directors
Leslie S. Rock
Secretary-Treasurer
Redmond, Washington
September 10, 1996
PLEASE COMPLETE, SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING.
<PAGE> 7
PROXY STATEMENT FOR
SPECIAL MEETING OF SHAREHOLDERS OF
INTERPOINT CORPORATION
TO BE HELD OCTOBER 11, 1996
------------------------
PROSPECTUS FOR SHARES OF
COMMON STOCK OF
CRANE CO.
------------------------
This Proxy Statement/Prospectus is being furnished to holders of shares of
common stock, no par value per share (the "Interpoint Common Stock"), of
Interpoint Corporation, a Washington corporation ("Interpoint"), in connection
with the solicitation of proxies by Interpoint's Board of Directors (the
"Interpoint Board") for use at a special meeting of shareholders to be held on
Friday, October 11, 1996 at the offices of Perkins Coie, 1201 Third Avenue,
40th Floor, Seattle, Washington, commencing at 9:00 a.m., local time, and any
adjournments or postponements thereof (the "Special Meeting").
The Special Meeting has been called to consider and vote upon a proposal to
approve the Agreement and Plan of Merger dated as of July 1, 1996 (the "Merger
Agreement"), a copy of which is attached as Appendix I to this Proxy
Statement/Prospectus, providing for the merger of Crane Acquisition Corp.
("Acquisition Corp."), a Washington corporation and wholly owned subsidiary of
Crane Co. ("Crane"), a Delaware corporation, with and into Interpoint (the
"Merger"), and the transactions contemplated thereby.
The Merger is conditioned upon the completion of a spinoff distribution by
Interpoint of all the capital stock of Advanced Digital Information Corporation
("ADIC"), its data storage subsidiary, to existing Interpoint shareholders (the
"Spinoff "). The Spinoff will not occur unless all other conditions to the
Merger, including approval of the Merger Agreement by the requisite vote of
Interpoint shareholders, have been satisfied. Accordingly, neither the Merger
nor the Spinoff will occur unless both occur. The Merger, in combination with
the Spinoff, results in the shareholders of Interpoint retaining their
proportionate equity interest in ADIC while receiving in the Merger, in exchange
for Interpoint's microelectronics business, common stock of Crane, a diversified
manufacturer of engineered industrial products and the largest American
distributor of doors, windows and millwork, whose shares are traded on the New
York Stock Exchange (the "NYSE").
Prior to the Spinoff, Interpoint will make contributions to ADIC's working
capital and transfer to ADIC certain other assets in accordance with the
provisions of the Merger Agreement. In the Spinoff, existing Interpoint
shareholders will receive one share of ADIC common stock (the "ADIC Common
Stock") for each share of Interpoint Common Stock held. The shares of ADIC
Common Stock distributed in the Spinoff will be listed for quotation on the
Nasdaq National Market under the symbol "ADIC." See "The Spinoff." An
Information Statement describing ADIC's assets, business and financial
performance (the "Information Statement") accompanies this Proxy
Statement/Prospectus.
At the effective time of the Merger (the "Effective Time"), Interpoint, as
the surviving corporation in the Merger (the "Surviving Corporation"), will
become a wholly owned subsidiary of Crane and each outstanding share of
Interpoint Common Stock, other than shares of Interpoint Common Stock held by
shareholders who have demanded dissenters' rights in accordance with the
Washington Business Corporation Act (the "WBCA"), will be converted into the
right to receive a fraction of a share of fully paid and nonassessable common
stock, par value $1.00 per share, of Crane (the "Crane Common Stock"), the
numerator of which is the Aggregate Share Distribution Amount (as defined below)
and the denominator of which is the product of (i) the average of the closing
sales price of the Crane Common Stock for the 10 consecutive trading days ending
on the trading date immediately preceding the closing date of the Merger (the
"Closing Date") and (ii) the number of shares of Interpoint Common Stock
outstanding immediately prior to the Effective Time. The Crane Common Stock to
be issued in the Merger will be listed on the NYSE. The "Aggregate Share
Distribution Amount" will be $59 million, less the aggregate principal amount of
interest-bearing indebtedness of Interpoint and its subsidiaries outstanding
immediately prior to the Effective Time and the net amount of certain
intercompany advances made by Interpoint to ADIC, as adjusted for certain other
balance sheet adjustments as described herein. Fractional shares of Crane Common
Stock will not be issued in the Merger. Interpoint shareholders otherwise
entitled to a fractional share will be paid the value of such fraction in cash,
without interest. All outstanding options to purchase Interpoint Common Stock
will be terminated by Interpoint with a cash payment before the Effective Time.
See "The Merger--Exchange of Interpoint Common Stock for the Merger
Consideration."
THE SHARES OF CRANE COMMON STOCK ISSUABLE PURSUANT TO THIS PROXY STATEMENT/
PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Proxy Statement/Prospectus is September 10, 1996 and it is
first being distributed to Interpoint shareholders on or about September 12,
1996.
<PAGE> 8
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS WITH RESPECT TO THE MATTERS DESCRIBED IN THIS PROXY
STATEMENT/PROSPECTUS OTHER THAN THOSE CONTAINED HEREIN, IN THE INFORMATION
STATEMENT OR IN THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN. ANY INFORMATION
OR REPRESENTATIONS WITH RESPECT TO SUCH MATTERS NOT CONTAINED HEREIN OR THEREIN
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY CRANE OR INTERPOINT. THIS
PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF CRANE OR INTERPOINT SINCE THE DATE HEREOF OR
THAT THE INFORMATION IN THIS PROXY STATEMENT/PROSPECTUS, IN THE INFORMATION
STATEMENT OR IN THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THEREOF.
AVAILABLE INFORMATION
Crane has filed with the Securities and Exchange Commission (the "SEC") a
Registration Statement on Form S-4 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Crane Common Stock to be issued to Interpoint shareholders pursuant to the
Merger Agreement. This Proxy Statement/Prospectus also constitutes the
prospectus of Crane filed as part of the Registration Statement. As permitted by
the rules and regulations of the SEC, this Proxy Statement/Prospectus does not
contain all the information set forth in the Registration Statement and exhibits
thereto. For further information, please refer to the Registration Statement,
including the exhibits thereto. Statements contained in this Proxy
Statement/Prospectus relating to the contents of any contract or other document
referred to herein are not necessarily complete, and reference is made to the
copy of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. All information contained herein with respect to Crane and
Acquisition Corp. has been provided by Crane and all information contained
herein with respect to Interpoint and ADIC has been provided by Interpoint.
Interpoint and Crane are each subject to the information and reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith each files reports, proxy statements and
other information with the SEC. Such reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the SEC located at Citicorp Center, Suite
1400, 500 West Madison Street, Chicago, Illinois 60661, and 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such information can be
obtained at prescribed rates from the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549. The SEC maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC,
including Interpoint and Crane. Crane Common Stock is listed on the NYSE and
material filed by Crane may be inspected at the offices of the NYSE, 20 Broad
Street, New York, New York 10005. The Registration Statement and any amendments
thereto, including exhibits filed as a part thereof, are available for
inspection and copying as set forth above.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY
REFERENCE HEREIN, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED, UPON
WRITTEN OR ORAL REQUEST, WITH RESPECT TO INTERPOINT DOCUMENTS, TO THE SECRETARY,
INTERPOINT CORPORATION, 10301 WILLOWS ROAD, P.O. BOX 97005, REDMOND, WASHINGTON
98073-9705, TELEPHONE (206) 882-3100; OR WITH RESPECT TO CRANE DOCUMENTS, TO THE
SECRETARY, CRANE CO., 100 FIRST STAMFORD PLACE, STAMFORD, CONNECTICUT 06902,
TELEPHONE (203) 363-7300. TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY OCTOBER 4, 1996.
ii
<PAGE> 9
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Crane. The following documents previously filed by Crane with the SEC are
incorporated by reference in this Proxy Statement/Prospectus:
(i) Annual Report on Form 10-K for the fiscal year ended December 31,
1995;
(ii) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1996 and June 30, 1996; and
(iii) Proxy Statement dated March 14, 1996 in connection with Crane's
annual meeting of stockholders held May 6, 1996.
Interpoint. The following documents previously filed by Interpoint with
the SEC are incorporated by reference in this Proxy Statement/Prospectus:
(i) Annual Report on Form 10-K for the fiscal year ended October 31,
1995;
(ii) Quarterly Reports on Form 10-Q for the quarters ended January 31,
1996, April 30, 1996 and July 31, 1996;
(iii) Proxy Statement dated January 25, 1996 in connection with
Interpoint's annual meeting of shareholders held February 21, 1996; and
(iv) Current Report on Form 8-K dated July 1, 1996.
All documents filed by Crane or Interpoint pursuant to Section 12(b),
13(a), 13(c), 14 or 15(d), as the case may be, of the Exchange Act subsequent to
the date hereof and prior to the date of the Special Meeting shall be deemed to
be incorporated by reference herein and to be a part hereof from the date any
such document is filed. The information relating to Interpoint and Crane
contained in this Proxy Statement/Prospectus does not purport to be
comprehensive and should be read together with the information in the documents
incorporated by reference.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document that also is incorporated by reference herein)
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed to constitute a part hereof except as so modified or
superseded. All information appearing in this Proxy Statement/Prospectus is
qualified in its entirety by the information and financial statements (including
notes thereto) appearing in the documents incorporated herein by reference,
except to the extent set forth in the immediately preceding statement.
iii
<PAGE> 10
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION................. ii
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE........................... iii
SUMMARY............................... 1
The Companies....................... 1
Special Meeting..................... 1
The Spinoff......................... 2
The Merger.......................... 3
Additional Considerations........... 5
Selected Historical Financial
Data............................. 7
Summary Unaudited Pro Forma Combined
Financial Data................... 10
Comparative and Equivalent Per Share
Data............................. 11
COMPARATIVE PER SHARE MARKET
INFORMATION......................... 12
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS................ 14
COMPANIES............................. 17
Crane............................... 17
Acquisition Corp. .................. 17
Interpoint.......................... 17
ADIC................................ 17
SPECIAL MEETING OF SHAREHOLDERS....... 18
General............................. 18
Matters to Be Considered at the
Special Meeting.................. 18
Record Date; Shares Entitled to
Vote; Vote Required.............. 18
Proxies; Proxy Solicitation......... 18
BACKGROUND OF AND REASONS FOR THE
MERGER.............................. 20
Background.......................... 20
Crane's Reasons for the Merger...... 23
Interpoint's Reasons for the Merger;
Recommendation of the Interpoint
Board............................ 23
THE SPINOFF........................... 25
Background of and Reasons for the
Spinoff.......................... 25
Distribution of ADIC Common Stock;
Treatment of Stock Options....... 25
Terms of the Separation Agreement... 25
Terms of the Tax Allocation
Agreement........................ 26
THE MERGER............................ 27
Effective Time of the Merger........ 27
Exchange of Interpoint Common Stock
for the Merger Consideration..... 27
Fractional Shares................... 28
Treatment of Stock Options.......... 28
<CAPTION>
PAGE
----
<S> <C>
Procedures for Exchange of
Interpoint Certificates.......... 29
Certain Representations and
Warranties....................... 30
Conduct of Business Pending the
Merger........................... 30
Certain Additional Agreements....... 32
Voting Agreement.................... 34
Conditions to Consummation of the
Merger........................... 34
Termination......................... 35
Expenses and Termination Fees....... 35
Amendment and Waiver................ 36
Accounting Treatment................ 36
Operations of Interpoint After the
Merger........................... 36
Federal Securities Law
Consequences..................... 36
INTERESTS OF CERTAIN PERSONS IN THE
MERGER; CERTAIN TRANSACTIONS........ 36
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES........................ 38
The Spinoff......................... 38
The Merger.......................... 39
Pending Legislation................. 40
RIGHTS OF DISSENTING INTERPOINT
SHAREHOLDERS........................ 41
DESCRIPTION OF CRANE CAPITAL STOCK.... 43
Crane Common Stock.................. 43
Crane Preferred Stock............... 43
COMPARISON OF SHAREHOLDER RIGHTS...... 43
Size and Classification of the Board
of Directors..................... 44
Removal of Directors................ 44
Special Meetings of Stockholders.... 44
Amendment to Certificate/Articles of
Incorporation.................... 45
Provisions Relating to Acquisitions
and Business Combinations........ 45
Mergers, Acquisitions and Other
Transactions..................... 46
Action Without a Meeting............ 47
Appraisal or Dissenters' Rights..... 47
Indemnification of Directors and
Officers......................... 47
Dividends........................... 48
Shareholder Rights Plan............. 48
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL
MEETING............................. 51
OTHER MATTERS......................... 51
LEGAL OPINION......................... 51
TAX OPINIONS.......................... 51
INDEPENDENT ACCOUNTANTS............... 52
</TABLE>
Appendix I -- Agreement and Plan of Merger dated as of July 1, 1996, by and
among Crane, Acquisition Corp. and Interpoint
Appendix II -- Sections 23B.13.010 -- 23B.13.310 of the Washington Business
Corporation Act
iv
<PAGE> 11
INDEX OF DEFINED TERMS
The following terms, when used in this Proxy Statement/Prospectus, have the
meanings ascribed to them on the pages of this Proxy Statement/Prospectus listed
below.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Acquiring Person...................... 49
Acquiror.............................. 46
Acquisition Corp. .................... i
ADIC.................................. i
ADIC Common Stock..................... i
ADIC Replacement Option............... 29
Affiliate Agreement................... 32
Aggregate Share Distribution Amount... i
Alternative Proposal.................. 31
Amendment............................. 50
Average Price......................... 4
B reorganization...................... 39
Closing............................... 4
Closing Date.......................... i
Code.................................. 6
Continuing Directors.................. 46
Crane................................. i
Crane Board........................... 23
Crane By-Laws......................... 43
Crane Certificate of Incorporation.... 43
Crane Common Stock.................... i
Crane Preferred Stock................. 43
Crane Rights.......................... 28
Crane Rights Agreement................ 28
Crane Rights Record Date.............. 48
Crane Series A Preferred Stock........ 43
Dain.................................. 22
DGCL.................................. 43
Director Shareholders................. 34
Distribution Date..................... 49
Effective Time........................ i
ELDEC................................. 6
Exchange Act.......................... ii
Exchange Agent........................ 28
HSR Act............................... 5
<CAPTION>
PAGE
----
<S> <C>
Information Statement................. i
Interpoint............................ i
Interpoint Affiliates................. 32
Interpoint Articles of
Incorporation....................... 43
Interpoint Board...................... i
Interpoint Bylaws..................... 43
Interpoint Certificates............... 29
Interpoint Common Stock............... i
Interpoint Replacement Option......... 29
Interpoint Replacement Option Exercise
Price............................... 29
IRS................................... 6
Merger................................ i
Merger Agreement...................... i
NASD.................................. 47
NYSE.................................. i
Record Date........................... 2
Redemption Price...................... 50
Registration Statement................ ii
Right Certificates.................... 49
Rights Purchase Price................. 49
Seafirst Bank......................... 32
SEC................................... ii
Securities Act........................ ii
Segregated Account.................... 32
Separation Agreement.................. 3
Special Meeting....................... i
Spinoff............................... i
Spinoff Agreements.................... 30
Spinoff Date.......................... 2
Surviving Corporation................. i
Tax Allocation Agreement.............. 3
Trading Days.......................... 4
Voting Agreement...................... 2
WBCA.................................. i
</TABLE>
v
<PAGE> 12
SUMMARY
Certain significant matters discussed in this Proxy Statement/Prospectus
are summarized below. This summary is not intended to be complete and is
qualified in all respects by reference to the more detailed information
appearing or incorporated by reference in this Proxy Statement/Prospectus
(including the Appendices hereto) or in the Information Statement. Shareholders
are urged to read this Proxy Statement/Prospectus, the Appendices hereto and
the Information Statement before voting on the matters discussed herein. As used
herein, unless the context otherwise requires, the term "Crane" refers to Crane
and its subsidiaries and the term "Interpoint" refers to Interpoint and its
subsidiaries, except for ADIC and ADIC Europe SARL. All information contained in
this Proxy Statement/Prospectus reflects the 2-for-1 split of Interpoint Common
Stock effective June 27, 1996.
THE COMPANIES
Crane...................... Crane is a diversified manufacturer of engineered
industrial products and the largest American
distributor of doors, windows and millwork. Founded
in 1855, Crane employs over 10,000 people in North
America, Europe, Asia and Australia combined. The
mailing address of Crane's principal executive
offices is 100 First Stamford Place, Stamford,
Connecticut 06902, and its telephone number is
(203) 363-7300. See "Available Information" and
"Companies--Crane."
Interpoint................. Interpoint designs, manufactures and sells
proprietary high-performance power converters and
custom hybrid microcircuits for use in a wide range
of applications, including commercial aerospace,
military electronics, general commercial
applications and implantable and nonimplantable
medical devices. The mailing address of
Interpoint's principal executive offices is 10301
Willows Road, P.O. Box 97005, Redmond, Washington
98073-9705, and its telephone number is (206)
882-3100. See "Available Information" and
"Companies--Interpoint."
Acquisition Corp. ......... Acquisition Corp., a Washington corporation and a
wholly owned subsidiary of Crane, was formed by
Crane solely for the purpose of effecting the
Merger. The mailing address of Acquisition Corp.'s
principal executive offices is c/o Crane, 100 First
Stamford Place, Stamford, Connecticut 06902, and
its telephone number is (203) 363-7300. See
"Companies-- Acquisition Corp."
ADIC....................... ADIC, a Washington corporation and a wholly owned
subsidiary of Interpoint, designs, manufactures,
markets and supports specialized data storage
peripherals used to backup and archive electronic
data for client/server and workstation network
computing environments. The mailing address of
ADIC's principal executive offices is 10201 Willows
Road, P.O. Box 97057, Redmond, Washington
98073-9757, and its telephone number is (206)
881-8004. See "The Companies--ADIC."
SPECIAL MEETING
Date, Time and Place of the
Special Meeting.......... The Special Meeting will be held on Friday,
October 11, 1996 at 9:00 a.m., local time, at the
offices of Perkins Coie, 1201 Third Avenue, 40th
Floor, Seattle, Washington.
1
<PAGE> 13
Purposes of the Special
Meeting.................. At the Special Meeting, shareholders of Interpoint
will consider and vote upon a proposal to approve
the Merger Agreement and the transactions
contemplated thereby, pursuant to which Interpoint
would become a wholly owned subsidiary of Crane.
Although no shareholder vote is required to approve
the Spinoff, the Merger and the Spinoff are
interdependent, so that a vote to approve the
Merger Agreement is in effect a vote to approve the
Spinoff.
Record Date................ Only holders of record of Interpoint Common Stock
at the close of business on August 26, 1996 (the
"Record Date") are entitled to notice of and to
vote at the Special Meeting and any adjournments or
postponements thereof. On the Record Date,
7,941,324 shares of Interpoint Common Stock were
outstanding and entitled to vote.
Quorum; Vote Required...... The presence, in person or by proxy, of the holders
of a majority of the outstanding shares of
Interpoint Common Stock entitled to vote is
necessary to constitute a quorum for the
transaction of business at the Special Meeting. The
affirmative vote of holders of shares representing
at least two-thirds of the outstanding shares of
Interpoint Common Stock is necessary to approve the
Merger Agreement and the transactions contemplated
thereby. As a result, abstentions, failures to vote
and broker nonvotes will have the practical effect
of voting against approval of the Merger Agreement
and the transactions contemplated thereby. See
"Special Meeting of Shareholders--Record Date;
Shares Entitled to Vote; Vote Required."
Ownership of Interpoint
Common Stock by
Management and Certain
Persons; Voting
Agreement................ Directors and executive officers of Interpoint and
their affiliates beneficially own in the aggregate
approximately 14.2% of the outstanding shares of
Interpoint Common Stock as of the Record Date and
have indicated that they plan to vote or direct the
vote of all shares of Interpoint Common Stock over
which they have voting control in favor of the
Merger Agreement and the transactions contemplated
thereby. Three of the directors included above, who
together beneficially own approximately 13.1% of
the outstanding shares of Interpoint Common Stock,
have entered into a Voting Agreement dated as of
July 1, 1996 (the "Voting Agreement") pursuant to
which they agreed to vote their shares of
Interpoint Common Stock in favor of the Merger
Agreement and the transactions contemplated
thereby. See "The Merger--Voting Agreement" and
"Interests of Certain Persons in the Merger;
Certain Transactions."
THE SPINOFF
Distribution of ADIC
Common Stock............. Subject to approval of the Merger Agreement and the
transactions contemplated thereby by Interpoint
shareholders, Interpoint will distribute to its
shareholders pro rata all the ADIC Common Stock.
Interpoint shareholders will receive one share of
ADIC Common Stock for each share of Interpoint
Common Stock held on the Closing Date immediately
prior to the effective time of the Merger (the
"Spinoff
2
<PAGE> 14
Date"). The Spinoff will be effected immediately
prior to the Merger, and is conditioned upon the
approval by Interpoint shareholders of the Merger
Agreement and the transactions contemplated
thereby. See "The Spinoff."
Separation and Tax
Allocation Agreements.... Prior to the Closing, Interpoint and ADIC will
enter into a Separation Agreement (the "Separation
Agreement") providing for the transfer of certain
assets from Interpoint to ADIC, including the
forgiveness of intercompany debt, and containing
certain other provisions that will govern the
relationship between ADIC and Interpoint following
the Spinoff. Interpoint and ADIC will also enter
into a Tax Allocation Agreement (the "Tax
Allocation Agreement") providing for the allocation
of tax benefits and obligations and certain other
related matters. See "The Spinoff--Terms of the
Separation Agreement" and "--Terms of the Tax
Allocation Agreement."
Quotation of ADIC Common
Stock on the Nasdaq
National Market.......... ADIC Common Stock distributed in the Spinoff will
be listed for quotation on the Nasdaq National
Market under the symbol "ADIC."
THE MERGER
General.................... Upon consummation of the Merger, Acquisition Corp.,
a wholly owned subsidiary of Crane, will be merged
with and into Interpoint, which will be the
Surviving Corporation, and shares of Interpoint
Common Stock outstanding immediately prior to the
Merger (other than shares as to which dissenters'
rights have been exercised) will be converted into
the right to receive shares of Crane Common Stock.
No fractional shares of Crane Common Stock will be
issued in the Merger. Interpoint shareholders
otherwise entitled to a fractional share will be
paid the value of such fraction in cash, without
interest. All outstanding options to purchase
Interpoint Common Stock will be terminated by
Interpoint with a cash payment prior to the
Effective Time.
Recommendation of
Interpoint Board of
Directors................ THE INTERPOINT BOARD, AFTER CAREFUL CONSIDERATION,
HAS DETERMINED THAT THE MERGER, IN COMBINATION WITH
THE SPINOFF, IS FAIR TO, AND IN THE BEST INTERESTS
OF, INTERPOINT AND ITS SHAREHOLDERS AND HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS
THAT INTERPOINT SHAREHOLDERS APPROVE THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY.
Reasons for the Merger..... The Interpoint Board's recommendation is based on a
number of factors discussed in this Proxy
Statement/Prospectus, including the structure of
the Merger Agreement and the transactions
contemplated thereby, including the Spinoff, which
allows Interpoint shareholders to participate in
the Merger and retain a proportionate equity
interest in ADIC as a stand-alone company whose
shares will be publicly traded; the opportunity for
Interpoint shareholders to benefit from owning
shares in a larger, more diversified company with
greater financial resources than Interpoint; the
opportunities presented by the Merger for revenue
enhancement, cost savings and future growth in the
microelectronics business; and the tax-free nature
of the Merger and the Spinoff to holders of
Interpoint Common Stock. See "Background of and
Reasons for the Merger."
3
<PAGE> 15
Effective Time of the
Merger................... Following receipt of all required approvals and the
satisfaction or waiver (where permissible) of the
other conditions to the Merger, the Merger will be
consummated and become effective at the time at
which Articles of Merger to be filed pursuant to
the WBCA are accepted for filing by the Secretary
of State of Washington or at such later date and
time as may be specified in such Articles of
Merger. See "The Merger-- Effective Time of the
Merger," "--Conditions to Consummation of the
Merger" and "--Amendment and Waiver."
Consideration Received by
Interpoint Shareholders
in the Merger............ In the Merger, Interpoint shareholders will be
entitled to receive, for each share of Interpoint
Common Stock held, a fraction of a share of Crane
Common Stock, the numerator of which is the
Aggregate Share Distribution Amount and the
denominator of which is the product of (i) the
Average Price (as defined below) and (ii) the
number of shares of Interpoint Common Stock
outstanding immediately prior to the Effective
Time. The "Aggregate Share Distribution Amount"
will be $59 million, less (a) the aggregate
principal amount of interest-bearing indebtedness
of Interpoint and its subsidiaries outstanding
immediately before the Effective Time, plus accrued
and unpaid interest thereon, as reduced by
$1,087,500 (the principal amount of a note payable
to Interpoint) and (b) the net amount of
intercompany advances made by Interpoint to ADIC
subsequent to April 30, 1996 from any source other
than the indebtedness referred to in clause (a)
above and outstanding immediately before the
Effective Time, excluding amounts advanced to
satisfy a management service charge of $10,000 per
month, but including the fair market value of
property other than cash, excluding (i) all of
Interpoint's interest in ADIC Europe SARL and
Visual Technologies, Limited and (ii) any
additional property (other than cash) to be
transferred by Interpoint to ADIC in connection
with the Spinoff and approved by Crane. The
"Average Price" is equal to the average of the
closing sales price of Crane Common Stock as
reported on the NYSE Composite Tape for the 10
consecutive trading days on which securities are
traded on the NYSE ("Trading Days") ending on (and
including) the Trading Day immediately preceding
the Closing Date. See "The Merger--Exchange of
Interpoint Common Stock for the Merger
Consideration."
Based on an estimated Aggregate Share Distribution
Amount of approximately $32 million to $36 million,
the closing price of Crane Common Stock on
September 5, 1996 and the number of outstanding
shares of Interpoint Common Stock on that date,
Interpoint estimates that each outstanding share of
Interpoint Common Stock will be converted into
Crane Common Stock having a value of approximately
$4.00 to $4.50 per share, or approximately .10 to
.11 of a share of Crane Common Stock. Interpoint
shareholders should be aware that the value of the
Crane Common Stock (and the fraction of a share
that represents such value) actually received in
the Merger in exchange for a share of Interpoint
Common Stock may vary from those estimates in
accordance with the formula set forth above and is
expected to fluctuate prior to the closing of the
Merger (the "Closing"). See "The Merger--Exchange
of Interpoint Common Stock for the Merger
Consideration."
4
<PAGE> 16
Quotation of Crane Common
Stock on the NYSE........ The Crane Common Stock to be issued in the Merger
will be listed on the NYSE.
Operations of Interpoint
After the Merger......... After the Merger, Interpoint will be a wholly owned
subsidiary of Crane and will operate as one of
Crane's business units. Crane currently intends to
maintain Interpoint's operations in their present
locations. After the Merger, Interpoint will have
access to resources generally available to Crane's
other business units. See "The Merger--Operations
of Interpoint After the Merger."
Termination; Termination
Fee........................ The Merger Agreement may be terminated in certain
circumstances as described in "The
Merger--Termination." Upon termination of the
Merger Agreement under certain circumstances,
Interpoint would be required to pay Crane $3.0
million plus an amount equal to all out-of-pocket
fees and expenses incurred by Crane, not to exceed
$1.0 million. See "The Merger--Expenses and
Termination Fees."
Conditions; Regulatory
Approvals................ Consummation of the Merger is conditioned upon the
fulfillment or waiver (where permissible) of
certain conditions, including, but not limited to,
approval of the Merger Agreement by the Interpoint
shareholders, completion of the Spinoff and
termination or expiration of the relevant waiting
period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR
Act"). The parties to the Merger filed
notifications under the HSR Act on July 17, 1996
and the waiting period in connection with such
filings expired on August 16, 1996.
Dissenters' Rights......... Holders of Interpoint Common Stock have the right
to dissent from the Merger and, subject to certain
conditions, to receive payment of the "fair value"
of their shares of Interpoint Common Stock, as
provided in Sections 23B.13.010 through 23B.13.310
of the WBCA. See "Rights of Dissenting Interpoint
Shareholders."
Accounting Treatment....... The Merger will be accounted for under the
"purchase" method of accounting. See "The
Merger--Accounting Treatment."
ADDITIONAL CONSIDERATIONS
Certain Federal Income Tax
Consequences............. It is expected that the Merger will constitute a
tax-free reorganization for federal income tax
purposes and, accordingly, no gain or loss will be
recognized by holders of Interpoint Common Stock
upon the conversion of Interpoint Common Stock into
Crane Common Stock in the Merger (except with
respect to any cash received in lieu of a
fractional share of Crane Common Stock or in
respect of shares for which dissenters' rights have
been perfected). It is further expected that no
gain or loss will be recognized by Interpoint or
Crane as a result of the Merger. It is expected
that the Spinoff will qualify as a tax-free
distribution for federal income tax purposes and,
accordingly, no gain or loss will be recognized by
holders of Interpoint Common Stock upon receipt of
ADIC Common Stock in the Spinoff.
5
<PAGE> 17
The parties will not be requesting a ruling from
the Internal Revenue Service (the "IRS") regarding
the tax treatment of the Spinoff or the Merger.
Although Perkins Coie and Milbank, Tweed, Hadley &
McCloy will issue opinions to Interpoint and to
Crane, respectively, that the Spinoff and the
Merger will be tax-free transactions under the
Internal Revenue Code of 1986, as amended (the
"Code"), those opinions will not be binding on the
IRS. In addition, those opinions will be based on a
number of representations, the inaccuracy of any
one of which could result in the Spinoff or the
Merger or both being taxable transactions to
Interpoint and its shareholders. Also, if the
Revenue Reconciliation Act of 1996, as proposed by
the Clinton administration, were passed by Congress
in its current form, which appears unlikely at this
time, the Spinoff would be taxable to Interpoint.
SHAREHOLDERS OF INTERPOINT ARE URGED TO CONSULT
THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX
CONSEQUENCES TO THEM OF BOTH THE SPINOFF AND THE
MERGER. SEE "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES."
Interests of Certain
Persons in the Merger;
Certain Transactions..... In considering the recommendation of the Interpoint
Board with respect to the Merger Agreement and the
transactions contemplated thereby, holders of
Interpoint Common Stock should be aware that
certain executive officers and directors of
Interpoint have interests in the Merger that are in
addition to and not necessarily aligned with the
interests of Interpoint shareholders generally.
These interests include, among other things: (i)
certain executive officers and directors will
receive cash payments in exchange for termination
of stock options held by them; (ii) the Merger
Agreement contains customary provisions with
respect to the continuation of existing
indemnification rights in favor of officers,
directors and employees of Interpoint and the
continuation of directors' and officers' liability
insurance; (iii) certain executive officers and
other management employees of Interpoint will be
the beneficiaries of a severance policy to be
continued by Interpoint, as the Surviving
Corporation, for at least two years following the
Closing, pursuant to which each will be eligible
for certain severance benefits; and (iv) Peter H.
van Oppen, Interpoint's Chairman, President and
Chief Executive Officer, will enter into a
six-month consulting agreement with ELDEC
Corporation ("ELDEC"), a wholly owned subsidiary of
Crane located in Seattle, Washington. See
"Interests of Certain Persons in the Merger;
Certain Transactions."
6
<PAGE> 18
SELECTED HISTORICAL FINANCIAL DATA
The following selected historical financial data of Crane as of December
31, 1994 and 1995 and for the years ended December 31, 1993, 1994 and 1995 and
Interpoint as of October 31, 1994 and 1995 and for the years ended October 31,
1993, 1994 and 1995 have been derived from and are qualified in their entirety
by, and should be read in conjunction with, the respective audited consolidated
financial statements and notes thereto incorporated by reference herein. See
"Incorporation of Certain Documents by Reference" and "Unaudited Pro Forma
Condensed Combined Financial Statements."
Crane's consolidated statement of income data for the years ended December
31, 1991 and 1992 and the balance sheet data as of December 31, 1991, 1992 and
1993 are derived from Crane's audited consolidated financial statements that are
neither included nor incorporated by reference herein. Interpoint's consolidated
statement of income data for the years ended October 31, 1991 and 1992 and the
balance sheet data as of October 31, 1991, 1992 and 1993 are derived from
Interpoint's audited consolidated financial statements that are neither included
nor incorporated by reference herein.
The following selected historical financial data of ADIC have been derived
from audited ADIC financial statements that are neither included nor
incorporated by reference herein. For the two-year period ended October 31,
1995, the selected historical financial data relate to ADIC as it was operated
as part of Interpoint. For the three-year period ended September 30, 1993, the
selected historical financial data relate to the operation of ADIC as an
independent company. In order to conform ADIC's fiscal year end to Interpoint's
fiscal year end upon the merger of ADIC into Interpoint in February 1994, ADIC's
financial statements for the month of October 31, 1993 are not included for
either the fiscal year ended September 30, 1993 or October 31, 1994.
The unaudited financial data presented below for the interim periods ended
June 30, 1995 and 1996 and July 31, 1995 and 1996 are derived from the unaudited
consolidated financial statements of each of Crane, Interpoint and ADIC, as
applicable. Those statements of Crane and Interpoint are incorporated by
reference herein. In the opinion of Crane, Interpoint and ADIC, the applicable
unaudited financial data have been prepared on the same basis as the audited
consolidated financial statements and include all adjustments (consisting only
of normal recurring adjustments) necessary to fairly state the information set
forth herein. Operating results for the interim periods ended June 30, 1996 and
July 31, 1996 are not necessarily indicative of the results that may be expected
for the entire year or for any other interim period.
7
<PAGE> 19
CRANE
<TABLE>
<CAPTION>
AT OR FOR SIX MONTHS
AT OR FOR FISCAL YEAR ENDED DECEMBER 31, ENDED JUNE 30,
---------------------------------------------------------------- -----------------------
1991 1992 1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF INCOME DATA
Net sales.............. $1,302,532 $1,306,977 $1,310,205 $1,653,466 $1,782,310 $ 884,057 $ 902,694
Depreciation and
amortization......... 28,411 28,530 29,420 44,691 48,765 23,846 24,072
Operating profit....... 78,902 45,244 85,856 109,889 142,948 67,518 77,550
Interest expense....... 11,540 14,464 11,396 24,171 26,913 14,030 11,630
Income before taxes.... 72,405 38,689 79,818 91,227 121,468 54,477 64,499
Provision for income
taxes................ 27,412 14,403 30,925 35,294 45,131 21,085 24,187
Income from
operations........... $ 44,993(1) $ 24,286 $ 48,893 $ 55,933 $ 76,337 $ 33,392 $ 40,312
========== ========== ========== ========== ========== ========== ========
Income per common
share:
Primary.............. $ 1.42(1) $ .79 $ 1.62 $ 1.86 $ 2.50 $ 1.10 $ 1.32
Fully diluted........ 1.41(1) .78 1.61 1.85 2.49 1.10 1.32
Weighted average
number of shares
outstanding........ 31,628 30,845 30,217 30,146 30,544 30,459 30,586
CONSOLIDATED BALANCE
SHEET DATA
Assets................. $ 630,237 $ 630,211 $ 744,165 $1,008,045 $ 998,411 $1,035,873 $1,023,905
Long-term debt......... 83,847 111,048 105,557 331,289 281,093 326,258 265,180
Cash dividends per
common share......... $ .75 $ .75 $ .75 $ .75 $ .75 $ .375 $ .375
</TABLE>
- ---------------
(1) Income before cumulative effect of a change in accounting for
post-retirement benefits other than pensions of $22,341 ($.70 per share).
INTERPOINT(1)
<TABLE>
<CAPTION>
AT OR FOR NINE
MONTHS
AT OR FOR FISCAL YEAR ENDED OCTOBER 31, ENDED JULY 31,
------------------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
INCOME DATA
Net sales................ $42,089 $47,832 $52,081 $54,755 $71,056 $48,473 $74,290
Acquisition expenses..... -- -- -- 729 -- -- --
Net income............... 41 2,143 2,320 1,726 3,088 1,821 4,332
Average number of common
and common equivalent
shares
outstanding(2)......... 7,742 7,722 7,841 7,990 8,005 7,977 8,152
Net income per
share(2)............... $ .01 $ .28 $ .30 $ .22 $ .39 $ .23 $ .53
CONSOLIDATED BALANCE
SHEET DATA(3)
Total assets............. $30,356 $34,006 $34,100 $39,139 $47,920 $43,167 $58,409
Long-term debt, excluding
current portion........ 5,775 7,372 5,935 4,029 3,551 3,364 13,146
Shareholders' equity..... 11,014 13,298 15,784 18,023 21,351 20,096 26,106
</TABLE>
- ---------------
(1) In February 1994, Interpoint acquired ADIC in a merger accounted for as a
pooling of interests. Consequently, all amounts presented are as if the
companies had been combined as of the beginning of the periods presented.
(2) On June 27, 1996, Interpoint effected a 2-for-1 stock split. Retroactive
effect is given to the split.
(3) Interpoint has not declared any dividends on the Interpoint Common Stock
during the periods indicated above.
8
<PAGE> 20
ADIC(1)(2)
<TABLE>
<CAPTION>
AT OR FOR FISCAL AT OR FOR NINE
AT OR FOR FISCAL YEAR YEAR MONTHS
ENDED SEPTEMBER 30, ENDED OCTOBER 31, ENDED JULY 31,
------------------------------- ------------------- -------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA
Net sales..................... $11,735 $12,837 $17,108 $20,083 $31,716 $20,969 $39,571
Net income (loss)............. (1,365) 964 1,285 (42) 292 170 1,941
======= ======= ======= ======= ======= ======= =======
Pro forma average number of
common and common equivalent
shares outstanding(3)....... 8,010 8,158
Pro forma net income per
share....................... $ 0.04 $ 0.24
======= =======
CONSOLIDATED BALANCE SHEET
DATA
Total assets.................. $ 3,637 $ 3,958 $ 5,895 $ 8,710 $13,943 $10,892 $21,269
Long-term and intercompany
debt, excluding current
portion..................... 106 916 672 2,358 5,434 3,892 8,441
Shareholders' equity.......... 539 1,524 2,808 3,027 3,387 3,304 5,304
</TABLE>
- ---------------
(1) The periods subsequent to the fiscal year ended September 30, 1993 reflect
ADIC's results of operations as a wholly owned subsidiary of Interpoint.
ADIC was acquired by Interpoint in February 1994 in a transaction accounted
for as a pooling of interests. Results of operations include allocations of
corporate expenses and interest expense on intercompany borrowings. The
fiscal years ended September 30, 1991, 1992 and 1993 reflect ADIC's results
of operations as a separate company prior to the acquisition by Interpoint.
(2) In June 1994, ADIC acquired its wholly owned subsidiary, ADIC Europe SARL,
in a transaction accounted for as a purchase.
(3) Pro forma net income per share is calculated for the nine months ended July
31, 1996 and for the fiscal year ended October 31, 1995 based on the number
of shares of Interpoint Common Stock outstanding at June 30, 1996, plus the
incremental shares outstanding, as calculated under the treasury stock
method, of the estimated number of ADIC stock options that will be
outstanding as a result of the Spinoff. Retroactive effect was given to the
2-for-1 stock split that became effective June 27, 1996.
9
<PAGE> 21
SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following summary unaudited pro forma combined financial data for the
year ended December 31, 1995 and for the six months ended June 30, 1996 give
effect to the Merger as if it had occurred at the beginning of the applicable
period for pro forma income statement data and as of June 30, 1996 for pro forma
balance sheet data using the purchase method of accounting. The pro forma income
statement data for the year ended December 31, 1995 and the six months ended
June 30, 1996 reflect the combination of statement of income data of Crane for
the year ended December 31, 1995 and the six months ended June 30, 1996 with the
statement of income data of Interpoint (after giving effect to the Spinoff) for
the year ended October 31, 1995 and the six months ended April 30, 1996,
respectively. The 1996 pro forma balance sheet data reflect the combination of
the balance sheet of Crane as of June 30, 1996 and the balance sheet of
Interpoint as of April 30, 1996. The summary pro forma combined financial data
should be read in conjunction with the unaudited pro forma combined financial
statements and notes thereto, which are included elsewhere in this Proxy
Statement/Prospectus. The pro forma combined financial data are not necessarily
indicative of actual or future operating results or the financial position that
would have occurred or will occur upon consummation of the Merger and the
Spinoff. See "Unaudited Pro Forma Condensed Combined Financial Statements."
<TABLE>
<CAPTION>
PRO FORMA
----------------------------------------
HISTORICAL ADJUSTMENTS
------------------------ -------------------
CRANE INTERPOINT ADIC(1) MERGER COMBINED
---------- ---------- -------- ------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
Net sales................................ $1,782,310 $ 71,056 $(31,716) $ (958)(2) $1,820,692
Cost of sales............................ 1,355,938 49,250 (22,107) (958)(2) 1,382,123
---------- ------- -------- ------- ----------
Gross profit......................... 426,372 21,806 (9,609) -- 438,569
Income before tax........................ 121,468 4,252 (215) (2,071)(3) (4) 123,434
Net income............................... $ 76,337 $ 3,088 $ (292) $(1,931)(5) $ 77,202
========== ======= ======== ======= ==========
Average primary shares outstanding....... 30,544 8,005 31,403
Net income per share..................... $ 2.50 $ 0.39 $ 2.46
SIX MONTHS ENDED JUNE 30, 1996
Net sales................................ $ 902,694 $ 45,077 $(24,386) $ (400)(2) $ 922,985
Cost of sales............................ 659,587 32,812 (17,657) (400)(2) 674,342
---------- ------- -------- ------- ----------
Gross profit......................... 243,107 12,265 (6,729) -- 248,643
Income before tax........................ 64,499 3,243 (1,506) (1,081)(3) (4) 65,155
Net income............................... $ 40,312 $ 1,996 $ (1,008) $ (976)(5) $ 40,324
========== ======= ======== ======= ==========
Average primary shares outstanding....... 30,586 8,050 31,445
Net income per share..................... $ 1.32 $ 0.25 $ 1.28
AS OF JUNE 30, 1996
Total assets............................. $1,023,905 $ 55,702 $(20,377) $31,925 (6) (7) 1,091,155
Current liabilities...................... 250,617 14,911 (7,358) 2,210 (8) (9) 260,380
Long-term debt........................... 265,180 16,055 (8,701) 13,701 (10) 286,235
Total equity............................. 407,088 23,360 (4,318) 15,314 (11)(12) 441,444
</TABLE>
- ---------------
(1) The ADIC adjustments reflect the Spinoff.
(2) Reflects the elimination of intercompany sales and costs of sales between
Interpoint and Crane.
(3) Reflects the estimated additional depreciation and amortization of goodwill
associated with the acquisition of Interpoint by Crane.
(4) Reflects the estimated interest expense on additional debt, which will be
used to fund the buyout of Interpoint stock options and a capital
contribution to ADIC.
(5) Includes estimated tax benefits associated with the pro forma adjustments.
(6) Reflects the preliminary allocation of purchase accounting adjustments to
Interpoint assets and liabilities.
(7) Reflects the preliminary estimate of cost in excess of Interpoint's net
assets acquired.
(8) Reflects the estimated additional debt required to fund the buyout of
Interpoint stock options prior to the Merger.
(9) Reflects the estimated tax benefit associated with the buyout of Interpoint
stock options.
(10) Reflects the capitalization of ADIC debt by Interpoint.
(11) Reflects the issuance of 858,900 shares of Crane Common Stock (at an
assumed average market value of $40 per share) in exchange for the
outstanding Interpoint Common Stock after the Spinoff.
(12) Reflects the elimination of Interpoint capital accounts upon consolidation
with Crane.
10
<PAGE> 22
COMPARATIVE AND EQUIVALENT PER SHARE DATA
Comparative Per Share Data. The following table presents comparative per
share data for Crane (on a historical and pro forma basis) and for Interpoint
(on a historical and equivalent per share basis). Historical information for
Crane and for Interpoint has been derived from their respective selected
financial data included elsewhere or incorporated by reference herein. The pro
forma combined information is not necessarily indicative of actual or future
operating results or financial position that would have occurred or will occur
upon consummation of the Merger. The information presented below should be read
in conjunction with the Unaudited Pro Forma Condensed Combined Financial
Statements included elsewhere in this Proxy Statement/Prospectus and the
separate historical consolidated financial statements of Crane and of Interpoint
incorporated by reference herein.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
----------------- ----------------
<S> <C> <C>
CRANE
Historical:
Net income per common share............................... $ 2.50 $ 1.32
Book value per common share............................... 12.44 13.41
Cash dividends per common share........................... .75 .375
Pro Forma Combined(1)(2):
Net income per common share............................... $ 2.46 $ 1.28
Book value per common share............................... 13.72 14.04
Cash dividends per common share........................... .75 .375
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
OCTOBER 31, 1995 APRIL 30, 1996
---------------- ----------------
<S> <C> <C>
INTERPOINT
Historical:
Net income per common share................................ $ .39 $ .25
Book value per common share................................ 2.67 2.90
Cash dividends per common share............................ N/A N/A
Pro Forma Equivalent(1)(2):
Net income per common share................................ $ .27 $ .14
Book value per common share................................ 1.48 1.52
Cash dividends per common share............................ .08 .04
</TABLE>
- ---------------
(1) Per share data were calculated assuming a conversion rate of one share of
Crane Common Stock for every 9.25 shares of Interpoint Common Stock. This
conversion rate is based on the Aggregate Share Distribution Amount, which
is $59 million less certain deductions which, as of June 30, 1996, were
approximately $24.6 million, resulting in the distribution of $34.4 million
of Crane Common Stock, or 858,900 shares at an assumed average market value
of $40 per share. The ultimate conversion rate may be higher or lower based
upon the final Aggregate Share Distribution Amount, which will be determined
as of the Effective Time. See "The Merger--Exchange of Interpoint Common
Stock for the Merger Consideration."
(2) The pro forma combined and pro forma equivalent per share amounts do not
include any values attributable to ADIC, which is to be spun off to
Interpoint's shareholders prior to the Merger.
Equivalent Per Share Data. On July 1, 1996, the last trading day
immediately prior to the public announcement of the execution of the Merger
Agreement, the closing sale price for the Crane Common Stock as reported on the
NYSE was $40 7/8 per share and the last sale price for the Interpoint Common
Stock as reported on the Nasdaq National Market was $15 per share. The
"equivalent per share price" of the Interpoint Common Stock on such date, based
on the closing sale price per share for the Crane Common Stock as reported on
the NYSE on such date, multiplied by the fraction of a share of Crane Common
Stock into which each share of Interpoint Common Stock is expected to be
converted based on the assumptions stated in footnote (1) to the table above,
and without including any value attributable to ADIC, would be $4.42 per share.
The ultimate "equivalent per share price" may be higher or lower based upon the
final Aggregate Share Distribution Amount, the trading prices of the Crane
Common Stock and the Interpoint Common Stock prior to the Closing, and the
number of shares of Interpoint Common Stock outstanding immediately prior to the
Closing.
11
<PAGE> 23
Comparative PER SHARE MARKET INFORMATION
Crane. Crane Common Stock is listed on the NYSE. The table below sets
forth for the fiscal periods indicated the high and low closing prices per share
of Crane Common Stock on the NYSE as reported in published financial sources and
the dividends per share paid on Crane Common Stock.
<TABLE>
<CAPTION>
PRICE PER
SHARE OF
CRANE COMMON
STOCK DIVIDENDS PER
------------- SHARE OF CRANE
HIGH LOW COMMON STOCK
---- ---- --------------
<S> <C> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1994
First Quarter....................................... $29 1/2 $24 3/4 $.1875
Second Quarter...................................... 27 1/4 24 1/8 .1875
Third Quarter....................................... 27 1/4 24 1/4 .1875
Fourth Quarter...................................... 27 7/8 24 7/8 .1875
FISCAL YEAR ENDED DECEMBER 31, 1995
First Quarter....................................... 31 25 7/8 .1875
Second Quarter...................................... 38 5/8 30 1/8 .1875
Third Quarter....................................... 39 1/2 30 .1875
Fourth Quarter...................................... 38 3/8 32 3/4 .1875
FISCAL YEAR ENDING DECEMBER 31, 1996
First Quarter....................................... 43 3/8 36 1/8 .1875
Second Quarter...................................... 44 1/2 38 3/4 .1875
Third Quarter (through September 5, 1996)........... 41 36 1/2
</TABLE>
On July 1, 1996, the last full trading day prior to announcement of the
execution of the Merger Agreement, the reported NYSE closing price per share of
Crane Common Stock was $40 7/8. On September 5, 1996, the most recent available
date prior to printing this Proxy Statement/Prospectus, the reported NYSE
closing price per share of Crane Common Stock was $40 1/4. On that date, there
were approximately 6,200 holders of record. The Crane Common Stock to be issued
in the Merger is currently held by Crane in treasury.
12
<PAGE> 24
Interpoint. Interpoint Common Stock is quoted on the Nasdaq National
Market. The table below sets forth for the fiscal periods indicated the high and
low sale prices per share of Interpoint Common Stock on the Nasdaq National
Market as reported in published financial sources. All Interpoint sales prices
shown below have been adjusted to reflect the 2-for-1 stock split of Interpoint
Common Stock effective June 27, 1996.
<TABLE>
<CAPTION>
PRICE PER
SHARE OF
INTERPOINT
COMMON STOCK
------------
HIGH LOW
---- ---
<S> <C> <C>
FISCAL YEAR ENDED OCTOBER 31, 1994
First Quarter....................................................... $6 7/8 $3 1/2
Second Quarter...................................................... 6 1/2 3 1/2
Third Quarter....................................................... 5 1/2 3 1/2
Fourth Quarter...................................................... 5 3/4 4
FISCAL YEAR ENDED OCTOBER 31, 1995
First Quarter....................................................... 4 3/4 3 3/8
Second Quarter...................................................... 4 5/8 3 1/2
Third Quarter....................................................... 5 3/8 3 3/4
Fourth Quarter...................................................... 6 1/4 4 1/2
FISCAL YEAR ENDING OCTOBER 31, 1996
First Quarter....................................................... 6 3/16 4 3/8
Second Quarter...................................................... 7 1/8 4 1/2
Third Quarter....................................................... 19 5/8 6 3/4
Fourth Quarter (through September 5, 1996).......................... 14 9 1/4
</TABLE>
On July 1, 1996, the last full trading day prior to announcement of the
execution of the Merger Agreement, the reported Nasdaq National Market last sale
price per share of Interpoint Common Stock was $15. On September 5, 1996, the
most recent available date prior to printing this Proxy Statement/Prospectus,
the reported Nasdaq National Market last sale price per share of Interpoint
Common Stock was $11 1/8. On that date, there were approximately 300 holders of
record.
Interpoint has never paid cash dividends on Interpoint Common Stock. The
Merger Agreement prohibits Interpoint from paying cash dividends prior to the
Effective Time.
INTERPOINT SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
THE CRANE COMMON STOCK AND THE INTERPOINT COMMON STOCK.
13
<PAGE> 25
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Combined Financial Statements
for the year ended December 31, 1995 and for the six months ended June 30, 1996
give effect to the Merger as if it had occurred at the beginning of the
applicable period for the Unaudited Pro Forma Condensed Combined Statements of
Income and as of June 30, 1996 for the Unaudited Pro Forma Condensed Combined
Balance Sheet using the purchase method of accounting. The Unaudited Pro Forma
Condensed Combined Statements of Income for the year ended December 31, 1995 and
the six months ended June 30, 1996 reflect the combination of the results of
operations of Crane for its fiscal year ended December 31, 1995 and the six
months ended June 30, 1996 with the results of operations of Interpoint (after
giving effect to the Spinoff) for the year ended October 31, 1995 and the six
months ended April 30, 1996, respectively. The Unaudited Pro Forma Condensed
Combined Balance Sheet reflects the combination of the balance sheets of Crane
as of June 30, 1996 and the balance sheet of Interpoint as of April 30, 1996.
These Unaudited Pro Forma Condensed Combined Financial Statements have been
prepared from the historical consolidated financial statements of Crane and of
Interpoint, which are incorporated by reference in this Proxy
Statement/Prospectus, and should be read in conjunction therewith. See
"Incorporation of Certain Documents by Reference."
This pro forma condensed combined financial information is not necessarily
indicative of actual or future operating results or financial position that
would have occurred or will occur upon consummation of the Merger and the
Spinoff.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FISCAL YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRO FORMA
-----------------------------------
HISTORICAL ADJUSTMENTS
------------------------ -------------------
CRANE INTERPOINT ADIC(1) MERGER COMBINED
---------- ---------- -------- ------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Net sales........................... $1,782,310 $ 71,056 $(31,716) $ (958)(2) $1,820,692
Cost of sales....................... 1,355,938 49,250 (22,107) (958)(2) 1,382,123
---------- ------- -------- ------- ----------
Gross profit...................... 426,372 21,806 (9,609) -- 438,569
Operating expenses.................. 283,424 16,848 (9,098) 1,671 (3) 292,845
Operating profit.................... 142,948 4,958 (511) (1,671)(3) 145,724
Other expenses...................... 21,480 706 (296) 400 (4) 22,290
Income before tax................... 121,468 4,252 (215) (2,071) 123,434
Provision for income taxes.......... 45,131 1,164 77 (140)(5) 46,232
Net income........................ $ 76,337 $ 3,088 $ (292) $(1,931) $ 77,202
========== ======= ======== ======= ==========
Average primary shares
outstanding(6).................... 30,544 8,005 31,403
Net income per share................ $ 2.50 $ 0.39 $ 2.46
</TABLE>
- ---------------
(1) The ADIC adjustments reflect the Spinoff.
(2) Reflects the elimination of intercompany sales and cost of sales between
Interpoint and Crane.
(3) Reflects the estimated additional depreciation and amortization of goodwill
associated with the acquisition of Interpoint by Crane.
(4) Reflects the estimated interest expense on additional debt, which will be
used to fund the buyout of Interpoint stock options and a capital
contribution to ADIC.
(5) Reflects estimated tax benefits associated with the pro forma adjustments.
(6) Adjusted to reflect the 2-for-1 split of Interpoint Common Stock effective
June 27, 1996.
14
<PAGE> 26
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
PRO FORMA
---------------------------------
HISTORICAL ADJUSTMENTS
---------------------- -------------------
CRANE INTERPOINT ADIC(1) MERGER COMBINED
-------- ---------- -------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Net sales.............................. $902,694 $ 45,077 $(24,386) $ (400)(2) $922,985
Cost of sales.......................... 659,587 32,812 (17,657) (400)(2) 674,342
-------- ------- -------- ------- --------
Gross profit......................... 243,107 12,265 (6,729) -- 248,643
Operating expenses..................... 165,557 8,874 (4,982) 781 (3) 170,230
Operating profit....................... 77,550 3,391 (1,747) (781)(3) 78,413
Other expenses......................... 13,051 148 (241) 300 (4) 13,258
Income before tax...................... 64,499 3,243 (1,506) (1,081) 65,155
Provision for income taxes............. 24,187 1,247 (498) (105)(5) 24,831
Net income........................... $ 40,312 $ 1,996 $ (1,008) $ (976) $ 40,324
======== ======= ======== ======= ========
Average primary shares
outstanding(6)....................... 30,586 8,050 31,445
Net income per share................... $ 1.32 $ 0.25 $ 1.28
</TABLE>
- ---------------
(1) The ADIC adjustments reflect the Spinoff.
(2) Reflects the elimination of intercompany sales and costs of sales between
Interpoint and Crane.
(3) Reflects the estimated additional depreciation and amortization of goodwill
associated with the acquisition of Interpoint by Crane.
(4) Reflects the estimated interest expense on additional debt, which will be
used to fund the buyout of Interpoint stock options and a capital
contribution to ADIC.
(5) Reflects estimated tax benefits associated with the pro forma adjustments.
(6) Adjusted to reflect the 2-for-1 split of Interpoint Common Stock effective
June 27, 1996.
15
<PAGE> 27
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1996
<TABLE>
<CAPTION>
PRO FORMA
----------------------------------------
HISTORICAL ADJUSTMENTS
------------------------ --------------------
CRANE INTERPOINT ADIC(1) MERGER COMBINED
---------- ---------- -------- -------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash.................................... $ 22,494 $ 1,762 $ (441) $ -- $ 23,815
Accounts receivable, net................ 231,984 19,537 (9,356) -- 242,165
Inventories............................. 246,230 22,543 (7,893) -- 260,880
Other current assets.................... 7,091 514 (269) -- 7,336
Deferred income taxes................... 23,200 759 (315) -- 23,644
Current assets........................ 530,999 45,115 (18,274) -- 557,840
Property, plant and equipment, net...... 240,866 8,703 (1,399) 2,000 (7) 250,170
Cost in excess of assets acquired....... 167,601 -- -- 29,925 (8) 197,526
Other assets............................ 84,439 1,884 (704) -- 85,619
---------- ------- -------- -------- ----------
Total assets.......................... $1,023,905 $ 55,702 $(20,377) $ 31,925 $1,091,155
========== ======= ======== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt.... $ 760 $ 1,008 $ -- $ -- $ 1,768
Loans payable........................... 18,115 187 -- 3,400 (2) 21,702
Accounts payable........................ 101,040 8,739 (5,853) -- 103,926
Accrued liabilities..................... 116,559 3,710 (1,178) -- 119,091
Income tax payable...................... 14,143 1,267 (327) (1,190)(3) 13,893
---------- ------- -------- -------- ----------
Current liabilities................... 250,617 14,911 (7,358) 2,210 260,380
Long-term debt.......................... 265,180 16,055 (8,701) 13,701 (4) 286,235
Other liabilities....................... 73,411 569 -- -- 73,980
Deferred income tax..................... 27,609 807 -- 700 (7) 29,116
Equity common shares.................... 30,364 4,825 (702) (3,264)(5)(6) 31,223
Capital surplus......................... 19,947 -- -- 33,497 (5)(6) 53,444
Retained earnings....................... 367,819 18,209 (3,560) (14,649)(6) 367,819
Cumulative translation adjustment....... (11,042) 326 (56) (270)(6) (11,042)
---------- ------- -------- -------- ----------
Total equity.......................... 407,088 23,360 (4,318) 15,314 441,444
Total liabilities and stockholders'
equity.............................. $1,023,905 $ 55,702 $(20,377) $ 31,925 $1,091,155
========== ======= ======== ======== ==========
</TABLE>
- ---------------
(1) The ADIC adjustments reflect the Spinoff.
(2) Represents the estimated additional debt required to fund the buyout of
Interpoint stock options prior to the Merger.
(3) Represents the estimated tax benefit associated with the buyout of
Interpoint stock options.
(4) Represents the capitalization of ADIC debt by Interpoint.
(5) Represents the issuance of 858,900 shares of Crane Common Stock (at an
assumed average market value of $40 per share) in exchange for the
outstanding Interpoint Common Stock after the Spinoff.
(6) Represents the elimination of Interpoint capital accounts upon consolidation
with Crane.
(7) Represents the preliminary allocation of purchase accounting adjustments to
Interpoint assets and liabilities.
(8) Represents the preliminary estimate of cost in excess of Interpoint's net
assets acquired.
16
<PAGE> 28
COMPANIES
CRANE
Crane is a diversified manufacturer of engineered industrial products and
the largest American distributor of doors, windows and millwork. Founded in
1855, Crane employs over 10,000 people in North America, Europe, Asia and
Australia combined. The mailing address of Crane's principal executive offices
is 100 First Stamford Place, Stamford, Connecticut 06902, and its telephone
number is (203) 363-7300. See "Available Information" and "Summary--Selected
Historical Financial Data."
ACQUISITION CORP.
Acquisition Corp., a Washington corporation and a wholly owned subsidiary
of Crane, was formed by Crane solely for the purpose of effecting the Merger.
The mailing address of Acquisition Corp.'s principal executive offices is c/o
Crane, 100 First Stamford Place, Stamford, Connecticut 06902, and its telephone
number is (203) 363-7300.
INTERPOINT
Interpoint designs, manufactures and sells microelectronics products,
including proprietary high-performance power converters and custom hybrid
microcircuits. Interpoint's power products are complex high-density DC-to-DC
(direct current to direct current) power conversion circuits designed by
Interpoint to meet the needs of either a general market or a specific customer.
Interpoint's DC-to-DC power converters convert single direct current input
voltage to one or more different direct current output voltages. Distributed
power, a major trend in complex electronic systems, uses multiple converters to
supply power for a system. Distributed power can reduce device and circuitry
redundancies, save weight and space, increase reliability and make it easier for
systems engineers to design independent subsystems. Pioneered in the aerospace
sector, distributed power designs have expanded to numerous applications such as
telecommunications and computers and have made high-density DC-to-DC power
converters among the highest growth areas in the power supply industry.
Interpoint's power converters are sold primarily to the high-end market, such as
the commercial aerospace and military electronics industries, where high
reliability and small size are critical.
Interpoint's custom microelectronics products are based on a customer's
electronic specification and intended to meet a specific application. Interpoint
manufactures custom microcircuits principally for medical applications such as
an implantable defibrillator, an electronic heart-assist pump and surgical
tools, and military electronics applications such as surveillance devices,
avionics and missile systems, as well as for industrial equipment and commercial
aircraft applications where small size is important. The mailing address of
Interpoint's principal executive offices is 10301 Willows Road, P.O. Box 97005,
Redmond, Washington 98073-9705, and its telephone number is (206) 882-3100. See
"Available Information" and "Summary-- Selected Historical Financial Data."
ADIC
ADIC designs, manufactures, markets and supports specialized data storage
peripherals used to back up and archive electronic data for client/server and
workstation computing environments. ADIC's principal products, automated tape
libraries, combine proprietary electromechanical robotics, electronic hardware
and firmware developed by ADIC with technologically advanced tape drives
manufactured by third parties. Prior to and as a condition of the Merger, all of
ADIC's stock will be distributed on a pro rata basis to Interpoint shareholders
pursuant to the Spinoff. The mailing address of ADIC's principal executive
offices is 10201 Willows Road, P.O. Box 97057, Redmond, Washington 98073-9757,
and its telephone number is (206) 881-8004. Additional information about ADIC is
included in the Information Statement accompanying this Proxy
Statement/Prospectus.
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SPECIAL MEETING OF SHAREHOLDERS
GENERAL
This Proxy Statement/Prospectus is being furnished to holders of shares of
Interpoint Common Stock in connection with the solicitation of proxies by the
Interpoint Board for use at the Special Meeting to be held on Friday, October
11, 1996, at the offices of Perkins Coie, 1201 Third Avenue, 40th Floor,
Seattle, Washington, commencing at 9:00 a.m., local time, and at any
adjournments or postponements thereof.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, shareholders of record of Interpoint as of the
close of business on the Record Date will consider and vote upon a proposal to
approve the Merger Agreement and the transactions contemplated thereby. The
Merger Agreement provides that upon the terms and subject to the conditions
thereof, Acquisition Corp. will merge with and into Interpoint and Interpoint,
as the Surviving Corporation, will become a wholly owned subsidiary of Crane and
that, immediately before the Effective Time, Interpoint will distribute to the
Interpoint shareholders on a pro rata basis all the capital stock of ADIC. See
"The Merger" and "The Spinoff."
Holders of Interpoint Common Stock will be entitled to dissenters' rights
as a result of the Merger. See "Rights of Dissenting Interpoint Shareholders."
THE INTERPOINT BOARD, AFTER CAREFUL CONSIDERATION, HAS DETERMINED THAT THE
MERGER, IN COMBINATION WITH THE SPINOFF, IS FAIR TO, AND IN THE BEST INTERESTS
OF, INTERPOINT AND ITS SHAREHOLDERS AND HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS THAT
INTERPOINT SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY. See "Background of and Reasons for the
Merger."
RECORD DATE; SHARES ENTITLED TO VOTE; VOTE REQUIRED
The close of business on August 26, 1996 has been fixed as the Record Date
for determining the holders of record of Interpoint Common Stock who are
entitled to notice of and to vote at the Special Meeting and any adjournments or
postponements thereof. On the Record Date, 7,941,324 shares of Interpoint Common
Stock were outstanding and entitled to vote. The holders of record on the Record
Date are entitled to one vote per share of Interpoint Common Stock. The
presence, in person or by proxy, of the holders of a majority of the outstanding
shares of Interpoint Common Stock entitled to vote is necessary to constitute a
quorum for the transaction of business at the Special Meeting. Under the WBCA,
the affirmative vote of holders of shares representing at least two-thirds of
the outstanding shares of Interpoint Common Stock is necessary to approve the
Merger Agreement and the transactions contemplated thereby.
Abstentions from voting, failures to vote and broker nonvotes will have the
practical effect of voting against approval of the Merger Agreement and the
transactions contemplated thereby. Directors and executive officers of
Interpoint and their affiliates beneficially own in the aggregate approximately
14.2% of the outstanding shares of Interpoint Common Stock as of the Record Date
and have indicated that they plan to vote or direct the vote of all shares of
Interpoint Common Stock over which they have voting control in favor of the
Merger Agreement and the transactions contemplated thereby.
Walter P. Kistler and John W. Stanton, each a director of Interpoint, and
Peter H. van Oppen, Chairman, President and Chief Executive Officer of
Interpoint, have agreed to vote the shares of Interpoint Common Stock owned by
them or for which they have the right to vote (representing, as of the Record
Date, an aggregate of 1,037,756 shares or approximately 13.1% of the outstanding
shares) in favor of the Merger Agreement and the transactions contemplated
thereby. See "The Merger--Voting Agreement."
PROXIES; PROXY SOLICITATION
Interpoint Common Stock represented by properly executed proxies received
at or prior to the Special Meeting that have not been revoked will be voted at
the Special Meeting in accordance with the instructions
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contained therein. Shares of Interpoint Common Stock represented by properly
executed proxies for which no instruction is given will be voted "FOR" approval
of the Merger Agreement and the transactions contemplated thereby. Interpoint
shareholders are requested to complete, sign, date and return promptly the
enclosed proxy card in the postage-prepaid envelope provided for this purpose to
ensure that their shares are voted. A shareholder may revoke a proxy by
submitting at any time prior to the vote on the Merger Agreement and the
transactions contemplated thereby a later-dated proxy, by delivering written
notice of revocation to the Secretary of Interpoint at any time prior to such
vote or by attending the Special Meeting and voting in person. Mere attendance
at the Special Meeting will not in and of itself revoke a proxy.
If the Special Meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the Special Meeting all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the Special Meeting (except for any proxies that have theretofore effectively
been revoked or withdrawn), notwithstanding that they may have been effectively
voted on the same or any other matter at a previous meeting.
Interpoint will bear the cost of soliciting proxies from its shareholders.
In addition to solicitation by mail, directors, officers and employees of
Interpoint may solicit proxies by telephone, telegram or otherwise. Such
directors, officers and employees will not be additionally compensated for such
solicitation, but may be reimbursed for out-of-pocket expenses incurred in
connection therewith. Brokerage firms, fiduciaries and other custodians who
forward soliciting material to the beneficial owners of Interpoint Common Stock
held of record by them will be reimbursed for their reasonable expenses incurred
in forwarding such material. Interpoint has retained W.F. Doring & Company to
assist in soliciting proxies for a fee not to exceed $5,000, plus reasonable
out-of-pocket expenses.
INTERPOINT SHAREHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXY
CARDS.
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BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND
The timing, terms and conditions of the Merger Agreement are the result of
arm's-length negotiations between representatives of Interpoint and of Crane.
Set forth below is a summary of the background of these negotiations.
Preliminary Discussions Between Interpoint and Crane. Peter H. van Oppen,
Interpoint's Chairman, President and Chief Executive Officer, was first
contacted by Roger Williams, a consultant to Crane, in January 1996 regarding a
potential transaction between Crane and Interpoint. Crane was interested in
pursuing a possible acquisition of Interpoint in part because of potential
synergies Crane believed might be realizable between Interpoint and Crane's
wholly owned subsidiary, ELDEC, an aerospace microelectronics products
manufacturer and long-standing customer of Interpoint. Mr. van Oppen informed
Mr. Williams that Interpoint was not seeking a buyer for all or any part of its
business, but that he would discuss a potential offer with a serious buyer in
accordance with his fiduciary duties to Interpoint shareholders. Messrs.
Williams and van Oppen had several telephone conversations during January 1996,
including conversations on January 8, 11 and 22, regarding the possible
structure of a transaction between Interpoint and Crane, the feasibility of
separating Interpoint's microelectronics business from its data storage
business, the potential tax consequences of such a transaction and other issues.
Mr. van Oppen discussed these conversations with John W. Stanton, a member of
the Interpoint Board and a significant shareholder of Interpoint, on January 23,
1996. Mr. Williams visited Interpoint on February 1, 1996 and toured its
facilities. Subsequent to Mr. Williams' visit, Mr. van Oppen conferred with Mr.
Stanton and Walter F. Walker, also a member of the Interpoint Board, on February
13 and 15, 1996, regarding his discussions with Mr. Williams.
On February 15, 1996, Interpoint and Crane signed a Confidentiality
Agreement providing for the confidential treatment of information provided by
Interpoint to Crane and its representatives and containing Crane's agreement
that, without the prior approval of the Interpoint Board, for a period of one
year from the date of the Confidentiality Agreement it would not acquire or
propose to acquire any securities of Interpoint or any material portion of its
assets or effect or propose to effect any merger or business combination with
Interpoint.
On February 20, 1996, Mr. van Oppen and Charles H. Stonecipher, Senior Vice
President of Interpoint and Chief Operating Officer of ADIC, met with Mr.
Williams, Arlan VanKoevering, President of ELDEC, and several other
representatives of ELDEC to discuss Crane's interest in Interpoint. This meeting
included a presentation describing Interpoint's business similar to that given
at investor conferences. In advance of this meeting, on February 20, 1996, Mr.
van Oppen had telephone conversations with Mr. Walker and with Calvin Waller,
also a member of the Interpoint Board, regarding the status of the discussions
regarding a possible transaction with Crane.
At the regularly scheduled Interpoint Board meeting held on February 21,
1996, Mr. van Oppen updated the Interpoint Board regarding his discussions with
Mr. Williams. The meeting was attended by all members of the Interpoint Board,
with the exception of the outside lead director, Christopher T. Bayley, who was
recovering from surgery, and David A. Uvelli, the only member of the Interpoint
Board other than Mr. van Oppen who is also an executive officer of Interpoint.
The Interpoint Board designated Messrs. Walker and Stanton to be Mr. van Oppen's
primary contacts on the Interpoint Board with respect to the proposed
transaction and to consult with Mr. van Oppen on a frequent basis as the
discussions proceeded. Mr. van Oppen updated Mr. Uvelli on the status of the
discussions regarding the proposed transaction later in the day on February 21
and updated Mr. Bayley in telephone conversations on February 23, March 1 and
March 5, 1996.
On several occasions in late February and early March 1996, Mr. van Oppen
had telephone conversations with Mr. Williams regarding the potential structures
of and benefits that could be realized through a transaction between the two
companies. Crane was initially interested in structuring the transaction as a
cash tender offer for all of Interpoint, including ADIC. Because Interpoint
believed the current market price of the Interpoint Common Stock did not
accurately reflect the value of Interpoint's and ADIC's businesses,
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Mr. van Oppen indicated that the Interpoint Board would not favorably consider a
cash tender offer unless it offered Interpoint shareholders a significant
premium to the then-current market price of approximately $4.50 to $5.50 per
share of Interpoint Common Stock (as adjusted to reflect the 2-for-1 split of
the Interpoint Common Stock).
On March 6, 1996, representatives of ELDEC toured Interpoint's facilities,
and on March 20, 1996 representatives of Crane, including R. S. Evans, Crane's
Chairman and Chief Executive Officer, and L. Hill Clark, Crane's President and
Chief Operating Officer, also toured Interpoint's facilities.
On April 4, Messrs. van Oppen, Walker and Stanton, together with legal
counsel, held a telephonic conference call to discuss the status of discussions
with Crane.
During April 1996, Mr. Williams contacted a data storage industry
consultant and obtained a report on the computer tape library industry. On May
1, 1996, this consultant conducted a one-day seminar on the computer tape
library industry for Mr. Evans and other Crane representatives. Thereafter,
Crane determined that ADIC did not offer the same fit with Crane's long-term
business strategies and therefore it was not interested in acquiring all of ADIC
as part of any transaction with Interpoint.
During April and May 1996, the trading price of the Interpoint Common Stock
began to rise fairly steadily, and rose significantly following Interpoint's
press release on May 21 announcing strong earnings for its second fiscal quarter
ended April 30, 1996, which were due largely to the performance of ADIC, which
increased its sales by more than 100% over the same period in the previous year
and had an even larger increase in earnings. On May 22, 1996, Interpoint held a
customary analysts' conference call, during which Mr. van Oppen and other
members of Interpoint's management discussed the past performance and future
prospects of both ADIC and the microelectronics business of Interpoint. Mr.
Williams, along with a number of analysts and other participants, listened to
the conference call. At that time, Interpoint believed Crane was no longer
interested in pursuing a transaction with Interpoint.
On May 29, 1996, Mr. Williams contacted Mr. van Oppen to discuss whether,
in light of the recent increase in the trading price of Interpoint Common Stock,
it was still possible to structure a transaction between Interpoint and Crane
that would be mutually advantageous to Interpoint and its shareholders and to
Crane. On May 30, Mr. van Oppen spoke with Mr. Evans and discussed structuring a
transaction in which Interpoint would spin off ADIC to Interpoint's existing
shareholders and Crane would acquire, on a tax-free basis, Interpoint's
microelectronics business in exchange for Crane Common Stock. On May 31, Mr. van
Oppen faxed a draft term sheet to Mr. Evans based on their discussions the prior
day, which contemplated that Crane would acquire Interpoint's microelectronics
business for $59 million of Crane Common Stock, as adjusted for Interpoint's
interest-bearing indebtedness and certain other matters. The term sheet also
contemplated that Crane would purchase shares of Interpoint Common Stock on a
pre-merger basis, which would provide cash to Interpoint to capitalize ADIC
prior to the proposed spinoff.
Between May 31 and June 10, 1996, Mr. van Oppen held several conversations
with Crane representatives regarding the terms of a possible transaction for the
acquisition of Interpoint, without ADIC, including discussions regarding the way
such a transaction could be structured so as to provide adequate working capital
to ADIC to enable it to operate on a stand-alone basis. On June 7, Mr. Williams
discussed with Mr. van Oppen and Leslie S. Rock, Vice President, Chief
Accounting Officer and Secretary-Treasurer of Interpoint, the detailed financial
results of Interpoint's second quarter. Mr. Williams was provided with detailed
internal second quarter consolidated financial statements.
On June 10, Mr. Williams sent a revised draft term sheet to Mr. van Oppen
proposing an investment by Crane in convertible preferred stock of ADIC in lieu
of a pre-merger purchase of Interpoint Common Stock. Following receipt of the
term sheet, Mr. van Oppen discussed the implications of the possible preferred
stock investment with several members of the Interpoint Board. On June 12,
Messrs. Evans and van Oppen discussed several alternatives for providing
financing for ADIC's business, including terms of a possible investment in ADIC
convertible preferred stock or convertible debt and other issues.
Negotiation of the Merger Agreement. On June 18, 1996, Mr. van Oppen
provided to Mr. Evans a revised draft term sheet outlining the principal terms
on which Interpoint would be willing to proceed with
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negotiating a possible transaction with Crane, including a provision whereby
Interpoint could make a capital contribution to ADIC prior to consummation of
the merger through borrowings against Interpoint's bank line, which borrowings
would be offset against the consideration paid by Crane in the Merger.
Interpoint and Crane determined that they would like to commence detailed
negotiations on those terms, and on June 23, Milbank, Tweed, Hadley & McCloy,
Crane's legal counsel, delivered an initial draft of the merger agreement to
Interpoint and its legal counsel, Perkins Coie. Representatives of Crane toured
Interpoint's Taiwan manufacturing facility and conducted a due diligence review
of its operations on June 24, 25 and 26. Representatives of Crane and Interpoint
and their respective legal counsels met in Seattle on June 25, 26 and 27 to
negotiate the terms of the merger agreement and to conduct a legal and business
due diligence review of Interpoint.
Approval by Interpoint Board. Between June 18 and 28, 1996, Mr. van Oppen
discussed the proposed merger with each member of the Interpoint Board in
individual telephone conversations in which he summarized the terms of the
proposed merger and the spinoff and the tentative timetable for negotiating a
merger agreement and closing the proposed merger and the spinoff.
A special meeting of the Interpoint Board commenced on Saturday, June 29,
1996, to consider the proposed merger and the spinoff. All members of the
Interpoint Board participated in the meeting, with all members participating in
person except Messrs. Bayley and Walker, who participated by conference
telephone call. Also present at the meeting were representatives of Perkins
Coie, Interpoint's legal counsel, and Dain Bosworth, Incorporated ("Dain"), who
had been retained by Interpoint to provide financial advice regarding the
proposed merger and spinoff. Dain was not requested to, and did not, prepare any
detailed analysis of or fairness opinion relating to the proposed merger or
spinoff or prepare any appraisal of all or any portion of Interpoint's business.
In anticipation of the June 29 meeting, Interpoint management delivered to each
director a draft of the proposed merger agreement, an overview of the
transaction, a summary chronology of the events leading up to the negotiation of
the merger agreement, and certain other information and financial analyses,
including information regarding the performance of Interpoint Common Stock in
relation to certain comparable companies and information regarding the cost of
cashing out options to purchase Interpoint Common Stock.
At the June 29 meeting of the Interpoint Board, Mr. van Oppen discussed the
history of the negotiations with Crane and discussed in detail the materials
distributed to the Interpoint Board. The Interpoint Board reviewed with legal
counsel certain material terms of the draft merger agreement, including the
"fiduciary out" provision, the circumstances under which a termination fee would
be payable and the formula for determining the amount of Crane Common Stock to
be issued to Interpoint shareholders in the proposed merger. The Interpoint
Board also discussed the proposed voting agreement pursuant to which certain
members of the Interpoint Board would agree to vote their shares of Interpoint
Common Stock in favor of the proposed merger.
At the June 29 meeting, the Interpoint Board discussed whether to seek an
opinion from an investment banker, appraiser or other outside financial advisor
that the consideration to be received by the Interpoint shareholders in the
proposed merger was fair from a financial point of view. The Interpoint Board
concluded that any potential additional information from such an opinion would
not add sufficiently to the total mix of information available to the directors
to justify the cost and delay associated with obtaining such an opinion. In
reaching its conclusion, the Interpoint Board considered the following factors:
(i) the cost of and time involved in obtaining a fairness opinion and the
limitations of such opinions; (ii) the 13-year operating history of Interpoint's
microelectronics business as a public company and that there are several
well-established valuation methodologies that Interpoint's management used to
analyze the consideration offered in the Merger; (iii) that the Interpoint
shareholders, through the proposed spinoff, would continue to have a
proportionate equity interest in ADIC, whose business it would have been more
difficult to value as a result of its recent growth and other factors; and (iv)
that Interpoint shareholders may dissent from the merger and obtain "fair value"
for their shares under the WBCA. After further discussion, the meeting was
adjourned to the next day.
On June 30, 1996, the Interpoint Board reconvened by telephone conference
call the meeting that was adjourned on June 29 to complete its discussion of the
proposed merger agreement and to vote on the
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transaction. All members of the Interpoint Board participated in the meeting, as
well as Interpoint's legal counsel and representatives of Dain. The discussion
commenced with an update by Interpoint's legal counsel on the progress of
finalizing the Merger Agreement and on the changes made to the draft of the
Merger Agreement from the draft previously circulated to and reviewed by the
Interpoint Board. After final questions from Interpoint Board members regarding
terms of the transaction and related matters were addressed, the Interpoint
Board unanimously approved the Merger Agreement and the transactions
contemplated thereby.
Execution of Merger Agreement. The Merger Agreement was executed as of
July 1, 1996. A copy of the Merger Agreement is attached as Appendix I to this
Proxy Statement/Prospectus.
CRANE'S REASONS FOR THE MERGER
The Board of Directors of Crane (the "Crane Board") believes that the terms
of the Merger are consistent with, and in furtherance of, the long-term business
strategies of Crane, and are fair to and in the best interests of Crane and its
stockholders. Accordingly, the Crane Board has unanimously approved the Merger.
The Merger is not subject to approval of the stockholders of Crane.
In reaching its determination, the Crane Board considered a number of
factors, including, without limitation, the following:
(i) the terms of the Merger, including, without limitation, the Merger
consideration;
(ii) information with respect to the financial condition, business and
operations of the microelectronics business of Interpoint and the future
prospects of Interpoint as a subsidiary of Crane following the Merger;
(iii) the microelectronics business of Interpoint complements the
business of Crane's subsidiary, ELDEC, and the acquisition of the
microelectronics business through the Merger will allow Crane to offer a
broader product line to customers in the aerospace and defense markets
served by ELDEC and Interpoint and to capitalize on the trends in such
markets toward outsourcing the design, development and supply of electronic
components and awarding such outsourced contracts to a smaller number of
suppliers; and
(iv) Interpoint's custom microelectronics business includes, in
addition to products for aerospace and defense markets, products for
applications such as implantable defibrillators and other medical devices,
which represent new markets with attractive growth prospects.
In view of the variety of factors considered in connection with its
evaluation of the Merger, the Crane Board did not find it practicable to and did
not quantify or otherwise assign relative weights to the specific factors
considered in reaching its determination.
INTERPOINT'S REASONS FOR THE MERGER; RECOMMENDATION OF THE INTERPOINT BOARD
The Interpoint Board believes that the Merger, in combination with the
Spinoff, is fair to, and in the best interests of, Interpoint and its
shareholders. ACCORDINGLY, THE INTERPOINT BOARD HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND RECOMMENDS THAT
INTERPOINT SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY.
The reasons for the Interpoint Board's decision included, among others, the
structure of the Merger Agreement and the transactions contemplated thereby,
including the Spinoff, which allows Interpoint shareholders to participate in
the Merger and retain a proportionate equity interest in ADIC as a stand-alone
company whose shares will be publicly traded; the opportunity for Interpoint
shareholders to benefit from owning shares in a larger, more diversified company
with greater financial resources than Interpoint; the relative lack of
volatility of Crane Common Stock compared to Interpoint Common Stock; the
opportunities presented by the Merger for revenue enhancement, cost savings and
future growth in the microelectronics business; and the tax-free nature of the
Merger and the Spinoff to holders of Interpoint Common Stock.
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In the course of its deliberations, the Interpoint Board reviewed and
considered a number of factors relevant to the Merger and the Spinoff,
including, without limitation (i) the current and historical market prices of
the Interpoint Common Stock and the Crane Common Stock, (ii) information
concerning the financial performance, condition, business, operations and
prospects of Interpoint and Crane, based on the Interpoint Board's familiarity
with Interpoint's business and publicly available information about Crane, (iii)
the expected federal income tax treatment of the both the Spinoff and the Merger
as tax-free transactions to the parties and to Interpoint's shareholders, (iv)
the proposed structure and timing of the Merger and the Spinoff, which enables
Interpoint to provide ADIC with adequate working capital to position ADIC for
future growth as a stand-alone company, (v) the greater market float and greater
liquidity represented by the shares of Crane Common Stock to be received by
Interpoint's shareholders in the Merger, (vi) the terms of the Merger Agreement
(including the "fiduciary out" and termination provisions thereof, which enable
Interpoint to consider other qualified proposals, if any) and related
agreements, and (vii) that Crane has the financial resources, willingness and
expertise to complete promptly a business combination with Interpoint requiring
payment of the Merger consideration in the form of Crane Common Stock.
The Interpoint Board also considered a number of potentially negative
factors in its deliberations concerning the Merger, including the possibility of
disruption to and potential loss of Interpoint's management and key personnel
pending consummation of or following the Merger, and the possibility that the
successful integration of the microelectronics business of Interpoint and
Crane's business units may not be achieved on a timely basis, if at all. The
Interpoint Board concluded that even if these possible risks did materialize
following the Merger, they did not significantly detract from the benefits to be
realized by Interpoint shareholders through the Merger and the Spinoff because
of the relatively small portion of Crane's total business that Interpoint's
operations would represent. The Interpoint Board was aware that certain members
of Interpoint's management have interests in the Merger that are in addition to
and potentially in conflict with the interests of the holders of Interpoint
Common Stock generally. See "Interests of Certain Persons in the Merger; Certain
Transactions."
In view of the variety of factors considered in connection with its
evaluation of the Merger Agreement and the transactions contemplated thereby,
the Interpoint Board did not find it practicable to and did not quantify or
otherwise assign relative weights to the specific factors considered in reaching
its determination.
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THE SPINOFF
The following describes certain aspects of the Spinoff. To the extent that
they relate to the Separation Agreement or the Tax Allocation Agreement, the
following descriptions do not purport to be complete and are qualified in their
entirety by reference to the Separation Agreement or the Tax Allocation
Agreement, which are filed as exhibits to the Registration Statement. For
additional information regarding ADIC's assets and business, Interpoint
shareholders should refer to the Information Statement.
BACKGROUND OF AND REASONS FOR THE SPINOFF
Crane was primarily interested in acquiring only Interpoint's
microelectronics components business. The Interpoint Board believed that the
best way to maximize value for Interpoint shareholders was to allow them to
continue to have an equity interest in ADIC through the Spinoff, and to merge
the microelectronics business of Interpoint with Crane in the Merger. See
"Background of and Reasons for the Merger."
DISTRIBUTION OF ADIC COMMON STOCK; TREATMENT OF STOCK OPTIONS
Interpoint shareholders will receive one share of ADIC Common Stock for
each share of Interpoint Common Stock held as of the close of business on the
Spinoff Date. The Spinoff will be effected immediately prior to the Merger, and
is conditioned upon the approval of the Merger Agreement and the transactions
contemplated thereby by Interpoint shareholders. As described in "The
Merger--Treatment of Stock Options," it is expected that ADIC employees who hold
options to purchase Interpoint Common Stock prior to the Spinoff will enter into
agreements providing that such options will be replaced with an option to
purchase ADIC Common Stock (which has the same vesting schedule and terms, other
than the exercise price, of the original Interpoint option) and a cash payment
for the portion of the original Interpoint option attributable to the
microelectronics business.
TERMS OF THE SEPARATION AGREEMENT
Asset Transfers. The Separation Agreement provides that prior to the vote
by Interpoint shareholders on the Merger, Interpoint will transfer ADIC Europe
SARL and its interest in Visual Technologies, Limited to ADIC and will forgive
all intercompany indebtedness of ADIC to Interpoint. At July 31, 1996, the
intercompany debt that would have been forgiven was $8,441,000. In addition,
Interpoint expects to make a cash contribution to ADIC's working capital
immediately prior to the Spinoff. The actual amount of the cash contributed will
be determined in Interpoint's discretion and will depend on Interpoint's and
ADIC's operating results and cash flows prior to the Spinoff.
Employee Benefits. The Separation Agreement provides for the treatment of
Interpoint stock options and certain other matters, including the allocation of
retirement, medical and disability and other employee welfare benefit plans
between Interpoint and ADIC. In general, from and after the Spinoff Date, ADIC
will assume, or retain and be solely responsible for, all liabilities and
obligations of Interpoint and its subsidiaries under such plans, to the extent
unpaid as of the Spinoff Date, with respect to persons who, on or after the
Spinoff Date, will be employees of ADIC. With respect to the Interpoint 401(k)
plan (i.e., the Interpoint Corporation Savings and Investment Plan), the account
balances of plan participants who are (or were) employed by ADIC prior to, or
immediately after, the Spinoff generally will be transferred from the Interpoint
401(k) plan to a new ADIC 401(k) plan.
Mutual Indemnities; Release of Guaranties. Pursuant to the Separation
Agreement, Interpoint and ADIC will each be responsible for all claims and
liabilities relating to its own business (whether or not such claims and
liabilities are asserted, or arise from activities occurring, prior to the
Spinoff) and will each indemnify the other against such claims and liabilities.
Interpoint and ADIC will each agree to use its best efforts to have the other
removed as guarantor or obligor in connection with any indebtedness, contracts
or other obligations in respect of which Interpoint or ADIC, as the case may be,
is primarily liable, and each will indemnify the other against losses incurred
as a result of its status as guarantor or obligor if such removal is not
effected.
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TERMS OF THE TAX ALLOCATION AGREEMENT
Prior to the Closing, Interpoint and ADIC will enter into the Tax
Allocation Agreement, which will set forth each party's rights and obligations
with respect to deficiencies and refunds, if any, of federal, state, local or
foreign taxes for periods before and after the Spinoff and related matters such
as the filing of tax returns and the conduct of IRS and other audits.
In general, under the Tax Allocation Agreement ADIC will be responsible for
taxes imposed and entitled to refunds of taxes with respect to its operations
before and after the Closing. Interpoint will generally be responsible for all
taxes imposed and entitled to refunds of taxes with respect to Interpoint and
its subsidiaries (except for ADIC) for all periods. The Tax Allocation Agreement
also provides that ADIC must pay to Interpoint an amount equal to any federal
income taxes of the Interpoint affiliated group that remain payable for the
taxable year ending on the date of the Spinoff after taking into account all
prior quarterly estimated tax payments for the Interpoint affiliated group. The
amount of that obligation will give rise to an intercompany advance by
Interpoint to ADIC in an amount sufficient to satisfy that obligation. Any such
advance will reduce the Aggregate Share Distribution Amount and, accordingly,
the amount of Crane Common Stock to be received by the Interpoint shareholders
in the Merger. If either Interpoint or ADIC carries back a net operating loss
after the Closing to a pre-Closing period, the company electing to carry back,
generally, would be entitled to any refunds resulting from such carryback. ADIC
will have no liability if the Spinoff does not qualify for tax-free treatment
under Section 355 of the Code unless the Spinoff is determined not to qualify as
a tax-free spinoff under Section 355 of the Code due to the actions or inactions
of ADIC (or any of its affiliates).
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THE MERGER
The following describes the Merger and summarizes the material provisions
of the Merger Agreement not summarized elsewhere in this Proxy
Statement/Prospectus. A copy of the Merger Agreement is attached as Appendix I
to this Proxy Statement/Prospectus and is incorporated herein by reference. The
following summary does not purport to be complete and is qualified in its
entirety by reference to the Merger Agreement.
EFFECTIVE TIME OF THE MERGER
Following receipt of all required approvals and the satisfaction or waiver
(where permissible) of the other conditions to the Merger, the Merger will be
consummated and become effective at the time at which Articles of Merger to be
filed pursuant to the WBCA are accepted for filing by the Secretary of State of
Washington or at such later date and time as may be stated in the Articles of
Merger. Interpoint and Crane currently intend that the Effective Time will occur
promptly after approval of the Merger Agreement and the transactions
contemplated thereby at the Special Meeting.
EXCHANGE OF INTERPOINT COMMON STOCK FOR THE MERGER CONSIDERATION
At the Effective Time, all outstanding shares of Interpoint Common Stock
will cease to be outstanding and, subject to the terms, conditions and
procedures set forth in the Merger Agreement, holders of shares of Interpoint
Common Stock (other than dissenting shares under the WBCA) will be entitled to
receive, for each share of Interpoint Common Stock held, a fraction of a share
of Crane Common Stock, the numerator of which is the Aggregate Share
Distribution Amount and the denominator of which is the product of (i) the
Average Price and (ii) the number of shares of Interpoint Common Stock
outstanding immediately prior to the Effective Time. The Aggregate Share
Distribution Amount will be $59 million, less (a) the aggregate principal amount
of interest-bearing indebtedness of Interpoint and its subsidiaries outstanding
immediately prior to the Effective Time, plus accrued and unpaid interest
thereon, as reduced by $1,087,500 (the principal amount of a note payable to
Interpoint) and (b) the net amount of intercompany advances made by Interpoint
to ADIC subsequent to April 30, 1996 from any source other than the indebtedness
referred to in clause (a) above and outstanding immediately prior to the
Effective Time, excluding amounts advanced to satisfy a management service
charge of $10,000 per month that Interpoint has prior to April 30, 1996
customarily provided for through intercompany advances, but including the fair
market value of property other than cash, excluding (i) all of Interpoint's
interest in ADIC Europe SARL and Visual Technologies, Limited and (ii) any
additional property (other than cash) to be transferred by Interpoint to ADIC
pursuant to the Spinoff and approved by Crane.
As of July 31, 1996, the aggregate principal amount of interest-bearing
indebtedness of Interpoint and its subsidiaries was approximately $14.34
million, and the net amount of intercompany advances made by Interpoint to ADIC
since April 30, 1996 as calculated in accordance with clause (b) in the
immediately preceding paragraph was approximately $13,000. Accordingly, assuming
no change in these amounts other than an increase of approximately $3.65 million
in the amount of interest-bearing indebtedness to fund the cancellation of
outstanding options to purchase Interpoint Common Stock (based on the number of
options outstanding at July 31, 1996 and the $11 5/8 per share closing price of
the Interpoint Common Stock on that date), a decrease of approximately $1.0
million in interest-bearing indebtedness as a result of certain tax benefits,
and estimated advances by Interpoint to ADIC subsequent to July 31, 1996 and
prior to the Effective Time of an additional $9 million to $5 million, the
Aggregate Share Distribution Amount would be approximately $32.09 million to
$36.09 million. Based on the number of shares of Interpoint Common Stock
outstanding on September 5, 1996 and the $40.25 per share closing sales price of
Crane Common Stock on that date, approximately $4.00 to $4.50 of Crane Common
Stock, or approximately .10 to .11 of a share of Crane Common Stock, would be
issued for each share of Interpoint Common Stock in the Merger.
The estimates of the Aggregate Share Distribution Amount and the number of
shares of Crane Common Stock to be issued in the Merger contained in the
preceding paragraph and elsewhere in this Proxy Statement/Prospectus are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Interpoint shareholders should be aware that the
actual Aggregate Share Distribution
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Amount may vary substantially based on several factors, including the operating
results of Interpoint and ADIC prior to the Effective Time, the trading price of
the Interpoint Common Stock for the 10 trading days prior to the Effective Time,
and the amount of cash provided by Interpoint to ADIC prior to the Spinoff.
Operating results will affect the cash generated or used by each of Interpoint
and ADIC, which will increase or decrease the amount of bank borrowings. In
addition, tax allocations under the Tax Allocation Agreement will vary depending
on the pre-tax profits of each of Interpoint and ADIC prior to the Effective
Time. The trading price of the Interpoint Common Stock for the 10 trading days
prior to the Effective Time and the number of outstanding options to purchase
Interpoint Common Stock will affect the cost of the cancellation of these
options, which will in turn affect the level of bank borrowings. For example,
assuming that the number of outstanding options at the Effective Time is the
same as it was at July 31, 1996, a $1 per share variance in the average trading
price of Interpoint Common Stock during the applicable 10-day period from the
$11 5/8 per share assumption used in the prior paragraph results in a $400,000
increase or decrease, as the case may be, in the cost of the cancellation of the
options. Finally, while Interpoint intends to advance funds to ADIC so it has a
minimum of $1.5 million in cash and no debt on its balance sheet at the
Effective Time, the actual amount of cash advanced will be determined in
Interpoint's discretion, based on its determination of ADIC's working capital
requirements and cash availability. In addition to the factors that will affect
the Aggregate Share Distribution Amount described above, the actual number of
shares of Crane Common Stock that is issued in the Merger will vary depending
upon the Average Price of the Crane Common Stock.
Each share of Crane Common Stock issued to holders of Interpoint Common
Stock in the Merger will be issued together with one associated Crane Right (as
defined below) in accordance with the Preferred Share Purchase Rights Agreement
dated as of July 27, 1988, as amended, by and between Crane and First Chicago
Trust Company of New York, as Rights Agent (the "Crane Rights Agreement"),
pursuant to which Crane has issued rights (the "Crane Rights") to purchase
shares of Crane Series A Preferred Stock (as defined below).
FRACTIONAL SHARES
No certificate or scrip representing fractional shares of Crane Common
Stock will be issued in the Merger. In lieu of any such fractional shares, each
holder of Interpoint Common Stock who otherwise would be entitled to receive a
fractional share of Crane Common Stock will instead receive from the exchange
agent designated by Crane (the "Exchange Agent") a cash payment in lieu of such
fractional share determined by multiplying (i) the arithmetic average of the
closing sales price of Crane Common Stock as reported on the NYSE Composite Tape
for the 10 consecutive Trading Days ending on (and including) the Trading Day
immediately preceding the Closing Date by (ii) the fractional share interest to
which such holder would otherwise be entitled. The payment of fractional shares
is intended to provide a mechanical rounding off of the consideration, and was
not separately bargained for.
TREATMENT OF STOCK OPTIONS
Interpoint has agreed in the Merger Agreement to take all actions necessary
so that all stock option plans or other plans or arrangements for the issuance
of Interpoint capital stock will be terminated, and outstanding options and
other rights to acquire Interpoint capital stock will be satisfied in full,
prior to the Effective Time. Prior to the Effective Time, Interpoint expects
that each holder of an outstanding option to purchase shares of Interpoint
Common Stock will have entered into a letter agreement providing for termination
of such option on the applicable terms described below.
Each outstanding option under the Interpoint Corporation 1981 Amended
Incentive Stock Option Plan, Nonqualified Stock Option Plan, Amended 1985
Incentive Stock Option Plan, and 1995 Stock Option and Award Plan to purchase
shares of Interpoint Common Stock held by an employee of Interpoint's
microelectronics business, whether or not the vesting requirements for exercise
of such option have been satisfied, will be cancelled in exchange for a payment
in cash in an amount per share of Interpoint Common Stock subject to such option
equal to the difference between the exercise price of such option and the
average of the high and low trading prices per share of Interpoint Common Stock
on the 10 trading days immediately preceding the Closing Date. Options to
purchase Interpoint Common Stock held by ADIC employees will be separated so
that each option to purchase one share of Interpoint Common Stock will become an
option to purchase one
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share of Interpoint Common Stock and an option to purchase one share of ADIC
Common Stock (an "Interpoint Replacement Option" and an "ADIC Replacement
Option," respectively). Each Interpoint Replacement Option will be assigned an
exercise price (the "Interpoint Replacement Option Exercise Price") determined
by multiplying the per share exercise price of the original option by the
quotient obtained by dividing (i) the Aggregate Share Distribution Amount by
(ii) the average of the high and low trading prices per share of Interpoint
Common Stock on the 10 trading days immediately preceding the Closing Date
multiplied by the number of shares of Interpoint Common Stock outstanding
immediately before the Effective Time. The exercise price per share of each
option to purchase shares of ADIC Common Stock will be equal to the difference
between the exercise price of the original option and the Interpoint Replacement
Option Exercise Price. Interpoint will purchase prior to the Effective Time each
Interpoint Replacement Option, whether or not the vesting requirements for
exercise of such option have been satisfied, for an amount per share of
Interpoint Common Stock subject to the Interpoint Replacement Option equal to
the difference between (i) the Interpoint Replacement Option Exercise Price and
(ii) the Aggregate Share Distribution Amount divided by the number of shares of
Interpoint Common Stock outstanding immediately prior to the Effective Time. The
vesting of ADIC Replacement Options will not be accelerated and the other terms
and conditions thereof (other than the exercise price) will be the same as the
original Interpoint option.
PROCEDURES FOR EXCHANGE OF INTERPOINT CERTIFICATES
As soon as reasonably practicable after the Effective Time, the Surviving
Corporation will cause the Exchange Agent to mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented outstanding shares of Interpoint Common Stock (the "Interpoint
Certificates") a letter of transmittal and instructions for use in effecting the
surrender of Interpoint Certificates in exchange for certificates representing
shares of Crane Common Stock and cash in lieu of fractional shares. Upon
surrender of an Interpoint Certificate for cancellation to the Exchange Agent,
together with such letter of transmittal duly executed and completed, the holder
of such Interpoint Certificate will be entitled to receive in exchange a
certificate representing that number of whole shares of Crane Common Stock, plus
the cash amount payable in lieu of a fractional share, and the Interpoint
Certificate so surrendered will be canceled. A certificate representing that
number of whole shares of Crane Common Stock, plus cash payable in lieu of a
fractional share, may be issued to a transferee in the event of a transfer of
ownership of the Interpoint Common Stock that is not registered in Interpoint's
transfer records, if an Interpoint Certificate is presented to the Exchange
Agent accompanied by all documents required to evidence and effect such transfer
and evidence that any applicable stock transfer taxes have been paid.
Notwithstanding the foregoing, Interpoint Certificates representing Interpoint
Common Stock surrendered for exchange by any person deemed an Interpoint
Affiliate (as defined below) will not be exchanged until Crane has received an
Affiliate Agreement (as defined below). See "--Certain Additional
Agreements--Interpoint Affiliates."
No dividends or other distributions declared or made after the Effective
Time with respect to Crane Common Stock with a record date on or after the
Effective Time will be paid to a holder of an Interpoint Certificate until such
holder surrenders such Interpoint Certificate. From and after the Effective
Time, the stock transfer books of Interpoint will be closed and there will be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Interpoint Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Interpoint Certificates are presented to the Surviving Corporation for any
reason, they will be canceled and exchanged in accordance with the terms of the
Merger Agreement. Neither Crane nor the Surviving Corporation will be liable to
any holder of shares of Interpoint Common Stock for any shares of Crane Common
Stock or cash in lieu of a fractional share delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
SHAREHOLDERS OF INTERPOINT SHOULD NOT SEND STOCK CERTIFICATES TO THE
EXCHANGE AGENT WITHOUT A LETTER OF TRANSMITTAL AND SHOULD NOT SEND STOCK
CERTIFICATES WITH THEIR PROXY CARD.
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CERTAIN REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various customary representations and
warranties of the parties (which are subject, in certain cases, to specified
exceptions), all of which terminate at the Effective Time. The Merger Agreement
contains, among other things, representations from the parties, as of the date
of the Merger Agreement and as of the Closing Date, relating to (i) each party's
organization and similar corporate matters; (ii) each party's capital structure;
(iii) the authorization, execution, delivery, performance by and enforceability
of the Merger Agreement and the transactions contemplated thereby (including,
with respect to Interpoint, the Spinoff and the agreements relating to the
Spinoff (the "Spinoff Agreements")); (iv) the absence of any governmental or
regulatory consent or approval required to enter into the Merger Agreement and
to consummate the transactions contemplated thereby; (v) the absence of any
violation of corporate documents or applicable law in connection with entering
into the Merger Agreement; (vi) certain documents and reports filed by each
party with the SEC and the accuracy of the information contained therein; and
(vii) the accuracy of the information each party has supplied with respect to
the filings required by the SEC in order to consummate the Merger and the
transactions contemplated by the Merger Agreement (including, with respect to
Interpoint, the Spinoff).
Additionally, the Merger Agreement contains various representations and
warranties of Interpoint relating to, among other things, (i) the absence of
certain changes or events having a material adverse effect on Interpoint and its
subsidiaries taken as a whole; (ii) the absence of undisclosed liabilities;
(iii) the absence of pending or threatened legal proceedings; (iv) certain tax
matters; (v) matters concerning benefit plans of Interpoint and its
subsidiaries; (vi) certain environmental matters; (vii) matters concerning
patents, copyrights, trademarks and other intellectual property rights; (viii)
certain matters concerning insurance; (ix) the inapplicability of any state
antitakeover laws or comparable provisions in Interpoint's articles of
incorporation; (x) the shareholder vote required to approve the Merger Agreement
and the transactions contemplated thereby; (xi) certain matters concerning real
property; (xii) certain labor matters; (xiii) certain matters concerning
contracts and agreements of Interpoint and its subsidiaries; (xiv) the business
of ADIC; (xv) the compliance with laws and certain contracts; and (xvi) labor
matters.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the terms of the Merger Agreement, Interpoint has agreed that
prior to the Effective Time it will, and will cause its subsidiaries (unless
expressly provided for in the Merger Agreement or Crane shall otherwise
previously consent in writing) to: (i) conduct their respective businesses only
in the ordinary course consistent with past practice; (ii) use all commercially
reasonable efforts to preserve intact in all material respects their present
business organizations and reputation; (iii) keep available the services of
their key officers and employees; (iv) maintain their assets and properties in
good working order and condition (ordinary wear and tear excepted); (v) maintain
insurance on their tangible assets and businesses in such amounts and against
such risks and losses as in effect on the date of the Merger Agreement; (vi)
preserve their relationships with customers and suppliers and others having
significant business dealings with them; and (vii) comply in all material
respects with all laws and orders of all applicable governmental or regulatory
authorities.
Interpoint has further agreed that prior to the Effective Time it will not,
and will not permit any of its subsidiaries (unless expressly provided for in
the Merger Agreement or Crane shall otherwise previously consent in writing) to:
(i) amend or propose to amend its articles of incorporation or bylaws; (ii)
declare, set aside or pay any dividends on or make other distributions in
respect of any of its capital stock; (iii) split, combine, reclassify or take
similar action with respect to any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (iv) adopt a plan of complete or
partial liquidation or resolutions providing for or authorizing such liquidation
or a dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization; (v) redeem, repurchase or otherwise acquire any shares of
its capital stock or any options with respect thereto; (vi) issue, deliver, sell
or exchange, or authorize or propose the issuance, delivery, sale or exchange
of, any shares of its capital stock or any options with respect thereto, other
than (a) the issuance or exchange of capital stock necessary to extinguish
options pursuant to the Merger Agreement or (b) the issuance by a
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wholly owned subsidiary of its capital stock to its parent corporation; (vii)
acquire (by merging or consolidating with, or by purchasing a substantial equity
interest in or a substantial portion of the assets of, or by any other manner)
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to acquire any
assets other than in the ordinary course of its business consistent with past
practice; (viii) sell, lease, grant any security interest in or otherwise
dispose of or encumber any of its assets or properties other than in the
ordinary course of its business consistent with past practice; (ix) except to
the extent required by applicable law, permit any material change in (a) any
pricing, marketing, purchasing, investment, accounting, financial reporting,
inventory, credit, allowance or tax practice or policy or (b) any method of
calculating any bad debt, contingency or other reserve for accounting, financial
reporting or tax purposes or make any material tax election or settle or
compromise any material income tax liability with any governmental or regulatory
authority; (x) incur any indebtedness for borrowed money or guarantee any such
indebtedness or voluntarily purchase, cancel, prepay or otherwise provide for a
complete or partial discharge in advance of a scheduled repayment date with
respect to, or waive any right under, any indebtedness for borrowed money other
than in the ordinary course of business consistent with past practice; provided,
however, Interpoint may incur indebtedness to fund the cash needs of ADIC and to
fund the retirement of the outstanding options; (xi) enter into, adopt, amend or
terminate any employee benefit plan of Interpoint or any of its subsidiaries or
other agreement, arrangement, plan or policy between such party and one or more
of its directors, officers or employees, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any plan or arrangement in effect as of the date of the
Merger Agreement; (xii) enter into any contract or amend or modify any existing
contract, or engage in any new transaction outside the ordinary course of
business consistent with past practice or not on an arm's-length basis, with any
affiliate of such party or any of its subsidiaries; (xiii) make any capital
expenditures or commitments for additions to plant, property or equipment
constituting capital assets in excess of $25,000, not to exceed $75,000 in the
aggregate; (xiv) make any change in the lines of business in which it
participates or is engaged; or (xv) enter into any contract, commitment or
arrangement to do or engage in any of the foregoing.
The Spinoff. With respect to the Spinoff, Interpoint has agreed to take
all actions as may be necessary to effect the Spinoff as contemplated in the
Merger Agreement. Additionally, Interpoint has agreed that it will not, nor will
it permit any of its subsidiaries to, transfer, or cause to be transferred, any
assets to ADIC or assume any liabilities, contingent or otherwise, of ADIC,
other than as expressly permitted by the Merger Agreement and the Spinoff
Agreements.
No Solicitation. Interpoint has agreed in the Merger Agreement that, prior
to the Effective Time, (i) neither it nor any of its subsidiaries shall, and it
shall cause its and their respective directors, officers, employees, legal,
investment banking and financial advisors, accountants and any other agents or
representatives not to, directly or indirectly, initiate, solicit or encourage,
or take any other action to facilitate any inquiries or the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its shareholders) with respect to a recapitalization,
merger, consolidation or other business combination including Interpoint or any
of its subsidiaries or any acquisition or similar transaction (including,
without limitation, a tender or exchange offer) involving the purchase of (a)
all or any significant portion of the assets of Interpoint or its subsidiaries,
(b) 5% or more of the outstanding shares of Interpoint Common Stock, or (c) 5%
of the outstanding shares of the capital stock of any subsidiary of Interpoint
(any such proposal or offer being hereinafter referred to as an "Alternative
Proposal"), or engage or participate in any negotiations concerning, or provide
any information or data to, or have any discussions with, or otherwise cooperate
with any person or group relating to an Alternative Proposal, or otherwise
facilitate any effort or attempt to make or implement an Alternative Proposal;
(ii) it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties with respect to any of
the foregoing; and (iii) it will notify Crane immediately if any such inquiries,
proposals or offers are received by, any such information is requested from, or
any such negotiations or discussions are sought to be initiated or continued
with, it or any of such persons; provided, however, that nothing contained in
the Merger Agreement prohibits the Interpoint Board from furnishing information
to (but only pursuant to a confidentiality agreement) or entering into
discussions or negotiations with any person or group that makes an unsolicited
bona fide Alternative Proposal if, and only to the extent that, (a) the
Interpoint Board, based on the written
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opinion of outside legal counsel, determines in good faith that such action is
required for the Interpoint Board to comply with its fiduciary duties to
shareholders imposed by law, (b) such Alternative Proposal is not conditioned on
the receipt of financing, the Interpoint Board has reasonably concluded in good
faith that the person or group making such Alternative Proposal will have
adequate sources of financing to consummate such Alternative Proposal and that
such Alternative Proposal is more favorable to Interpoint's shareholders than
the Merger, (c) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or group, Interpoint provides
written notice to Crane to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person or group, and (d)
Interpoint keeps Crane informed of the status and all material information with
respect to any such discussions or negotiations. The parties additionally agreed
that, notwithstanding anything in the Merger Agreement to the contrary,
Interpoint will not enter into any agreement (including an agreement in
principle) with any person or group that provides for, or in any way
facilitates, an Alternative Proposal (other than a confidentiality agreement
under the circumstances described above) or make any public announcement with
respect thereto unless and until the Merger Agreement is validly terminated and
Interpoint pays Crane the termination fee provided for therein. See
"--Termination" and "--Expenses and Termination Fees."
Third-Party Standstill Agreements. Interpoint has agreed that until the
Effective Time, neither Interpoint nor any of its subsidiaries will terminate,
amend, modify or waive any provision of any confidentiality or standstill
agreement to which it is a party and Interpoint will enforce, to the fullest
extent permitted under applicable law, the provisions of any such agreement,
including, but not limited to, by obtaining injunctions to prevent any breaches
of such agreements and to enforce specifically the terms and provisions thereof
in any court having jurisdiction.
Advice of Changes. Each of Crane and Interpoint has agreed to promptly
advise the other, orally and in writing, of any change or event, including,
without limitation, any complaint, investigation or hearing by any governmental
or regulatory authority or the institution or threat of litigation, having, or
which insofar as can be reasonably foreseen could have, a material adverse
effect on Interpoint or Crane, or on the ability of Interpoint or Crane to
consummate the transactions contemplated by the Merger Agreement.
Notice and Cure. Each of Crane and Interpoint has agreed to notify the
other of, and use all commercially reasonable efforts to cure before the
Closing, any event, transaction or circumstance, as soon as practical after it
becomes known to such party, that causes or will cause any covenant or agreement
of Crane or Interpoint under the Merger Agreement to be breached or that renders
or will render untrue any representation or warranty of Crane or Interpoint
contained in the Merger Agreement. Each of Crane and Interpoint also has agreed
to notify the other in writing of, and will use all commercially reasonable
efforts to cure, before the Closing, any violation or breach, as soon as
practical after it becomes known to such party, of any representation, warranty,
covenant or agreement made by Crane or Interpoint.
CERTAIN ADDITIONAL AGREEMENTS
Interpoint Affiliates. Interpoint has agreed that, at least 30 days prior
to the Closing Date, it will deliver a letter to Crane identifying all persons
who, at the time of the Special Meeting, may, in Interpoint's reasonable
judgment, be deemed to be "affiliates" (as such term is used in Rule 145 under
the Securities Act) of Interpoint ("Interpoint Affiliates"). Interpoint has
further agreed to use its best efforts to cause each Interpoint Affiliate to
deliver to Crane on or prior to the Closing Date a written agreement (an
"Affiliate Agreement") in the form of an exhibit to the Merger Agreement. The
Merger Agreement provides that Crane is entitled to place legends as specified
in such Affiliate Agreement on the certificates evidencing any Crane Common
Stock to be received by such Interpoint Affiliates pursuant to the terms of the
Merger Agreement, and to issue appropriate stop transfer instructions to the
transfer agent for the Crane Common Stock, consistent with the terms of such
Affiliate Agreement.
Outstanding Indebtedness. Interpoint has agreed to establish a separate
segregated account (the "Segregated Account") into which it will deposit
borrowings under its line of credit with Seafirst Bank of America NW, N.A.
("Seafirst Bank") for the purpose of funding (i) the cash payments to the
holders of the outstanding options to purchase Interpoint Common Stock as
contemplated in the Merger Agreement and
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(ii) payments in respect of dissenting shares of Interpoint Common Stock. See
"Rights of Dissenting Interpoint Shareholders." Repayments of those borrowings
will be paid by Interpoint exclusively from funds generated by its operations.
Crane and its affiliates (other than Interpoint) will not pay, guarantee or
secure the Segregated Account indebtedness. Crane has agreed in the Merger
Agreement that it will cause all borrowings of Interpoint under its line of
credit with Seafirst Bank (other than borrowings for the Segregated Account) to
be repaid as soon as practicable following the Closing Date.
Employee Benefit Plans. The parties have agreed in the Merger Agreement
that Interpoint will institute, and the Surviving Corporation will continue for
at least two years following the Closing Date, a severance policy for the
benefit of certain key employees of Interpoint, pursuant to which such key
employees who continue in the employ of the Surviving Corporation will become
eligible for enhanced severance benefits in the event of their subsequent
termination of employment. See "Interests of Certain Persons in the Merger;
Certain Transactions."
Indemnification of Directors and Officers. Under the Merger Agreement,
Interpoint and, from and after the Effective Time, the Surviving Corporation
agreed to indemnify, defend and hold harmless the officers, directors and
employees of Interpoint and its subsidiaries against all losses, claims,
damages, costs and expenses, liabilities, judgments and settlement amounts
arising out of the fact that such person is or was an officer, director or
employee of Interpoint or its subsidiaries and relating to or arising out of any
action or omission occurring at or prior to the Effective Time or pertaining to
the Merger Agreement or the transactions contemplated thereby (including the
execution and performance of the Voting Agreement by certain directors). The
Merger Agreement also provides that the Surviving Corporation will cause
Interpoint's existing directors' and officers' liability insurance (or policies
of at least the same coverage and amounts containing terms that are no less
advantageous to the insured parties) to be maintained for two years after the
Effective Time with respect to claims arising from facts or events that occurred
on or prior to the Effective Time; provided, however, that under certain
circumstances the Surviving Corporation will not be required to maintain such
insurance, and, instead, Crane would to the fullest extent permitted by law
indemnify the indemnified parties or provide coverage for such indemnified
parties under its directors' and officers' liability insurance maintained at
such time to the fullest extent of the coverage that would otherwise have been
provided pursuant to the Merger Agreement. In addition, the Merger Agreement
provides that in the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers a substantial portion of its properties and assets to
any person, then, and in each such case, proper provision will be made so that
the successors and assigns of the Surviving Corporation or, at Crane's option,
Crane assumes the indemnification obligations contained in the Merger Agreement.
NYSE Listing. Crane has agreed to use its best efforts to cause the Crane
Common Stock to be issued in the Merger to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Closing Date.
Certain Tax Matters. Crane and Interpoint have agreed not to take or fail
to take any action that would cause Crane, Interpoint or their respective
shareholders (except to the extent that any shareholder of Interpoint may
receive cash in lieu of fractional shares or is the owner of dissenting shares
of Interpoint Common Stock) to recognize gain or loss for federal income tax
purposes as a result of the consummation of the Merger or the Spinoff. In
addition, Crane has agreed that it will not permit Interpoint to liquidate or
merge into Crane or into any subsidiaries of Crane at any time within one year
after the Closing Date. Interpoint has agreed to secure any indebtedness used to
purchase Interpoint options only with assets held by it immediately prior to the
Closing. Crane has provided in the Merger Agreement that it has no plan or
intention to liquidate Interpoint; to merge Interpoint into another corporation;
to cause Interpoint to sell or otherwise dispose of any of its assets, except
for dispositions made in the ordinary course of business; or to sell or
otherwise dispose of any shares of Interpoint Common Stock acquired in the
Merger, except for transfers of Interpoint Common Stock to corporations
controlled by Crane. See "Certain Federal Income Tax Consequences."
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VOTING AGREEMENT
Pursuant to the Merger Agreement, Interpoint and each of Walter P. Kistler,
John W. Stanton and Peter H. van Oppen (the "Director Shareholders") have
entered into the Voting Agreement providing that each of the Director
Shareholders will vote all shares of Interpoint Common Stock owned by him on the
Record Date in favor of the Merger Agreement and the transactions contemplated
thereby. The Voting Agreement contains various customary representations and
warranties of each of the Director Shareholders.
Each Director Shareholder has undertaken in the Voting Agreement to attend
the Special Meeting, in person or by proxy, and to vote (or cause to be voted)
all his shares of Interpoint Common Stock, and any other voting securities of
Interpoint (whether issued before or after the date of the Voting Agreement)
that such Director Shareholder owns or has the right to vote, for approval of
the Merger Agreement and the transactions contemplated thereby. The Voting
Agreement also applies to any adjournment or postponement of the Special
Meeting. The Voting Agreement also provides that the Director Shareholders will
not be required to vote to approve the Merger Agreement and the transactions
contemplated thereby in the event that holders of a majority of the shares of
Interpoint Common Stock voting on the Merger Agreement and the transactions
contemplated thereby at the Special Meeting (excluding those shares held by the
Director Shareholders) do not vote to approve the Merger Agreement and the
transactions contemplated thereby.
CONDITIONS TO CONSUMMATION OF THE MERGER
In addition to approval of the Merger Agreement and the transactions
contemplated thereby by the Interpoint shareholders, the obligation of each
party to effect the Merger is subject to the satisfaction of or, where legally
permissible, the waiver of various conditions, including: (i) the effectiveness
of the Registration Statement and the Information Statement and the absence of
any stop order suspending each such effectiveness or any proceedings for that
purpose being pending or threatened; (ii) the receipt of all state securities or
"Blue Sky" permits and other authorizations necessary to issue the Crane Common
Stock; (iii) the expiration or termination of any waiting period (and any
extension thereof) under the HSR Act; (iv) no court of competent jurisdiction or
other competent governmental or regulatory authority having enacted, issued,
promulgated, enforced or entered any law or order (whether temporary,
preliminary or permanent) that is in effect and has the effect of making illegal
or otherwise restricting, preventing or prohibiting consummation of the Merger,
the Spinoff or the other transactions contemplated by the Merger Agreement; (v)
the receipt of all material consents, approvals and notices from governmental or
regulatory authorities or any other public or private third parties required to
consummate the Merger and the Spinoff; (vi) the continuing accuracy in all
material respects of the parties' representations and warranties in the Merger
Agreement; (vii) the parties' having performed and complied with, in all
material respects, each agreement, covenant and obligation required by the
Merger Agreement to be performed or complied with by it on or prior to the
Closing Date; (viii) the receipt of a tax opinion from each party's special
counsel to the effect that (a) the Spinoff qualifies as a tax-free distribution
as described in Section 355 of the Code and (b) the Merger qualifies as a
tax-free reorganization described in Section 368(a) of the Code; and (ix) all
proceedings to be taken by each party to the Merger Agreement in connection
therewith being reasonably satisfactory in form and substance to the other party
thereto, and each party having received copies of all such documents and other
evidences it may reasonably request from the other to establish the consummation
of the transactions and the taking of all proceedings in connection therewith.
The obligation of Crane to effect the Merger is further subject to the
satisfaction of the following conditions (all or any of which may be waived in
whole or in part by Crane in its sole discretion): (i) the Spinoff having been
completed on or prior to the Closing Date to the satisfaction of Crane, and the
Spinoff Agreements having been entered into on or prior to the Closing Date to
the reasonable satisfaction of Crane; (ii) the aggregate number of dissenting
shares of Interpoint Common Stock not exceeding 10% of the total number of
shares of Interpoint Common Stock outstanding on the Closing Date; and (iii) the
outstanding indebtedness of Interpoint being at least $15 million immediately
prior to the Effective Time.
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<PAGE> 46
The obligation of Interpoint to effect the Merger is further subject to the
condition (which may be waived by Interpoint in its sole discretion) that the
Crane Rights have not become exercisable or transferable apart from the
associated shares of Crane Common Stock on or prior to the Closing Date.
TERMINATION
The Merger Agreement may be terminated and the transactions contemplated
thereby abandoned by (i) mutual written agreement of the Crane Board and the
Interpoint Board or (ii) either Crane or Interpoint upon written notice to the
other (a) at any time after December 31, 1996 if the Merger has not been
consummated on or prior to such date, provided that such failure to consummate
the Merger was not caused by a breach of the Merger Agreement by the terminating
party, (b) if the approval of Interpoint shareholders has not been obtained, (c)
if there has been a material breach of any representation, warranty, covenant or
agreement on the part of the nonterminating party set forth in the Merger
Agreement, which breach is not curable or, if curable, has not been cured within
30 days following receipt by the nonterminating party of notice of such breach
from the terminating party, or (d) if any court of competent jurisdiction or
other competent governmental or regulatory authority has issued an order,
judgment or decree making illegal or otherwise restraining, preventing or
prohibiting the Merger or the Spinoff and such order, judgment or decree shall
have become final and nonappealable and such terminating party has used all
reasonable effects to remove such order, judgment or decree.
Additionally, Crane may terminate the Merger Agreement if (i) the
Interpoint Board or any committee thereof (a) at any time after Interpoint or
any of its subsidiaries is required to notify Crane of a potential Alternative
Proposal pursuant to the Merger Agreement, withdraws or modifies in any manner
adverse to Crane its approval or recommendation of the Merger Agreement or the
Merger, (b) approves or recommends any Alternative Proposal (including approving
of, expressing no opinion on or remaining neutral as to a third-party tender
offer for shares of Interpoint Common Stock when expressing the position of
Interpoint to any such tender offer in complying with Rule 14e-2 promulgated
under the Exchange Act), or (c) resolves to take any of the actions specified in
clause (a) or (b); (ii) Interpoint or any of its subsidiaries announces, or
enters into a definitive agreement or a letter of intent for, an Alternative
Proposal or the Interpoint Board or any committee thereof shall resolve to take
such action; (iii) any person or group (within the meaning of Section 13(d)(3)
of the Exchange Act) other than Crane acquires that number of shares of
Interpoint capital stock entitled to cast at least 35% of the total number of
votes entitled to be cast in an election of directors of Interpoint, or the
directors of Interpoint in office on the date of the Merger Agreement shall
cease to represent a majority of the directors of Interpoint; or (iv) the
Interpoint Board or any committee thereof withdraws or modifies in a manner
adverse to Crane its approval or recommendation of the Merger Agreement or the
Merger. The Merger Agreement also provides that Interpoint may terminate the
Merger Agreement if the Interpoint Board or any committee thereof determines to
enter into a definitive agreement or an agreement in principle for an
Alternative Proposal, subject to paying Crane the termination fee described
under "--Expenses and Termination Fees."
EXPENSES AND TERMINATION FEES
The Merger Agreement provides that if (i) Crane terminates the Merger
Agreement pursuant to clause (i), (ii) or (iii) of the immediately preceding
paragraph, (ii) Interpoint terminates the Merger Agreement pursuant to the last
sentence of the immediately preceding paragraph, or (iii) either party
terminates the Merger Agreement due to the failure of Interpoint's shareholders
to approve the Merger Agreement and the transactions contemplated thereby and
within six months thereafter the Interpoint Board or any committee thereof
approves or recommends any Alternative Proposal as provided above, or if
Interpoint or any of its subsidiaries announces, or enters into a definitive
agreement or a letter of intent for, an Alternative Proposal or the Interpoint
Board or any committee thereof resolves to take such action, then Interpoint is
obligated to pay Crane $3.0 million plus an amount equal to all out-of-pocket
fees and expenses incurred by Crane in connection with or related to the Merger
Agreement and the transactions contemplated thereby (not to exceed $1.0 million)
within five days of the notice of termination. Interpoint has agreed that if
such payment is not timely paid, the amount not timely paid will bear interest
at 10% per annum accruing from the date such
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<PAGE> 47
payment was due and continuing until the termination payment is paid in full.
Interpoint has additionally agreed that in the event it is necessary for Crane
to institute proceedings to seek collection of the termination payment and it is
entitled to receive any of the amounts sought in the collection proceeding, in
addition to paying such amount Interpoint will reimburse Crane for the
attorneys' fees and other costs and expenses incurred by Crane in connection
with such collection.
Under the Merger Agreement, except as described above, whether or not the
Merger is consummated, all costs and expenses incurred in connection with the
Merger Agreement and the transactions contemplated thereby will be paid by the
party incurring such cost or expense.
AMENDMENT AND WAIVER
The Merger Agreement may be amended, supplemented or modified by action
taken by or on behalf of the respective Boards of Directors of the parties
thereto at any time prior to the Effective Time, whether prior to or after the
approval of the Interpoint shareholders has been obtained, but after such
adoption and approval only to the extent permitted by applicable law.
At any time prior to the Effective Time, any of the parties to the Merger
Agreement may to the extent permitted by applicable law (i) extend the time for
performing any of the obligations or other acts of the other parties thereto;
(ii) waive any inaccuracies in the representations and warranties of the other
parties thereto or in any document delivered pursuant to the Merger Agreement;
or (iii) waive compliance with any of the covenants, agreements or conditions of
the other parties contained in the Merger Agreement.
ACCOUNTING TREATMENT
The Merger will be accounted for as a purchase under generally accepted
accounting principles. The effect of purchase accounting treatment is that the
assets, liabilities and shareholders' equity accounts of Interpoint will be
recorded at their fair values at the Effective Time. Any excess consideration
paid by Crane over the fair value of Interpoint's assets will be recorded as
goodwill.
OPERATIONS OF INTERPOINT AFTER THE MERGER
Following consummation of the Merger, Crane intends that the business of
Interpoint will continue to be operated in its customary manner. At the
Effective Time, Interpoint, as the Surviving Corporation, will continue to
operate under the name "Interpoint Corporation."
FEDERAL SECURITIES LAW CONSEQUENCES
All shares of Crane Common Stock received by Interpoint shareholders in the
Merger will be freely transferable, except that shares of Crane Common Stock
received by persons who are deemed to be "affiliates" (as such term is defined
under the Securities Act) of Interpoint prior to the Merger may be resold by
them only in transactions permitted by the resale provisions of Rule 145
promulgated under the Securities Act. Persons who may be deemed to be affiliates
of Interpoint generally include individuals or entities that control, are
controlled by, or are under common control with such party and include
directors, and may include certain officers of such party, as well as principal
shareholders of such party. The Merger Agreement requires Interpoint to use its
best efforts to cause each of its affiliates to execute a written agreement to
the effect that such affiliate will not offer or sell or otherwise dispose of
any of the shares of Crane Common Stock issued to such affiliate in or pursuant
to the Merger in violation of the Securities Act or the rules and regulations
promulgated by the SEC thereunder. See "--Certain Additional
Agreements--Interpoint Affiliates."
INTERESTS OF CERTAIN PERSONS IN THE MERGER; CERTAIN TRANSACTIONS
In considering the recommendation of the Interpoint Board with respect to
the Merger Agreement and the transactions contemplated thereby, holders of
Interpoint Common Stock should be aware that certain executive officers and
directors of Interpoint have interests in the Merger that are in addition to and
not
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<PAGE> 48
necessarily aligned with the interests of Interpoint shareholders generally. The
Interpoint Board has considered these interests, among other matters, in
approving the Merger Agreement and the transactions contemplated thereby.
Employment/Severance Agreements. Fourteen members of Interpoint's
management, including David A. Uvelli, Senior Vice President, General Manager,
Power Products Division and a director, Leslie S. Rock, Vice President, Chief
Accounting Officer and Secretary-Treasurer and Sally M. Veillette, Vice
President and General Manager, Custom Microelectronics Division, will be
beneficiaries of a severance policy adopted by Interpoint and to be continued by
the Surviving Corporation for at least two years following the Closing. If,
within two years after the Effective Date, the employment of any of such members
of Interpoint's management is substantially changed in terms of materially
reduced responsibility or compensation, or is terminated for a reason other than
voluntary resignation, cause, permanent or total disability or death, he or she
will receive payment equal to 125% (in the case of officers) or 60% (in the case
of nonofficers) of his or her annual base salary in effect immediately preceding
the date of termination under the severance policy. In addition, each would
receive other benefits to which he or she would normally be entitled in the
event of termination.
Acceleration of Vesting and Cash Payment of Interpoint Stock
Options. Immediately prior to the Effective Time, all outstanding options to
purchase shares of Interpoint Common Stock, whether or not the vesting
requirements for exercise of such options have been satisfied, held by employees
of Interpoint's microelectronics business (including Leslie S. Rock, David A.
Uvelli and Sally M. Veillette) will be terminated in exchange for cash payments
by Interpoint. Options held by employees of the ADIC data storage business
(including Mr. van Oppen and Mr. Stonecipher) and all members of the Interpoint
Board other than Dr. Uvelli will be cancelled in exchange for an ADIC
Replacement Option and a cash payment for the portion of the original option
that is attributable to the microelectronics business. See "The
Merger--Treatment of Stock Options." As of the Record Date, Interpoint's
executive officers and directors had the following outstanding options:
<TABLE>
<CAPTION>
NUMBER OF SHARES WEIGHTED NUMBER OF
SUBJECT TO AVERAGE SHARES AS TO
OUTSTANDING EXERCISE WHICH OPTIONS
NAME OF INDIVIDUAL POSITION OPTIONS PRICE ARE VESTED
- -------------------------------- -------------------------- ---------------- -------- -------------
<S> <C> <C> <C> <C>
Peter H. van Oppen.............. Chairman, President and 147,482 $ 3.45 127,482
CEO
David A. Uvelli................. Sr. VP, General Manager, 54,000 $ 3.88 36,500
Power Products Division,
and Director
Charles H. Stonecipher.......... Sr. VP and COO, ADIC 70,000 $ 5.28 23,000
Sally M. Veillette.............. VP, General Manager, 27,500 $ 5.27 7,000
Custom Microelectronics
Division
Leslie S. Rock.................. VP, CAO, Secretary- 16,100 $ 1.89 16,100
Treasurer
Christopher T. Bayley........... Director 13,000 $ 2.92 12,000
Walter P. Kistler............... Director 13,000 $ 2.92 12,000
Russel F. McNeill............... Director 8,800 $ 3.09 7,800
Walter F. Walker................ Director 12,000 $ 5.48 0
John W. Stanton................. Director 13,000 $ 2.63 12,000
</TABLE>
Indemnification of Directors and Officers Pursuant to the Merger
Agreement. The Merger Agreement provides for indemnification of, and
maintenance of liability insurance for, directors and officers of Interpoint in
respect of actions or omissions occurring at or prior to the Effective Time or
pertaining to the Merger Agreement. See "The Merger--Certain Additional
Agreements--Indemnification of Directors and Officers."
Consulting Agreement. Mr. van Oppen will enter into a consulting agreement
with ELDEC providing that, for a period of six months beginning October 31,
1996, Mr. van Oppen will provide certain advice and
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assistance to ELDEC relating to the Interpoint microelectronics business in
exchange for $150,000, payable in three equal installments.
Sales to ELDEC. In the ordinary course of its business, Interpoint sells
power products and custom microelectronics to ELDEC, a wholly owned subsidiary
of Crane. During Interpoint's fiscal years ended October 31, 1993, 1994 and
1995, and the nine months ended July 31, 1996, Interpoint derived revenues of
approximately $624,000, $645,000, $958,000 and $827,000, respectively, from such
sales.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material federal income tax
consequences of the Spinoff and the Merger to Interpoint, ADIC, Crane and the
shareholders of Interpoint who are citizens of or residents in the United
States. It does not discuss all the tax consequences that may be relevant to
Interpoint shareholders because of their particular tax situation (such as
insurance companies, financial institutions, dealers in securities, tax-exempt
organizations or non-U.S. persons) or to Interpoint shareholders who acquired
their shares of Interpoint Common Stock pursuant to the exercise of employee
stock options or warrants, or otherwise as compensation. This summary also does
not discuss tax consequences to holders of outstanding Interpoint options.
Neither Interpoint nor ADIC nor Crane has requested a ruling from the IRS
with regard to any of the federal income tax consequences of the Spinoff or the
Merger. A condition to the obligation of Interpoint to consummate the Spinoff
and the Merger is that it receive the opinion of Perkins Coie, special counsel
to Interpoint, to the effect that (i) the Spinoff qualifies as a tax-free
distribution described in Section 355 of the Code and (ii) the Merger qualifies
as a reorganization described in Section 368(a) of the Code. A condition to the
obligation of Crane to consummate the Merger is a similar opinion to be given by
Milbank, Tweed, Hadley & McCloy, special counsel to Crane. These opinions also
include an opinion as to the accuracy of the tax consequences described herein.
However, these opinions of counsel will not be binding on the IRS or guarantee
that the IRS will not challenge the tax treatment of the Spinoff or the Merger.
The opinions of counsel will be based on federal income tax law as it
exists at the Effective Time of the Merger and the Spinoff and on the
assumptions that (i) representations made as of the Effective Time by
Interpoint, ADIC, Acquisition Corp. and certain significant shareholders of
Interpoint are accurate, (ii) the Merger will qualify as a merger under
applicable state law, (iii) the Merger and the Spinoff and related transactions
will occur as described in the Merger Agreement, and (iv) all parties to the
Merger Agreement will comply with their covenants contained in the Merger
Agreement, including, but not limited to, the covenant of Crane not to liquidate
or merge Interpoint into Crane or into any of its subsidiaries within one year
after the Closing Date and that Crane will not provide any funds or guaranty
with respect to Interpoint's obligation to pay its shareholders with respect to
dissenting shares of Interpoint Common Stock or options to acquire Interpoint
Common Stock. Any change in federal income tax law after the date hereof or any
change in those assumptions could vary the conclusions set forth herein.
THE SPINOFF
The Spinoff will not be a taxable transaction if it meets the requirements
of Section 355 of the Code, including, among others, that (i) there is a
business purpose for the Spinoff independent of tax reasons, (ii) the Spinoff is
not a device for the distribution of earnings and profits to the Interpoint
shareholders, (iii) after the Spinoff, ADIC and Interpoint each continue to
conduct a trade or business that has been actively conducted for the five years
preceding the Spinoff and that was not acquired in a taxable transaction, (iv)
the Spinoff results in a distribution of control (within the meaning of Section
368(c) of the Code) of ADIC, and (v) the historical shareholders of Interpoint
continue to hold an amount of stock establishing a continuity of interest in
Interpoint and ADIC.
Business Purpose. Crane has represented that it would not agree to
consummate the Merger if ADIC or the ADIC business had to be acquired as a part
of the Merger. Interpoint has represented that a business purpose for the
Spinoff is to eliminate an asset that Crane did not want in the Merger. Thus,
the Spinoff is
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necessary to facilitate the Merger. The IRS has ruled in the past that a
premerger spinoff designed to eliminate unwanted assets of the target company
for a post-spinoff merger constitutes a valid business purpose. See Rev. Proc.
96-30, Appendix A, Section 2.07, 1996-19 I.R.B. 8 (May 6, 1996). Based on the
representations of Crane and Interpoint, counsel to Crane and to Interpoint will
opine that the business purpose requirement for the Spinoff will be met.
No Device. In general, a sale or exchange of the stock of Interpoint or
ADIC after the Spinoff would be evidence that the Spinoff was a device for the
distribution of the earnings and profits of Interpoint in violation of the
requirements of Section 355 of the Code. The Merger results in an exchange of
Interpoint's stock for Crane Common Stock. However, the regulations under
Section 355 indicate that the exchange of stock pursuant to a plan of
reorganization under Section 368(a) of the Code in which either no gain or loss
or only an insubstantial amount of gain is recognized on the exchange will not
be treated as a subsequent sale or exchange. Treas. Reg.
sec. 1.355-2(d)(2)(iii)(E). Thus, the fact that the Interpoint shareholders will
exchange their Interpoint Common Stock for Crane Common Stock pursuant to the
Merger will not result in a determination that the Spinoff is a device for the
distribution of the earnings and profits of Interpoint if the Merger qualifies
as a reorganization and little or no gain is recognized in the Merger. As
indicated below, counsel to Crane and to Interpoint will opine that the Merger
is a reorganization under Section 368(a) and that no gain or loss should be
recognized with respect to the Merger except with respect to cash paid in lieu
of fractional shares and dissenting shares.
Five-Year Active Trade or Business. Under Section 355 of the Code, both
Interpoint and ADIC must continue a business that has been conducted as an
active trade or business for at least five years prior to the Spinoff and that
was not acquired by Interpoint or ADIC in a taxable purchase of stock or assets.
Interpoint has represented that Interpoint and ADIC each will continue a
business after the Effective Time that has been actively conducted by Interpoint
and ADIC, respectively, for at least five years and that the business was not
acquired in any taxable acquisition of stock or assets during the past five
years. Based on that representation, counsel to Interpoint and to Crane will
opine that the active trade or business test will be met.
Continuity of Shareholder Interest. To qualify under Section 355 of the
Code, historical shareholders of Interpoint must retain a continuity of interest
in both Interpoint and ADIC after the Spinoff. Although the shareholders of
Interpoint will not continue to hold Interpoint shares after the Merger, the
courts have held that the continuity of interest test nonetheless can be met if
those shareholders retain a continuing interest in the surviving corporation in
the merger. See Commissioner v. Morris Trust, 367 F.2d 794 (4th Cir. 1966); Rev.
Rul. 75-406, 1975-2 C.B. 125. Certain significant shareholders will be asked to
represent, and counsel to Interpoint and to Crane have assumed, that those
shareholders do not have any plan as of the Effective Time to dispose of their
interest in ADIC or Crane following the Effective Time. Interpoint and Crane
have represented they are not aware of any plan that would result in the
historical shareholders of Interpoint and Crane retaining less than a 50%
continuing interest in ADIC and Crane after the Effective Time. The IRS has
ruled that a 50% continuing interest satisfies the continuity of interest
requirement. Treas. Reg. sec. 1.355-2(c)(2), example 2. Thus, the continuity of
interest test should be met for the Spinoff and the Merger.
If any of the requirements were not met, the Spinoff would not qualify as a
tax-free transaction under Section 355. In that event, Interpoint would
recognize any gain or loss as if it had sold the ADIC Common Stock, and the
Interpoint shareholders would be taxed as if they had received the ADIC Common
Stock as a dividend distribution with respect to their Interpoint Common Stock.
THE MERGER
A merger such as the Merger can qualify as a tax-free reorganization under
Section 368(a)(1)(B), which applies to an exchange of stock in one corporation
solely for voting stock of the acquiring corporation. Rev. Rul. 67-448, 1967-2
C.B. 144 & Treas. Reg. sec. 1.368-2(j)(7), examples (4) and (5).
For the Merger to qualify as a reorganization under Section 368(a)(1)(B) (a
"B reorganization"), Acquisition Corp. must be a newly formed special-purpose
corporation formed solely for the purpose of effecting the Merger. Crane has
represented that Acquisition Corp. is a transitory corporation with no purpose
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<PAGE> 51
other than to facilitate the Merger. Crane has also represented that it will
not, as of the Effective Time, have a plan to liquidate or merge Interpoint into
Crane or any of Crane's subsidiaries and that at no time within one year
following the Effective Time will Crane merge Interpoint into Crane or any of
Crane's subsidiaries. In that way, the parties can establish that the Merger
resulted in the acquisition of the stock of Interpoint, rather than its assets,
in compliance with Section 368(a)(1)(B). If contrary to such representations the
IRS were to determine Crane did have a plan to merge or liquidate Interpoint,
the Merger would not qualify as a tax-free reorganization.
No consideration other than Crane voting stock can be used in a B
reorganization. Crane has also represented that no consideration other than
Crane voting stock will be used to acquire Interpoint capital stock, except that
Interpoint may use its cash to satisfy obligations to pay dissenting
shareholders or optionholders of Interpoint. Crane has represented it will not
pay, guaranty or contribute funds directly or indirectly to satisfy that
Interpoint obligation. Interpoint has established the Segregated Account to
satisfy its obligations to dissenting shareholders and optionholders. If,
notwithstanding this representation, any consideration other than Crane voting
stock were used to satisfy the claims of dissenting shareholders or
optionholders, the Merger may be taxable.
If the Merger qualifies as a reorganization under Section 368(a) of the
Code, the tax consequences to the parties will be as follows: (i) no gain or
loss will be recognized by Interpoint, Crane or Acquisition Corp. upon the
receipt by Crane of Interpoint Common Stock sold in exchange for Crane Common
Stock; (ii) the basis of the Interpoint Common Stock received by Crane will be
the same as the basis of the Interpoint Common Stock in the hands of the
Interpoint shareholders immediately prior to the exchange; (iii) the holding
period of the Interpoint Common Stock received by Crane will include the period
during which the Interpoint Common Stock was held by Interpoint shareholders;
(iv) no gain or loss will be recognized by an Interpoint shareholder who
receives solely shares of Crane Common Stock in exchange for Interpoint Common
Stock; (v) the basis of the Crane Common Stock received by the Interpoint
shareholders will be the same as the basis for the Interpoint Common Stock
surrendered in the exchange, reduced by the tax basis allocable to any
fractional share interest in Crane Common Stock with respect to which cash is
being received; (vi) the holding period of the Crane Common Stock received by
Interpoint shareholders includes the holding period of the Interpoint Common
Stock surrendered in the exchange, assuming the shares of Interpoint Common
Stock were held as a capital asset on the date of the exchange; (vii) an
Interpoint shareholder who receives cash in lieu of fractional shares will
recognize capital gain or loss equal to the difference between the cash received
and the tax basis allocated to the fractional share interest; and (viii) an
Interpoint shareholder who receives cash for dissenting shares will be treated
as having had the Interpoint Common Stock redeemed in exchange for cash, which
will result in capital gain or loss to such shareholder unless such shareholder
constructively owns shares of Interpoint Common Stock that are exchanged for
Crane Common Stock in the Merger or actually or constructively owns Crane Common
Stock after the Merger.
If the Merger does not qualify as a tax-free reorganization under Section
368(a) of the Code, the Interpoint shareholders would be treated as having sold
their Interpoint shares in a taxable transaction, resulting in gain or loss with
respect to each such share.
PENDING LEGISLATION
The Clinton administration has proposed legislation as part of the Revenue
Reconciliation Act of 1996 that would treat a spinoff as taxable to the
distributing corporation (but not the shareholders of the distributing
corporation) if the shareholders of the distributing corporation did not retain
for a two-year period following the spinoff a 50% or greater interest in the
distributing corporation and any successor thereto. See Section 9522 of the
Revenue Reconciliation Act of 1996. The proposal, if passed by Congress, in its
present form, would be effective for distributions occurring after March 19,
1996. Because the Interpoint shareholders will not acquire a 50% or greater
interest in Crane pursuant to the Merger, the Clinton proposal would result in
tax to Interpoint as a result of the Spinoff. It is uncertain whether this
proposal will pass Congress or, if passed, whether the proposed effective date
will be adopted. On March 29, 1996, Senator William V. Roth, Jr., Chairman of
the Senate Finance Committee, and Congressman Bill Archer, Chairman of the Ways
and Means Committee, issued a statement indicating that the effective date of
any such legislation would be the
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date of congressional action on the bill and not the retroactive date provided
in the Clinton administration's proposal. A number of Democrats have also
endorsed such approach. Thus, it does not appear likely that this proposal, if
enacted in the future, would apply to the Spinoff unless Congress acted before
the Spinoff Date and did not adopt transition rules excepting transactions such
as the Spinoff pursuant to agreements that were executed prior to approval of
the legislation, which also does not appear likely. The Revenue Reconciliation
Act of 1996 is in the form of a draft administration proposal and has not yet
been introduced as a bill to Congress. No hearings are scheduled at this time
with respect to the subject matter of the proposal. Congress is scheduled to end
its current session on October 4, 1996.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A GENERAL SUMMARY OF THE
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE SPINOFF AND THE MERGER AND DOES
NOT PURPORT TO BE AN ANALYSIS OR LISTING OF ANY CONSEQUENCES ARISING UNDER THE
LAWS OF ANY STATE, LOCALITY OR FOREIGN JURISDICTION. HOLDERS OF INTERPOINT
COMMON STOCK ARE URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S.
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE SPINOFF AND MERGER TO
THEM.
RIGHTS OF DISSENTING INTERPOINT SHAREHOLDERS
The following summary of the availability of dissenters' rights for holders
of Interpoint Common Stock does not purport to be complete and is qualified in
its entirety by reference to Chapter 23B.13 of the WBCA (a copy of which is
attached as Appendix II to this Proxy Statement/Prospectus). Any shareholder
contemplating the exercise of dissenters' rights is urged to review the full
text of Chapter 23B.13 of the WBCA. The procedures set forth in such Chapter
must be followed exactly or dissenters' rights may be lost.
A holder of Interpoint Common Stock who properly follows the procedures for
dissenting and demanding payment for his or her Interpoint shares pursuant to
Chapter 23B.13 (as summarized below) may be entitled to receive in cash the
"fair value" of his or her Interpoint shares in lieu of the consideration
provided in the Merger Agreement. An Interpoint shareholder's dissenters' rights
do not apply to the Spinoff and a dissenting shareholder will not be entitled to
receive payment for the ADIC shares to be received in the Spinoff. The "fair
value" of a dissenting shareholder's shares will be the value of such shares
immediately prior to the Effective Time, after giving effect to the Spinoff,
excluding any appreciation or depreciation in anticipation of the Merger, unless
exclusion would be inequitable. The "fair value" could be more than, equal to or
less than the value of the consideration the shareholder would have received
pursuant to the Merger Agreement if the shareholder had not dissented. In the
event the dissenting shareholder and the corporation cannot agree on the "fair
value" of the dissenter's Interpoint Common Stock, "fair value" may ultimately
be determined by a court in an appraisal proceeding.
To properly exercise dissenters' rights with respect to the Merger and to
be entitled to payment under Chapter 23B.13 of the WBCA, a holder of Interpoint
Common Stock must, among other things, (i) prior to the Special Meeting, deliver
to Interpoint written notice of the shareholder's intent to demand payment for
his or her shares if the Merger is effected, (ii) not vote his or her shares in
favor of the Merger, and (iii) upon receipt of a dissenter's notice from
Interpoint (as described below), timely deliver a demand for payment, certifying
whether the shareholder acquired beneficial ownership before the date of the
first announcement to the news media or to shareholders of the terms of the
Merger, and timely deposit the shareholder's Interpoint certificates in
accordance with the terms of the dissenter's notice. Thus, any holder of
Interpoint Common Stock who wishes to dissent and who executes and returns a
proxy on the accompanying form must specify that such holder's shares are to be
voted against the Merger or that the proxy holder should abstain from voting
such holder's shares in favor of the Merger. A vote against the Merger is not a
proper exercise of dissenters' rights. If the shareholder returns a proxy
without voting instructions, or with instructions to vote in favor of the
Merger, such holder's shares will automatically be voted in favor of the Merger,
and the shareholder will lose any dissenters' rights. Within 10 days after the
Effective Time, Interpoint will send a written dissenter's notice to each holder
of Interpoint Common Stock who satisfied the requirements of clauses (i) and
(ii) above, indicating where the payment demand must be sent and where and when
Interpoint
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share certificates must be deposited. Such notice will include, among other
things, a form of payment demand that includes the date of the first
announcement to the news media or to shareholders of the terms of the Merger and
requires the person asserting dissenters' rights to certify whether or not such
person acquired beneficial ownership of the shares before that date, and will
set the date by which Interpoint must receive the payment demand, which date may
not be less than 30 or more than 60 days after the dissenter's notice is
delivered. Shareholders who fail to file timely written intent to demand payment
or who vote in favor of the Merger will not be entitled to receive the
dissenter's notice and will be bound by the terms of the Merger Agreement.
Written objections to the Merger by holders of Interpoint Common Stock should be
addressed to the Secretary of Interpoint at its principal executive offices at
10301 Willows Road, P.O. Box 97005, Redmond, Washington 98073-9705. Such
objections must be received by Interpoint prior to the Special Meeting.
A beneficial shareholder may assert dissenters' rights as to shares held on
the beneficial shareholder's behalf only if (i) the beneficial shareholder
submits to Interpoint the record shareholder's written consent to dissent not
later than the time the beneficial shareholder asserts dissenters' rights and
(ii) the beneficial shareholder does so with respect to all shares of which such
shareholder is the beneficial shareholder or over which such shareholder has
power to direct the vote.
Within 30 days after the later of the Effective Time and the date the
payment demand is received, Interpoint will pay each dissenter who complied with
the above conditions the amount that Interpoint estimates to be the fair value
of the shareholder's shares, plus accrued interest. The payment must be
accompanied by, among other things, (i) Interpoint's balance sheet as of the end
of a fiscal year ended not more than 16 months before the date of payment, an
income statement for that year, a statement of changes in shareholders' equity
for that year, and the latest available interim financial statements, if any,
and (ii) an explanation of how Interpoint estimated the fair value of the shares
and how the interest was calculated. Notwithstanding the foregoing, with respect
to shares acquired after the date of the first announcement to the news media or
to shareholders of the terms of the Merger, Interpoint may elect to withhold
payment of the fair value of the dissenter's shares plus accrued interest and,
in such event, Interpoint will estimate after the Effective Time the fair value
of the shares, plus accrued interest, and will offer to pay this amount to each
dissenter who agrees to accept it in full satisfaction of the dissenter's
demand.
A dissenter may notify Interpoint in writing of the dissenter's own
estimate of the fair value of the dissenter's shares and the amount of interest
due and demand payment of the dissenter's estimate, less any payment made, or,
with respect to after-acquired shares for which Interpoint elected to withhold
payment, reject Interpoint's offer of the fair value determined for such shares
and demand payment of the dissenter's estimate of the fair value of the
dissenter's shares and interest due, if:
(i) The dissenter believes that the amount paid or offered is less
than the fair value of the dissenter's shares or that the interest due is
incorrectly calculated;
(ii) Interpoint fails to make payment within 60 days after the date
set for demanding payment; or
(iii) The Merger is not effected, and Interpoint does not return the
deposited Interpoint certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.
A dissenter will be deemed to have waived the right to demand payment
unless the dissenter notifies Interpoint of his or her demand in writing within
30 days after Interpoint makes or offers payment for the dissenter's shares.
If a demand for payment remains unsettled, Interpoint will commence a
proceeding in the Superior Court of King County, Washington within 60 days after
receiving the payment demand and petition the court to determine the fair value
of the shares and accrued interest. If Interpoint does not commence such
proceeding within the 60-day period, it shall pay each dissenter whose demand
remains unsettled the amount demanded. Interpoint will make all dissenters,
whether or not residents of Washington State, whose demands remain unsettled
parties to the proceeding as in an action against their shares, and all parties
must be served with a copy of the petition. Interpoint may join as a party to
the proceeding any shareholder who claims to be a
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dissenter but who has not, in Interpoint's opinion, complied with the provisions
of Chapter 23B.13. If the court determines that such shareholder has not
complied with the provisions of Chapter 23B.13, the shareholder shall be
dismissed as a party. Each dissenter made a party to the proceeding will be
entitled to judgment (i) for the amount, if any, by which the court finds the
fair value of the shares, plus interest, exceeds the amount paid by Interpoint
or (ii) for the fair value, plus accrued interest, of the dissenter's
after-acquired shares for which Interpoint elected to withhold payment.
DESCRIPTION OF CRANE CAPITAL STOCK
Crane's Certificate of Incorporation, as amended (the "Crane Certificate of
Incorporation"), authorizes the issuance of 85,000,000 shares of capital stock,
of which 80,000,000 shares are designated as Crane Common Stock and 5,000,000
shares are designated as Preferred Stock, par value $.01 per share (the "Crane
Preferred Stock").
As of September 5, 1996, 29,891,059 shares of Crane Common Stock were
issued and outstanding and no shares of Crane Preferred Stock were issued and
outstanding.
The following description of the terms of Crane's capital stock does not
purport to be complete and is qualified in its entirety by reference to the
General Corporation Law of Delaware (the "DGCL") and the Crane Certificate of
Incorporation.
CRANE COMMON STOCK
Holders of Crane Common Stock are entitled to cast one vote per share on
all matters on which Crane's stockholders are entitled to vote. The number of
votes required to take action by Crane's stockholders are as provided in the
DGCL or the Crane Certificate of Incorporation. Holders of Crane Common Stock do
not have cumulative voting rights or preemptive, redemption, subscription or
conversion rights. Holders of Crane Common Stock are entitled to receive
dividends when and as declared by the Crane Board out of funds legally available
for the payment thereof. Subject to any preferential rights that may be granted
to holders of Crane Preferred Stock, holders of Crane Common Stock are entitled
to share ratably in all assets of Crane that are legally available for
distribution to its stockholders in the event of its liquidation or dissolution.
CRANE PREFERRED STOCK
The Crane Certificate of Incorporation provides that the Crane Preferred
Stock may be issued from time to time in one or more series as determined by the
Crane Board. The Crane Board may, by resolution, fix the designations,
preferences and relative, participating, optional or other rights or
qualifications, limitations or restrictions of any series of Crane Preferred
Stock.
Of the Crane Preferred Stock, 350,000 shares have been designated Series A
Junior Participating Preferred Stock (the "Crane Series A Preferred Stock"). For
a discussion of the terms of the Crane Series A Preferred Stock, see "Comparison
of Shareholder Rights--Shareholder Rights Plan."
COMPARISON OF SHAREHOLDER RIGHTS
Upon consummation of the Merger, holders of Interpoint Common Stock will
become holders of Crane Common Stock, and their rights will thereafter be
governed by the DGCL instead of the WBCA, and by the Crane Certificate of
Incorporation and the By-Laws of Crane (the "Crane By-Laws"), as opposed to
Interpoint's Articles of Incorporation (the "Interpoint Articles of
Incorporation") and the Bylaws of Interpoint (the "Interpoint Bylaws").
The following is a summary of certain material differences between the
rights of Crane's stockholders, on one hand, and Interpoint's shareholders, on
the other hand. These differences arise from differences between the DGCL and
the WBCA, and between the Crane Certificate of Incorporation and the Crane
By-Laws and the Interpoint Articles of Incorporation and the Interpoint Bylaws.
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The following does not purport to be a complete statement of the rights of
the Crane stockholders under the DGCL, the Crane Certificate of Incorporation
and the Crane By-Laws as compared with the rights of Interpoint's shareholders
under the WBCA, the Interpoint Articles of Incorporation and the Interpoint
Bylaws. The identification of certain specific differences is not meant to
indicate that other equally or more significant differences do not exist. The
following summary is qualified in its entirety by reference to the DGCL, the
WBCA and the full text of the charter and bylaw documents of each of Crane and
Interpoint. For information as to how such documents may be obtained, see
"Available Information."
SIZE AND CLASSIFICATION OF THE BOARD OF DIRECTORS
Crane. The DGCL provides that the board of directors of a Delaware
corporation shall consist of one or more directors as fixed by the corporation's
certificate of incorporation or by-laws. The Crane Certificate of Incorporation
provides for a board of directors comprised of not less than three nor more than
fifteen persons, which number may be increased or decreased within such range by
the Crane Board. Crane currently has nine directors. As permitted under the
DGCL, the Crane Board is classified into three classes which are as nearly equal
in number as reasonably possible. Directors in each class serve for a three-year
term, and elections are staggered such that one class is elected each year.
Interpoint. The WBCA provides that the board of directors of a Washington
corporation shall consist of one or more directors as fixed by the corporation's
articles of incorporation or bylaws. The Interpoint Bylaws provide for a board
of directors comprised of not less than six nor more than ten directors, which
number may be increased or decreased within such range by the Interpoint Board.
Interpoint currently has seven directors. As permitted under the WBCA, the
Interpoint Board is classified into three classes which are as equal in number
as possible. Directors in each class serve for a three-year term, and elections
are staggered such that one class is elected each year.
REMOVAL OF DIRECTORS
Crane. The DGCL provides that a director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors. However, in the case
of a corporation whose board is classified, the directors may be removed only
for cause unless the certificate of incorporation provides otherwise. The Crane
Certificate of Incorporation provides that a director or directors may be
removed at any time, but only for cause and only by the affirmative vote of the
holders of at least two-thirds of the voting power of the shares then entitled
to vote at an election of directors, voting together as a single class.
Interpoint. The WBCA provides that a corporation's shareholders may remove
one or more directors with or without cause unless the articles of incorporation
provide that directors may be removed only for cause. The Interpoint Articles of
Incorporation provide that any director may be removed in accordance with the
laws of Washington State. The Interpoint Bylaws provide that any director or the
entire board may be removed, with or without cause, by the affirmative vote of a
majority of the outstanding shares entitled to vote at a meeting of shareholders
called expressly for that purpose.
SPECIAL MEETINGS OF STOCKHOLDERS
Crane. Under the DGCL, a special meeting of stockholders may be called by
the board of directors or by any other person authorized to do so in the
certificate of incorporation or the by-laws. The Crane Certificate of
Incorporation provides that a special meeting of stockholders may be called only
by a majority of the entire Crane Board or by Crane's Chairman of the Board.
Business transacted at any special meeting is limited to the purposes stated in
the notice of the special stockholders meeting given to stockholders. The DGCL
and the Crane By-Laws require notice of stockholders meetings to be sent to all
stockholders of record entitled to vote thereon not less than 10 nor more than
60 days prior to the date of the meeting.
Interpoint. Under the WBCA, a special meeting of shareholders may be
called by a corporation's board of directors or other persons authorized by the
corporation's articles of incorporation or bylaws, or, unless limited by the
articles of incorporation, on written demand of holders of at least 10% of all
votes entitled to be
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cast on any issue proposed to be considered at the proposed special meeting. The
Interpoint Bylaws provide that in addition to the parties permitted under the
WBCA, a special meeting of shareholders may also be called by the President of
Interpoint. The Interpoint Bylaws require that, unless otherwise prescribed by
statute, written notice of shareholders meetings must be sent to all
shareholders of record not less than 10 nor more than 50 days prior to the date
of the meeting. The WBCA provides that notice of a shareholders meeting to act
on an amendment to the articles of incorporation, a plan of merger or a share
exchange or certain other transactions must be given not less than 20 nor more
than 60 days prior to the date of the meeting.
AMENDMENT TO CERTIFICATE/ARTICLES OF INCORPORATION
Crane. Under the DGCL, amendments to a corporation's certificate of
incorporation require the approval of the board of directors and stockholders
holding a majority of the outstanding stock of such class entitled to vote on
such amendment as a class, unless a different proportion is specified in the
certificate of incorporation or by other provisions of the DGCL. The Crane
Certificate of Incorporation specifies that the affirmative vote of the holders
of at least two-thirds of the voting power of the then-outstanding shares
entitled to vote thereon, voting together as a single class, is required to
amend, repeal or adopt any provisions inconsistent with the provisions of the
Crane Certificate of Incorporation pertaining to (i) the Crane Board (including,
among other things, the classification of the Board, filling vacancies and the
removal of directors), (ii) actions taken by stockholders (which may be effected
only at a meeting) and the power to call a special meeting of stockholders, and
(iii) amendments to the Crane By-Laws.
Interpoint. The WBCA authorizes a corporation's board of directors to make
various changes of an administrative nature to the corporation's articles of
incorporation without shareholder action. Such changes include a change to the
corporate name, changes to the number of outstanding shares in order to
effectuate a stock split or stock dividend in the corporation's shares and
changes to or elimination of provisions with respect to the par value of the
corporation's stock. The WBCA requires that other amendments to a corporation's
articles of incorporation must be recommended to the shareholders by the board
of directors, unless the board determines that, because of a conflict of
interest or other special circumstances, it should make no recommendation and
communicates the basis for its determination to the shareholders. Under the
WBCA, such amendments must be approved by each voting group entitled to vote
thereon by a majority of all the votes entitled to be cast by that voting group,
unless another proportion is specified in the articles of incorporation, by the
board of directors as a condition to its recommendation, or by the provisions of
the WBCA. The Interpoint Articles of Incorporation do not specify another
proportion other than requiring that approval by 80% of the voting stock must be
obtained to amend or adopt any provision inconsistent with the "Business
Transaction Amendment" provision contained in the Interpoint Articles of
Incorporation, provided that only a majority of the voting stock is required if
such amendment or adoption of a new provision is approved by a majority of the
Interpoint Board, with the concurrence of a majority of the Continuing Directors
(as defined below).
PROVISIONS RELATING TO ACQUISITIONS AND BUSINESS COMBINATIONS
Crane. Section 203 of the DGCL prohibits a Delaware corporation from
engaging in any "business combination" with any person who owns 15% or more of a
corporation's voting stock (i.e., an "interested stockholder") for a period of
three years following the date that such person became an interested
stockholder, unless: (i) the corporation's board of directors has approved,
prior to the date on which such stockholder became an interested stockholder,
either the business combination or the transaction that resulted in the person
becoming an interested stockholder; (ii) upon consummation of the transaction
that resulted in the stockholder becoming an interested stockholder, such
stockholder owned at least 85% of the corporation's voting stock outstanding at
such time (excluding shares owned by persons who are both directors and officers
and shares owned by employee stock plans in which participants do not have the
right to determine confidentially whether shares will be tendered in a tender or
exchange offer); or (iii) on or after the date on which such stockholder became
an interested stockholder, the business combination is approved by the board of
directors and authorized by the affirmative vote (at an annual or special
meeting and not by written consent) of at least 66 2/3% of the outstanding
voting stock not owned by the interested stockholder.
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For purposes of determining whether a person is the "owner" of 15% or more
of a corporation's voting stock for purposes of Section 203 of the DGCL,
ownership is defined broadly to include the right, directly or indirectly, to
acquire the stock or to control the voting or disposition of the stock. A
"business combination" is also defined broadly to include: (i) mergers and sales
or other dispositions of 10% or more of the assets of a corporation with or to
an interested stockholder; (ii) certain transactions resulting in the issuance
or transfer to the interested stockholder of any stock of the corporation or its
subsidiaries; (iii) certain transactions that would result in an increase in the
proportionate share of a corporation's or its subsidiaries' stock owned by the
interested stockholder; and (iv) any receipt by the interested stockholder of
the benefit, directly or indirectly (except proportionately as a stockholder),
of any loans, advances, guarantees, pledges or other financial benefits provided
by or through the corporation or any of its subsidiaries.
A Delaware corporation may elect not to be governed by Section 203 by a
provision contained in its original certificate of incorporation or an amendment
thereto or to the by-laws, which amendment must be approved by a majority of the
shares entitled to vote and may not be further amended by the board of
directors. Such an amendment is not effective until 12 months following its
adoption. Crane has not expressly made such an election in its original
certificate of incorporation or amendment thereto or in the Crane By-Laws.
Interpoint. Chapter 23B.19 of the WBCA, which applies to Washington
corporations which have a class of voting stock registered with the SEC under
the Exchange Act, prohibits a "target corporation," with certain exceptions,
from engaging in certain "significant business transactions" with a person or
group of persons which beneficially owns 10% or more of the voting securities of
the target corporation (i.e., an "Acquiror") for a period of five years after
such acquisition, unless the transaction or acquisition of shares is approved by
a majority of the members of the target corporation's board of directors prior
to the time of acquisition. Such prohibited transactions include, among other
things, a merger or consolidation with, disposition of assets to, or issuance or
redemption of stock to or from, the Acquiror, termination of 5% or more of the
employees of the target corporation as a result of the Acquiror's acquisition of
10% or more of the shares, or allowing the Acquiror to receive any
disproportionate benefit as a shareholder. After the five-year period, a
"significant business transaction" may take place if it complies with certain
"fair price" provisions of the statute. A corporation may not "opt out" of this
statute. The Merger will not be subject to the provisions of the statute because
the Interpoint Board has approved the Merger Agreement and the transactions
contemplated thereby.
The Interpoint Articles of Incorporation contain a provision requiring the
affirmative vote of 80% of the votes entitled to be cast by the holders of all
shares of Interpoint entitled to vote generally in the election of directors for
certain business transactions, if such transactions are out of the ordinary
course of business and inconsistent with past practice, with any person or group
of persons which is the beneficial owner, directly or indirectly, of shares of
Interpoint having 20% or more of the votes entitled to be cast by the holders of
all outstanding shares of voting stock (or any person or group of persons which
had such status at any time in the preceding two years). Notwithstanding the
foregoing, such business transaction will only require the affirmative vote
otherwise required if the business transaction is approved by a majority of the
directors who were members of the Interpoint Board on December 15, 1986, or who
were elected to the Interpoint Board upon the recommendation of a majority of
persons who were on the Interpoint Board on December 15, 1986, voting separately
as a class ("Continuing Directors"). The majority of the Continuing Directors
have approved the Merger.
MERGERS, ACQUISITIONS AND OTHER TRANSACTIONS
Crane. Under the DGCL, a merger, consolidation or sale of all or
substantially all of a corporation's assets must be approved by the board of
directors and by a majority of the outstanding stock of the corporation entitled
to vote thereon, provided that no vote of stockholders of a constituent
corporation surviving a merger is required (unless the corporation provides
otherwise in its certificate of incorporation) if (i) the merger agreement does
not amend the certificate of incorporation of the surviving corporation, (ii)
each share of stock of the surviving corporation outstanding before the merger
is an identical outstanding or treasury share after the merger, and (iii) either
no shares of common stock of the surviving corporation are to be issued or
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delivered pursuant to the merger or, if such common stock will be issued or
delivered, it will not increase the number of shares of common stock outstanding
immediately prior to the merger by more than 20%.
Interpoint. Under the WBCA, a merger, consolidation or sale of
substantially all of a corporation's assets other than in the regular course of
business must be approved by the affirmative vote of a majority of directors and
by two-thirds of all votes entitled to be cast by each voting group entitled to
vote as a separate group, unless another proportion (but not less than a
majority of all votes entitled to be cast) is specified in the articles of
incorporation. The Interpoint Articles of Incorporation provide that the
Interpoint Board may sell, lease or exchange all of Interpoint's property and
assets upon authorization by the affirmative vote of the holders of at least
two-thirds of the voting stock.
ACTION WITHOUT A MEETING
Crane. The DGCL authorizes stockholder action without a meeting, unless
otherwise provided in a corporation's certificate of incorporation. The Crane
Certificate of Incorporation, however, provides that any action to be taken by
the stockholders of Crane must be effected at a duly called annual or special
meeting of stockholders and may not be effected by any consent in writing by
such stockholders.
Interpoint. Under the WBCA, and pursuant to the Interpoint Bylaws,
shareholder action may be taken without a meeting if written consents setting
forth such action are signed by all holders of outstanding shares entitled to
vote thereon.
APPRAISAL OR DISSENTERS' RIGHTS
Crane. Under the DGCL, dissenters' rights of appraisal are available to a
stockholder of a corporation only in connection with certain mergers or
consolidations involving such corporation. Appraisal rights are not available
under the DGCL if the corporation's stock is either (i) listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. (the "NASD") or (ii) held of record by more than 2,000 stockholders;
provided, however, that appraisal rights will be available if the merger or
consolidation requires stockholders to exchange their stock for anything other
than (a) shares of the surviving corporation, (b) shares of another corporation
that will be listed on a national securities exchange, designated as a national
market system security on an interdealer quotation system by the NASD or held of
record by more than 2,000 stockholders, (c) cash in lieu of fractional shares,
or (d) a combination of such shares and cash in lieu of fractional shares.
Additionally, no appraisal rights are available if the corporation is the
surviving corporation, and no vote of its stockholders is required for the
merger.
Interpoint. Under the WBCA, a shareholder of a Washington corporation may
exercise dissenters' rights in connection with a plan of merger providing for a
shareholder vote, a plan of exchange involving the acquisition of the
corporation's shares providing for a shareholder vote, a sale or exchange of
all, or substantially all, of the property of the corporation other than in the
usual and regular course of business providing for a shareholder vote, a reverse
stock split that results in the shareholder becoming a fractional holder, and
any corporate action taken by shareholder vote for which the articles of
incorporation, bylaws or resolution of the board of directors provide for
dissenters' rights. Accordingly, Interpoint's shareholders have the right to
dissent from the Merger and receive payment of the fair value of their shares of
Interpoint Common Stock. See "Rights of Dissenting Interpoint Shareholders."
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Crane. Under the DGCL, a corporation is permitted to adopt a provision in
its certificate of incorporation reducing or eliminating the liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such liability does not arise
from certain proscribed conduct (e.g., intentional misconduct or breach of the
duty of loyalty). The Crane Certificate of Incorporation provides for certain
specified limitations on a director's liability to the fullest extent permitted
under the DGCL. In addition, the DGCL grants each Delaware corporation the power
to indemnify any of its officers, directors, employees or agents who are parties
to any action, suit or proceeding by
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reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another entity, provided that such
officer, director, employee or agent acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to a criminal proceeding, had no reasonable cause
to believe his or her conduct was unlawful. To the extent a director, officer,
employee or agent is successful in the defense of such an action, suit or
proceeding, the corporation is required by the DGCL to indemnify such person for
reasonable expenses incurred thereby. The Crane By-Laws provide for
indemnification of officers and directors to the extent permitted by the DGCL.
Interpoint. The WBCA provides that a corporation's articles of
incorporation may include a provision that eliminates or limits the personal
liability of a director to the corporation or its shareholders for monetary
damages for conduct as a director. However, the provision may not eliminate or
limit the liability of a director for acts or omissions that involve intentional
misconduct by the director or a knowing violation of law by the director, for
unlawful distributions, or for any transaction from which the director will
personally receive a benefit in money, property or services to which the
director is not legally entitled. The Interpoint Articles of Incorporation
provide for the limitation of director liability to the full extent permitted by
the WBCA. In addition, under the WBCA, if authorized by the articles of
incorporation or a bylaw adopted or ratified by the shareholders or by a
resolution adopted or ratified by the shareholders, a corporation has the power
to indemnify a director or officer made a party to a proceeding, or advance or
reimburse expenses incurred in a proceeding, under any circumstances, except
that no such indemnification shall be allowed on account of (i) acts or
omissions of a director or officer finally adjudged to be intentional misconduct
or a knowing violation of the law, (ii) conduct of a director or officer finally
adjudged to be an unlawful distribution, or (iii) any transaction with respect
to which it was finally adjudged that such director or officer personally
received a benefit in money, property or services to which the director or
officer was not legally entitled. Unless limited by the corporation's articles
of incorporation, Washington law requires indemnification if the director or
officer is wholly successful on the merits of the action or otherwise. Any
indemnification of a director must be reported to the shareholders in writing.
The Interpoint Bylaws provide for the indemnification of a director or officer
to the full extent permitted by applicable law. Written commentary by the
drafters of the WBCA, which has the status of legislative history, specifically
indicates that a corporation may indemnify its directors and officers for
amounts paid in settlement of derivative actions, provided that the director's
or officer's conduct does not fall within one of the categories set forth above.
DIVIDENDS
Crane. A Delaware corporation may declare and pay dividends out of its
surplus or, if it has no surplus, out of any net profits for the fiscal year in
which the dividend was declared or for the preceding fiscal year in which the
dividend was declared (provided that such payment will not reduce capital below
the amount of capital represented by all classes of shares having a preference
upon the distribution of assets).
Interpoint. Under the WBCA, a corporation may make a distribution in cash
or in property to its shareholders upon the authorization of its board of
directors unless, after giving effect to such distribution, (i) the corporation
would be unable to pay its debts as they become due in the usual course of
business, or (ii) the corporation's total assets would be less than the sum of
its total liabilities plus the amount that would be needed, if the corporation
were to be dissolved at the time of the distribution, to satisfy the
preferential rights of shareholders whose preferential rights are superior to
those receiving the distribution.
SHAREHOLDER RIGHTS PLAN
The following is a summary of the Crane Rights Agreement. The Crane Rights
Agreement will not be triggered by the Merger. This summary does not purport to
be complete and is qualified in its entirety to Crane's Registration Statement
on Form 8-A dated July 1, 1988, as amended, including the Crane Rights Agreement
filed as an exhibit thereto.
On June 27, 1988, the Crane Board declared a dividend of one Crane Right
for each outstanding share of Crane Common Stock to the stockholders of record
on July 11, 1988 (the "Crane Rights Record Date").
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Each Crane Right entitles the registered holder to purchase from Crane one
one-hundredth of a share of Crane Series A Preferred Stock at a price of $105
per one one-hundredth of a share of Crane Series A Preferred Stock (the "Rights
Purchase Price"), subject to adjustment.
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired beneficial ownership of 20% or more of the outstanding
shares of Crane Common Stock and (ii) 10 business days (or such later date as
may be determined by action of the Crane Board prior to such time as any person
becomes an Acquiring Person) following the commencement of, or announcement of
an intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 20% or more of
such outstanding shares of Crane Common Stock (the earlier of such dates being
called the "Distribution Date"), the Crane Rights will be evidenced, with
respect to any of the Crane Common Stock certificates outstanding as of the
Crane Rights Record Date, by such Crane Common Stock certificate with a copy of
a summary of the Crane Rights attached thereto.
The Crane Rights Agreement provides that, until the Distribution Date, the
Crane Rights will be transferred with and only with the Crane Common Stock.
Until the Distribution Date (or earlier redemption or expiration of the Crane
Rights), new Crane Common Stock certificates issued after the Crane Rights
Record Date, upon transfer or new issuance, will contain a notation
incorporating the Crane Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Crane Rights), the surrender
for transfer of any certificates for shares of Crane Common Stock outstanding as
of the Crane Rights Record Date, even without such notation or a copy of a
summary of the Crane Rights being attached thereto, will also constitute the
transfer of the Crane Rights associated with the shares of Crane Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Crane Rights ("Right
Certificates") will be mailed to holders of record of Crane Common Stock as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Crane Rights.
The Crane Rights are not exercisable until the Distribution Date. The Crane
Rights will expire on June 27, 1998, unless such date is extended or unless the
Crane Rights are earlier redeemed by Crane, in each case as described below.
The Rights Purchase Price payable, and the number of shares of Crane Series
A Preferred Stock or other securities or property issuable, upon exercise of the
Crane Rights are subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Crane Series A Preferred Stock, (ii) upon the grant to
holders of the Crane Series A Preferred Stock of certain rights or warrants to
subscribe for or purchase Crane Series A Preferred Stock at a price, or
securities convertible into Crane Series A Preferred Stock with a conversion
price, less than the then-current market price of the Crane Series A Preferred
Stock, or (iii) upon the distribution to holders of the Crane Series A Preferred
Stock of evidences of indebtedness or assets (excluding regular periodic cash
dividends payable in Crane Series A Preferred Stock) or of subscription rights
or warrants (other than those referred to above).
The number of outstanding Crane Rights and the number of one one-hundredths
of a share of Crane Series A Preferred Stock issuable upon exercise of each
Crane Right are also subject to adjustment in the event of a stock split of the
Crane Common Stock or a stock dividend on the Crane Common Stock payable in
Crane Common Stock or subdivisions, consolidations or combinations of the Crane
Common Stock occurring, in any such case, prior to the Distribution Date.
Crane Series A Preferred Stock purchasable upon exercise of the Crane
Rights will not be redeemable. Each share of Crane Series A Preferred Stock will
be entitled to a minimum preferential quarterly dividend payment of $1.00 per
share but will be entitled to an aggregate dividend of 100 times the dividend
declared per share of Crane Common Stock. In the event of liquidation, the
holders of Crane Series A Preferred Stock will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 100 times the payment made per share of Crane Common Stock.
Each share of Crane Series A Preferred Stock will have 100 votes, voting
together with the shares of Crane Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Crane Common
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Stock are exchanged, each share of Crane Series A Preferred Stock will be
entitled to receive 100 times the amount received per share of Crane Common
Stock. These rights are protected by customary antidilution provisions.
Because of the nature of the Crane Series A Preferred Stock's dividend,
voting and liquidation rights, the value of the one one-hundredth interest in a
share of Crane Series A Preferred Stock purchasable upon exercise of each Crane
Right should approximate the value of one share of Crane Common Stock.
In the event that Crane is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Crane
Right will thereafter have the right to receive, upon the exercise thereof at
the then-current exercise price of the Crane Rights, that number of shares of
common stock of the acquiring company which at the time of such transaction will
have a market value of two times the exercise price of the Crane Rights. In the
event that (i) any person becomes an Acquiring Person or (ii) during such time
as there is an Acquiring Person, there shall be any reclassification of
securities or recapitalization or reorganization of Crane which has the effect
of increasing by more than 1% the proportionate share of the outstanding shares
of any class of equity securities of Crane or any of its subsidiaries
beneficially owned by the Acquiring Person, proper provision shall be made so
that each holder of a Crane Right, other than Crane Rights beneficially owned by
the Acquiring Person (which will thereafter be void), will thereafter have the
right to receive upon exercise that number of shares of Crane Common Stock
having a market value of two times the exercise price of the Crane Rights.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
shares of Crane Common Stock and prior to the acquisition by such person or
group of 50% or more of the outstanding shares of Crane Common Stock, the Crane
Board may exchange the Crane Rights (other than Crane Rights owned by such
person or group which have become void), in whole or in part, at an exchange
ratio of one share of Crane Common Stock, or one one-hundredth of a share of
Crane Series A Preferred Stock (or of a share of a class or series of Crane
Preferred Stock having equivalent rights, preferences and privileges), per Crane
Right (subject to adjustment).
With certain exceptions, no adjustment in the Rights Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Rights Purchase Price. No fractional shares of Crane Series A Preferred
Stock will be issued (other than fractions which are integral multiples of one
one-hundredth of a share of Crane Series A Preferred Stock, which may, at
Crane's election, be evidenced by depositary receipts) and in lieu thereof an
adjustment in cash will be made based on the market price of the Crane Series A
Preferred Stock on the last trading day prior to the date of exercise.
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
shares of Crane Common Stock, the Crane Board may redeem the Crane Rights in
whole, but not in part, at the price of $.01 per Crane Right (the "Redemption
Price"). The redemption of the Crane Rights may be made effective at such time,
on such basis and with such conditions as the Crane Board in its sole discretion
may establish. Immediately upon any redemption of the Crane Rights, the right to
exercise the Crane Rights will terminate and the only right of the holders of
Crane Rights will be to receive the Redemption Price.
The terms of the Crane Rights may be amended by the Crane Board without the
consent of the holders of the Crane Rights, including an amendment to lower the
threshold for exercisability of the Crane Rights from 20% to not less than the
greater of (i) any percentage greater than the largest percentage of the
outstanding shares of Crane Common Stock then known to Crane to be beneficially
owned by any person or group of affiliated or associated persons and (ii) 10%,
except that from and after such time as any person becomes an Acquiring Person
no such amendment may adversely affect the interests of the holders of the Crane
Rights.
Until a Crane Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of Crane, including, without limitation, the right to
vote or to receive dividends.
On June 25, 1990, the Crane Board approved an amendment (the "Amendment ")
to the Crane Rights Agreement. The Amendment eliminated an exception that
rendered the "flip-in" provision of the Crane Rights Agreement inapplicable in
the event that at least 80% of the Crane Common Stock was acquired
50
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through an all-cash, all-shares tender offer. In addition, the Amendment
eliminated a shareholder referendum procedure that permitted the Crane Rights to
be redeemed under certain circumstances by action of Crane's stockholders
without the approval of the Crane Board.
The Amendment also provided for certain technical revisions to the Crane
Rights Agreement, including (i) adding a provision that permits the Crane Board,
after the Crane Rights become exercisable for Crane Common Stock, to substitute
common stock-equivalent preferred stock in the event Crane is not able to
authorize sufficient shares of Crane Common Stock and (ii) adding an exception
to the provisions governing the triggering of the Crane Rights that would exempt
a person or group that the Crane Board determines in good faith would otherwise
have triggered the Crane Rights inadvertently, so long as the person or group,
as promptly as practicable, divests sufficient stock to bring its ownership
below the triggering threshold.
Shareholder rights plans such as Crane's plan are intended to encourage
potential hostile acquirors of a "target" corporation to negotiate with the
board of directors of the target corporation in order to avoid occurrence of the
"triggering events" specified in such plans. Shareholder rights plans are
intended to give the directors of a target corporation the opportunity to assess
the fairness and appropriateness of a proposed transaction in order to determine
whether or not it is in the best interests of the corporation and its
stockholders. Notwithstanding these purposes and intentions of shareholder
rights plans, such plans, including that of Crane, could have the effect of
discouraging a business combination which stockholders believe to be in their
best interests. The Crane Rights Agreement, however, should not interfere with
any merger or other business combination approved by the Crane Board since the
Crane Rights may be redeemed by Crane at the Redemption Price prior to the time
that a person or group has acquired beneficial ownership of 20% or more of the
Crane Common Stock.
Interpoint does not have a shareholder rights plan. Therefore, the
existence of the Crane Rights Agreement makes it more difficult in Crane's case
than in Interpoint's case for a potential acquiror to effect a business
combination that has not been negotiated with the Crane Board.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
If the Merger is not consummated prior to the 1997 Annual Meeting of
shareholders of Interpoint, proposals for shareholder action that eligible
Interpoint shareholders wish to present at the 1997 Annual Meeting must be
received by Interpoint at its principal executive offices no later than
September 27, 1996.
OTHER MATTERS
The Interpoint Board does not intend to bring any other matters before the
Special Meeting and does not know of any other matters that may be brought
before the Special Meeting by others. If, however, other matters should properly
come before the Special Meeting, the persons named in the proxy intend to vote
thereon in their discretion unless such authority is withheld.
LEGAL OPINION
The legality of the Crane Common Stock to be issued in connection with the
Merger is being passed upon for Crane by Milbank, Tweed, Hadley & McCloy.
TAX OPINIONS
Certain of the tax consequences of the Merger will be passed upon at the
Effective Time, as a condition to the Merger, by Perkins Coie and certain of the
tax consequences of the Merger will be passed upon at the Effective Time by
Milbank, Tweed, Hadley & McCloy. See "Certain Federal Income Tax Consequences."
51
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INDEPENDENT ACCOUNTANTS
The consolidated financial statements of Interpoint incorporated in this
Proxy Statement/Prospectus by reference to the Interpoint Annual Report on Form
10-K for the fiscal year ended October 31, 1995 have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in accounting and auditing.
Representatives of Price Waterhouse LLP are expected to be present at the
Special Meeting, will have the opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
The consolidated financial statements of Crane incorporated in this Proxy
Statement/Prospectus by reference to the Crane Annual Report to Shareholders for
the fiscal year ended December 31, 1995 have been so incorporated in reliance on
the report of Deloitte & Touche LLP, independent accountants, given on the
authority of such firm as experts in accounting and auditing.
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APPENDIX I
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 1, 1996
BY AND AMONG
CRANE CO.,
CRANE ACQUISITION CORP.
AND
INTERPOINT CORPORATION
<PAGE> 65
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is attached
but is inserted for convenience only.
<TABLE>
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ARTICLE I
THE MERGER AND SPINOFF
1.01 The Merger.................................................................. I-1
1.02 Closing..................................................................... I-1
1.03 Effective Time.............................................................. I-2
1.04 Articles of Incorporation and Bylaws of the Surviving Corporation........... I-2
1.05 Directors and Officers of the Surviving Corporation......................... I-2
1.06 Effects of the Merger....................................................... I-2
1.07 Further Assurances.......................................................... I-2
1.08 The Spinoff................................................................. I-2
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Stock................................................. I-2
2.02 Exchange of Certificates.................................................... I-3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization and Qualification.............................................. I-5
3.02 Capital Stock............................................................... I-6
3.03 Authority Relative to this Agreement........................................ I-6
3.04 Non-Contravention; Approvals and Consents................................... I-7
3.05 SEC Reports and Financial Statements........................................ I-8
3.06 Absence of Certain Changes or Events........................................ I-8
3.07 Absence of Undisclosed Liabilities.......................................... I-8
3.08 Legal Proceedings........................................................... I-9
3.09 Information Supplied........................................................ I-9
3.10 Compliance with Laws and Orders............................................. I-9
3.11 Compliance with Agreements; Certain Agreements.............................. I-9
3.12 Taxes....................................................................... I-10
3.13 Employee Benefit Plans; ERISA............................................... I-11
3.14 Labor Matters............................................................... I-13
3.15 Environmental Matters....................................................... I-14
3.16 Intellectual Property Rights................................................ I-15
3.17 Vote Required............................................................... I-15
3.18 Insurance................................................................... I-15
3.19 Ownership of Parent Common Stock............................................ I-16
3.20 Article XII of the Company's Articles of Incorporation and State Takeover
Laws........................................................................ I-16
3.21 No Affiliated Transactions.................................................. I-16
3.22 Spinoff Sub................................................................. I-16
3.23 Real Property............................................................... I-16
3.24 Contracts................................................................... I-17
</TABLE>
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<TABLE>
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
4.01 Organization and Qualification.............................................. I-18
4.02 Capital Stock............................................................... I-18
4.03 Authority Relative to this Agreement........................................ I-18
4.04 Non-Contravention; Approvals and Consents................................... I-19
4.05 SEC Reports and Financial Statements........................................ I-19
4.06 Information Supplied........................................................ I-20
4.07 Ownership of Company Common Stock........................................... I-20
ARTICLE V
COVENANTS
5.01 Covenants of the Company and Parent......................................... I-20
5.02 No Solicitations............................................................ I-22
5.03 Conduct of Business of Sub.................................................. I-23
5.04 Third Party Standstill Agreements........................................... I-23
5.05 Purchases of Common Stock of the Other Party................................ I-23
5.06 Spinoff..................................................................... I-23
5.07 Spinoff Sub Transactions.................................................... I-23
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Access to Information; Confidentiality...................................... I-23
6.02 Preparation of Registration Statement, Proxy Statement and Form 10.......... I-24
6.03 Approval of Stockholders.................................................... I-24
6.04 Company Affiliates.......................................................... I-24
6.05 Stock Exchange Listing...................................................... I-25
6.06 Outstanding Indebtedness.................................................... I-25
6.07 Regulatory and Other Approvals.............................................. I-25
6.08 Employee Benefit Plans...................................................... I-25
6.09 Company Option Plans........................................................ I-25
6.10 Directors' and Officers' Indemnification and Insurance...................... I-25
6.11 Expenses.................................................................... I-26
6.12 Brokers or Finders.......................................................... I-26
6.13 Takeover Statutes........................................................... I-27
6.14 Conveyance Taxes............................................................ I-27
6.15 Certain Tax Matters......................................................... I-27
ARTICLE VII
CONDITIONS
7.01 Conditions to Each Party's Obligation to Effect the Merger.................. I-27
7.02 Conditions to Obligation of Parent and Sub to Effect the Merger............. I-28
7.03 Conditions to Obligation of the Company to Effect the Merger................ I-28
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination................................................................. I-29
8.02 Effect of Termination....................................................... I-30
8.03 Amendment................................................................... I-30
8.04 Waiver...................................................................... I-31
</TABLE>
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ARTICLE XI
GENERAL PROVISIONS
9.01 Non-Survival of Representations, Warranties, Covenants and Agreements....... I-31
9.02 Notices..................................................................... I-31
9.03 Entire Agreement; Incorporation of Exhibits................................. I-32
9.04 Public Announcements........................................................ I-32
9.05 No Third Party Beneficiary.................................................. I-32
9.06 No Assignment; Binding Effect............................................... I-32
9.07 Headings.................................................................... I-32
9.08 Invalid Provisions.......................................................... I-32
9.09 Governing Law............................................................... I-33
9.10 Enforcement of Agreement.................................................... I-33
9.11 Certain Definitions......................................................... I-33
9.12 Counterparts................................................................ I-34
</TABLE>
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding Sections of this Agreement listed below:
<TABLE>
<S> <C>
"affiliate"...................................................... Section 9.11(a)
"Affiliate Agreement"............................................ Section 6.04
"Aggregate Share Distribution Amount"............................ Section 2.01(b)
"Agreement"...................................................... Preamble
"Alternative Proposal"........................................... Section 5.02
"Antitrust Division"............................................. Section 6.07
"Articles of Merger"............................................. Section 1.03
"Average Price".................................................. Section 2.01(b)
"beneficially"................................................... Section 9.11(b)
"Benefit Plan"................................................... Section 3.13
"business day"................................................... Section 9.11(c)
"CERCLA"......................................................... Section 3.15(b)
"Certificates"................................................... Section 2.02(b)
"Closing"........................................................ Section 1.02
"Closing Date"................................................... Section 1.02
"COBRA".......................................................... Section 3.13(d)
"Code"........................................................... Recitals
"Company"........................................................ Preamble
"Company Affiliates"............................................. Section 6.04
"Company Common Stock"........................................... Section 2.01(b)
"Company Disclosure Letter"...................................... Section 3.01
"Company Financial Statements"................................... Section 3.05
"Company Option Plan"............................................ Section 2.01(d)
"Company Permits"................................................ Section 3.10
"Company SEC Reports"............................................ Section 3.05
"Company Stockholders' Approval"................................. Section 6.03
"Company Stockholders' Meeting".................................. Section 6.03
"Confidentiality Agreement"...................................... Section 6.01(b)
"Constituent Corporations"....................................... Section 1.01
"Contracts"...................................................... Section 3.04(a)
"control," "controlling," "controlled by" and "under common
control with".................................................. Section 9.11(a)
"Conversion Number".............................................. Section 2.01(b)
"Conveyance Taxes"............................................... Section 6.14
"Defined Benefit Plan"........................................... Section 3.13
"Dissenting Share"............................................... Section 2.01(c)(i)
"Effective Time"................................................. Section 1.03
"Environmental Law".............................................. Section 3.15(f)(i)
"Environmental Permits".......................................... Section 3.15(h)
"ERISA".......................................................... Section 3.13(n)(ii)
"ERISA Affiliate"................................................ Section 3.13
"Exchange Act"................................................... Section 3.04(b)
"Exchange Agent"................................................. Section 2.02(a)
"Exchange Fund".................................................. Section 2.02(a)
"Form 10"........................................................ Section 3.04(b)(v)
"FTC"............................................................ Section 6.07
"GAAP"........................................................... Section 3.13
"Governmental or Regulatory Authority"........................... Section 3.04(a)
"group".......................................................... Section 9.11(f)
"Hazardous Material"............................................. Section 3.15(h)(ii)
</TABLE>
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<TABLE>
<S> <C>
"HSR Act"........................................................ Section 3.04(b)
"Indemnified Liabilities"........................................ Section 6.10(a)
"Indemnified Parties"............................................ Section 6.10(a)
"Indemnifying Party"............................................. Section 6.10(a)
"Intellectual Property".......................................... Section 3.16
"knowledge"...................................................... Section 9.11(d)
"laws"........................................................... Section 3.04(a)
"Lien"........................................................... Section 3.02(b)
"material", "material adverse effect" and "materially adverse"... Section 9.11(e)
"Merger"......................................................... Recitals
"NYSE"........................................................... Section 2.01(c)
"Options"........................................................ Section 3.02
"orders"......................................................... Section 3.04(a)
"Parent"......................................................... Preamble
"Parent Common Stock"............................................ Section 2.01(c)
"Parent Disclosure Letter"....................................... Section 4.02
"Parent Financial Statements".................................... Section 4.05
"Parent Preferred Stock"......................................... Section 4.02(a)
"Parent Rights".................................................. Section 4.02(a)
"Parent Rights Agreement"........................................ Section 4.02(a)
"Parent SEC Reports"............................................. Section 4.05
"Parent Series A Preferred Stock"................................ Section 4.02(a)
"person"......................................................... Section 9.11(f)
"Plan"........................................................... Section 3.13(b)(ii)
"Proxy Statement"................................................ Section 3.09
"Qualified Plan"................................................. Section 3.13
"Registration Statement"......................................... Section 4.06
"Representatives"................................................ Section 9.11(g)
"SEC"............................................................ Section 3.04(b)
"Secretary of State"............................................. Section 1.03
"Securities Act"................................................. Section 3.04(b)
"Segregated Account"............................................. Section 6.06
"Significant Subsidiaries"....................................... Section 9.11(h)
"Spinoff "....................................................... Recitals
"Spinoff Agreements"............................................. Recitals
"Spinoff Memorandum"............................................. Recitals
"Spinoff Sub".................................................... Recitals
"Sub"............................................................ Preamble
"Sub Common Stock"............................................... Section 2.01(a)
"Subject Defined Benefit Plan"................................... Section 3.13
"Subsidiary"..................................................... Section 9.11(i)
"Surviving Corporation".......................................... Section 1.01
"Surviving Corporation Common Stock"............................. Section 2.01
"Taiwan Sub"..................................................... Section 3.04(b)
"Taxes".......................................................... Section 3.12.1
"Tax Return"..................................................... Section 3.12.1
"Trading Day".................................................... Section 2.01(b)(i)
"WBCA"........................................................... Section 1.01
</TABLE>
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This AGREEMENT AND PLAN OF MERGER dated as of July 1, 1996 (this
"Agreement") is made and entered into by and among CRANE CO., a Delaware
corporation ("Parent"), CRANE ACQUISITION CORP., a Washington corporation wholly
owned by Parent ("Sub"), and INTERPOINT CORPORATION, a Washington corporation
(the "Company").
WHEREAS, Parent and the Company have determined to engage in a business
combination with respect to the microelectronics business of the Company, and
Sub has been formed to participate in such business combination;
WHEREAS, in furtherance thereof, the respective Boards of Directors of
Parent, the Company and Sub have approved the merger of Sub with and into the
Company with the Company becoming a wholly owned subsidiary of Parent (the
"Merger") immediately following the pro rata distribution (the "Spinoff") by the
Company to its stockholders of all of the stock of Advanced Digital Information
Corporation ("Spinoff Sub"), all pursuant to the terms and conditions set forth
in this Agreement and agreements or arrangements to be entered into between the
Company and Spinoff Sub (the "Spinoff Agreements"), the essential terms of which
have been described in a memorandum heretofore distributed by the Company to
Parent (the "Spinoff Memorandum") providing for the deconsolidation of the
Company and Spinoff Sub, including, without limitation, the restructuring of
outstanding stock options which currently relate only to the shares of the
Company;
WHEREAS, the Board of Directors of Parent has determined that the Merger is
in furtherance of and consistent with its business strategies and is in the best
interests of Parent's stockholders, and the Board of Directors of the Company
has determined that the Merger and the Spinoff are in the best interests of the
Company's stockholders;
WHEREAS, for federal income tax purposes, it is intended that (a) the
Spinoff be a transaction that qualifies under Section 355 of the Internal
Revenue Code of 1986, as amended (the "Code") and (b) the Merger shall qualify
as a reorganization within the meaning of Section 368(a) of the Code;
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE MERGER AND SPINOFF
1.01 The Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined in Section 1.03), Sub shall be
merged with and into the Company in accordance with the Washington Business
Corporation Act, Title 23B of the Revised Code of Washington (the "WBCA"). At
the Effective Time, the separate existence of Sub shall cease and the Company
shall continue as the surviving corporation in the Merger (the "Surviving
Corporation"). Sub and the Company are sometimes referred to herein as the
"Constituent Corporations". As a result of the Merger, the outstanding shares of
capital stock of the Constituent Corporations shall be converted or cancelled in
the manner provided in Article II.
1.02 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
8.01, and subject to the satisfaction or waiver (where applicable) of the
conditions set forth in Article VII, the closing of the Merger (the "Closing")
will take place at the offices of Perkins Coie, 1201 Third Avenue, Seattle,
Washington 98101, at 10:00 a.m., local time, as soon as practicable, but no
later than the fifth (5th) business day, following satisfaction of the condition
set forth in Section 7.01(a), unless another date, time or place is agreed to in
writing by the parties hereto (the "Closing Date"). At the Closing there shall
be delivered to Parent, Sub and the Company the certificates and other documents
and instruments required to be delivered under Article VII.
I-1
<PAGE> 71
1.03 Effective Time. At the Closing, the articles of merger substantially
in the form of Exhibit B hereto (the "Articles of Merger") shall be executed by
the Company in its capacity as the Surviving Corporation, and such Articles of
Merger, to which a plan of merger shall be attached, shall be delivered to the
Secretary of State of the State of Washington (the "Secretary of State") for
filing as provided in RCW 23B.11.050 of the WBCA on the Closing Date. The Merger
shall become effective at the date and time stated in the Articles of Merger
(the "Effective Time").
1.04 Articles of Incorporation and Bylaws of the Surviving Corporation. At
the Effective Time, (i) the Articles of Incorporation of Sub, as amended by the
Articles of Merger, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended as provided by law and such Articles of
Incorporation, and (ii) the Bylaws of Sub shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by law, the Articles of
Incorporation of the Surviving Corporation and such Bylaws.
1.05 Directors and Officers of the Surviving Corporation. The directors of
Sub and the officers of Sub immediately prior to the Effective Time shall, from
and after the Effective Time, be the directors and officers, respectively, of
the Surviving Corporation until their successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Articles of Incorporation and
Bylaws.
1.06 Effects of the Merger. Subject to the foregoing, the effects of the
Merger shall be as provided in the applicable provisions of the WBCA.
1.07 Further Assurances. Each party hereto will, either prior to or after
the Effective Time, execute such further documents, instruments, deeds, bills of
sale, assignments and assurances and take such further actions as may reasonably
be requested by one or more of the others to consummate the Merger, to vest the
Surviving Corporation with full title to all assets, properties, rights,
approvals, immunities and franchises of either of the Constituent Corporations
or to effect the other purposes of this Agreement.
1.08 The Spinoff. The Spinoff shall occur prior to the Effective Time in
accordance with the terms of this Agreement and the Spinoff Agreements.
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof:
(a) Capital Stock of Sub. Each issued and outstanding share of the common
stock, without par value, of Sub ("Sub Common Stock") shall be converted into
and become one fully paid and nonassessable share of common stock, without par
value, of the Surviving Corporation ("Surviving Corporation Common Stock"). Each
certificate representing outstanding shares of Sub Common Stock shall at the
Effective Time represent an equal number of shares of Surviving Corporation
Common Stock.
(b) Exchange Ratio for Company Common Stock. (i) Each issued and
outstanding share of common stock, without par value, of the Company ("Company
Common Stock") (other than Dissenting Shares (as defined in Section 2.01(c)))
shall be converted into the right to receive the number (the "Conversion
Number") of fully paid and nonassessable shares of voting common stock, par
value $1.00 per share, of Parent ("Parent Common Stock") represented by a
fraction determined by dividing the Aggregate Share Distribution Amount (as
defined below) by the product of (x) the Average Price (as hereinafter defined)
and (y) the number of shares of Company Common Stock outstanding immediately
prior to the Effective Time. The Aggregate Share Distribution Amount shall be
$59 million, less (i) the aggregate principal amount of interest-bearing
indebtedness of the Company and the Subsidiaries outstanding immediately prior
to the Effective Time, plus accrued and unpaid interest thereon, as reduced by
the principal amount of the Apex Microtechnology Corp. note, and (ii) the net
amount of intercompany advances made by the Company to Spinoff Sub subsequent to
April 30, 1996 from any source other than the indebtedness referred to in clause
(i) hereof and outstanding immediately prior to the Effective Time, excluding
only amounts advanced to satisfy a
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management service charge of $10,000 per month which the Company has prior to
April 30, 1996 customarily provided for through intercompany advances but
including the fair market value of property other than cash, excluding (A) all
of the Company's interest in Spinoff Sub Europe and Visual Technologies, Limited
and (B) any additional property (other than cash) to be transferred by the
Company to Spinoff Sub pursuant to the Spinoff Agreements and approved by
Parent. The "Average Price" shall be equal to the arithmetic average of the
Sales Price (as hereinafter defined) for the ten (10) consecutive Trading Days
(as hereinafter defined) ending on (and including) the Trading Day immediately
preceding the Closing Date. The term "Sales Price" shall mean, on any Trading
Day, the closing sales price of Parent Common Stock reported on the New York
Stock Exchange, Inc. ("NYSE") Composite Tape on such day. The term "Trading Day"
shall mean any day on which securities are traded on the NYSE.
(ii) All shares of Company Common Stock converted in accordance with
paragraph (i) of this Section 2.01(b) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the shares of Parent Common
Stock and any cash in lieu of fractional shares of Parent Common Stock to be
issued or paid in consideration therefor (determined in accordance with Section
2.02(e)), upon the surrender of such certificate in accordance with Section
2.02, without interest.
(c) Dissenting Shares. (i) Notwithstanding any provision of this Agreement
to the contrary, each outstanding share of Company Common Stock which is held by
a holder who has properly preserved and perfected such holder's right to dissent
in accordance with the applicable provisions of the WBCA and has not effectively
withdrawn or lost such right to dissent (a "Dissenting Share"), shall not be
converted into or represent a right to receive shares of Parent Common Stock
pursuant to Section 2.01(b), but the holder thereof shall be entitled only to
such rights to payment as are granted by the applicable provisions of the WBCA
solely from the Surviving Corporation and not from Parent; provided, however,
that any Dissenting Share held by a person at the Effective Time who shall,
after the Effective Time, withdraw such person's dissent, or lose the right to
dissent, in either case pursuant to the WBCA, shall be deemed to be converted
into, as of the Effective Time, the right to receive shares of Parent Common
Stock pursuant to Section 2.01(b).
(ii) The Company shall give Parent (x) prompt notice of any written notice
of dissent, withdrawals of dissent and any other instruments served pursuant to
the applicable provisions of the WBCA relating to the dissent process received
by the Company and (y) the opportunity to direct all negotiations and
proceedings with respect to such dissent under the WBCA. The Company will not
voluntarily make any payment with respect to any dissent and will not, except
with the prior written consent of Parent, settle or offer to settle any related
demand for the payment of fair value for the Dissenting Share.
(d) Stock Options. On or before the Closing Date, the Company shall have
terminated all stock option plans or other plans or arrangements for the
issuance of capital stock of the Company (the "Company Option Plans") and as of
the Closing Date there shall be no options or other rights to acquire capital
stock of the Company. The Company hereby agrees to use its best efforts to cause
stock options or other rights to acquire capital stock of the Company issued and
outstanding to be validly satisfied in full and terminated in exchange for cash
payments. In no event shall Parent provide any funds hereunder for the
extinguishment of options.
(e) Parent Rights. Each share of Parent Common Stock issued to holders of
Company Common Stock in the Merger shall be issued together with one associated
Parent Right (as defined in Section 4.02(a)) in accordance with the Parent
Rights Agreement (as defined in Section 4.02(a)). References herein to the
shares of Parent Common Stock issuable in the Merger shall be deemed to include
the associated Parent Rights.
2.02 Exchange of Certificates.
(a) Exchange Agent. Promptly following the Effective Time, Parent shall
make available to the Surviving Corporation for deposit with a bank or trust
company designated before the Closing Date by Parent and reasonably acceptable
to the Company (the "Exchange Agent"), certificates representing the number of
duly authorized whole shares of Parent Common Stock issuable in connection with
the Merger plus an
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amount of cash equal to the aggregate amount payable in lieu of fractional
shares in accordance with Section 2.02(e), to be held for the benefit of and
distributed to such holders in accordance with this Section. The Exchange Agent
shall agree to hold such shares of Parent Common Stock and funds (such shares of
Parent Common Stock and funds, together with earnings thereon, being referred to
herein as the "Exchange Fund") for delivery as contemplated by this Section and
upon such additional terms as may be agreed upon by the Exchange Agent, the
Company and Parent.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock (the "Certificates") whose shares are converted pursuant to Section
2.01(b) into the right to receive shares of Parent Common Stock (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as the Surviving Corporation may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock and cash in lieu of
fractional shares. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal duly executed and
completed in accordance with its terms, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of Parent Common Stock, plus the cash amount payable in lieu of
fractional shares in accordance with Section 2.02(e), which such holder has the
right to receive pursuant to the provisions of this Article II, and the
Certificate so surrendered shall forthwith be canceled. In no event shall the
holder of any Certificate be entitled to receive interest on any funds to be
received in the Merger. In the event of a transfer of ownership of Company
Common Stock which is not registered in the transfer records of the Company, a
certificate representing that number of whole shares of Parent Common Stock,
plus the cash amount payable in lieu of fractional shares in accordance with
Section 2.02(e), may be issued to a transferee if the Certificate representing
such Company Common Stock is presented to the Exchange Agent accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.02(b), each Certificate shall be deemed at any
time after the Effective Time for all corporate purposes of Parent, except as
limited by paragraph (c) below, to represent ownership of the number of shares
of Parent Common Stock into which the number of shares of Company Common Stock
shown thereon have been converted as contemplated by this Article II.
Notwithstanding the foregoing, Certificates representing Company Common Stock
surrendered for exchange by any person constituting an "affiliate" of the
Company for purposes of Section 6.04 shall not be exchanged until Parent has
received an Affiliate Agreement (as defined in Section 6.04) as provided in
Section 6.04.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date on or after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the shares
of Parent Common Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.02(e)
until the holder of record of such Certificate shall surrender such Certificate
in accordance with this Section. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions, if any, with a record
date on or after the Effective Time which theretofore became payable, but which
were not paid by reason of the immediately preceding sentence, with respect to
such whole shares of Parent Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date on or
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms hereof (including any cash paid pursuant to Section
2.02(e)) shall be deemed to have been issued at the Effective Time in full
satisfaction of all rights pertaining to the shares of Company Common Stock
represented thereby. From and
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after the Effective Time, the stock transfer books of the Company shall be
closed and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Section.
(e) No Fractional Shares. No certificate or scrip representing fractional
shares of Parent Common Stock will be issued in the Merger upon the surrender
for exchange of Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a stockholder of Parent.
In lieu of any such fractional shares, each holder of Company Common Stock who
would otherwise have been entitled to a fraction of a share of Parent Common
Stock in exchange for Certificates pursuant to this Section shall receive from
the Exchange Agent a cash payment in lieu of such fractional share determined by
multiplying (A) the arithmetic average of the Sales Price of a whole share of
Company Common Stock for the ten (10) consecutive Trading Days ending on (and
including) the Trading Day immediately preceding the Closing Date by (B) the
fractional share interest to which such holder would otherwise be entitled. Such
payment with respect to fractional shares is merely intended to provide a
mechanical rounding off of, and is not separately bargained for, consideration.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the stockholders of the Company for six (6) months
after the Effective Time shall be delivered to Parent, upon demand, and any
stockholders of the Company who have not theretofore complied with this Article
II shall thereafter look only to Parent (subject to abandoned property, escheat
and other similar laws) as general creditors for payment of their claim for
Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to Parent Common Stock.
Neither Parent nor the Surviving Corporation shall be liable to any holder of
shares of Company Common Stock for shares of Parent Common Stock (or dividends
or distributions with respect thereto) or cash payable in respect of fractional
share interests delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
3.01 Organization and Qualification. Each of the Company and its
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has full
corporate power and authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties. Each of the
Company and its Subsidiaries is duly qualified, licensed or admitted to do
business and is in good standing in each jurisdiction in which the ownership,
use or leasing of its assets and properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary, except for
such failures to be so qualified, licensed or admitted and in good standing
which, individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect (as defined in Section
9.11) on the Company and its Subsidiaries taken as a whole. Section 3.01 of the
letter dated the date hereof and delivered to Parent and Sub by the Company
concurrently with the execution and delivery of this Agreement (the "Company
Disclosure Letter") sets forth (i) the name and jurisdiction of incorporation of
each Subsidiary of the Company, (ii) its authorized capital stock, (iii) the
number of issued and outstanding shares of capital stock and (iv) the record
owners of such shares. Except for interests in Spinoff Sub, the Subsidiaries of
the Company and as disclosed in Section 3.01 of the Company Disclosure Letter,
the Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for, any
equity or similar interest in, any corporation, partnership, joint venture or
other business association or entity. The Company has previously delivered to
Parent correct and complete copies of the certificate or articles of
incorporation and bylaws (or other comparable charter documents) of the Company
and each of its Subsidiaries. The Company has made available to Parent prior to
the execution of this Agreement the minute books and other similar records of
the
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Company which contain a true and complete record, in all material respects, of
all action taken at all meetings and by all written consents in lieu of meetings
of the stockholders, the boards of directors and committees of the boards of
directors of the Company since January 1, 1991.
3.02 Capital Stock. (a) The authorized capital stock of the Company
consists solely of 20,000,000 shares of Company Common Stock and 500,000 shares
of preferred stock, par value $1.00 per share ("Company Preferred Stock"). As of
the close of business on June 26, 1996 and after giving effect to the two-
for-one stock split effective June 28, 1996, 7,931,598 shares of Company Common
Stock were issued and outstanding and 857,080 shares were reserved for issuance
pursuant to Company Option Plans. Since June 26, 1996, except as set forth in
Section 3.02 of the Company Disclosure Letter, there has been no change in the
number of issued and outstanding shares of Company Common Stock or shares of
Company Common Stock reserved for issuance. As of the date hereof, no shares of
Company Preferred Stock are issued and outstanding. All of the issued and
outstanding shares of Company Common Stock are, and all shares reserved for
issuance will be, upon issuance in accordance with the terms specified in the
instruments or agreements pursuant to which they are issuable, duly authorized,
validly issued, fully paid and nonassessable. Except pursuant to this Agreement
and except as set forth in Section 3.02 of the Company Disclosure Letter, there
are no outstanding subscriptions, options, warrants, rights (including "phantom"
stock rights), preemptive rights or other contracts, commitments, understandings
or arrangements, including any right of conversion or exchange under any
outstanding security, instrument or agreement (together, "Options"), obligating
the Company or any of its Subsidiaries to issue or sell any shares of capital
stock of the Company or to grant, extend or enter into any Option with respect
thereto.
(b) Except as disclosed in Section 3.02 of the Company Disclosure Letter,
all of the outstanding shares of capital stock of each Subsidiary of the Company
are duly authorized, validly issued, fully paid and nonassessable and are owned,
beneficially and of record, by the Company or a Subsidiary wholly owned,
directly or indirectly, by the Company, free and clear of any liens, claims,
mortgages, encumbrances, pledges, security interests, equities and charges of
any kind (each a "Lien"). Except as disclosed in Section 3.02 of the Company
Disclosure Letter, there are no (i) outstanding Options obligating the Company
or any of its Subsidiaries to issue or sell any shares of capital stock of any
Subsidiary of the Company or to grant, extend or enter into any such Option or
(ii) voting trusts, proxies or other commitments, understandings, restrictions
or arrangements in favor of any person other than the Company or a Subsidiary
wholly owned, directly or indirectly, by the Company with respect to the voting
of or the right to participate in dividends or other earnings on any capital
stock of any Subsidiary of the Company.
(c) Except as disclosed in Section 3.02 of the Company Disclosure Letter,
there are no outstanding contractual obligations of the Company or any
Subsidiary of the Company to repurchase, redeem or otherwise acquire any shares
of Company Common Stock or any capital stock of any Subsidiary of the Company or
to provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any Subsidiary of the Company or any other
person.
3.03 Authority Relative to this Agreement. The Company has full corporate
power and authority to enter into this Agreement and the Spinoff Agreements and,
subject to obtaining the Company Stockholders' Approval (as defined in Section
6.03(b)), to perform its obligations hereunder and to consummate the
transactions contemplated hereby including, without limitation, the Spinoff. The
execution, delivery and performance of this Agreement and the Spinoff Agreements
by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby have been or in the case of the Spinoff
Agreements, will be duly and validly approved by the Board of Directors of the
Company; the Board of Directors of the Company has resolved to recommend
adoption of this Agreement by the stockholders of the Company and directed that
this Agreement be submitted to the stockholders of the Company for their
consideration, and no other corporate proceedings on the part of the Company or
its stockholders are necessary to authorize the execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby, other than obtaining the Company
Stockholders' Approval. This Agreement has been, and the Spinoff Agreements when
entered into will be, duly and validly executed and delivered by the Company
and, subject to the obtaining of the Company Stockholders' Approval, each
constitutes or will constitute a legal, valid and binding obligation of the
Company enforceable
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against the Company in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.04 Non-Contravention; Approvals and Consents. Except as disclosed in
Section 3.04 of the Company Disclosure Letter, (a) The execution and delivery of
this Agreement and the Spinoff Agreements by the Company do not, and the
performance by the Company of its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with, result in a violation or breach of, constitute (with or without
notice or lapse of time or both) a default under, result in or give to any
person any right of payment or reimbursement, termination, cancellation,
modification or acceleration of, or result in the creation or imposition of any
Lien upon any of the assets or properties of the Company or any of its
Subsidiaries, including Spinoff Sub, under, any of the terms, conditions or
provisions of (i) the certificates or articles of incorporation or bylaws (or
other comparable charter documents) of the Company or any of its Subsidiaries,
including Spinoff Sub, or (ii) subject to the obtaining of the Company
Stockholders' Approval and the taking of the actions described in paragraph (b)
of this Section, (x) any statute, law, rule, regulation or ordinance (together,
"laws"), or any judgment, decree, order, writ, permit or license (together,
"orders"), of any court, tribunal, arbitrator, authority, agency, commission,
official or other instrumentality of the United States, any foreign country or
any domestic or foreign state, county, city or other political subdivision (a
"Governmental or Regulatory Authority") applicable to the Company or any of its
Subsidiaries, including Spinoff Sub, or any of their respective assets or
properties, or (y) any note, bond, mortgage, security agreement, indenture,
license, franchise, permit, concession, contract, lease or other instrument,
obligation or agreement of any kind (together, "Contracts") to which the Company
or any of its Subsidiaries, including Spinoff Sub, is a party or by which the
Company or any of its Subsidiaries, including Spinoff Sub, or any of their
respective assets or properties is bound, excluding from the foregoing clauses
(x) and (y) conflicts, violations, breaches, defaults, terminations,
modifications, accelerations and creations and impositions of Liens which,
individually or in the aggregate, could not be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole or
on the ability of the Company to consummate the transactions contemplated by
this Agreement.
(b) Except (i) for the filing of a premerger notification report by the
Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"), (ii) for the
filing of the Proxy Statement (as defined in Section 3.09) and the Registration
Statement (as defined in Section 4.06) with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (the "Exchange Act"), and the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), the declaration of the effectiveness of the Registration
Statement by the SEC and filings with various state securities authorities that
are required in connection with the transactions contemplated by this Agreement,
(iii) for the filing of the Articles of Merger and other appropriate merger
documents required by the WBCA with the Secretary of State and appropriate
documents with the relevant authorities of other states in which the Constituent
Corporations are qualified to do business, (iv) for the filing of the
Registration Statement on Form 10 (the "Form 10") with the SEC pursuant to the
Exchange Act in connection with the Spinoff and the declaration of the
effectiveness of the Form 10 by the SEC, and (v) as disclosed in Section 3.04 of
the Company Disclosure Letter, no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority or other public or private
third party is necessary or required under any of the terms, conditions or
provisions of any law or order of any Governmental or Regulatory Authority or
any Contract to which the Company or any of its Subsidiaries, including Spinoff
Sub, is a party or by which the Company or any of its Subsidiaries, including
Spinoff Sub, or any of their respective assets or properties is bound for the
execution and delivery of this Agreement and the Spinoff Agreements by the
Company, the performance by the Company of its obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, other than such consents, approvals, actions, filings and notices which
the failure to make or obtain, as the case may be, individually or in the
aggregate, could not be reasonably expected to have a material adverse effect on
the Company and its Subsidiaries taken as a whole or on the ability of the
Company to consummate the transactions contemplated by this Agreement and the
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Spinoff Agreements. Section 3.04 of the Company Disclosure Letter sets forth (a)
the procedure required to effect the transfer of the nominee shares issued by
Interpoint Taiwan Corporation ("Taiwan Sub") and (b) any consents, approvals or
actions of, filings with or notice to any Governmental or Regulatory Authority
or other public or private third party necessary or required with respect to
Taiwan Sub in connection with the transactions contemplated by this Agreement.
(c) The Company and each of its Subsidiaries are in compliance with all
laws and orders governing the importing or exporting of goods and services into
or out of the United States, and all good manufacturing practice standards
established by the EPA, OSHA, FDA or any other Governmental or Regulatory
Authority. Without limitation as to the foregoing, neither the Company nor any
of its Subsidiaries, including Spinoff Sub, nor any of their respective agents
or representatives, have taken or omitted to take any action, which constitutes
a violation of the Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C.
Section 78dd.
3.05 SEC Reports and Financial Statements. The Company delivered or made
available to Parent prior to the execution of this Agreement, a true and
complete copy of each form, report, schedule, registration statement, definitive
proxy statement and other document (together with all amendments thereof,
supplements thereto and documents incorporated therein by reference) filed by
the Company or any of its Subsidiaries with the SEC since October 31, 1993 (as
such documents have since the time of their filing been amended or supplemented,
the "Company SEC Reports"), which are all the documents (other than preliminary
material) that the Company and its Subsidiaries were required to file with the
SEC since such date. As of their respective dates, the Company SEC Reports (i)
complied as to form in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited interim
consolidated financial statements (including, in each case, the notes, if any,
thereto) included in the Company SEC Reports (the "Company Financial
Statements") complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated therein or in the
notes thereto and except with respect to unaudited statements as permitted by
Form 10-Q of the SEC) and fairly present (subject, in the case of the unaudited
interim financial statements, to normal, recurring year-end audit adjustments
(which are not expected to be, individually or in the aggregate, materially
adverse to the Company and its Subsidiaries taken as a whole)) the consolidated
financial position of the Company and its consolidated subsidiaries as at the
respective dates thereof and the consolidated results of their operations and
cash flows for the respective periods then ended. Except as set forth in Section
3.05 of the Company Disclosure Letter, each Subsidiary, including Spinoff Sub,
of the Company is treated as a consolidated subsidiary of the Company in the
Company Financial Statements for all periods covered thereby.
3.06 Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, (a) since April
30, 1996 there has not been any change, event or development having, or that
could be reasonably expected to have, individually or in the aggregate, a
material adverse effect on the Company and its Subsidiaries taken as a whole,
and (b) except as disclosed in Section 3.06 of the Company Disclosure Letter,
between such date and the date hereof (i) the Company and its Subsidiaries,
including Spinoff Sub, have conducted their respective businesses only in the
ordinary course consistent with past practice and (ii) neither the Company nor
any of its Subsidiaries, including Spinoff Sub, has taken any action which, if
taken after the date hereof, would constitute a breach of any provision of
clause (ii) of Section 5.01(b).
3.07 Absence of Undisclosed Liabilities. Except for matters reflected or
reserved against in the balance sheet for the period ended April 30, 1996
included in the Company Financial Statements or as disclosed in Section 3.07 of
the Company Disclosure Letter, neither the Company nor any of its Subsidiaries,
including Spinoff Sub, had at such date, or has incurred since that date, any
liabilities or obligations (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due) of any nature that would be required
by generally accepted accounting principles to be reflected on a consolidated
balance sheet of the Company and its consolidated subsidiaries (including the
notes thereto), except liabilities or obligations
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(i) which were incurred in the ordinary course of business consistent with past
practice or (ii) which have not been, and could not be reasonably expected to
be, individually or in the aggregate, materially adverse to the Company and its
Subsidiaries taken as a whole.
3.08 Legal Proceedings. Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement or in Section 3.08 of the Company
Disclosure Letter, (i) there are no actions, suits, arbitrations or proceedings
pending or, to the knowledge of the Company, threatened against, relating to or
affecting, nor are there any Governmental or Regulatory Authority investigations
or audits pending or to the knowledge of the Company threatened against,
relating to or affecting, the Company or any of its Subsidiaries, including
Spinoff Sub, or any of their respective assets and properties which,
individually or in the aggregate, could be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole or
on the ability of the Company to consummate the transactions contemplated by
this Agreement, and (ii) neither the Company nor any of its Subsidiaries,
including Spinoff Sub, is subject to any order of any Governmental or Regulatory
Authority which, individually or in the aggregate, is having or could be
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Company to consummate the
transactions contemplated by this Agreement.
3.09 Information Supplied. The proxy statement relating to the Company
Stockholders' Meeting (as defined in Section 6.03), as amended or supplemented
from time to time (as so amended and supplemented, the "Proxy Statement"), the
Form 10 and any other documents to be filed by the Company with the SEC or any
other Governmental or Regulatory Authority in connection with the Merger, the
Spinoff and the other transactions contemplated hereby will (in the case of the
Proxy Statement, Form 10 and any such other documents filed with the SEC under
the Exchange Act or the Securities Act) comply as to form in all material
respects with the requirements of the Exchange Act and the Securities Act,
respectively, and will not, on the date of its filing or, in the case of the
Proxy Statement, at the date it is mailed to stockholders and at the time of the
Company Stockholders' Meeting, in the case of the Form 10, at the time it
becomes effective under the Exchange Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to information supplied in
writing by or on behalf of Parent or Sub expressly for inclusion therein and
information incorporated by reference therein from documents filed by Parent or
any of its Subsidiaries with the SEC.
3.10 Compliance with Laws and Orders. The Company and its Subsidiaries
hold all permits, licenses, variances, exemptions, orders and approvals of all
Governmental and Regulatory Authorities necessary for the lawful conduct of
their respective businesses (the "Company Permits"), except for failures to hold
such permits, licenses, variances, exemptions, orders and approvals which,
individually or in the aggregate, are not having and could not be reasonably
expected to have a material adverse effect on the Company and its Subsidiaries
taken as a whole. The Company and its Subsidiaries are in compliance with the
terms of the Company Permits, except failures so to comply which, individually
or in the aggregate, are not having and could not be reasonably expected to have
a material adverse effect on the Company and its Subsidiaries taken as a whole.
Except as disclosed in the Company SEC Reports filed prior to the date of this
Agreement, the Company and its Subsidiaries are not in violation of or default
under any law or order of any Governmental or Regulatory Authority, except for
such violations or defaults which, individually or in the aggregate, are not
having and could not be reasonably expected to have a material adverse effect on
the Company and its Subsidiaries taken as a whole.
3.11 Compliance with Agreements; Certain Agreements. Except as disclosed
in the Company SEC Reports filed prior to the date of this Agreement, neither
the Company nor any of its Subsidiaries, including Spinoff Sub, nor, to the
knowledge of the Company, any other party thereto is in breach or violation of,
or in default in the performance or observance of any term or provision of, and
no event has occurred which, with notice or lapse of time or both, could be
reasonably expected to result in a default under, (i) the certificates or
articles of incorporation or bylaws (or other comparable charter documents) of
the Company or any of its Subsidiaries, including Spinoff Sub, or (ii) any
Contract to which the Company or any of its Subsidiaries, including Spinoff Sub,
is a party or by which the Company or any of its Subsidiaries or any of their
respective
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assets or properties is bound, except in the case of clause (ii) for breaches,
violations and defaults which, individually or in the aggregate, are not having
and could not be reasonably expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole.
3.12 Taxes.
3.12.1 Definitions
(a) Taxes. "Taxes" means any federal, state, county, local or foreign
taxes, charges, fees, levies, other assessments, or withholding taxes or charges
imposed by any governmental entity, and includes any interest and penalties
(civil or criminal) on or additions to any taxes.
(b) Tax Return. "Tax Return" means a report, return or other information
(including any amendments) required to be supplied to a governmental entity by
the Company with respect to Taxes including, where permitted or required,
combined or consolidated returns for any group of entities that includes the
Company.
(c) Company. For purposes of this section Company means the Company and
each Subsidiary, including Spinoff Sub, of the Company.
3.12.2 Representations
3.12.2.1 Tax Return Filings. Except as set forth in Section 3.12.2.1 of
the Company Disclosure Letter, the Company has filed all Tax Returns (or the Tax
Returns have been filed on behalf of the Company) required to be filed by
applicable law prior to the Closing Date. All Tax Returns were (and, as to Tax
Returns not filed as of the date hereof, will be) true, complete and correct in
all material respects and filed on a timely basis. The Company (i) has paid all
Taxes that are due for the periods covered by the Tax Returns or (ii) has duly
and fully provided reserves adequate to pay all Taxes in accordance with GAAP.
3.12.2.2 Tax Reserves. Except as set forth in Section 3.12.2.2 of the
Company Disclosure Letter, the Company has maintained on its books and records
reserves adequate to pay all Taxes not yet due and payable.
3.12.2.3 Tax Liens. Except as set forth in Section 3.12.2.3 of the Company
Disclosure Letter, there are no Tax liens upon the assets of the Company except
liens for Taxes not yet due.
3.12.2.4 Withholding Taxes. Except as set forth in Section 3.12.2.4 of the
Company Disclosure Letter, the Company has complied in all material respects
with all applicable laws, rules, and regulations relating to the payment and
withholding of Taxes (including withholding and reporting requirements under
Code sec.sec. 1441 through 1464, 3401 through 3406, 6041 and 6049 and similar
provisions under any other laws) and has, within the time and in the manner
prescribed by law, withheld from employee wages and paid over to the proper
governmental authorities all required amounts.
3.12.2.5 Extensions of Time for Filing Returns. Except as set forth in
Section 3.12.2.5 of the Company Disclosure Letter, the Company has not requested
(and no request has been made on its behalf) any extension of time within which
to file any Tax Return.
3.12.2.6 Waivers of Statute of Limitations. Except as set forth in Section
3.12.2.6 of the Company Disclosure Letter, the Company has not executed any
outstanding waivers or comparable consents regarding the application of the
statute of limitations for any Taxes or Tax Returns (and no extensions have been
executed on its behalf).
3.12.2.7 Expiration of Statute of Limitations. Except as set forth in
Section 3.12.2.7 of the Company Disclosure Letter, (i) Tax Returns have been
examined by the appropriate taxing authorities for the 1992-1993 taxable year;
and (ii) no deficiency for any Taxes has been suggested, proposed, asserted or
assessed against the Company that has not been resolved and paid in full.
3.12.2.8 Audit, Administrative and Court Proceedings. Except as set forth
in Section 3.12.2.8 of the Company Disclosure Letter, no audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of the Company.
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3.12.2.9 Tax Rulings. Except as set forth in Section 3.12.2.9 of the
Company Disclosure Letter, the Company has not received any written ruling of a
taxing authority relating to Taxes, or any other written and legally binding
agreement with a taxing authority relating to Taxes.
3.12.2.10 Availability of Tax Returns and Associated Work Papers. Company
has made available (or, in the case of Tax Returns to be filed on or before the
Closing Date, will make available) to Parent complete and accurate copies of all
Tax Returns and associated work papers filed by or on behalf of the Company for
all taxable years ending on or prior to the Closing Date.
3.12.2.11 Tax Sharing Agreements. Except for complete and accurate copies
of tax sharing agreements provided to Parent, no agreements relating to
allocating or sharing of Taxes exist among Company and any Subsidiaries. The
Company shall not amend any tax sharing agreements, or other arrangements to
which the Company is a party prior to the Closing.
3.12.2.12 Code Section 341(f). Except as set forth in Section 3.12.2.12 of
the Company Disclosure Letter, the Company has not filed (and will not file
prior to the Closing Date) a consent pursuant to Code Section 341(f) or agreed
to have Code Section 341(f)(2) apply to any disposition of a subsection (f)
asset.
3.12.2.13 Code Section 481 Adjustments. Except as set forth in Section
3.12.2.13 of the Company Disclosure Letter, the Company is not required to
include in income any adjustment pursuant to Code Section 481(a) by reason of a
voluntary change in accounting method initiated by the Company, and the Internal
Revenue Service has not proposed an adjustment or change in accounting method.
3.12.2.14 Code Section 280G. Except as set forth in Section 3.12.2.14 of
the Company Disclosure Letter, the Company is not a party to any agreement,
contract, or arrangement that would result, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Code
Section 280G.
3.12.2.15 Code Sections 6661 and 6662. All transactions that could give
rise to an understatement of federal income tax (within the meaning of Code
Section 6661 for Tax Returns filed on or before December 31, 1989, and within
the meaning of Code Section 6662 for tax returns filed after December 31, 1989)
by the Company have been adequately disclosed on the Company's Tax Returns in
accordance with Code Section 6661(b)(2)(B) for Tax Returns filed on or prior to
December 31, 1989, and in accordance with Code Section 6662(d)(2)(B) for Tax
Returns filed after December 31, 1989.
3.13 Employee Benefit Plans; ERISA.
(a) Section 3.13(a) of the Company Disclosure Letter (i) contains a true
and complete list and description of each Benefit Plan, (ii) identifies each
Benefit Plan that is a Qualified Plan, (iii) identifies each Benefit Plan which
at any time during the five-year period preceding the date of this Agreement was
a Defined Benefit Plan and (iv) lists, describes and identifies each other Plan
maintained, established, sponsored or contributed to by an ERISA Affiliate, or
any predecessor thereof, which, during the five-year period preceding the date
of this Agreement, was at any time a Defined Benefit Plan. Neither the Company,
Spinoff Sub nor any Subsidiary of the Company has scheduled or agreed upon
future increases of benefit levels (or creations of new benefits) with respect
to any Benefit Plan, and no such increases or creation of benefits have been
proposed, made the subject of representations to employees or requested or
demanded by employees under circumstances which make it reasonable to expect
that such increases will be granted.
(b) Neither the Company, Spinoff Sub nor any Subsidiary of the Company
maintains or is obligated to provide benefits under any life, medical or health
plan (other than as an incidental benefit under a Qualified Plan) which provides
benefits to retirees or other terminated employees other than benefits mandated
by applicable law, including, but not limited to, continuation coverage required
to be provided under Section 4980B of the Code or Sections 601 through 609 of
ERISA.
(c) Neither the Company, Spinoff Sub, any Subsidiary of the Company nor any
ERISA Affiliate has at any time contributed to any "multiemployer plan", as that
term is defined in Section 4001 of ERISA.
(d) Except as set forth in Section 3.13(d) of the Company Disclosure
Letter, each of the Benefit Plans is, and its administration is and has been
since inception, in all material respects in compliance with, and
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neither the Company, Spinoff Sub nor any Subsidiary of the Company has received
any claim or notice that any such Benefit Plan is not in material compliance
with, all applicable laws and orders and prohibited transactions exemptions,
including the requirements of ERISA, the Code, the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), the Age Discrimination in
Employment Act, the Equal Pay Act and Title VII of the Civil Rights Act of 1964.
Each Qualified Plan is qualified under Section 401(a) of the Code, and, if
applicable, complies with the requirements of Section 401(k) of the Code.
(e) Neither the Company, Spinoff Sub nor any Subsidiary of the Company is
in default in performing any of its contractual obligations under any Benefit
Plan or any related trust agreement or insurance contract. All contributions and
other payments required to be made by the Company, Spinoff Sub or any Subsidiary
of the Company to any Benefit Plan with respect to any period ending before or
at or including the Closing Date have been made or reserves adequate for such
contributions or other payments have been or will be set aside therefor and have
been or will be reflected in financial statements in accordance with GAAP. There
are no material outstanding liabilities of any Benefit Plan other than
liabilities for benefits to be paid to participants in such Benefit Plan and
their beneficiaries in accordance with the terms of such Benefit Plan.
(f) No event has occurred, and there exists no condition or set of
circumstances in connection with any Benefit Plan, under which the Company, the
Surviving Corporation, Spinoff Sub or any Subsidiary of the Company, directly or
indirectly (through any indemnification agreement or otherwise), could
reasonably be expected to be subject to a material liability under Section 409
of ERISA, Section 502(i) of ERISA or Section 4975 of the Code.
(g) No transaction contemplated by this Agreement will result in material
liability to the PBGC under Section 4062, 4063, 4064 or 4069 of ERISA, or
otherwise, with respect to any Benefit Plan by the Company, the Surviving
Corporation, Spinoff Sub or any Subsidiary of the Company or ERISA Affiliate,
and no event or condition exists or has existed which could reasonably be
expected to result in any such liability with respect to any such corporation or
organization. No "reportable event" within the meaning of Section 4043 of ERISA
has occurred with respect to any Subject Defined Benefit Plan. No termination
re-establishment or spin-off re-establishment transaction has occurred with
respect to any material Subject Defined Benefit Plan. No Subject Defined Benefit
Plan has incurred any accumulated funding deficiency whether or not waived. No
filing has been made and no proceeding has been commenced for the complete or
partial termination of, or withdrawal from, any Qualified Plan.
(h) Except as set forth in Section 3.13(h) of the Company Disclosure
Letter, no benefit under any Benefit Plan, including, without limitation, any
severance or parachute payment plan or agreement, will be established or become
accelerated, vested, funded or payable by reason of any transaction contemplated
under this Agreement.
(i) Except as set forth in Section 3.13(i) of the Company Disclosure
Letter, to the knowledge of the Company, other than routine claims for benefits,
there are no pending or threatened claims by or on behalf of any Benefit Plan,
by any person covered thereby, or otherwise, which allege violations of law
which could reasonably be expected to result in material liability on the part
of the Company, any Subsidiary of the Company or any fiduciary (with respect to
whom the Company or any Subsidiary of the Company has an indemnification
obligation) of any such Benefit Plan, nor is there any reasonable basis for such
a claim, nor are there any ongoing IRS, DOL or other agency audits or
investigations of any Benefit Plans.
(j) Except as set forth in Section 3.13(j) of the Company Disclosure
Letter, no employer securities, employer real property or other employer
property is included in the assets of any Benefit Plan.
(k) The fair market value of the assets of each Subject Defined Benefit
Plan, as determined as of the last day of the plan year of such plan which
coincides with or first precedes the date of this Agreement, was not materially
less than the present value of the accumulated benefit obligations under such
plan at such date as established on the basis of the actuarial assumptions
applicable under such Subject Defined Benefit Plan at said date and, to the
knowledge of the Company, there have been no material changes in such values
since said date.
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(l) Complete and correct copies of the following documents have been
furnished to Parent prior to the execution of this Agreement:
(i) the Company Savings & Investment Plan 401K, and any related
agreements thereto;
(ii) current summary Plan descriptions of each Benefit Plan subject to
ERISA, and any similar descriptions of all other Benefit Plans;
(iii) the most recent Form 5500 series filings and schedules thereto
for each Benefit Plan subject to ERISA reporting requirements;
(iv) the most recent determination of the Internal Revenue Service
with respect to the qualified status of each Qualified Plan;
(v) the most recent accountings with respect to any Benefit Plan
funded through a trust; and
(vi) the most recent actuarial report of the qualified actuary of any
Subject Defined Benefit Plan or any other Benefit Plan with respect to
which actuarial valuations are conducted.
(m) For purposes of this Agreement, the following terms shall have the
following meanings:
(i) "Benefit Plan" means any Plan, existing at the Closing Date,
maintained by the Company or any Subsidiary of the Company, or by Spinoff
Sub, to which the Company or any Subsidiary of the Company or Spinoff Sub
contributes or has contributed, or under which any employee, former
employee or director of the Company or any Subsidiary of the Company or
Spinoff Sub or any beneficiary thereof is covered, is eligible for coverage
or has benefit rights due to such individual's status as an employee,
former employee or director of the Company or any Subsidiary of the Company
or Spinoff Sub.
(ii) "Defined Benefit Plan" means each Benefit Plan which is subject
to Part 3 of Title I of ERISA (other than a money purchase pension plan),
Section 412 of the Code (other than a money purchase pension plan) or Title
IV of ERISA (other than a money purchase pension plan).
(iii) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
(iv) "ERISA Affiliate" means any person who is in the same controlled
group of corporations or who is under common control with the Company or,
before the Closing, the Company or any Subsidiary, including Spinoff Sub,
of the Company (within the meaning of Section 414(b) or (c) of the Code).
(v) "GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
(vi) "PBGC" means the Pension Benefit Guaranty Corporation established
under ERISA.
(vii) "Plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock
option, stock ownership, stock appreciation rights, phantom stock, leave of
absence, layoff, vacation, day or dependent care, legal services,
cafeteria, life, health, accident, disability, workmen's compensation or
other insurance, severance, separation or other employee benefit plan,
practice, policy or arrangement of any kind, whether written or oral,
including, but not limited to, any "employee benefit plan" within the
meaning of Section 3(3) of ERISA.
(viii) "Qualified Plan" means each Benefit Plan which is intended to
qualify under Section 401(a) of the Code.
(ix) "Subject Defined Benefit Plan" means each Defined Benefit Plan
listed and described in Section 3.13(a) of the Company Disclosure Letter.
3.14 Labor Matters. Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement or in Section 3.14 of the Company Disclosure
Letter, there are no material controversies pending or, to the knowledge of the
Company, threatened between the Company or any of its Subsidiaries and any of
its employees or their representatives and, to the knowledge of the Company,
there are no material
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organizational efforts presently being made involving any of the now unorganized
employees of the Company or any of its Subsidiaries. Since January 1, 1993,
there has been no work stoppage, strike or other concerted action by employees
of the Company or any of its Subsidiaries.
3.15 Environmental Matters. (a) Each of the Company and its Subsidiaries,
including Spinoff Sub, has obtained all licenses, permits, authorizations,
registrations, approvals and consents from Governmental or Regulatory
Authorities which are required under any applicable Environmental Law (as
defined below) in respect of its business or operations ("Environmental
Permits"). Each of such Environmental Permits is in full force and effect and
each of the Company and its Subsidiaries, including Spinoff Sub, is in
compliance with the terms and conditions of all such Environmental Permits and
with any applicable Environmental Law.
(b) No site or facility now or previously owned, operated or leased by the
Company or any of its Subsidiaries, including Spinoff Sub, is listed or proposed
for listing on the National Priorities List promulgated pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, and the rules and regulations thereunder ("CERCLA"), or on any similar
state or local list of sites requiring investigation or cleanup.
(c) No Liens have arisen under or pursuant to any Environmental Law on any
site or facility now or previously owned, operated or leased by the Company or
any of its Subsidiaries, including Spinoff Sub, and no action of any
Governmental or Regulatory Authority has been taken or is in process which could
subject any of such properties to such Liens, and neither the Company nor any of
its Subsidiaries, including Spinoff Sub, would be required to place any notice
or restriction relating to the presence of Hazardous Materials at any such site
or facility owned by it in any deed to the real property on which such site or
facility is located.
(d) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by, or which are in the possession
of, the Company or any of its Subsidiaries, including Spinoff Sub, in relation
to any site or facility now or previously owned, operated or leased by the
Company or any of its Subsidiaries, including Spinoff Sub, which have not been
delivered to Parent prior to the execution of this Agreement.
(e) There has been no release or disposal of Hazardous Materials at, on,
under, from, to or in connection with (i) the Company or any of its
Subsidiaries, including Spinoff Sub, or (ii) any site or facility now or
previously owned, operated or leased by the Company or any of its Subsidiaries,
including Spinoff Sub, or (iii) any off-site location, such as a landfill.
(f) There is no Environmental Claim pending, or to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries, including
Spinoff Sub.
(g) There is no asbestos, PCBs or underground storage tank at any site or
facility currently owned or leased by the Company or any of its Subsidiaries,
including Spinoff Sub.
(h) As used herein:
(i) "Environmental Law" means any law or order of any Governmental or
Regulatory Authority, or any interpretation thereof, relating to the
regulation or protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
wastes into the environment (including, without limitation, ambient air,
soil, surface water, ground water, wetlands, land or subsurface strata), or
otherwise relating to the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous
substances or wastes; and
(ii) "Hazardous Material" means (A) any petroleum or petroleum
products, flammable explosives, radioactive materials, asbestos in any form
that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid containing
levels of polychlorinated biphenyls (PCBs); (B) any chemicals or other
materials or substances which are now or hereafter become defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances,"
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"toxic pollutants" or words of similar import under any Environmental Law;
and (C) any other chemical or other material or substance, exposure to
which is now or hereafter prohibited, limited or regulated by any
Governmental or Regulatory Authority under any Environmental Law.
(iii) "Environmental Claim" means any written notice by any person
alleging potential liability (including, without limitation, potential
liability for investigatory costs, cleanup costs, governmental response
costs, natural resources damages, property damages, personal injuries or
penalties) arising out of, based on or relating to (A) the presence, or
release into the environment, of any Hazardous Materials or (B)
circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.
3.16 Intellectual Property Rights. Section 3.16 of the Company Disclosure
Letter provides a true and correct list of all patents and patent rights,
trademarks and trademark rights, copyrights and copyright rights and all pending
applications for and registrations of any of the foregoing owned or used by the
Company or a Subsidiary of the Company. The Company and each Subsidiary of the
Company has all right, title and interest in, or a valid, binding and
enforceable license to use all of the Intellectual Property owned or used by the
Company or such Subsidiary of the Company in its business or operations. The
Company and each Subsidiary of the Company has the right to use all Intellectual
Property necessary to conduct its business as currently conducted and as
proposed to be conducted. Neither the Company nor any Subsidiary of the Company
is in default (or with the giving of notice or lapse of time or both, would be
in default) under any license to use or contract regarding such Intellectual
Property, such Intellectual Property is not being infringed by any third party,
and neither the Company nor any Subsidiary of the Company is infringing or has
received notice that it is infringing any Intellectual Property of any third
party, and no claim is pending or, to the knowledge of the Company, has been
made to such effect that has not been resolved. Except as disclosed in Section
3.16 of the Company Disclosure Letter, (i) the Company and each of its
Subsidiaries has the exclusive right to use its Intellectual Property, (ii) all
registrations with and applications to Governmental or Regulatory Authorities in
respect of its Intellectual Property are valid and in full force and effect and
are not subject to the payment of any taxes or maintenance fees or the taking of
any other actions by the Company or a Subsidiary of the Company to maintain
their validity or effectiveness, (iii) there are no restrictions on the direct
or indirect transfer of any contract, or any interest therein, held by the
Company or any Subsidiary of the Company in respect of its Intellectual
Property, and (iv) the Company and the Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of their
trade secrets and other proprietary information or materials not patentable or
otherwise protected as a trade secret. For purposes of this Agreement,
"Intellectual Property" means patents and patent rights, trademarks and
trademark rights, trade names and trade name rights, service marks and service
mark rights, service names and service name rights, brand names, inventions,
processes, formulae, copyrights and copyright rights, trade dress, business and
product names, logos, slogans, trade secrets, industrial models, processes,
designs, methodologies, computer programs (including all source codes) and
related documentation, technical information, manufacturing, engineering and
technical drawings, know-how and other proprietary intellectual property rights
and all pending applications for and registrations of any of the foregoing.
3.17 Vote Required. (a) The affirmative vote of the holders of record of
at least two-thirds of the outstanding shares of Company Common Stock with
respect to the adoption of this Agreement is the only vote of the holders of any
class or series of the capital stock of the Company required to adopt this
Agreement and approve the Merger and the other transactions contemplated hereby.
(b) The Company has obtained an undertaking from each of Walter P. Kistler,
John W. Stanton and Peter H. van Oppen that they will vote all of their shares
of Company Common Stock owned on the record date of the Merger in favor of the
Merger.
3.18 Insurance. Section 3.18 of the Company Disclosure Letter sets forth
an accurate and complete list and description of coverage of all policies of or
binders for casualty, liability, property, worker's compensation and other forms
of insurance owned or held by the Company and its Subsidiaries and all pending
or, to the knowledge of the Company, threatened, claims thereunder. Except as
set forth in Section 3.18 of the Company Disclosure Letter, each of the Company
and its Subsidiaries is, and continuously since at least April 30, 1993, has
been, insured with reputable insurers against all risks and in such amounts
normally insured against by
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companies of the same type and in the same line of business as the Company and
its Subsidiaries. Except as set in Section 3.18 of the Company Disclosure
Letter, since April 30, 1993, there have been no claims by the Company or its
Subsidiaries under any insurance policy.
3.19 Ownership of Parent Common Stock. Neither the Company nor any of its
Subsidiaries or other affiliates beneficially owns any shares of Parent Common
Stock.
3.20 Article XII of the Company's Articles of Incorporation and State
Takeover Laws. The Company has taken all necessary actions so that this
Agreement, the Merger or the other transactions contemplated hereby or thereby
shall be exempt from the requirements of any "moratorium," "control share,"
"fair price" or other anti-takeover laws or regulations of any state as well as
Article XII of the Company's Articles of Incorporation.
3.21 No Affiliated Transactions. After giving effect to the Spinoff and
the Merger, neither the Company nor any of its Subsidiaries will have any
agreement or arrangement with Spinoff Sub or any of its Subsidiaries other than
this Agreement and the Spinoff Agreements.
3.22 Spinoff Sub. Spinoff Sub designs, assembles and markets automated
data libraries for computer networks and work stations. Spinoff Sub will not be
in any way engaged in the micro-electronics business carried on by the Company.
Section 3.22 of the Company Disclosure Letter contains a pro forma balance sheet
of Spinoff Sub as of April 30, 1996.
3.23 Real Property. (a) Section 3.23(a) of the Company Disclosure Letter
contains a true and correct list of (i) each parcel of real property owned by
the Company or any Subsidiary of the Company, (ii) each parcel or real property
leased by the Company or any Subsidiary of the Company (as lessor or lessee) and
(iii) all Liens relating to or affecting any parcel of real property referred to
in clause (i).
(b) Except as disclosed in Section 3.23(b) of the Company Disclosure
Letter, the Company or a Subsidiary of the Company has good and marketable fee
simple title to each parcel of real property owned by it, free and clear of all
Liens. Except for the real property leased to others referred to in clause (ii)
of paragraph (a) above, the Company or a Subsidiary of the Company is in
possession of each parcel of real property owned by it, together with all
buildings, structures, facilities, fixtures and other improvements thereon. The
Company and the Subsidiaries have adequate rights of ingress and egress with
respect to the real property listed in Section 3.23(b) of the Company Disclosure
Letter and all buildings, structures, facilities, fixtures and other
improvements thereon. None of such real property, buildings, structures,
facilities, fixtures or other improvements, or the use thereof, contravenes or
violates any building, zoning, administrative, occupational safety and health or
other applicable Law in any material respect (whether or not permitted on the
basis of prior nonconforming use, waiver or variance).
(c) The Company or a Subsidiary of the Company has a valid and subsisting
leasehold estate in and the right to quiet enjoyment of the real properties
leased by it for the full term of the lease thereof. Each lease referred to in
clause (ii) of paragraph (a) above is a legal, valid and binding agreement,
enforceable in accordance with its terms, of the Company or a Subsidiary of the
Company and of each other person that is a party hereto, and except as set forth
in Section 3.23(c) of the Company Disclosure Letter, there is no, and neither
the Company nor any Subsidiary of the Company has received notice of any,
default (or any condition or event which, after notice or lapse of time or both,
would constitute a default) thereunder. Neither the Company nor any Subsidiary
of the Company owes any brokerage commissions with respect to any such leased
space.
(d) Except as disclosed in Section 3.23(d) of the Company Disclosure
Letter, no tenant or other party in possession of any of the real properties
owned by the Company and the Subsidiaries, has any right to purchase, or holds
any right of first refusal to purchase, such properties.
(e) Except as disclosed in Section 3.23(e) of the Company Disclosure
Letter, the improvements on the real property are in good operating condition
and in a state of good maintenance and repair, ordinary wear and tear excepted,
are adequate and suitable for the purposes for which they are presently being
used and, to the
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knowledge of Company, there are no condemnation or appropriation proceedings
pending or threatened against any of such real property or the improvements
thereon.
3.24 Contracts. (a) Section 3.24 of the Company Disclosure Letter (with
paragraph references corresponding to those set forth below) contains a true and
complete list of each of the following Contracts (true and complete copies or,
if none, reasonably complete and accurate written descriptions of which,
together with all amendments and supplements thereto, have been delivered or
made available to Parent prior to the execution of this Agreement), to which the
Company or any Subsidiary of the Company is a party or by which any of their
respective assets and properties is bound:
(i) all Contracts (excluding Benefit Plans) providing for a commitment
of employment or consultation services for a specified or unspecified term
or otherwise relating to employment or the termination of employment, the
name, position and rate of compensation of each person party to such a
Contract and the expiration date of each such Contract;
(ii) all Contracts with any person containing any provision or
covenant prohibiting or materially limiting the ability of the Company or
any Subsidiary of the Company to engage in any business activity or compete
with any person or prohibiting or materially limiting the ability of any
person to compete with the Company or any Subsidiary of the Company;
(iii) all partnership, joint venture, shareholders' or other similar
Contracts with any person;
(iv) all Contracts relating to indebtedness of the Company or any
Subsidiary of the Company in excess of $25,000;
(v) all Contracts with distributors, dealers, manufacturer's
representatives, customers, sales agencies or franchisees which in any case
involve the payment or potential payment, pursuant to the terms of any such
Contract, by or to the Company or any Subsidiary of the Company of more
than $25,000 annually;
(vi) all Contracts relating to (A) the future disposition or
acquisition of any assets and properties individually or in the aggregate
material to the business or condition of the Company, and (B) any merger or
other business combination;
(vii) all Contracts between or among the Company or any Subsidiary of
the Company, on the one hand, and any officer, director or Affiliate (other
than the Company or any Subsidiary) of the Company, on the other hand, and
providing for annual payments by or to the Company or any Subsidiary of the
Company exceeding $25,000;
(viii) all collective bargaining or similar labor Contracts;
(ix) all Contracts (other than this Agreement) that (A) limit or
contain restrictions on the ability of the Company or any Subsidiary of the
Company to declare or pay dividends on, to make any other distribution in
respect of or to issue or purchase, redeem or otherwise acquire its capital
stock, to incur Indebtedness, to incur or suffer to exist any Lien, to
purchase or sell any assets and properties, to change the lines of business
in which it participates or engages or to engage in any merger or other
business combination or (B) require the Company or any Subsidiary of the
Company to maintain specified financial ratios or levels of net worth or
other indicia of financial condition; and
(x) all other Contracts (other than Benefit Plans, leases listed in
and insurance policies listed in Section 3.18 of the Company Disclosure
Letter that (A) involve the payment or potential payment, pursuant to the
terms of any such Contract, by or to the Company or any Subsidiary of the
Company of more than $25,000 annually and (B) cannot be terminated within
thirty (30) days after giving notice of termination without resulting in
any substantial cost or penalty to the Company or any Subsidiary of the
Company.
(b) Each Contract required to be disclosed in Section 3.24(a) of the
Company Disclosure Letter is in full force and effect and constitutes a legal,
valid and binding agreement, enforceable in accordance with its terms, of the
Company or a Subsidiary of the Company and, to the knowledge of the Company, of
each other
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party thereto; and except as disclosed in Section 3.24(b) of the Company
Disclosure Letter neither the Company, any Subsidiary of the Company nor, to the
knowledge of the Company, any other party to such Contract is in violation or
breach of or default under any such Contract (or with notice or lapse of time or
both, would be in violation or breach of or default under any such Contract),
the effect of which, individually or in the aggregate, could reasonably be
expected to be materially adverse to the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
4.01 Organization and Qualification. Each of Parent and Sub is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has full corporate power and
authority to conduct its business as and to the extent now conducted and to own,
use and lease its assets and properties. Sub was formed solely for the purpose
of engaging in the transactions contemplated by this Agreement, has engaged in
no other business activities and has conducted its operations only as
contemplated hereby. Each of Parent and Sub is duly qualified, licensed or
admitted to do business and is in good standing in each jurisdiction in which
the ownership, use or leasing of its assets and properties, or the conduct or
nature of its business, makes such qualification, licensing or admission
necessary, except for such failures to be so qualified, licensed or admitted and
in good standing which, individually or in the aggregate, are not having and
could not be reasonably expected to have a material adverse effect on Parent and
its Subsidiaries taken as a whole.
4.02 Capital Stock. The authorized capital stock of Parent consists solely
of 80,000,000 shares of Parent Common Stock and 5,000,000 shares of preferred
stock, par value $.01 per share ("Parent Preferred Stock"). As of June 25, 1996,
30,364,464 shares of Parent Common Stock were issued and outstanding and
17,920,462 shares were held in the treasury of Parent. Since such date, except
as set forth in Section 4.02 of the letter dated the date hereof and delivered
by Parent to the Company concurrently with the execution and delivery of this
Agreement (the "Parent Disclosure Letter"), there has been no change in the
number of issued and outstanding shares of Parent Common Stock or shares of
Parent Common Stock held in treasury or reserved for issuance since such date.
As of the date hereof, no shares of Parent Preferred Stock are issued and
outstanding and 250,000 shares are designated Series A Junior Participating
Preferred Stock ("Parent Series A Preferred Stock") and are reserved for
issuance in accordance with the Preferred Share Purchase Rights Agreement dated
as of July 27, 1988, as amended, by and between Parent and Morgan Shareholder
Services Trust Company, as Rights Agent (the "Parent Rights Agreement"),
pursuant to which Parent has issued rights (the "Parent Rights") to purchase
shares of Parent Series A Preferred Stock. All of the issued and outstanding
shares of Parent Common Stock are, and all shares reserved for issuance will be,
upon issuance in accordance with the terms specified in the instruments or
agreements pursuant to which they are issuable, duly authorized, validly issued,
fully paid and nonassessable. Except (i) for Options issued pursuant to Parent's
option arrangements disclosed in Parent's SEC Reports, (ii) pursuant to this
Agreement and the Parent Rights Agreement and (iii) as set forth in Section 4.02
of the Parent Disclosure Letter, there are no outstanding Options obligating
Parent or any of its Subsidiaries to issue or sell any shares of capital stock
of Parent or to grant, extend or enter into any Option with respect thereto.
4.03 Authority Relative to this Agreement. Each of Parent and Sub has full
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by each of Parent and
Sub and the consummation by each of Parent and Sub of the transactions
contemplated hereby have been duly and validly approved by its Board of
Directors and by Parent in its capacity as the sole stockholder of Sub, and no
other corporate proceedings on the part of either of Parent or Sub or their
stockholders are necessary to authorize the execution, delivery and performance
of this Agreement by Parent and Sub and the consummation by Parent and Sub of
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Sub and constitutes a legal, valid
and binding obligation of each of Parent and Sub enforceable against each of
Parent and Sub in accordance with
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its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4.04 Non-Contravention; Approvals and Consents. (a) The execution and
delivery of this Agreement by each of Parent and Sub do not, and the performance
by each of Parent and Sub of its obligations hereunder and the consummation of
the transactions contemplated hereby will not, conflict with, result in a
violation or breach of, constitute (with or without notice or lapse of time or
both) a default under, result in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any Lien upon any of the assets or
properties of Parent under, any of the terms, conditions or provisions of (i)
the certificates or articles of incorporation or bylaws (or other comparable
charter documents) of Parent, or (ii) subject to the taking of the actions
described in paragraph (b) of this Section, (x) any laws or orders of any
Governmental or Regulatory Authority applicable to Parent or any of its assets
or properties, or (y) any Contracts to which Parent is a party or by which
Parent or any of its assets or properties is bound, excluding from the foregoing
clauses (x) and (y) conflicts, violations, breaches, defaults, terminations,
modifications, accelerations and creations and impositions of Liens which,
individually or in the aggregate, could not be reasonably expected to have a
material adverse effect on Parent and its Subsidiaries taken as a whole or on
the ability of Parent and Sub to consummate the transactions contemplated by
this Agreement.
(b) Except (i) for the filing of a premerger notification report by Parent
under the HSR Act, (ii) for the filing of the Proxy Statement, Registration
Statement and Form 10 with the SEC pursuant to the Exchange Act and the
Securities Act, the declaration of the effectiveness of the Registration
Statement and Form 10 by the SEC and filings with various state securities
authorities that are required in connection with the transactions contemplated
by this Agreement, (iii) for the filing of the Articles of Merger and other
appropriate merger documents required by the WBCA with the Secretary of State
and appropriate documents with the relevant authorities of other states in which
the Constituent Corporations are qualified to do business, and (iv) as disclosed
in Section 4.04 of the Parent Disclosure Letter, no consent, approval or action
of, filing with or notice to any Governmental or Regulatory Authority or other
public or private third party is necessary or required under any of the terms,
conditions or provisions of any law or order of any Governmental or Regulatory
Authority or any Contract to which Parent is a party or by which Parent or any
of its assets or properties is bound for the execution and delivery of this
Agreement by each of Parent and Sub, the performance by each of Parent and Sub
of its obligations hereunder or the consummation of the transactions
contemplated hereby, other than such consents, approvals, actions, filings and
notices which the failure to make or obtain, as the case may be, individually or
in the aggregate, could not be reasonably expected to have a material adverse
effect on Parent and its Subsidiaries taken as a whole or on the ability of
Parent and Sub to consummate the transactions contemplated by this Agreement.
4.05 SEC Reports and Financial Statements. Parent has made available to
the Company prior to the execution of this Agreement a true and complete copy of
each form, report, schedule, registration statement, definitive proxy statement
and other document (together with all amendments thereof and supplements
thereto) filed by Parent with the SEC since December 31, 1993 (as such documents
have since the time of their filing been amended or supplemented, the "Parent
SEC Reports"), which are all the documents (other than preliminary material)
that Parent was required to file with the SEC since such date. As of their
respective dates, the Parent SEC Reports (i) complied as to form in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The audited consolidated financial statements
and unaudited interim consolidated financial statements (including, in each
case, the notes, if any, thereto) included in the Parent SEC Reports (the
"Parent Financial Statements") complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to unaudited statements
as permitted by Form 10-Q of the SEC)
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and fairly present (subject, in the case of the unaudited interim financial
statements, to normal, recurring year-end audit adjustments (which are not
expected to be, individually or in the aggregate, materially adverse to Parent
and its Subsidiaries taken as a whole)) the consolidated financial position of
Parent and its consolidated subsidiaries as at the respective dates thereof and
the consolidated results of their operations and cash flows for the respective
periods then ended. Except as set forth in Section 4.05 of the Parent Disclosure
Letter, each Significant Subsidiary of Parent is treated as a consolidated
subsidiary of Parent in the Parent Financial Statements for all periods covered
thereby.
4.06 Information Supplied. The registration statement on Form S-4 to be
filed with the SEC by Parent in connection with the issuance of shares of Parent
Common Stock in the Merger, as amended or supplemented from time to time (as so
amended and supplemented, the "Registration Statement"), and any other documents
to be filed by Parent with the SEC or any other Governmental or Regulatory
Authority in connection with the Merger and the other transactions contemplated
hereby will (in the case of the Registration Statement and any such other
documents filed with the SEC under the Securities Act or the Exchange Act)
comply as to form in all material respects with the requirements of the Exchange
Act and the Securities Act, respectively, and will not, on the date of its
filing or, in the case of the Registration Statement, at the time it becomes
effective under the Securities Act, at the date the Proxy Statement is mailed to
stockholders and at the time of the Company Stockholders' Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, except
that no representation is made by Parent or Sub with respect to information
supplied in writing by or on behalf of the Company expressly for inclusion
therein and information incorporated by reference therein from documents filed
by Parent with the SEC.
4.07 Ownership of Company Common Stock. Neither Parent nor any of its
Subsidiaries beneficially owns any shares of Company Common Stock.
ARTICLE V
COVENANTS
5.01 Covenants of the Company and Parent. At all times from and after the
date hereof until the Effective Time, the Company and, solely where indicated
below, Parent, each covenants and agrees as to itself and its Subsidiaries that
(except as expressly contemplated or permitted by this Agreement, or to the
extent that the other parties hereto shall otherwise previously consent in
writing):
(a) Ordinary Course. The Company and each of its Subsidiaries shall
conduct their respective businesses only in, and none of the Company and such
Subsidiaries shall take any action except in, the ordinary course consistent
with past practice.
(b) Without limiting the generality of paragraph (a) of this Section, (i)
the Company and its Subsidiaries shall use all commercially reasonable efforts
to preserve intact in all material respects their present business organizations
and reputation, to keep available the services of their key officers and
employees, to maintain their assets and properties in good working order and
condition, ordinary wear and tear excepted, to maintain insurance on their
tangible assets and businesses in such amounts and against such risks and losses
as are currently in effect, to preserve their relationships with customers and
suppliers and others having significant business dealings with them and to
comply in all material respects with all laws and orders of all Governmental or
Regulatory Authorities applicable to them, and (ii) the Company shall not, nor
shall it permit any of its Subsidiaries to, except as otherwise expressly
provided for in this Agreement:
(A) amend or propose to amend its articles of incorporation or bylaws
(or other comparable corporate charter documents);
(B) (w) declare, set aside or pay any dividends on or make other
distributions in respect of any of its capital stock, (x) split, combine,
reclassify or take similar action with respect to any of its capital stock
or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in
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substitution for shares of its capital stock, (y) adopt a plan of complete
or partial liquidation or resolutions providing for or authorizing such
liquidation or a dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization or (z) directly or indirectly
redeem, repurchase or otherwise acquire any shares of its capital stock or
any Option with respect thereto;
(C) issue, deliver, sell or exchange, or authorize or propose the
issuance, delivery, sale or exchange of, any shares of its capital stock or
any Options with respect thereto, other than (v) the issuance or exchange
of capital stock necessary for the extinguishment of Options and the
termination of Company Option Plans solely as provided in Section 2.01(d),
provided that the Company may only issue shares of Company Common Stock
after using its best efforts to cash-out options as provided in Section
2.01(d), or (w) the issuance by a wholly owned Subsidiary of its capital
stock to its parent corporation;
(D) acquire (by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of,
or by any other manner) any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets other than in the ordinary course of
its business consistent with past practice;
(E) other than dispositions in the ordinary course of its business
consistent with past practice, sell, lease, grant any security interest in
or otherwise dispose of or encumber any of its assets or properties;
(F) except to the extent required by applicable law, (x) permit any
material change in (A) any pricing, marketing, purchasing, investment,
accounting, financial reporting, inventory, credit, allowance or tax
practice or policy or (B) any method of calculating any bad debt,
contingency or other reserve for accounting, financial reporting or tax
purposes or (y) make any material tax election or settle or compromise any
material income tax liability with any Governmental or Regulatory
Authority;
(G) (x) incur any indebtedness for borrowed money or guarantee any
such indebtedness, or (y) voluntarily purchase, cancel, prepay or otherwise
provide for a complete or partial discharge in advance of a scheduled
repayment date with respect to, or waive any right under, any indebtedness
for borrowed money other than in the ordinary course of its business
consistent with past practice; provided, however, that the Company may
incur indebtedness to fund the cash needs of Spinoff Sub and to fund the
retirement of the outstanding options;
(H) enter into, adopt, amend (except as may be required by applicable
law) or terminate any Company Employee Benefit Plan or other agreement,
arrangement, plan or policy between such party or one of its Subsidiaries
and one or more of its directors, officers or employees, or increase in any
manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan or arrangement in
effect as of the date hereof;
(I) enter into any Contract or amend or modify any existing Contract,
or engage in any new transaction outside the ordinary course of business
consistent with past practice or not on an arm's length basis, with any
affiliate of such party or any of its Subsidiaries;
(J) make any capital expenditures or commitments for additions to
plant, property or equipment constituting capital assets in excess of
$25,000, not to exceed $75,000 in the aggregate;
(K) make any change in the lines of business in which it participates
or is engaged; or
(L) enter into any Contract, commitment or arrangement to do or engage
in any of the foregoing.
(c) Advice of Changes. Each of Parent, the Company and Sub shall confer on
a regular and frequent basis with the other with respect to its business and
operations and other matters relevant to the Merger, and shall promptly advise
the other, orally and in writing, of any change or event, including, without
limitation, any complaint, investigation or hearing by any Governmental or
Regulatory Authority (or communication indicating the same may be contemplated)
or the institution or threat of litigation, having, or which, insofar as can be
reasonably foreseen, could have, a material adverse effect on the Company or
Parent, as the case may be, and its Subsidiaries taken as a whole or on the
ability of the Company or Parent, as the case may be, to consummate the
transactions contemplated hereby; provided that no party shall be required to
make any disclosure to the extent such disclosure would constitute a violation
of any applicable law.
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(d) Notice and Cure. Each of Parent and the Company will notify the other
of, and will use all commercially reasonable efforts to cure before the Closing,
any event, transaction or circumstance, as soon as practical after it becomes
known to such party, that causes or will cause any covenant or agreement of
Parent or the Company under this Agreement to be breached or that renders or
will render untrue any representation or warranty of Parent or the Company
contained in this Agreement. Each of Parent and the Company also will notify the
other in writing of, and will use all commercially reasonable efforts to cure,
before the Closing, any violation or breach, as soon as practical after it
becomes known to such party, of any representation, warranty, covenant or
agreement made by Parent or the Company. No notice given pursuant to this
paragraph shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein.
(e) Fulfillment of Conditions. Subject to the terms and conditions of this
Agreement, each of Parent and the Company will take or cause to be taken all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy each condition to the other's obligations contained in
this Agreement and to consummate and make effective the transactions
contemplated by this Agreement, and neither Parent nor the Company will, nor
will it permit any of its Subsidiaries to, take or fail to take any action that
could be reasonably expected to result in the nonfulfillment of any such
condition.
5.02 No Solicitations. Prior to the Effective Time, the Company agrees (a)
that neither it nor any of its Subsidiaries shall, and it shall cause their
respective Representatives (as defined in Section 9.11) not to, directly or
indirectly, initiate, solicit or encourage, or take any other action to
facilitate any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its stockholders)
with respect to a recapitalization, merger, consolidation or other business
combination including the Company or any of its Subsidiaries or any acquisition
or similar transaction (including, without limitation, a tender or exchange
offer) involving the purchase of (i) all or any significant portion of the
assets of the Company or its Subsidiaries, (ii) 5% or more of the outstanding
shares of Company Common Stock or (iii) 5% of the outstanding shares of the
capital stock of any Subsidiary of the Company (any such proposal or offer being
hereinafter referred to as an "Alternative Proposal"), or engage or participate
in any negotiations concerning, or provide any information or data to, or have
any discussions with, or otherwise cooperate with any person or group relating
to an Alternative Proposal (excluding the transactions contemplated by this
Agreement), or otherwise facilitate any effort or attempt to make or implement
an Alternative Proposal; (b) that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
with respect to any of the foregoing, and it will take the necessary steps to
inform such parties of its obligations under this Section; and (c) that it will
notify Parent immediately if any such inquiries, proposals or offers are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, it or any of such
persons; provided, however, that nothing contained in this Section 5.02 shall
prohibit the Board of Directors of the Company from furnishing information to
(but only pursuant to a confidentiality agreement in customary form and having
terms and conditions no less favorable to the Company than the Confidentiality
Agreement (as defined in Section 6.01)) or entering into discussions or
negotiations with any person or group that makes an unsolicited bona fide
Alternative Proposal, if, and only to the extent that, (A) the Board of
Directors of the Company, based upon the written opinion of outside legal
counsel (a copy of which shall be provided promptly to Parent), determines in
good faith that such action is required for the Board of Directors to comply
with its fiduciary duties to stockholders imposed by law, (B) such Alternative
Proposal is not conditioned on the receipt of financing, the Board of Directors
has reasonably concluded in good faith that the person or group making such
Alternative Proposal will have adequate sources of financing to consummate such
Alternative Proposal and that such Acquisition Proposal is more favorable to the
Company's stockholders than the Merger, (C) prior to furnishing such information
to, or entering into discussions or negotiations with, such person or group, the
Company provides written notice to Parent to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or group, and (D) the Company keeps Parent informed of the status and all
material information with respect to any such discussions or negotiations.
Nothing in this Section 5.02 shall (x) permit the Company to terminate this
Agreement (except as specifically provided in Article VIII), (y) permit the
Company to enter into any agreement (other than a confidentiality agreement
under the circumstances described above), including without limitation an
agreement in principle, or make
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any public announcement with respect to an Alternative Proposal for so long as
this Agreement remains in effect, or (z) affect any other obligation of the
Company under this Agreement. It is hereby agreed that, notwithstanding anything
herein to the contrary, the Company shall not enter into any agreement
(including an agreement in principle) with any person or group that provides
for, or in any way facilitates, an Alternative Proposal (other than a
confidentiality agreement under the circumstances described above) or make any
public announcement with respect thereto unless and until this Agreement is
validly terminated pursuant to Article VIII and the Company pays Parent the
termination fee provided for in Section 8.02(b).
5.03 Conduct of Business of Sub. Prior to the Effective Time, except as
may be required by applicable law and subject to the other provisions of this
Agreement, Parent shall cause Sub to (a) perform its obligations under this
Agreement in accordance with its terms, (b) not incur directly or indirectly any
liabilities or obligations other than those incurred in connection with the
Merger, (c) not engage directly or indirectly in any business or activities of
any type or kind and not enter into any agreements or arrangements with any
person, or be subject to or bound by any obligation or undertaking, which is not
contemplated by this Agreement and (d) not create, grant or suffer to exist any
Lien upon its properties or assets which would attach to any properties or
assets of the Surviving Corporation after the Effective Time.
5.04 Third Party Standstill Agreements. During the period from the date of
this Agreement through the Effective Time, neither the Company nor any of its
Subsidiaries shall terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it is a party. During such
period, the Company shall enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreement, including, but not limited
to, by obtaining injunctions to prevent any breaches of such agreements and to
enforce specifically the terms and provisions thereof in any court having
jurisdiction.
5.05 Purchases of Common Stock of the Other Party. During the period from
the date hereof through the Effective Time, neither Parent nor any of its
Subsidiaries or other affiliates will purchase any shares of stock in the
Company, Spinoff Sub or any of the Company's Subsidiaries and neither the
Company nor any of its Subsidiaries or other affiliates will purchase any shares
of Parent Common Stock.
5.06 Spinoff. The Company shall take all actions as may be necessary to
effect the Spinoff as contemplated herein.
5.07 Spinoff Sub Transactions. The Company shall not, nor permit any of
its Subsidiaries to, transfer, or cause to be transferred, any assets to Spinoff
Sub or assume any liabilities, contingent or otherwise, of Spinoff Sub, other
than as expressly permitted by this Agreement, the Spinoff Agreements and
provided for in the pro forma balance sheet of Spinoff Sub contained in Section
3.23 of the Company Disclosure Letter.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Access to Information; Confidentiality. The Company shall, and shall
cause each of its Subsidiaries to, throughout the period from the date hereof to
the Effective Time, (i) provide Parent and its Representatives with full access,
upon reasonable prior notice and during normal business hours, to all officers,
employees, agents and accountants of the Company and its Subsidiaries and their
respective assets, properties, books and records, but only to the extent that
such access does not unreasonably interfere with the business and operations of
the Company and its Subsidiaries, and (ii) furnish promptly to such persons (x)
a copy of each report, statement, schedule and other document filed or received
by the Company or any of its Subsidiaries pursuant to the requirements of
federal or state securities laws and each material report, statement, schedule
and other document filed with any other Governmental or Regulatory Authority,
and (y) all other information and data (including, without limitation, copies of
the Company's Contracts or Company Employee Benefit Plans, and other books and
records) concerning the business and operations of the Company and its
Subsidiaries as Parent or any of such other persons reasonably may request. No
investigation pursuant to this paragraph or otherwise shall affect any
representation or warranty contained in this Agreement or any condition to the
obligations of the parties hereto. Any such information or material obtained
pursuant to this Section 6.01 that constitutes Confidential Information (as such
term is defined in the
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Confidentiality Agreement dated as of June 25, 1996 between the Company and
Parent (the "Confidentiality Agreement")) shall be governed by the terms of the
Confidentiality Agreement.
6.02 Preparation of Registration Statement, Proxy Statement and Form
10. The Company and Parent shall prepare and file with the SEC as soon as
reasonably practicable after the date hereof the Proxy Statement, Parent shall
prepare and file with the SEC as soon as reasonably practicable after the date
hereof the Registration Statement, in which the Proxy Statement will be included
as the prospectus and the Company shall prepare and file with the SEC as soon as
reasonably practicable after the date hereof the Form 10. Parent and the Company
shall use their best efforts to have the Registration Statement declared
effective by the SEC as promptly as practicable after such filing. The Company
shall use its best efforts to have the Form 10 declared effective by the SEC as
promptly as practicable after such filing. Parent shall also take any action
(other than qualifying as a foreign corporation or taking any action which would
subject it to service of process in any jurisdiction where Parent is not now so
qualified or subject) required to be taken under applicable state blue sky or
securities laws in connection with the issuance of Parent Common Stock in
connection with the Merger. If at any time prior to the Effective Time any event
shall occur that should be set forth in an amendment of or a supplement to the
Registration Statement or Form 10, Parent or the Company, as the case may be,
shall prepare and file with the SEC such amendment or supplement as soon
thereafter as is reasonably practicable. Parent, Sub and the Company shall
cooperate with each other in the preparation of the Registration Statement, Form
10 and the Proxy Statement and any amendment or supplement thereto, and each
shall notify the other of the receipt of any comments of the SEC with respect to
the Registration Statement, Form 10 or the Proxy Statement and of any requests
by the SEC for any amendment or supplement thereto or for additional
information, and shall provide to the other promptly copies of all
correspondence between Parent or the Company, as the case may be, or any of its
Representatives with respect to the Registration Statement, Form 10 or the Proxy
Statement. The Company shall give Parent and its counsel the opportunity to
review the Form 10 and all responses to requests for additional information by
and replies to comments of the SEC before their being filed with, or sent to,
the SEC. Parent shall give the Company and its counsel the opportunity to review
the Registration Statement and all responses to requests for additional
information by and replies to comments of the SEC before their being filed with,
or sent to, the SEC. Each of the Company, Parent and Sub agrees to use its best
efforts, after consultation with the other parties hereto, to respond promptly
to all such comments of and requests by the SEC and to cause (x) the
Registration Statement and Form 10 to be declared effective by the SEC at the
earliest practicable time and to be kept effective as long as is necessary to
consummate the Merger and the transactions contemplated hereby, and (y) the
Proxy Statement to be mailed to the holders of Company Common Stock entitled to
vote at the meeting of the stockholders of the Company at the earliest
practicable time.
6.03 Approval of Stockholders. The Company shall, through its Board of
Directors, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders' Meeting") for the purpose of voting on
the adoption of this Agreement (the "Company Stockholders' Approval") as soon as
reasonably practicable after the date hereof. Subject to the exercise of
fiduciary obligations under applicable law as advised in writing by outside
counsel (a copy of which will be provided promptly to Parent), the Company
shall, through its Board of Directors, include in the Proxy Statement the
recommendation of the Board of Directors of the Company that the stockholders of
the Company adopt this Agreement, and shall use its best efforts to obtain such
adoption.
6.04 Company Affiliates. At least thirty (30) days prior to the Closing
Date the Company shall deliver a letter to Parent identifying all persons who,
at the time of the Company Stockholders' Meeting, may, in the Company's
reasonable judgment, be deemed to be "affiliates" (as such term is used in Rule
145 under the Securities Act) of the Company ("Company Affiliates"). The Company
shall use its best efforts to cause each Company Affiliate to deliver to Parent
on or prior to the Closing Date a written agreement substantially in the form
and to the effect of Exhibit A hereto (an "Affiliate Agreement"). Parent shall
be entitled to place legends as specified in such Affiliate Agreements on the
certificates evidencing any Parent Common Stock to be received by such Company
Affiliates pursuant to the terms of this Agreement, and to issue appropriate
stop transfer instructions to the transfer agent for the Parent Common Stock,
consistent with the terms of such Affiliate Agreements.
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6.05 Stock Exchange Listing. Parent shall use its best efforts to cause
the shares of Parent Common Stock to be issued in the Merger in accordance with
this Agreement to be approved for listing on the NYSE, subject to official
notice of issuance, prior to the Closing Date.
6.06 Outstanding Indebtedness. The Company shall establish a separate
segregated account (the "Segregated Account") into which the Company shall
deposit borrowings under its line of credit with Seafirst Bank for the purpose
of funding (i) the satisfaction of the outstanding options to purchase Company
Common Stock as contemplated herein, and (ii) payments in respect of Dissenting
Shares. Repayments of those borrowings shall be made by the Company exclusively
from funds generated by its operations. Parent and its affiliates (other than
the Company) will not pay, guarantee or secure the Segregated Account
indebtedness. Parent hereby agrees it will cause all borrowings of the Company
under its line of credit with Seafirst Bank (other than borrowings for the
Segregated Account) to be repaid as soon as practicable following the Closing
Date.
6.07 Regulatory and Other Approvals. Subject to the terms and conditions
of this Agreement and without limiting the provisions of Sections 6.02 and 6.03,
each of the Company and Parent will proceed diligently and in good faith to, as
promptly as practicable, (a) obtain all consents, approvals or actions of, make
all filings with and give all notices to Governmental or Regulatory Authorities
or any other public or private third parties required of Parent, the Company or
any of their Subsidiaries to consummate the Merger and the other matters
contemplated hereby, and (b) provide such other information and communications
to such Governmental or Regulatory Authorities or other public or private third
parties as the other party or such Governmental or Regulatory Authorities or
other public or private third parties may reasonably request in connection
therewith. In addition to and not in limitation of the foregoing, each of the
parties will (x) take promptly all actions necessary to make the filings
required of Parent and the Company or their affiliates under the HSR Act, (y)
comply at the earliest practicable date with any request for additional
information received by such party or its affiliates from the Federal Trade
Commission (the "FTC") or the Antitrust Division of the Department of Justice
(the "Antitrust Division") pursuant to the HSR Act, and (z) cooperate with the
other party in connection with such party's filings under the HSR Act and in
connection with resolving any investigation or other inquiry concerning the
Merger or the other matters contemplated by this Agreement commenced by either
the FTC or the Antitrust Division or state attorneys general.
6.08 Employee Benefit Plans. The Company shall institute, and the
Surviving Corporation shall continue for at least two years following the
Closing Date, a severance policy for the benefit of key employees of the
Company, who shall be chosen by the Chief Executive Officer of the Company and
agreed to by Parent, pursuant to which such key employees who continue in the
employ of the Surviving Corporation shall become eligible for enhanced severance
benefits in the event of their subsequent termination of employment.
6.09 Company Option Plans. The Company shall take all actions as may be
necessary so that the Company Option Plans shall be terminated, and outstanding
options and other rights to acquire capital stock of the Company are satisfied
in full, prior to the Effective Time, pursuant to Section 2.01(d).
6.10 Directors' and Officers' Indemnification and Insurance. (a) The
Company, and from and after the Effective Time the Surviving Corporation (each,
an "Indemnifying Party"), shall, for a period of not less than the applicable
statute of limitations (and thereafter, for so long as any claims, actions or
proceedings commenced prior to such time are pending), indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, a director, officer or
employee of the Company or any of its Subsidiaries (the "Indemnified Parties")
against (i) all losses, claims, damages, costs and expenses, liabilities,
judgments and settlement amounts that are paid or incurred in connection with
any claim, action, suit, proceeding or investigation (whether asserted or
claimed prior to, at or after the Effective Time) that is based in whole or in
part on, or arises in whole or in part out of, the fact that such Indemnified
Party is or was a director, officer or employee of the Company or any of its
Subsidiaries and relates to or arises out of any action or omission occurring at
or prior to the Effective Time ("Indemnified Liabilities"), and (ii) all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
hereby, including the execution and performance of the voting undertaking
contemplated by Section 3.17(b), in each case to the full extent a
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corporation is permitted under applicable law to indemnify its own directors,
officers or employees, as the case may be; provided that no Indemnifying Party
shall be liable for any settlement of any claim effected without its written
consent, which consent shall not be unreasonably withheld. Without limiting the
foregoing, in the event that any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Party (whether arising prior to
or after the Effective Time), (w) the Indemnifying Parties will, except for a
claim arising or based upon the gross negligence or willful misconduct of the
Indemnified Party, pay expenses in advance of the final disposition of any such
claim, action suit, proceeding or investigation to each Indemnified Party to the
full extent permitted by applicable law; provided that the person to whom
expenses are advanced provides any undertaking required by applicable law to
repay such advance if it is ultimately determined that such person is not
entitled to indemnification; (x) the Indemnified Parties shall retain counsel
reasonably satisfactory to the Indemnifying Parties; (y) the Indemnifying
Parties shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties (subject to the final sentence of this paragraph) promptly
as statements therefor are received; and (z) the Indemnifying Parties shall use
all commercially reasonable efforts to assist in the vigorous defense of any
such matter. Any Indemnified Party wishing to claim indemnification under this
Section, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify the Indemnifying Parties, but the failure so to
notify an Indemnifying Party shall not relieve it from any liability which it
may have under this paragraph except to the extent such failure irreparably
prejudices such party. The Indemnified Parties as a group may retain only one
law firm to represent them with respect to each such matter unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
(b) The Surviving Corporation shall, until the second (2nd) anniversary of
the Effective Time, cause to be maintained in effect, to the extent available,
the policies of directors' and officers' liability insurance maintained by the
Company and its Subsidiaries as of the date hereof (or policies of at least the
same coverage and amounts containing terms that are no less advantageous to the
insured parties) with respect to claims arising from facts or events that
occurred on or prior to the Effective Time; provided that if, such insurance is
not available or in the business judgment of the then Board of Directors of the
Surviving Corporation, either (a) the premium cost for such insurance is
substantially disproportionate to the amount of coverage, or (b) the coverage
provided by such insurance is so limited by exclusions that there is
insufficient benefit from such insurance, then and in that event, the Surviving
Corporation shall not be required to maintain such insurance, but Parent shall
and hereby agrees to the full extent permitted by law to hold harmless and
indemnify the indemnified parties or provide coverage for such indemnified
parties under Parent's directors and officers liability insurance maintained at
such time to the fullest extent of the coverage which would otherwise have been
provided herein.
(c) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers a substantial portion of its properties and assets to
any person, then and in each such case, proper provision shall be made so that
the successors and assigns of the Surviving Corporation, or at Parent's option,
Parent shall assume the obligations set forth in paragraph (a) of this Section
6.10.
6.11 Expenses. Except as set forth in Section 8.02, whether or not the
Merger is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such cost or expense.
6.12 Brokers or Finders. Each of Parent and the Company represents, as to
itself and its affiliates, that no agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any broker's or
finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, other than Roger D. Williams &
Company, whose fees and expenses will be paid by Parent in accordance with
Parent's agreement with such firm, and each of Parent and the Company shall
indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any other such fee or commission or
expenses related thereto asserted by any person on the basis of any act or
statement alleged to have been made by such party or its affiliate.
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6.13 Takeover Statutes. If any "fair price", "moratorium", "control share
acquisition" or other form of antitakeover statute or regulation shall become
applicable to the transactions contemplated hereby, the Company and the members
of the Board of Directors of the Company shall grant such approvals and take
such actions as are reasonably necessary so that the transactions contemplated
hereby may be consummated as promptly as practicable on the terms contemplated
hereby and thereby and otherwise act to eliminate the effects of such statute or
regulation on the transactions contemplated hereby and thereby.
6.14 Conveyance Taxes. The Company and Parent shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications,
affidavits or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated by this Agreement
(collectively, "Conveyance Taxes") that are required or permitted to be filed on
or before the Effective Time. The Company shall pay all Conveyance Taxes arising
out of or in connection with the transactions contemplated by this Agreement.
6.15 Certain Tax Matters. (a) Parent and the Company shall not take or
fail to take any action if the taking or failure to take such action would cause
Parent, the Company or their respective stockholders (except to the extent that
any stockholder of the Company may receive cash in lieu of fractional shares or
is the owner of Dissenting Shares) to recognize gain or loss for federal income
tax purposes as a result of the consummation of the Merger or the Spinoff.
(b) In no event will Parent permit the Company to liquidate or merge into
Parent or into any Subsidiaries of Parent at any time within one year after
Closing. The Company shall secure any indebtedness used to purchase the
Company's options as contemplated herein only with assets held by it immediately
prior to the Closing.
(c) Parent has no plan or intention to liquidate the Company; to merge the
Company with or into another corporation; to cause the Company to sell or
otherwise dispose of any of its assets, except for dispositions made in the
ordinary course of business; or to sell or otherwise dispose of any of the
Company shares acquired in the Merger, except for transfers of stock to
corporations controlled by Parent.
ARTICLE VII
CONDITIONS
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have been approved by the
requisite vote of the stockholders of the Company under the WBCA and the
Company's Articles of Incorporation.
(b) Registration Statement; Form 10; State Securities Laws. The
Registration Statement and the Form 10 shall have become effective in accordance
with the provisions of the Securities Act and the Exchange Act, and no stop
order suspending each such effectiveness shall have been issued and remain in
effect and no proceeding seeking such an order shall be pending or threatened.
Parent shall have received all state securities or "Blue Sky" permits and other
authorizations necessary to issue the Parent Common Stock pursuant to this
Agreement.
(c) HSR Act. Any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated.
(d) No Injunctions or Restraints. No court of competent jurisdiction or
other competent Governmental or Regulatory Authority shall have enacted, issued,
promulgated, enforced or entered any law or order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making
illegal or otherwise restricting, preventing or prohibiting consummation of the
Merger, the Spinoff or the other transactions contemplated by this Agreement.
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(e) Governmental and Regulatory and Other Consents and Approvals. Other
than the filing provided for by Section 1.03, all consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
or any other public or private third parties required of Parent, the Company or
any of their Subsidiaries to consummate the Merger, the Spinoff and the other
matters contemplated hereby, the failure of which to be obtained or taken could
be reasonably expected to have a material adverse effect on Parent and its
Subsidiaries or the Surviving Corporation and its Subsidiaries, in each case
taken as a whole, or on the ability of Parent and the Company to consummate the
transactions contemplated hereby shall have been obtained, all in form and
substance reasonably satisfactory to Parent and the Company.
7.02 Conditions to Obligation of Parent and Sub to Effect the Merger. The
obligation of Parent and Sub to effect the Merger is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by Parent and
Sub in their sole discretion):
(a) Representations and Warranties. The representations and warranties
made by the Company in this Agreement shall be true and correct, in all material
respects (except with respect to the representation and warranty by the Company
set forth in Section 3.22, which shall be true and correct in all respects), as
of the Closing Date as though made on and as of the Closing Date or, in the case
of representations and warranties made as of a specified date earlier than the
Closing Date, on and as of such earlier date, except as affected by the
transactions contemplated by this Agreement, and the Company shall have
delivered to Parent a certificate, dated the Closing Date and executed in the
name and on behalf of the Company by its Chairman of the Board and Chief
Executive Officer, to such effect.
(b) Performance of Obligations. The Company shall have performed and
complied with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by the Company at
or prior to the Closing, and the Company shall have delivered to Parent a
certificate, dated the Closing Date and executed in the name and on behalf of
the Company by its Chairman of the Board and Chief Executive Officer, to such
effect.
(c) The Spinoff. The Spinoff shall have been completed on or prior to the
Closing Date to the satisfaction of Parent, and the Spinoff Agreements shall
have been entered into on or prior to the Closing Date to the reasonable
satisfaction of Parent.
(d) Tax Opinion. Parent and Sub shall have received the opinion, based on
appropriate representations of the Company, Parent, Spinoff Sub, Sub and certain
significant shareholders of the Company, of Milbank, Tweed, Hadley & McCloy,
special counsel to Parent, dated the Closing Date, to the effect that (i) the
Spinoff qualifies as a tax-free distribution described in Code sec. 355 and (ii)
the Merger qualifies as a reorganization described in Code sec. 368(a).
(e) Dissenting Shares. The aggregate number of Dissenting Shares shall not
exceed 10% of the total number of shares of Company Common Stock outstanding on
the Closing Date.
(f) Proceedings. All proceedings to be taken on the part of the Company in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Parent, and Parent shall have received copies of all such documents
and other evidences as Parent may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
(g) Outstanding Indebtedness. Immediately prior to the Effective Time, the
outstanding indebtedness of the Company shall be at least $15 million.
7.03 Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by the Company
in its sole discretion):
(a) Representations and Warranties. The representations and warranties
made by Parent and Sub in this Agreement shall be true and correct, in all
material respects, as of the Closing Date as though made on
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and as of the Closing Date or, in the case of representations and warranties
made as of a specified date earlier than the Closing Date, on and as of such
earlier date, except as affected by the transactions contemplated by this
Agreement, and Parent and Sub shall each have delivered to the Company a
certificate, dated the Closing Date and executed in the name and on behalf of
Parent by its Chairman of the Board and Chief Executive Officer, and in the name
and on behalf of Sub by its Chairman of the Board, President or any Vice
President, to such effect.
(b) Performance of Obligations. Parent and Sub shall have performed and
complied with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by Parent or Sub
at or prior to the Closing, and Parent and Sub shall each have delivered to the
Company a certificate, dated the Closing Date and executed in the name and on
behalf of Parent by its Chairman of the Board and Chief Executive Officer, and
in the name and on behalf of Sub by its Chairman of the Board, President or any
Vice President, to such effect.
(c) Parent Rights Agreement. On or prior to the Closing Date, the Parent
Rights shall not have become exercisable or transferable apart from the
associated shares of Parent Common Stock.
(d) Tax Opinion. The Company shall have received the opinion, based on
appropriate representations of the Company, Parent, Sub, Spinoff Sub, and
certain significant shareholders of the Company, of Perkins Coie, special
counsel to the Company, dated the Closing Date, to the effect that (i) the
Spinoff qualifies as a tax-free distribution described in Code sec. 355 and (ii)
the Merger qualifies as a reorganization described in Code sec. 368(a).
(e) Proceedings. All proceedings to be taken on the part of Parent and Sub
in connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Company, and the Company shall have received copies of all such
documents and other evidences as the Company may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, at any time prior to the Effective Time,
whether prior to or after the Company Stockholders' Approval:
(a) By mutual written agreement of the Board of Directors' of the parties
hereto;
(b) By either the Company or Parent upon written notification to the
non-terminating party by the terminating party:
(i) at any time after December 31, 1996 if the Merger shall not have
been consummated on or prior to such date and such failure to consummate
the Merger is not caused by a breach of this Agreement by the terminating
party;
(ii) if the Company Stockholders' Approval shall not be obtained by
reason of the failure to obtain the requisite vote upon a vote held at a
meeting of such stockholders, or any adjournment thereof, called therefor;
(iii) if there has been a material breach of any representation,
warranty, covenant or agreement on the part of the non-terminating party
set forth in this Agreement, which breach is not curable or, if curable,
has not been cured within thirty (30) days following receipt by the
non-terminating party of notice of such breach from the terminating party;
or
(iv) if any court of competent jurisdiction or other competent
Governmental or Regulatory Authority shall have issued an order, judgment
or decree (other than a temporary restraining order) making illegal or
otherwise restraining, preventing or prohibiting the Merger or the Spinoff
and such
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order, judgment or decree shall have become final and nonappealable and
such terminating party shall have used all reasonable effects to remove
such order, judgment or decree;
(c) By Parent, by written notice to the Company:
(i) if the Board of Directors of the Company or any committee thereof,
(A) at any time after the Company or any of its Subsidiaries has become
aware of any event which would require that notice be given to Parent
pursuant to Section 5.02, shall withdraw or modify in any manner adverse to
Parent its approval or recommendation of this Agreement or the Merger, (B)
shall approve or recommend any Alternative Proposal (including approving
of, expressing no opinion or remaining neutral as to a third party tender
offer for shares of the Company Common Stock when expressing the position
of the Company to any such tender offer in complying with Rule 14e-2
promulgated under the 1934 Act), or (C) shall resolve to take any of the
actions specified in clauses (A) or (B);
(ii) if the Company or any of its Subsidiaries announces, or enters
into a definitive agreement or a letter of intent for, an Alternative
Proposal or the Board of Directors of the Company or any committee thereof
shall resolve to take such action;
(iii) if any person or group (within the meaning of Section 13(d)(3)
of the 1934 Act) other than Parent shall acquire a number of shares of
capital stock of the Company entitled to cast at least 35% of the total
number of votes entitled to be cast in an election of directors of the
Company, or the directors of the Company currently in office shall cease to
represent a majority of the directors of the Company; or
(iv) if the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent its approval
or recommendation of this Agreement or the Merger.
(d) By the Company, by written notice to Parent, if the Board of Directors
of the Company or any committee thereof determines to, subject to the last
sentence of Section 5.02, enter into a definitive agreement or an agreement in
principle for an Alternative Proposal.
8.02 Effect of Termination. (a) If this Agreement is validly terminated by
either the Company or Parent pursuant to Section 8.01, this Agreement will
forthwith become null and void and there will be no liability or obligation on
the part of either the Company or Parent (or any of their respective
Representatives or affiliates), except (i) that the provisions of Sections 6.11,
6.12 and this Section 8.02 will continue to apply following any such
termination, (ii) that nothing contained herein shall relieve any party hereto
from liability for wilful breach of its representations, warranties, covenants
or agreements contained in this Agreement and (iii) as provided in paragraph (b)
below.
(b) In the event that (A) Parent terminates this Agreement pursuant to
Section 8.01(c)(i), (ii) or (iii),(B) the Company terminates this Agreement
pursuant to Section 8.01(d) or (C) either party terminates this Agreement
pursuant to Section 8.01(b)(ii) and any of the events described in Section
8.01(c)(i)(B) or Section 8.01(c)(ii) shall have occurred within six months after
such termination, the Company shall pay to Parent $3,000,000 plus an amount
equal to all out-of-pocket expenses and fees, not to exceed $1,000,000 in the
aggregate, (including, without limitation, fees and expenses payable to all
legal, accounting and other professional advisory firms) incurred by Parent in
connection with or related to this Agreement and the transactions contemplated
hereby, by wire transfer of same day funds, not later than five days after
notice of termination pursuant to Section 8.01 was provided. The Company agrees
that if it fails to pay timely the termination payment due pursuant to this
Section, the amount not timely paid shall bear interest at the rate of 10% per
annum accruing from the date such payment was due and continuing until the
termination payment is paid in full. In the event that it is necessary for
Parent to institute proceedings to seek collection of the termination payment
and it is entitled to receive any of the amounts sought in the collection
proceeding, in addition to paying such amount the Company shall reimburse Parent
for the attorneys' fees and other costs and expenses incurred by Parent in
connection with such collection.
8.03 Amendment. This Agreement may be amended, supplemented or modified by
action taken by or on behalf of the respective Boards of Directors of the
parties hereto at any time prior to the Effective Time, whether prior to or
after the Company Stockholders' Approval shall have been obtained, but after
such
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adoption and approval only to the extent permitted by applicable law. No such
amendment, supplement or modification shall be effective unless set forth in a
written instrument duly executed by or on behalf of each party hereto.
8.04 Waiver. At any time prior to the Effective Time any party hereto, by
action taken by or on behalf of its Board of Directors, may to the extent
permitted by applicable law (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other parties hereto
contained herein or in any document delivered pursuant hereto or (iii) waive
compliance with any of the covenants, agreements or conditions of the other
parties hereto contained herein. No such extension or waiver shall be effective
unless set forth in a written instrument duly executed by or on behalf of the
party extending the time of performance or waiving any such inaccuracy or
non-compliance. No waiver by any party of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or construed as a
waiver of the same or any other term or condition of this Agreement on any
future occasion.
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements contained
in this Agreement or in any instrument delivered pursuant to this Agreement
shall not survive the Merger but shall terminate at the Effective Time, except
for the agreements contained in Article I and Article II, in Sections 6.08,
6.10, 6.11, 6.12, 6.14, 6.15, 8.02 and this Article IX and the agreements of the
"affiliates" of the Company delivered pursuant to Section 6.04, which shall
survive the Effective Time.
9.02 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:
If to Parent or Sub, to:
Crane Co.
100 First Stamford Place
Stamford, CT 06902
Facsimile No.: 203-363-7274
Attn: Chairman and Chief Executive Officer
with a copy to:
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, NY 10005
Facsimile No.: 212-530-5219
Attn: Larry Lederman, Esq.
If to the Company, to:
Interpoint Corporation
10301 Willows Road
P.O. Box 97005
Redmond, WA 98073-9705
Facsimile No. 206-869-7402
Attn: Peter van Oppen
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with a copy to:
Perkins Coie
1201 Third Avenue, 40th Floor
Seattle, Wa 98101
Facsimile No.: 206-583-8500
Attn: Linda A. Schoemaker, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other parties hereto.
9.03 Entire Agreement; Incorporation of Exhibits. (a) This Agreement
supersedes all prior discussions and agreements among the parties hereto with
respect to the subject matter hereof, other than the Confidentiality Agreement,
which shall survive the execution and delivery of this Agreement in accordance
with its terms, and contains, together with the Confidentiality Agreement, the
sole and entire agreement among the parties hereto with respect to the subject
matter hereof.
(b) The Company Disclosure Letter, the Parent Disclosure Letter and any
Exhibit attached to this Agreement and referred to herein are hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
9.04 Public Announcements. Except as otherwise required by law or the
rules of any applicable securities exchange or national market system, so long
as this Agreement is in effect, Parent and the Company will not, and will not
permit any of their respective Representatives to, issue or cause the
publication of any press release or make any other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld. Parent and
the Company will cooperate with each other in the development and distribution
of all press releases and other public announcements with respect to this
Agreement and the transactions contemplated hereby, and will furnish the other
with drafts of any such releases and announcements as far in advance as
practicable.
9.05 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and except as otherwise expressly
provided for herein, it is not the intention of the parties to confer
third-party beneficiary rights upon any other person.
9.06 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto without the
prior written consent of the other parties hereto and any attempt to do so will
be void, except that Sub may assign any or all of its rights, interests and
obligations hereunder to another direct or indirect wholly owned Subsidiary of
Parent, provided that any such Subsidiary agrees in writing to be bound by all
of the terms, conditions and provisions contained herein. Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of and
is enforceable by the parties hereto and their respective successors and
assigns.
9.07 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define, modify or limit the provisions
hereof.
9.08 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law or order, and
if the rights or obligations of any party hereto under this Agreement will not
be materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
and (iii) the remaining provisions of this Agreement will remain in full force
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and effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.
9.09 Governing Law. Except to the extent that the WBCA is mandatorily
applicable to the Merger and the rights of the stockholders of the Constituent
Corporations, this Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to a contract executed and
performed in such State, without giving effect to the conflicts of laws
principles thereof.
9.10 Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specified terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.11 Certain Definitions. As used in this Agreement:
(a) except as provided in Section 6.04, the term "affiliate," as applied to
any person, shall mean any other person directly or indirectly controlling,
controlled by, or under common control with, that person; for purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as applied to
any person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that person, whether
through the ownership of voting securities, by contract or otherwise;
(b) a person will be deemed to "beneficially" own securities if such person
would be the beneficial owner of such securities under Rule 13d-3 under the
Exchange Act, including securities which such person has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time);
(c) the term "business day" means a day other than Saturday, Sunday or any
day on which banks located in the State of New York are authorized or obligated
to close;
(d) the term "knowledge" or any similar formulation of "knowledge" shall
mean the knowledge of any executive officer of the Company or Parent, as the
case may be.
(e) any reference to any event, change or effect being "material" or
"materially adverse" or having a "material adverse effect" on or with respect to
an entity (or group of entities taken as a whole) means such event, change or
effect is material or materially adverse, as the case may be, to the business,
financial condition or results of operations of such entity (or of such group of
entities taken as a whole), provided that with respect to the Company, such
determination shall be made as if the Spinoff had occurred and Spinoff Sub and
the Company were deconsolidated at such time;
(f) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act);
(g) the "Representatives" of any entity means such entity's directors,
officers, employees, legal, investment banking and financial advisors,
accountants and any other agents and representatives;
(h) the term "Significant Subsidiaries" means, with respect to any party,
the Subsidiaries of such party which constitute "significant subsidiaries" under
Rule 405 promulgated by the SEC under the Securities Act; and
(i) the term "Subsidiary" means, with respect to any party, any corporation
or other organization, whether incorporated or unincorporated, of which more
than fifty percent (50%) of either the equity interests in, or the voting
control of, such corporation or other organization is, directly or indirectly
through Subsidiaries or otherwise, beneficially owned by such party; provided
that with respect to the Company, unless otherwise expressly indicated herein,
Spinoff Sub shall not be deemed a Subsidiary of the Company solely for purposes
of Article III of this Agreement.
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9.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
signed by its officer thereunto duly authorized as of the date first above
written.
<TABLE>
<S> <C>
Attest: CRANE CO.
/s/ AUGUSTUS I. DUPONT By: /s/ DAVID S. SMITH
- --------------------------------------------- ---------------------------------------------
Secretary Name: David S. Smith
Title: Vice President
Attest: CRANE ACQUISITION CORP.
/s/ AUGUSTUS I. DUPONT By: /s/ DAVID S. SMITH
- --------------------------------------------- ---------------------------------------------
Secretary Name: David S. Smith
Title: Vice President
Attest: INTERPOINT CORPORATION
/s/ LESLIE S. ROCK By: /s/ PETER H. VAN OPPEN
- --------------------------------------------- ---------------------------------------------
Secretary Name: Peter H. van Oppen
Title: Chief Executive Officer
</TABLE>
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APPENDIX II
WASHINGTON BUSINESS CORPORATION ACT
CHAPTER 23B.13
DISSENTERS' RIGHTS
23B.13.010 DEFINITIONS. As used in this chapter:
(1) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under RCW 23B.13.020 and who exercises that right when and in
the manner required by RCW 23B.13.200 through 23B.13.280.
(3) "Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
23B.13.020 RIGHT TO DISSENT. (1) A shareholder is entitled to dissent
from, and obtain payment of the fair value of the shareholder's shares in the
event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party (i) if shareholder approval is required for the merger by RCW
23B.11.030, section 38 of this act, or the articles of incorporation and
the shareholder is entitled to vote on the merger, or (ii) if the
corporation is a subsidiary that is merged with its parent RCW 23B.11.040;
(b) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(c) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a sale for cash pursuant to a loan by which all
or substantially all of the net proceeds of the sale will be distributed to
the shareholders within one year after the date of sale;
(d) An amendment of the articles of incorporation that materially
reduces the number of shares owned by the shareholder to a fraction of a
share if the fractional share so created is to be acquired for cash under
RCW 23B.06.040; or
(e) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(2) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this chapter may not challenge the corporate action
creating the shareholder's entitlement unless the action fails to comply
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with the procedural requirements imposed by this title, sections 17 through 28
of this act, the articles of incorporation, or the bylaws, or is fraudulent with
respect to the shareholder or the corporation.
(3) The right of a dissenting shareholder to obtain payment of the fair
value of the shareholder's shares shall terminate upon the occurrence of any one
of the following events:
(a) The proposed corporate action is abandoned or rescinded;
(b) A court having jurisdiction permanently enjoins or sets aside the
corporate action; or
(c) The shareholder's demand for payment is withdrawn with the written
consent of the corporation.
23B.13.030 DISSENT OF NOMINEES AND BENEFICIAL OWNERS. (1) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in the shareholder's name only if the shareholder dissents with
respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf
the shareholder asserts dissenters' rights. The rights of a partial dissenter
under this subsection are determined as if the shares as to which the dissenter
dissents and the dissenter's other shares were registered in the names of
different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder does so with respect to all shares of
which such shareholder is the beneficial shareholder or over which such
shareholder has power to direct the vote.
23B.13.200 NOTICE OF DISSENTERS' RIGHTS. (1) If proposed corporate action
creating dissenters' rights under RCW 23B.13.020 is submitted to a vote at a
shareholders' meeting, the meeting notice must state that shareholders are or
may be entitled to assert dissenters' rights under this chapter and be
accompanied by a copy of this chapter.
(2) If corporate action creating dissenters' rights under RCW 23B.13.020 is
taken without a vote of shareholders, the corporation, within ten days after the
effective date of such corporate action, shall notify in writing all
shareholders entitled to assert dissenters' rights that the action was taken and
send them the dissenters' notice described in RCW 23B.13.220.
23B.13.210 NOTICE OF INTENT TO DEMAND PAYMENT. (1) If proposed corporate
action creating dissenters' rights under RCW 23B.13.020 is submitted to a vote
at a shareholders' meeting, a shareholder who wishes to assert dissenters'
rights must (a) deliver to the corporation before the vote is taken written
notice of the shareholder's intent to demand payment for the shareholder's
shares if the proposed action is effected, and (b) not vote such shares in favor
of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection (1)
of this section is not entitled to payment for the shareholder's shares under
this chapter.
23B.13.220 DISSENTERS' NOTICE. (1) If proposed corporate action creating
dissenters' rights under RCW 23B.13.020 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters' notice to all
shareholders who satisfied the requirements of RCW 23B.13.210.
(2) The dissenters' notice must be sent within ten days after the effective
date of the corporate action, and must:
(a) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(b) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
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(c) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not the person acquired beneficial
ownership of the shares before that date;
(d) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty nor more than sixty days
after the date the notice in subsection (1) of this section is delivered;
and
(e) Be accompanied by a copy of this chapter.
23B.13.230 DUTY TO DEMAND PAYMENT. (1) A shareholder sent a dissenters'
notice described in RCW 23B.13.220 must demand payment, certify whether the
shareholder acquired beneficial ownership of the shares before the date required
to be set forth in the dissenters' notice pursuant to RCW 23B.13.220(2)(c), and
deposit the shareholder's certificates in accordance with the terms of the
notice.
(2) The shareholder who demands payment and deposits the shareholder's
share certificates under subsection (1) of this section retains all other rights
of a shareholder until the proposed corporate action is effected.
(3) A shareholder who does not demand payment or deposit the shareholder's
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for the shareholder's shares under this
chapter.
23B.13.240 SHARE RESTRICTIONS. (1) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment is
received until the proposed corporate action is effected or the restriction is
released under RCW 23B.13.260.
(2) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until the
effective date of the proposed corporate action.
23B.13.250 PAYMENT. (1) Except as provided in RCW 23B.13.270, within
thirty days of the later of the effective date of the proposed corporate action,
or the date the payment demand is received, the corporation shall pay each
dissenter who complied with RCW 23B.13.230 the amount the corporation estimates
to be the fair value of the shareholder's shares, plus accrued interest.
(2) The payment must be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(b) An explanation of how the corporation estimated the fair value of
the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under RCW
23B.13.280; and
(e) A copy of this chapter.
23B.13.60 FAILURE TO TAKE ACTION. (1) If the corporation does not effect
the proposed action within sixty days after the date set for demanding payment
and depositing share certificates, the corporation shall return the deposited
certificates and release any transfer restrictions imposed on uncertificated
shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation wishes to undertake the proposed action, it must
send a new dissenters' notice under RCW 23B.13.220 and repeat the payment demand
procedure.
23B.13.270 AFTER-ACQUIRED SHARES. (1) A corporation may elect to withhold
payment required by RCW 23B.13.250 from a dissenter unless the dissenter was the
beneficial owner of the shares
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before the date set forth in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action.
(2) To the extent the corporation elects to withhold payment under
subsection (1) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of the dissenter's demand. The corporation shall send with its offer an
explanation of how it estimated the fair value of the shares, an explanation of
how the interest was calculated, and a statement of the dissenter's right to
demand payment under RCW 23B.13.280.
23B.13.280 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(1) A dissenter may notify the corporation in writing of the dissenter's own
estimate of the fair value of the dissenter's shares and amount of interest due,
and demand payment of the dissenter's estimate, less any payment under RCW
23B.13.250, or reject the corporation's offer under RCW 23B.13.270 and demand
payment of the dissenter's estimate of the fair value of the dissenter's shares
and interest due, if:
(a) The dissenter believes that the amount paid under RCW 23B.13.250
or offered under RCW 23B.13.270 is less than the fair value of the
dissenter's shares or that the interest due is incorrectly calculated;
(b) The corporation fails to make payment under RCW 23B.13.250 within
sixty days after the date set for demanding payment; or
(c) The corporation does not effect the proposed action and does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty days after the date set for
demanding payment.
(2) A dissenter waives the right to demand payment under this section
unless the dissenter notifies the corporation of the dissenter's demand in
writing under subsection (1) of this section within thirty days after the
corporation made or offered payment for the dissenter's shares.
23B.13.300 COURT ACTION. (1) If a demand for payment under RCW 23B.13.280
remains unsettled, the corporation shall commence a proceeding within sixty days
after receiving the payment demand and petition the court to determine the fair
value of the shares and accrued interest. If the corporation does not commence
the proceeding within the sixty-day period, it shall pay each dissenter whose
demand remains unsettled the amount demanded.
(2) The corporation shall commence the proceeding in the superior court of
the county where a corporation's principal office, or, if none in this state,
its registered office, is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled, parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(4) The corporation may join as a party to the proceeding any shareholder
who claims to be a dissenter but who has not, in the opinion of the corporation,
complied with the provisions of this chapter. If the court determines that such
shareholder has not complied with the provisions of this chapter, the
shareholder shall be dismissed as a party.
(5) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to it. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
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(6) Each dissenter made a party to the proceeding is entitled to judgment
(a) for the amount, if any, by which the court finds the fair value of the
dissenter's shares, plus interest, exceeds the amount paid by the corporation,
or (b) for the fair value, plus accrued interest, of the dissenter's
after-acquired shares for which the corporation elected to withhold payment
under RCW 23B.13.270.
23B.13.310 COURT COSTS AND COUNSEL FEES. (1) The court in a proceeding
commenced under RCW 23B.13.300 shall determine all costs of the proceeding,
including the reasonable compensation and expenses of appraisers appointed by
the court. The court shall assess the costs against the corporation, except that
the court may assess the costs against all or some of the dissenters, in amounts
the court finds equitable, to the extent the court finds the dissenters acted
arbitrarily, vexatiously, or not in good faith in demanding payment under RCW
23B.13.280.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of RCW 23B.13.200 through 23B.13.280;
(b) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by Chapter 23B.13 RCW.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL")
permits a Delaware corporation, in its certificate of incorporation, to limit or
eliminate, subject to certain statutory limitations, the liability of a director
to the corporation or its stockholders for monetary damages for breaches of
fiduciary duty, except for liability (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from
which the director derived an improper personal benefit. Article. IX of Crane's
Certificate of Incorporation provides that the personal liability of directors
of Crane is eliminated to the fullest extent permitted by Section 102(b)(7) of
the DGCL.
Under Section 145 of the DGCL, a corporation has the power to indemnify
directors and officers under certain prescribed circumstances and, subject to
certain limitations, against certain costs and expenses, including attorneys'
fees, actually and reasonably incurred in connection with any action, suit or
proceeding, whether civil, criminal, administrative or investigative, to which
any of them is a party by reason of his being a director or officer of the
corporation if it is determined that he acted in accordance with the applicable
standard of conduct set forth in such statutory provision. Article X of Crane's
By-Laws provides that Crane will indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by reason of the fact that he is or was or has agreed to become a
director or officer of Crane, or is or was serving or has agreed to serve at the
request of Crane as a director or officer or trustee of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted in such capacity, against all
expenses (including attorney' fees) actually and reasonably incurred by such
person or on such person's behalf in connection with such action, suit or
proceeding if such person acted in accordance with the standard of conduct set
forth in Article X of Crane's By-Laws. Article X of Crane's By-Laws further
permits Crane to maintain insurance on behalf of any such person against any
liability asserted against such person and incurred by such person or on such
person's behalf in any such capacity or arising out of his status as such,
whether or not Crane would have the power to indemnify such person against such
liability under Article X.
Crane maintains standard policies of insurance under which coverage is
provided (a) to its directors and officers against loss arising from claims made
by reason of breach of duty or other wrongful act and (b) to Crane with respect
to payments which may be made by Crane to such officers and directors pursuant
to the above indemnification provisions or otherwise as a matter of law.
Crane has entered into agreements with each of its directors and officers
pursuant to which Crane has agreed to indemnify such directors and officers, and
to advance expenses in connection therewith, to the fullest extent permitted by
law, and to maintain directors' and officers' liability insurance on behalf of
such indemnified persons unless, in the business judgment of the Board of
Directors of Crane, the premium cost for such insurance is substantially
disproportionate to the amount of coverage or the coverage is so limited by
exclusions that there is insufficient benefit from such insurance. The
agreements further provide that, if indemnification is not available, then in
any case in which Crane is jointly liable with the indemnified person Crane will
contribute to the fullest extent permitted by law to the amount of expenses,
judgments, fines and settlements paid or payable by the indemnified person in
such proportion as is appropriate to reflect the relative benefits received, and
the relative fault of, Crane and the indemnified person. Such rights cannot be
modified, except as required by law, by any change in Crane's Certificate of
Incorporation or By-Laws.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
The exhibits to this Registration Statement are listed in the accompanying
Exhibit Index and are filed (except where otherwise indicated) as part of this
Registration Statement.
II-1
<PAGE> 110
(b) No financial statement schedules are required to be filed.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(b) The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(c) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (b) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any lability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(e) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the Registration Statement through the date
of responding to the request.
(f) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-2
<PAGE> 111
SIGNATURES
Pursuant to the requirements of the Securities Act, Crane Co. has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, and the State
of Connecticut, on September 9, 1996.
CRANE CO.
By /s/ R. S. EVANS
------------------------------------
R. S. Evans
Chairman of the
Board and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Augustus I. duPont and Thomas J. Ungerland, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and revocation for him in his name, place and stead in any and
all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- -------------------
<S> <C> <C>
/s/ R. S. EVANS Chairman of the Board and September 9, 1996
- ------------------------------------------ Chief Executive Officer
R. S. Evans (Principal Executive
Officer)
/s/ D. S. SMITH Vice President Finance and September 9, 1996
- ------------------------------------------ Chief Financial Officer
D. S. Smith (Principal Financial
Officer)
/s/ M. L. RAITHEL Controller September 9, 1996
- ------------------------------------------ (Principal Accounting
M. L. Raithel Officer)
/s/ M. ANATHAN, III Director September 9, 1996
- ------------------------------------------
M. Anathan, III
/s/ E. T. BIGELOW, JR. Director September 9, 1996
- ------------------------------------------
E. T. Bigelow, Jr.
</TABLE>
II-3
<PAGE> 112
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- -------------------
<S> <C> <C>
/s/ R. S. FORTE Director September 9, 1996
- ------------------------------------------
R. S. Forte
/s/ D. R. GARDNER Director September 9, 1996
- ------------------------------------------
D. R. Gardner
/s/ J. GAULIN Director September 9, 1996
- ------------------------------------------
J. Gaulin
/s/ D. C. MINTON Director September 9, 1996
- ------------------------------------------
D. C. Minton
/s/ C. J. QUEENAN, JR. Director September 9, 1996
- ------------------------------------------
C. J. Queenan, Jr.
/s/ B. YAVITZ Director September 9, 1996
- ------------------------------------------
B. Yavitz
</TABLE>
II-4
<PAGE> 113
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ------------------------------------------------------------------------- --------
<C> <S> <C>
2.1* Agreement and Plan of Merger, dated as of July 1, 1996, by and among
Crane Co., Crane Acquisition Corp. and Interpoint Corporation (included
as Appendix I to the Proxy Statement/Prospectus that forms a part of this
Registration Statement)..................................................
3.1 Crane Co. Certificate of Incorporation, as amended (incorporated by
reference to Exhibit D to Crane Co.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1987 -- Commission File No. 1-1657).......
3.2 Crane Co. By-Laws, as amended (incorporated by reference to Exhibit A to
Crane Co.'s Annual Report on Form 10-K for the fiscal year ended December
31, 1995 -- Commission File No. 1-1657)..................................
4.1 Preferred Share Purchase Rights Agreement dated as of June 27, 1988
(incorporated by reference to Exhibit 1 to Crane Co.'s Report on Form 8-K
filed on July 12, 1988 -- Commission File No. 1-1657)....................
4.2 Amendment to Preferred Share Purchase Rights Agreement dated as of June
25, 1990 (incorporated by reference to Exhibit 1 to Crane Co.'s Report on
Form 8-K filed on June 29, 1990 -- Commission File No. 1-1657)...........
4.3* Certificate of Designation of Series A Junior Participating Preferred
Stock....................................................................
4.4 Indenture, dated as of April 1, 1991, between Crane Co. and the Bank of
New York (incorporated by reference to Exhibit 4 to Crane Co.'s
Registration Statement No. 33-39658).....................................
5.1* Opinion of Milbank, Tweed, Hadley & McCloy as to the legality of the
Crane Common Stock being registered......................................
8.1* Form of opinion of Milbank, Tweed, Hadley & McCloy as to certain federal
income tax consequences..................................................
8.2 Form of opinion of Perkins Coie as to certain federal income tax
consequences (incorporated by reference to Exhibit 8.1 to Advanced
Digital Information Corporation's Registration Statement on Form
10 -- Commission File No. 0-21103).......................................
10.1 Forms of Employment/Severance Agreement between Crane Co. and its
Executive Officers (form I and form II) (incorporated by reference to
Exhibit C to Crane Co.'s Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 -- Commission File No. 1-1657)...................
10.2 E.V.A. Incentive Compensation Plan for Executive Officers (incorporated
by reference to Exhibit B to Crane Co.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1994 -- Commission File No. 1-1657)...
10.3 Crane Co. Restricted Stock Award Plan, as amended through May 6, 1996
(incorporated by reference to Exhibit 4.3 to Crane Co.'s Registration
Statement on Form S-8 filed June 24, 1996 -- File No. 33-06735)..........
10.4 Form of Restricted Stock Award Agreement -- Incentive Award (incorporated
by reference to Exhibit 4.4 to Crane Co.'s Registration Statement on Form
S-8 filed June 24, 1996 -- File No. 33-06735)............................
10.5 Form of Restricted Stock Award Agreement -- Incentive Award-Executive
Officer (incorporated by reference to Exhibit 4.5 to Crane Co.'s
Registration Statement on Form S-8 filed June 24, 1996 -- File No.
33-06735)................................................................
10.6 Form of Restricted Stock Award Agreement -- Time Vesting (incorporated by
reference to Exhibit 4.6 to Crane Co.'s Registration Statement on Form
S-8 filed June 24, 1996 -- File No. 33-06735)............................
</TABLE>
II-5
<PAGE> 114
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ------------------------------------------------------------------------- --------
<C> <S> <C>
10.7 Crane Co. Non-Employee Directors Restricted Stock Award Plan, as amended
through May 10, 1993 (incorporated by reference to Exhibit B to Crane
Co.'s Annual Report on Form 10-K for the fiscal year ended December 31,
1994 -- Commission File No. 1-1657)......................................
10.8 Form of Indemnification Agreements entered into with each director and
executive officer of Crane Co. (incorporated by reference to Exhibit C to
Crane Co.'s definitive proxy statement filed in connection with Crane
Co.'s April 27, 1987 Annual Meeting).....................................
10.9 Crane Co. Retirement Plan for Non-Employee Directors (incorporated by
reference to Exhibit E to Crane Co.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1988 -- Commission File No. 1-1657).......
10.10 Crane Co. Stock Option Plan, as amended as of February 27, 1995
(incorporated by reference to Exhibit 4(a) to Crane Co.'s Registration
Statement on Form S-8 filed on May 17, 1995 (File No. 33-59389)).........
10.11 Form of Separation Agreement between Advanced Digital Information
Corporation and Interpoint Corporation (incorporated by reference to
Exhibit 2.1 to Advanced Digital Information Corporation's Registration
Statement on Form 10 -- Commission File No. 0-21103).....................
10.12 Form of Tax Allocation Agreement between Advanced Digital Information
Corporation and Interpoint Corporation (incorporated by reference to
Exhibit 10.2 to Advanced Digital Information Corporation's Registration
Statement on Form 10 -- Commission File No. 0-21103).....................
21.1 List of subsidiaries of Crane Co. (incorporated by reference to Exhibit
21 to Crane Co.'s Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 -- Commission File No. 1-1657).........................
23.1* Consent of Milbank, Tweed, Hadley & McCloy (included in Exhibit 5.1).....
23.2* Consent of Perkins Coie..................................................
23.3* Consent of Deloitte & Touche LLP.........................................
23.4* Consent of Price Waterhouse LLP..........................................
23.5* Consent of KPMG Peat Marwick LLP.........................................
24.1* Power of Attorney (included on signature page of this Registration
Statement)...............................................................
99.1* Form of Interpoint Corporation Proxy.....................................
99.2* Form of Consulting Agreement between Peter van Oppen and
ELDEC Corporation........................................................
</TABLE>
- ---------------
* Filed herewith.
II-6
<PAGE> 1
Exhibit 4.3
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
CRANE CO.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
-----------------------------
Crane Co., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on August 19, 1996:
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Certificate
of Incorporation, the Board of Directors hereby creates a series of Preferred
Stock, par value $.01 per share (the "Preferred Stock"), of the Corporation and
hereby states the designation and number of shares, and fixes the relative
rights, preferences and limitations thereof (in addition to any provisions set
forth in the Certificate of Incorporation of the Corporation which are
applicable to the Preferred Stock of all classes and series) as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 350,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of
<PAGE> 2
any outstanding securities issued by the Corporation convertible into Series A
Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock, par
value $1.00 per share (the "Common Stock"), of the Corporation, and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1 or (b) subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in shares of Common Stock or
a subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend
2
<PAGE> 3
Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $1 per share on the Series A Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a
fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
3
<PAGE> 4
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series A Preferred
Stock and the holders of shares of Common Stock and any other capital
stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on the Series A Preferred Stock
and all such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series
A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A
4
<PAGE> 5
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, or in any other Certificate
of Designations creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
5
<PAGE> 6
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each share
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank
junior with respect to the payment of dividends and the distribution of assets
to all other series of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
such as to affect them adversely without the affirmative vote of the holders of
at least two-thirds of the outstanding shares of Series A Preferred Stock,
voting together as a single class.
6
<PAGE> 7
IN WITNESS WHEREOF, CRANE CO. has caused this certificate to
be executed by its Chairman of the Board and Chief Executive Officer and
attested by its Secretary this 19th day of August, 1996.
CRANE CO.
By:/s/ R.S. Evans
-------------------------------------
Name: R.S. Evans
Title: Chairman of the Board and
Chief Executive Officer
Attest:
/s/ Augustus I. duPont
- ----------------------
Secretary
7
<PAGE> 1
Exhibit 5.1
[Letterhead of Milbank, Tweed, Hadley & McCloy]
September 10, 1996
Crane Co.
100 First Stamford Place
Stamford, Connecticut 06902
Re: Registration Statement on Form S-4
Issuance of shares of Common Stock
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-4 (the "Registration
Statement") of Crane Co., a Delaware corporation (the "Company"), dated the date
hereof, filed with the Securities and Exchange Commission for the purpose of
registering under the Securities Act of 1933, as amended, shares of common
stock, par value $1.00 per share, of the Company (the "Shares"). The Shares are
to be issued to the holders of common stock, without par value, of Interpoint
Corporation, a Washington corporation ("Interpoint"), pursuant to the Agreement
and Plan of Merger dated as of July 1, 1996 (the "Merger Agreement") by and
among Interpoint, Crane Acquisition Corp., a wholly-owned subsidiary of the
Company ("Acquisition"), and the Company whereby Acquisition will be merged with
and into Interpoint (the "Merger").
We are acting as special counsel for the Company in connection with the
Registration Statement, the Merger and certain matters contemplated thereby.
We have examined originals, or copies certified to our satisfaction, of
such corporate records of the Company, certificates of public officials,
certificates of officers and representatives of the Company and other documents
as we have deemed it necessary or appropriate to review as a basis for the
opinions hereinafter expressed. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity with authentic originals of all documents submitted
to us as copies and the authenticity of the originals of such latter documents.
As to the questions of fact material to the opinions hereinafter expressed, we
have, when relevant facts were not independently established, relied upon the
representations set forth in the Merger Agreement, certificates of public
officials and officers of the Company and other appropriate persons and
statements of the Company contained in the Registration Statement.
<PAGE> 2
2
Based upon and subject to the foregoing, and having regard to legal
consideration which we deem relevant, we are of the opinion that upon the
approval of the Merger Agreement by the requisite vote of the stockholders of
Interpoint and the consummation of the Merger pursuant to the Washington
Business Corporation Act, the Shares when issued pursuant to the terms of the
Merger Agreement will have been legally and validly issued, fully paid and
nonassessable.
The foregoing opinions are limited to the federal laws of the United
States of America and the General Corporation Law of the State of Delaware, and
we do not express any opinion as to the laws of any other jurisdiction.
We hereby consent to reference to us under the heading "Legal Opinion"
in the Proxy Statement/Prospectus and to the filing of this opinion as Exhibit 5
to the Registration Statement.
Very truly yours,
/s/ Milbank, Tweed, Hadley & McCloy
AFL/RSR
<PAGE> 1
Exhibit 8.1
[Form of Milbank, Tweed, Hadley & McCloy Opinion]
__________ __, 1996
Crane Co.
100 First Stamford Place
Stamford, Connecticut 06902
Federal Income Tax Consequences of the Proposed Spinoff and Merger
Dear Crane Co.:
You have requested our opinion concerning the material federal
income tax consequences of the spinoff by Interpoint Corporation ("Interpoint")
of all of the capital stock of its subsidiary Advanced Digital Information
Corporation ("ADIC") to its shareholders (the "Spinoff") followed by an exchange
by Interpoint shareholders of Interpoint common stock for shares of Crane Co.
voting common stock (the "Merger"), pursuant to (i) the Spinoff Agreements, (ii)
the Agreement and Plan of Merger, dated as of July 1, 1996 (the "Merger
Agreement"), by and among Crane Co., Interpoint and Crane Acquisition Corp., and
(iii) the Registration Statement on Form S-4, filed by Crane Co. with respect to
the Merger (the "Registration Statement"). Capitalized terms used in this
opinion and not otherwise defined have the meanings given to them in the
Registration Statement.
In rendering our opinion, we have examined and relied upon the
accuracy and completeness of the facts, information, covenants, and
representations contained in originals or copies, certified or otherwise
identified to our satisfaction, of the Merger Agreement, the Proxy
Statement/Prospectus filed as part of the Registration Statement (the "Proxy
Statement/ Prospectus"), and other documents we have deemed necessary and
appropriate. In addition, we
<PAGE> 2
2
have relied upon representations made to us by Crane Co., Interpoint and ADIC
(the "Certificates"). Our opinion is conditioned on, among other things, the
accuracy of the facts, information, covenants and representations set forth in
the Certificates, and their being true at the Effective Time.
In our examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of those documents. We have also assumed the
transactions related to the Spinoff and the Merger or contemplated by the Merger
Agreement will be consummated in accordance with the Merger Agreement and as
described in the Proxy Statement/Prospectus.
The opinions set forth here are as of the date of this Letter
and are subject in each case to the truth and accuracy as of the Effective Date
of the representations stated here as being relied upon with respect to our
opinions as to the Spinoff and the Merger. In rendering our opinions, we have
considered the applicable provisions of the Internal Revenue Code of 1986 (the
"Code"), Treasury Regulations promulgated thereunder, pertinent judicial
authorities, Internal Revenue Service ("IRS") interpretive rulings, and other
authorities we considered relevant. We caution that statutes, regulations,
judicial decisions, and administrative interpretations are subject to change at
any time and, in some circumstances, with retroactive effect. A change in the
authorities upon which our opinion is based could affect our conclusions.
THE SPINOFF
Facts:
Interpoint will spinoff all its ADIC shares in a pro-rata
distribution to its shareholders.
In rendering our opinion, we have relied upon the following
representations of Interpoint officers:
- Interpoint owns all of the total combined voting power of ADIC
and all of the total number of shares of all other ADIC stock
classes immediately prior to the distribution.
<PAGE> 3
3
- No intercorporate debt will exist between Interpoint and ADIC
at the time of, or subsequent to, the distribution of ADIC
stock except as may arise after the spinoff under the Tax
Allocation Agreement dated as of _________, 1996 between Crane
and ADIC.
- The total adjusted bases and the fair market value of the
assets transferred to ADIC by Interpoint each equals or
exceeds the sum of the liabilities assumed by ADIC plus any
liabilities to which the transferred assets are subject.
- The liabilities assumed in the transaction and the liabilities
to which the transferred assets are subject were incurred in
the ordinary course of business and are associated with the
assets being transferred.
- Interpoint neither accumulated its receivables nor made
extraordinary payment of its payables in anticipation of the
Spinoff.
- Interpoint will distribute all its ADIC stock and securities.
- No part of the consideration to be distributed by Interpoint
will be received by a shareholder as a creditor, employee, or
in any capacity other than that of a shareholder of the
corporation.
- Interpoint did not acquire control of ADIC within the
preceding five years in a transaction in which gain or loss
was recognized in whole or in part.
- Immediately following the distribution, Interpoint and ADIC
each will be engaged in a trade or business actively conducted
for at least five years prior to the distribution and not
acquired by Interpoint or ADIC during that period in a taxable
transaction.
- Following the transaction, Interpoint and ADIC will each
continue the active conduct of its business, independently and
with its separate employees.
- There is no plan or intention by any shareholder who owns 5
percent or more of the stock of Interpoint, and the Interpoint
management, to its best knowledge, is not aware of any plan or
intention on the part of any other Interpoint shareholder or
security holder to sell, exchange, transfer by gift, or
otherwise dispose of any stock in, or securities of, either
Interpoint (other than in the Merger) or ADIC after the
transaction.
- Other than the Merger, there is no plan or intention to
liquidate either Interpoint or ADIC, to merge either
corporation into any other corporation and, in no event, will
Crane Co. cause or permit Interpoint to be merged into Crane
Co. or a Crane Co. subsidiary within one year of the effective
date of the Merger, or to sell or otherwise dispose of the
assets of either corporation after the Spinoff, except in the
ordinary course of business.
<PAGE> 4
4
- There is no plan or intention by either Interpoint or ADIC,
directly or through any subsidiary corporation, to purchase
any of its outstanding stock after the transaction, other than
stock purchases where: (i) there is a sufficient business
reason for the stock purchase; (ii) the stock to be purchased
is widely held; (iii) the stock purchases will be made in the
open market; and (iv) there is no plan or intention that the
aggregate amount of stock purchases will equal or exceed 20
percent of the outstanding stock of the corporation.
- The distribution of the ADIC stock is carried out for the
following corporate business purpose: to tailor Interpoint's
assets to facilitate the acquisition of Interpoint and its
business by Crane Co., a transaction that otherwise would not
occur. The distribution of the stock, or stock and securities,
of ADIC is motivated, in whole or substantial part, by this
corporate business purpose.
- Immediately before the distribution, items of income, gain,
loss, deduction, and credit will be taken into account as
required by the applicable intercompany transaction
regulations. Further, Interpoint's excess loss account, if
any, with respect to the ADIC stock will be included in income
immediately before the distribution.
- Payments made in connection with all continuing transactions,
if any, between Interpoint and ADIC, will be for fair market
value based on terms and conditions arrived at by parties
bargaining at arm's length.
- No two parties to the transaction are regulated investment
companies, real estate investment trusts, or a corporation
fifty percent of more of the value of whose total assets are
stock and securities, and eighty percent or more of the value
of whose total assets are assets held for investment. In
making the percentage determinations under the preceding
sentence, stock and securities in any subsidiary corporation
are disregarded and the parent corporation is deemed to own
its ratable share of the subsidiary's assets, and a
corporation is considered a subsidiary if the parent owns
fifty percent or more of the combined voting power of all
classes of stock entitled to vote or fifty percent or more of
the total value of shares of all classes of stock outstanding.
In rendering our opinion, we have relied upon the following
representations of Crane Co. officers:
- Crane Co. would not otherwise acquire Interpoint if Interpoint
owned ADIC.
- Crane Co. has no plan or intention to acquire ADIC stock or
securities.
<PAGE> 5
5
Analysis:
Interpoint's pro-rata spinoff of its ADIC shares to its
shareholders will be tax-free because the following Code Section355 requirements
have been or will be satisfied:
- Interpoint will have "control" of ADIC immediately prior to
the distribution.(1) "Control" for this purpose requires
Interpoint to own at least 80 percent of the total combined
voting power of ADIC and at least 80 percent of the total
number of shares of all other ADIC stock classes.(2)
Interpoint owns all the ADIC stock.
- Immediately following the distribution, Interpoint and ADIC
each will be engaged in a trade or business actively conducted
for at least five years prior to the distribution and not
acquired by Interpoint or ADIC during that period in a taxable
transaction.(3)
- The spinoff transaction will not be used "principally as a
device" to distribute Interpoint's or ADIC's earnings and
profits.(4)
Interpoint has a good corporate business purpose for spinning off its ADIC
shares to its shareholders -- to tailor Interpoint's assets to facilitate the
subsequent tax-free acquisition of Interpoint by Crane Co.(5) A good corporate
business purpose is evidence the spinoff was not used principally as a device
for the distribution of earnings and profits.(6)
- Interpoint did not acquire control of ADIC within the
preceding five years in a transaction in which gain or loss
was recognized in whole or in part.(7)
- Interpoint will distribute all its ADIC stock and
securities.(8)
- --------
1 Code Section355(a)(1)(A).
2 Code SectionSection355(a)(1)(D)(ii) & 368(c).
3 Code Section355(a)(1)(C), (b)(2)(B), & (b)(2)(C); Treas. Reg.
Section1.355-3(b).
4 Code Section355(a)(1)(B).
5 Rev. Proc. 96-30, Appendix A, Section2.07, 1996-19 I.R.B. 1 (June 10, 1996).
6 Treas. Reg. Section1.355-2(b)(4), (d)(3)(ii).
7 Code Section355(b)(2)(D).
8 Code Section355(a)(1)(D).
<PAGE> 6
6
- Interpoint has a good corporate business purpose for spinning
off its ADIC shares to its shareholders -- to tailor
Interpoint's assets to facilitate a subsequent tax-free
acquisition of Interpoint by Crane that otherwise would not
occur.(9)
- Predistribution Interpoint shareholders will maintain their
continuity of interest in Interpoint and ADIC following the
distribution and the Merger.(10)
Crane Co.'s tax-free acquisition of Interpoint following Interpoint's pro-rata
spinoff of ADIC shares will not destroy the Code Section355 continuity of
interest by the former Interpoint shareholders.(11)
- Interpoint and ADIC will satisfy the continuity of business
enterprise requirement following the distribution.(12)
Based upon the foregoing, our opinion is:
1. Interpoint will spinoff all its ADIC shares in a tax-free,
pro-rata distribution to its shareholders. Code Section355.
2. No gain or loss will be recognized to Interpoint upon the
distribution of all its ADIC shares. Code Section355(c).
3. No gain or loss will be recognized to (and no amount will
be included in the income of) any of the Interpoint shareholders upon
their receipt of ADIC shares. Code Section355(a)(1).
4. The basis of the stock of ADIC and Interpoint in the hands
of the Interpoint shareholders after the distribution will, in each
instance, be the same as the shareholders' aggregate bases in their
Interpoint stock immediately prior to the distribution, allocated in
proportion to the fair market value of each in accordance with Treas.
Reg. Section1.358-1(a) & -2(a)(2). Code Section358(b)(2).
5. The holding period of the ADIC shares to be received by the
Interpoint shareholders will, in each instance, include the holding
period of the Interpoint stock with respect to which the distribution
will be made, provided the shares were held as a capital asset on the
date of the exchange. Code Section1223(1).
- --------
9 Rev. Proc. 96-30, Appendix A,Section2.07, 1996-19 I.R.B. 1 (June 10, 1996).
10 Treas. Reg.Section1.355-2(c).
11 Rev. Rul. 70-434, 1970-2 C.B. 83 (continuity of interest requirement not
broken by (B) reorganization following spinoff).
12 Treas. Reg. Section1.355-1(b).
<PAGE> 7
7
THE MERGER
Facts:
Following Interpoint's spinoff of its ADIC shares to its
shareholders, Crane Co.'s transitory subsidiary will merge into Interpoint.
Interpoint shareholders will receive solely Crane Co. voting common stock and,
after the Merger, Crane Co. will own 100 percent of Interpoint.
In rendering our opinion, we have relied upon the following
representations of Crane Co. and Interpoint officers:
- The fair market value of Crane Co. common stock and other
consideration received by each Interpoint shareholder will be
approximately equal to the fair market value of the Interpoint
common stock surrendered in the exchange.
- There is no plan or intention by any Interpoint common
shareholder who owns five percent or more of Interpoint common
stock, and to the best of the knowledge of the Interpoint
management, there is no plan or intention on the part of the
remaining Interpoint common shareholders collectively to sell,
exchange, or otherwise dispose of a number of shares of Crane
Co. stock received in the Merger that would reduce the
Interpoint shareholders' ownership of Crane Co. to a number of
shares having a value, as of the date of the Merger, of less
than 50 percent of the value of all of the formerly
outstanding Interpoint common stock as of the same date.
Shares of Interpoint common stock surrendered by dissenters or
exchanged for cash in lieu of fractional shares of Crane Co.
stock will be treated as outstanding Interpoint common stock
on the Merger date. Moreover, shares of Interpoint common
stock and shares of Crane Co. common stock held by Interpoint
shareholders and otherwise sold, redeemed, or disposed of
prior or subsequent to the transaction will be considered as
having been disposed of in making this representation.13
- Prior to the Merger, Crane Co. will own all the outstanding
Acquisition Corp. stock.
- Interpoint has no plan or intention to issue additional shares
of its stock that would result in Crane Co. owning less than
80 percent of the total combined voting power and 80 percent
of the total number of shares of each other Interpoint stock
class.
- --------
13 Rev. Rul. 66-224, 1966-2 C.B. 114 (50 percent equity continuity of interest,
by value, found adequate); Rev. Proc. 77-37, 1977-2 C.B. 568 (IRS considers
contemporaneous sales and redemptions if part of the plan in making the
continuity determination); Boris I. Bittker & James S. Eustice, Federal
Income Taxation of Corporations and Shareholders 12-28 (6th ed. 1994) (IRS
views a 50 percent continuity-of-equity interest by value as sufficient).
<PAGE> 8
8
- Crane Co. has no plan or intention to reacquire any of its
stock issued in the Merger, although Crane may from time to
time, consistently with its prior practices, purchase some of
its stock from sellers in New York Stock Exchange transactions
or from employees to facilitate employee benefit plan
transactions (e.g., in connection with stock option exercises
or withholding on the vesting of restricted stock).
- Crane Co. has no plan or intention to liquidate Interpoint; to
merge Interpoint into another corporation and, in no event, to
cause or permit Interpoint to be merged into Crane Co. or a
Crane Co. subsidiary within one year of the effective date of
the Merger; to cause Interpoint to sell or otherwise dispose
of any of its assets, except for dispositions made in the
ordinary course of business; or to sell or otherwise dispose
of any of the Interpoint shares acquired in the transaction,
except possibly for transfers of stock to corporations
controlled by Crane.
- Acquisition Corp. will have no liabilities. Acquisition Corp.
will not transfer to Interpoint any assets subject to
liabilities, in the Merger.
- Following the Merger, Interpoint will continue its historic
business and use a significant portion of its historic
business assets.14
- Crane Co., Interpoint and the Interpoint shareholders will pay
their respective expenses, if any, incurred in connection with
the Merger.
- There is no intercorporate indebtedness existing between Crane
Co. and Interpoint or between Acquisition Corp. and Interpoint
that was issued, acquired, or will be settled at a discount.
- Crane Co. will acquire Interpoint stock solely in exchange for
Crane Co. voting common stock. For purposes of this
representation, Interpoint stock redeemed for cash or other
property furnished by Crane Co. will be considered as acquired
by Crane Co. Further, no liabilities of Interpoint or the
Interpoint shareholders will be assumed by Crane Co., nor will
any of the Interpoint stock be subject to any liabilities.
- Immediately prior to the Merger, Interpoint will make cash
payments to all stock option holders fully satisfying all
outstanding options in respect of Interpoint shares. No funds
will be supplied for that purpose, directly or indirectly, by
Crane Co., nor will Crane Co. directly or indirectly reimburse
Interpoint for any payments to stock option holders.
- At the time of the Merger, Interpoint will not have
outstanding any warrants, options, convertible securities, or
any other type of right pursuant to which any person could
acquire stock of Interpoint that, if exercised or converted,
would
- --------
(14) Treas. Reg. Section1.368-1(d) (1980). See generally Bittker & Eustice,
supra note 13, at 12-204.
<PAGE> 9
9
affect Crane Co.'s acquisition or retention of at least 80
percent of the total combined voting power and at least 80
percent of the total number of shares of each other Interpoint
stock class.
- Crane Co. does not own, nor has it owned during the past five
years, any shares of the Interpoint stock. [If its has, it
will have sold all the shares in arm's length sales prior to
the Merger.]
- No two parties to the Merger are regulated investment
companies, real estate investment trusts, or a corporations
fifty percent or more of the value of whose total assets are
stock and securities, and eighty percent or more of the value
of whose total assets are assets held for investment. In
making the percentage determinations under the preceding
sentence, stock and securities in any subsidiary corporation
are disregarded and the parent corporation is deemed to own
its ratable share of the subsidiary's assets, and a
corporation is considered a subsidiary if the parent owns
fifty percent or more of the combined voting power of all
classes of stock entitled to vote or fifty percent or more of
the total value of shares of all classes of stock outstanding.
- Interpoint will pay its dissenting shareholders the value of
their stock out of its own funds. No funds will be supplied
for that purpose, directly or indirectly, by Crane Co., nor
will Crane Co. directly or indirectly reimburse Interpoint for
any payments to dissenters.
- On the date of the Merger, the fair market value of the assets
of Interpoint will exceed the sum of its liabilities, plus the
amount of liabilities, if any, to which its assets are
subject.
- Interpoint is not under the jurisdiction of a court in a case
under Title 11 of the United States Code or a receivership,
foreclosure, or similar proceeding in a federal or state
court.
- Crane Co.'s ownership of the two microelectronic corporations,
Interpoint and Crane Co.'s existing subsidiary, ELDEC, will
result in decreased aggregate research and development,
production and sales costs, thereby creating the opportunity
for more competitive pricing and greater profits.
- Crane Co. will be able to consolidate certain corporate and
administrative functions common to both Interpoint and ELDEC,
thereby reducing duplicative positions, reducing other
non-labor corporate and administrative expenses, and limiting
or avoiding duplicative expenditures for administrative and
customer service programs and information systems.
<PAGE> 10
10
Analysis:
For the Merger to qualify as a tax-free reverse subsidiary (A)
merger under Code Section368(a)(2)(E), Interpoint, after the Merger, must hold
substantially all of its and the Crane Co. subsidiary's assets.(15) Interpoint's
spinoff of all its ADIC shares to its shareholders prior to the reorganization
causes Interpoint to fail the substantially all requirement of Code
Section368(a)(2)(E).(16)
Although the transaction will not qualify as a tax-free
reverse subsidiary merger, it will qualify as a tax-free forced (B)
reorganization under Code Section368(a)(1)(B).(17) The (B) reorganization
requirements will be satisfied because:
- Crane Co. will acquire Interpoint stock solely in exchange for
Crane Co. voting common stock; and
- Crane Co. will acquire, in the reorganization, at least 80
percent of the total combined voting power of Interpoint plus
at least 80 percent of the total number of shares of all other
Interpoint stock classes.(18)
Immediately prior to the Effective Time, Interpoint will make
cash payments to holders of certain stock options outstanding pursuant to the
Spinoff Agreements and the Company Option Plans in full satisfaction of all
stock options. All Interpoint Option Plans will be terminated and all
outstanding options in respect of Interpoint shares will be fully satisfied.
Based upon the foregoing, our opinion is:
1. The Merger will constitute a reorganization within the
meaning of Code Section368(a)(1)(B), and Crane Co., Interpoint, and
Acquisition Corp. will each be a party to the reorganization within the
meaning of Code Section368(b).
2. No gain or loss will be recognized by Interpoint, Crane
Co., or Acquisition Corp. upon the receipt by Crane Co. of Interpoint
stock solely in exchange for Crane Co. voting common stock. Rev. Rul.
57-278, 1957-1 C.B. 124.
- --------
(15) Code Section368(a)(2)(E)(i); see Rev. Proc. 77-37, Section3.01, 1977-2
C.B. 568 (substantially all of corporation's assets means 90 percent of
corporation's net assets and 70 percent of corporation's gross assets).
(16) See Helvering v. Elkhorn Coal Co., 95 F.2d 732 (4th Cir. 1938).
(17) Rev. Rul. 67-448, 1967-2 C.B. 144; see Treas. Reg. Section1.368-2(j)(7),
examples (4) & (5).
(18) Code Section368(c); Bittker & Eustice, supra note 13, at 12-50.
<PAGE> 11
11
3. The basis of the Interpoint stock received by Crane Co.
will be the same as the basis of the stock in the hands of the
Interpoint shareholders immediately prior to the exchange. Code
Section362(b).
4. The holding period of the Interpoint stock received by
Crane Co. will include the period during which the stock was held by
Interpoint shareholders. Code Section1223(2).
5. No gain or loss will be recognized by an Interpoint
shareholder who receives solely shares of Crane Co. common stock in
exchange for Interpoint common stock. Code Section354(a)(1). An
Interpoint shareholder who receives cash in lieu of fractional shares
of Crane Co. common stock will recognize gain or loss equal to the
difference between the cash received and the tax basis allocated to the
fractional share interest.(19) Any gain or loss recognized by a
shareholder will constitute capital gain or loss.
6. The basis of the Crane Co. voting common stock received by
the Interpoint shareholders will be the same as the basis of the
Interpoint stock surrendered in the exchange, reduced by the tax basis
allocable to any fractional share interest in Crane Co. common stock
with respect to which cash is being received. Code Section358(a)(1).
7. The holding period of the Crane Co. voting common stock
received by the Interpoint shareholders includes the holding period of
the Interpoint stock surrendered in the exchange, provided the shares
of Interpoint stock were held as a capital asset on the date of the
exchange. Code Section1223(1).
Except as expressly set forth above, we express no opinion to
any party as to the tax consequences, whether federal, state, local or foreign,
of the Merger or any transaction related to the Merger or contemplated by the
Merger Agreement or the Proxy Statement/Prospectus. We are furnishing this
opinion to you solely in connection with the Merger Agreement Section7.02(d),
which states Crane Co. and Acquisition Corp.'s obligation to effect the Merger
is conditioned on the delivery of this opinion. This opinion is solely for your
benefit and is not to be used, circulated, quoted or otherwise referred to for
any purpose without our express prior written permission.
Very truly yours,
[Milbank, Tweed, Hadley & McCloy]
RAJ/SF/SAR
Tax 31771_4
- --------
(19) See Rev. Rul. 66-365, 1966-2 C.B. 116 (cash in lieu of fractional shares
treated as a distribution in full payment in exchange for the fractional
share interest under Code Section302(a)).
<PAGE> 1
EXHIBIT 23.2
CONSENT OF PERKINS COIE
We hereby consent to the filing of our form of opinion as Exhibit 8.2 to
this Registration Statement on Form S-4. In giving such consent, we do not admit
that we are in the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended.
/s/ PERKINS COIE
September 6, 1996
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Crane Co. on Form S-4 of our reports dated January 22, 1996, appearing in and
incorporated by reference in the Annual Report on Form 10-K of Crane Co. for
the year ended December 31, 1995 and to the reference to us under the heading
"Independent Accountants" in the Proxy Statement/Prospectus which is a part of
this Registration Statement.
DELOITTE & TOUCHE LLP
Stamford Connecticut
September 10, 1996
<PAGE> 1
EXHIBIT 23.4
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Proxy Statement/
Prospectus constituting part of this Registration Statement on Form S-4 of Crane
Co. of our report dated December 5, 1995 appearing on page 11 of Interpoint
Corporation's Annual Report on Form 10-K for the year ended October 31, 1995. We
also consent to the reference to us under the heading "Independent
Accountants" in such Proxy Statement/Prospectus.
Price Waterhouse LLP
Seattle, Washington
September 6, 1996
<PAGE> 1
EXHIBIT 23.5
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Interpoint Corporation
We consent to the use of our report incorporated herein by reference relating
to the statements of income, stockholders' equity and cash flows of Advanced
Digital Information Corporation for the year ended September 30, 1993.
KPMG Peat Marwick LLP
Seattle, Washington
September 6, 1996
<PAGE> 1
EXHIBIT 99.1
PROXY
INTERPOINT CORPORATION
10301 Willows Road
P.O. Box 97005
Redmond, WA 98073-9705
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 11, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
INTERPOINT CORPORATION
The undersigned hereby appoints Peter H. van Oppen and Leslie S. Rock,
and either of them, attorneys and proxies, with full power of substitution, to
vote as designated below all shares of Common Stock of Interpoint Corporation
("Interpoint") held of record by the undersigned on August 26, 1996, at the
Special Meeting of Shareholders of Interpoint to be held at the offices of
Perkins Coie, 1201 Third Avenue, 40th Floor, Seattle, Washington on Friday,
October 11, 1996, at 9:00 a.m., and at any adjournments or postponements
thereof with all the powers the undersigned would possess if personally
present.
- ------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 2
Please mark
your vote as
indicated in
this sample [X]
FOR AGAINST ABSTAIN
APPROVAL OF THE AGREEMENT AND PLAN OF MERGER DATED AS [ ] [ ] [ ]
OF JULY 1, 1996 BY AND AMONG CRANE CO., CRANE
ACQUISITION CORP. AND INTERPOINT AND THE TRANSACTIONS
CONTEMPLATED THEREBY.
The Board of Directors recommends that you vote "FOR"
the Proposal.
THIS PROXY WILL BE VOTED AS DIRECTED ON THIS PROXY CARD.
WHEN NO CHOICE IS INDICATED, THIS PROXY WILL BE
VOTED FOR THE PROPOSAL.
Whether or not you plan to attend the meeting in person,
you are urged to complete, date, sign and promptly mail
this proxy in the enclosed return envelope so that your
shares may be represented at the meeting.
(Print Shareholder Name(s))____________________
(Signature(s) of Shareholder or Authorized
Signatory)_____________________________________
Dated:________________, 1996
Please sign exactly as your name(s) appears on your stock certificate. If
shares of stock stand of record in the name(s) of two or more persons or in the
name of husband and wife, whether as joint tenants or otherwise, both or all of
such persons should sign the proxy. If shares of stock are held of record by a
corporation, the proxy should be executed by the president or vice president
and the secretary or assistant secretary. Executives, administrators or other
fiduciaries who execute the above proxy for a designated stockholder should give
their full title. Please date the proxy.
- -----------------------------------------------
<FOLD AND DETACH HERE>
<PAGE> 1
EXHIBIT 99.2
CONSULTING AGREEMENT
Agreement made as of September __, 1996 between ELDEC CORPORATION, a
Washington corporation with offices at 16700 - 13th Avenue West, P.O. Box 100,
Lynnwood, Washington 98046-0100 (referred to in this Agreement as "ELDEC") and
Peter H. van Oppen, 5384 Butterworth Road, Mercer Island, Washington 98040
(referred to in this Agreement as "Consultant").
WHEREAS, CRANE CO. ("CRANE"), a Delaware corporation and the parent
company of ELDEC, has entered into an Agreement and Plan of Merger dated as of
July 1, 1996 (the "Merger Agreement") with Interpoint Corporation, a Washington
corporation ("Interpoint"), pursuant to which it will acquire the
microelectronics business of Interpoint;
WHEREAS, Consultant has served as the Chairman and Chief Executive
Officer of Interpoint for more than five years;
WHEREAS, as contemplated by the Merger Agreement, Interpoint will
spinoff to its stockholders its Applied Digital Information Corporation
subsidiary ("ADIC"), and Consultant will become Chairman and Chief Executive
Officer of ADIC; and
WHEREAS, ELDEC desires to retain Consultant to provide advice and
assistance in connection with the transition of the microelectronics business of
Interpoint to CRANE ownership as a sister corporation of ELDEC;
NOW, THEREFORE, in consideration of the mutual promises described
below, the parties agree as follows:
1. STATEMENT OF WORK
Subject to the terms and conditions set forth below, ELDEC engages the
Consultant to provide advice and assistance as requested by the President of
ELDEC relating to the acquisition of the microelectronics business of Interpoint
by CRANE, including without limitation the following tasks:
a. Employee education and discussion.
b. Microelectronics business review and analysis.
c. Integration opportunity identification and evaluation.
d. Key customer visits and discussions.
e. Key supplier visits and discussions.
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Consultant will be available for up to five days per month during the
term hereof at times to be mutually agreed.
2. TERM
The services called for under this Agreement will begin on October 31,
1996 and terminate on April 30, 1997 unless terminated earlier under Paragraph
10.
3. CONSIDERATION AND PAYMENT
As consideration for such services, ELDEC will pay the Consultant a fee
of $150,000 payable in three installments of $50,000 each. The first payment
will be made on October 31, 1996, the second on January 31, 1997 and the third
on April 30, 1997. In addition, ELDEC will reimburse Consultant for any
authorized expenditures for travel expenses in accordance with standard ELDEC
policies.
The parties acknowledge that Consultant will cease to be an employee of
Interpoint immediately following the time at which the merger contemplated in
the Merger Agreement is effective (the "Effective Time"), and that Consultant
will (i) be entitled to receive from Interpoint (or its successor), at the time
of his termination of employment with Interpoint, payment (based upon his salary
in effect immediately prior to such termination) for any vacation time that he
has accrued, but not used, as of the Effective Time, and (ii) be entitled to
continued insurance coverages through the end of the month in which his
employment with Interpoint terminates. The parties further acknowledge that,
notwithstanding the foregoing, for purposes of the Interpoint Profit Sharing
Plan and the Interpoint Management Incentive Plan, Consultant will be deemed to
remain an employee of Interpoint through October 31, 1996 and accordingly
will remain entitled to participate in such plans for the fiscal year ended
October 31, 1996.
4. DIRECTION
The Consultant's contact at ELDEC will be Arlan VanKoevering,
President, to whom the Consultant will report and who will give the Consultant
his general direction.
5. ASSIGNMENT
The rights and obligations of the Consultant under this Agreement are
personal to the Consultant and may not be assigned or transferred to any other
person, firm or corporation.
6. CONFIDENTIALITY
In the course of the performance of services for ELDEC, the Consultant
may acquire proprietary information belonging to ELDEC. In recognition of the
value of this information to ELDEC, the Consultant agrees to keep in strictest
confidence all proprietary information relating to work performed under this
Agreement or which the Consultant may acquire in connection with or as a result
of this Agreement. The Consultant further agrees that during the term of this
Agreement or any time thereafter, he will not disclose or communicate to anyone
outside of ELDEC any information designated by ELDEC as proprietary, or which
given the surrounding circumstances would normally be regarded as proprietary.
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7. INDEPENDENT CONTRACTOR
It is agreed that the Consultant is an independent contractor and not
an agent, partner, employee or joint venturer of ELDEC. The Consultant shall not
have the right or power to enter into any contracts or commitments on behalf of
ELDEC.
8. TAXES
Consultant acknowledges that he is responsible for the payment of all
self-employment, social security and other taxes arising out of the performance
of services hereunder. Consultant agrees to indemnify and hold ELDEC harmless
from any amounts ELDEC is obligated to pay for such taxes and penalties, if any.
9. WORKER'S COMPENSATION
If Consultant has no worker's compensation insurance, the Consultant
hereby indemnifies ELDEC, its officers, directors, employees and agents and
assigns from any and all claims, damages, costs, attorney fees and liabilities
which in any way arise out of or are incurred in conjunction with work performed
under this Agreement, and which could in any way have been covered under
worker's compensation insurance.
10. TERMINATION
This Agreement may be terminated pursuant to the following:
a. Immediately on the death or incapacity of the Consultant; or
b. By ELDEC, at any time, immediately upon written or verbal
notice, if Consultant assigns this Agreement, or any right or
obligation of this Agreement, without prior written consent
from ELDEC.
The obligations of the Consultant under Paragraph 6 above shall survive
any expiration or termination of this Agreement. On termination, Consultant will
return to ELDEC all written information, materials or files supplied to or
created by Consultant at the expense of ELDEC.
11. NOTICES
Any notice required to be given hereunder shall be deemed to have been
sufficiently given either when served personally or when sent by first class
mail addressed to the parties at the address set forth in this Agreement.
12. OTHER PROVISIONS
This Agreement supersedes all prior oral and written agreements, if
any, between the parties, and constitutes the entire agreement between the
parties for the performance of the
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effort described in Paragraph 1 of this Agreement. This Agreement may not be
amended except by a written instrument signed by both parties. This Agreement
shall be construed in accordance with and governed by the laws of the State of
Washington.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
ELDEC CORPORATION
______________________________ _______________________________
Peter H. van Oppen Arlan VanKoevering
Consultant President
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