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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
DECEMBER 21, 1994
Date of Report (Date of earliest event reported)
SAVIN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-7786 13-2949772
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) number)
333 Ludlow Street, P.O. Box 10270 06904-2270
(Address of principal executive offices) (Zip Code)
(203) 967-5000
(Registrant's telephone number, including area code)
9 West Broad Street
(Former name or former address, if changed since last report)
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Item 1. Changes in Control of Registrant.
On December 21, 1994 Savin Corporation ("Savin"), Ricoh
Corporation ("Ricoh"), and SC Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Ricoh ("Merger Sub"), entered into an Agreement and
Plan of Merger (the "Merger Agreement"), providing for the merger of Merger Sub
with and into Savin (the "Merger"). As a result of the Merger, Savin will be the
surviving corporation and will become a wholly-owned subsidiary of Ricoh.
In the Merger each outstanding share of common stock, par
value $.001 per share of Savin ("Common Stock"), other than shares of Common
Stock held by individuals exercising appraisal rights under the General
Corporation Law of the State of Delaware, shall be converted into the right to
receive an amount payable in cash, without interest, equal to (a) $41,500,000
less (i) the amount of any reduction in the aggregate purchase price agreed to
by Savin under the circumstances described below, (ii) the amount of any portion
of the aggregate purchase price which Savin agrees to escrow under the
circumstances described below pending the resolution of one or more lawsuits and
(iii) the aggregate amount of all payments, if any, made by Savin to its
directors in connection with any redemption, cancellation or termination of
options to purchase 155,000 shares of Common Stock in the aggregate granted to
such directors (the "Director Options"), divided by (b) the total number of
shares of Common Stock that are (i) issued and outstanding immediately prior to
the effective time of the Merger (the "Effective Time"), and (ii)
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issuable pursuant to Director Options outstanding immediately prior to the
Effective Time, whether or not then exercisable.
The consummation of the Merger is conditioned upon the
satisfaction of certain conditions, including (a) the approval and adoption of
the Merger Agreement by Savin's stockholders, and (b) the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
If a condition to Ricoh's obligation to consummate the merger
is not satisfied because of the breach of any representation or warranty of
Savin or any Majority Stockholder (as defined below) set forth in the Merger
Agreement or the Stockholder Agreements (as defined below) or because of the
occurrence of any material adverse change in the business, assets, properties,
financial condition or results of operation of Savin and its subsidiaries (a
"Material Adverse Change"), and such failures could not reasonably be expected
to result in a net reduction of $2,000,000 or more in either the value of the
surviving corporation to Ricoh or the net worth of Savin, Savin may, at its
option, cause such condition to be satisfied by agreeing to a purchase price
reduction in an amount which represents the amount by which the net reduction in
either the value of the surviving corporation to Ricoh or the net worth of Savin
(whichever is greater) resulting from such breach of representation or warranty
or Material Adverse Change exceeds $500,000. In addition, if any condition to
Ricoh's obligation to consummate the merger is unsatisfied because of the
existence of
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one or more material lawsuits (net of amounts to be paid or reimbursed pursuant
to Savin's insurance policies and net of any amount reserved by Savin with
respect to such lawsuits), Savin and Ricoh may agree to cause such condition to
be satisfied by escrowing an amount equal to the net reduction in either the
value of the surviving corporation to Ricoh or Merger Sub or net worth of Savin
(whichever is greater) pending the resolution of such lawsuit or lawsuits.
In order to induce Ricoh to enter into the Merger Agreement,
HCS Technology, N.V., the owner of 600,000 shares of Common Stock; International
Nederlanden Lease Structured Finance B.V., the owner of 600,000 shares of Common
Stock; King Holding Corporation, the owner of 1,013,583 shares of Common Stock;
and Janos Szekeres, the owner of 326,000 shares of Common Stock (collectively,
the "Majority Stockholders"), each entered into a letter agreement, dated
December 21, 1994 (each a "Stockholder Agreement"), with Ricoh, pursuant to
which, among other things, each Majority Stockholder agreed, among other things,
to vote all its shares in favor of the Merger and not to sell or otherwise
transfer any of its shares prior to consummation of the Merger. Each Majority
Stockholder also granted to Ricoh an exclusive and irrevocable option (an
"Option"), exercisable under certain circumstances, to purchase all of the
shares of Common Stock owned by each such Majority Stockholder (the "Option
Shares") at a price intended to approximate the per share price payable in the
Merger. Such option will become exercisable under certain limited circumstances,
including (i) the failure of Savin to call
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a special meeting of stockholders to approve the Merger Agreement for a date on
or before April 20, 1995 or the adjournment of such meeting to a date after
April 20, 1995; (ii) the failure of the Board of Directors of Savin to recommend
to the stockholders the adoption and approval of the Merger Agreement or the
withdrawal of such recommendation after it has been made; (iii) the breach by
Savin or any Majority Stockholder of its agreement not to solicit, participate
in or initiate inquiries, discussions or negotiations with third parties
concerning any acquisition of Savin or the shares of the capital stock of Savin
or any business combination involving Savin; (iv) the breach by any Majority
Stockholder of its agreement to vote all of its shares of Common Stock in favor
of the approval and adoption of the Merger Agreement and against any action or
agreement that would either result in Savin's breach in any material respect of
a covenant, representation, warranty or other obligation under the Merger
Agreement or impede, interfere with or attempt to discourage the Merger; or (v)
any attempt by a Majority Stockholder to revoke the proxy granted to Ricoh or
the failure by a Majority Stockholder timely to deliver a valid proxy in the
event the validity of the proxy granted by such Majority Stockholder is called
into doubt.
The number of shares of Common Stock held or controlled by the
Majority Stockholders is sufficient to constitute a quorum and to approve and
adopt the Merger Agreement regardless of the vote of any other stockholder of
Savin.
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The special meeting of Savin stockholders to vote on the
approval and adoption of the Merger Agreement is tentatively scheduled for late
February.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
SAVIN CORPORATION
(Registrant)
By: /s/ Thomas L. Salierno, Jr.
Thomas L. Salierno, Jr.
Vice President, Controller
January 5, 1995 and Treasurer
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EXHIBIT INDEX
Exhibit Page
1. Agreement and Plan of Merger
dated as of December 21,
1994, among Savin, Ricoh and
Merger Sub
2. Letter Agreement between
Ricoh and Janos Szekeres
3. Schedule of other Majority
Stockholders executing a
Letter Agreement
substantially in the form
attached hereto as Exhibit 2
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Exhibit 1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 21, 1994
(the "Agreement"), by and among RICOH CORPORATION, a Delaware corporation (the
"Parent"), SC ACQUISITION CORP., a Delaware corporation and a wholly owned
subsidiary of the Parent (the "Acquiror"), and SAVIN CORPORATION, a Delaware
corporation (the "Company"). The Acquiror and the Company are sometimes
collectively referred to herein as the "Constituent Corporations."
RECITALS:
The respective Boards of Directors of the Parent, the Acquiror
and the Company each have approved this Agreement pursuant to which, among other
things, the Acquiror will be merged with and into the Company (the "Merger") on
the terms and conditions contained herein and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL").
In order to induce the Parent and the Acquiror to agree to
enter into this Agreement and to effect the Merger, each of the stockholders of
the Company listed on Schedule A hereto (the "Majority Stockholders") have
entered into a Stockholder Agreement, dated the date hereof (the "Stockholder
Agreement"), with the Parent.
NOW THEREFORE, in consideration of the premises and the
representations, warranties and covenants contained
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herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time (as defined in Section 1.2) and in
accordance with the DGCL, the Acquiror shall be merged with and into the
Company, which shall be the surviving corporation in the Merger (hereinafter
sometimes referred to as the "Surviving Corporation"). At the Effective Time,
the separate existence of the Acquiror shall cease.
1.2 Effective Time. The Merger shall become effective as of
the date and time (the "Effective Time") of filing with the Secretary of State
of the State of Delaware of a certificate of merger (the "Certificate of
Merger") in such form as required by, and executed in accordance with, the DGCL.
1.3 Effect of the Merger. As of the Effective
Time, the effects of the Merger shall be as set forth in
Section 259 of the DGCL.
1.4 Certificate of Incorporation. The Certificate of
Incorporation of the Acquiror, as in effect immediately prior to the Effective
Time, shall become, from and after the Effective Time, the Certificate of
Incorporation of the Surviving Corporation until thereafter
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amended in accordance with applicable law. As of the Effective Time, the name of
the Surviving Corporation shall be Savin Corporation.
1.5 By-Laws. The By-Laws of the Acquiror, as in effect
immediately prior to the Effective Time, shall become, from and after the
Effective time, the By-Laws of the Surviving Corporation until thereafter
amended as provided therein and in accordance with applicable law.
1.6 Directors. The directors of the Acquiror at the Effective
Time shall become, from and after the Effective Time, the directors of the
Surviving Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualify in the manner
provided in the Certificate of Incorporation and By-Laws of the Surviving
Corporation, or as otherwise provided by applicable law.
1.7 Officers. The officers of the Acquiror at the Effective
Time shall become, from and after the Effective Time, the initial officers of
the Surviving Corporation and shall hold office from the Effective Time until
their respective successors are duly elected or appointed and qualify in the
manner provided in the Certificate of Incorporation and By-Laws of the Surviving
Corporation, or as otherwise provided by applicable law.
1.8 Meeting of the Company's Stockholders; Proxy Statement.
The Company shall take all action necessary in accordance with applicable law to
convene a meeting of its
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stockholders as promptly as practicable to consider and vote upon the Merger.
The Company shall, through its Board of Directors (the "Board"), recommend that
the Company's stockholders vote in favor of the Merger and the approval and
adoption of this Agreement, unless the Board shall determine in good faith,
following an appropriate review and based on the advice of the Board's outside
counsel, that such action would cause the Board to breach its fiduciary duties
under Delaware law. As soon as practicable, the Company shall file with the
Securities and Exchange Commission (the "SEC") under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and shall use its best efforts to have
cleared by the SEC, a proxy statement (the "Proxy Statement") with respect to
the meeting of the Company's stockholders referred to in this Section 1.8.
1.9 Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall determine or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Constituent Corporations acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in
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the name and on behalf of each of the Constituent Corporations or otherwise, all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of each of the Constituent Corporations or otherwise, all
such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
ARTICLE 2
CONVERSION OF SECURITIES
2.1 Common Stock.
2.1.1 Each share of Common Stock, par
value $.001 per share, of the Company (the "Common Stock") issued and
outstanding immediately prior to the Effective Time (except for shares of Common
Stock then owned of record by the Parent or the Acquiror and except for
Dissenting Shares (as defined in Section 2.2)) shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into the
right to receive an amount in cash equal to (a) $41,500,000 less (i) the amount
of any reduction in the aggregate purchase price for the shares of Common Stock
pursuant to Section 6.2, (ii) the amount of any portion of the aggregate
purchase price for the shares of Common Stock that shall be paid to the Escrow
Agent pursuant to Section 6.2 and (iii) the aggregate amount of all
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payments, if any, made by the Company to the holders of Options (as defined in
Section 2.5) in connection with any redemption, cancellation or termination
thereof, divided by (b) the total number of shares of Common Stock that are (i)
issued and outstanding immediately prior to the Effective Time (including,
without limitation, all shares of Common Stock issued in settlement of
Unresolved Claims ((as defined in Section 4.2)) and all shares of Common Stock
issued to the Escrow Agent ((as defined in Section 5.12)) pursuant to Section
5.12) and (ii) issuable pursuant to Options outstanding immediately prior to the
Effective Time, whether or not then exercisable (such quotient being hereinafter
referred to as the "Price Per Share") payable to the holder thereof, without
interest thereon, upon surrender of the certificate representing such share of
Common Stock.
2.1.2 Each share of Common Stock held in
the Company's treasury immediately prior to the Effective Time, if any, shall,
by virtue of the Merger, be cancelled and retired and cease to exist, without
any conversion thereof.
2.2 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, each share of Common Stock that is issued and
outstanding immediately prior to the Effective Time and that is held by a
stockholder who has properly exercised and perfected appraisal rights under
Section 262 of the DGCL (the "Dissenting Shares"), shall not be converted into
or exchangeable for the right to receive
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the Price Per Share, but shall be entitled to receive such consideration as
shall be determined pursuant to Section 262 of the DGCL; provided, however,
that, if such holder shall have failed to perfect or shall have effectively
withdrawn or lost its right to appraisal and payment under the DGCL, each share
of Common Stock of such holder shall thereupon be deemed to have been converted
into and to have become exchangeable for, as of the Effective Time, the right to
receive the Price Per Share, without any interest thereon, in accordance with
Section 2.4, and such shares shall no longer be Dissenting Shares.
2.3 Acquiror Common Stock. Each share of common stock of the
Acquiror issued and outstanding immediately prior to the Effective Time shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into one share of common stock of the Surviving
Corporation.
2.4 Exchange of Common Stock.
2.4.1 On the Closing Date (as defined in
Section 7.1), the Parent shall cause the Acquiror to deposit in trust with a
bank or trust company designated by the Acquiror and reasonably satisfactory to
the Company (the "Exchange Agent") cash, cash equivalents or a combination
thereof in an aggregate amount equal to the product of: (i) the number of shares
of Common Stock issued and outstanding at the Effective Time (other than shares
of Common Stock then owned of record by the Parent or the
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Acquiror or held in the Company's treasury and other than any Dissenting
Shares); and (ii) the Price Per Share (such product being hereinafter referred
to as the "Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, make the payments provided for in Section 2.1.1 out of the
Exchange Fund. The Exchange Agent may invest all or portions of the Exchange
Fund in any one or more of the following: (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than one year from the
date of acquisition thereof; (b) time deposits and certificates of deposit of
any commercial bank incorporated in the United States of America of recognized
standing having capital and surplus in excess of $50,000,000; (c) securities,
bonds, notes, debentures, investments or other forms of debt of any Person rated
at least AA or the equivalent thereof by Standard & Poor's Corporation and at
least Aa or the equivalent thereof by Moody's Investors Service, Inc.; or (d)
investments in money market or mutual funds registered under the Investment
Company Act of 1940, as amended, whose sole investments are comprised of
securities of the types described in clauses (a) through (c) above. All net
earnings with respect to any investment of the Exchange Fund shall be paid to
the Surviving Corporation as and when requested by the Surviving Corporation. If
any cash or cash equivalents deposited with the Exchange Agent for purposes
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of paying the Price Per Share for the Common Stock pursuant to this Article 2
remains unclaimed following the expiration of six months after the Effective
Time, such cash (together with accrued interest) shall be delivered to the
Surviving Corporation by the Exchange Agent and, thereafter, holders of
certificates that immediately prior to the Effective Time represented shares of
Common Stock shall be entitled to look only to the Surviving Corporation
(subject to abandoned property, escheat or similar laws) as general creditors
thereof with respect to the surrender and exchange of such certificates.
2.4.2 Promptly after the Effective Time, the
Exchange Agent shall mail to each record holder (other than the Parent and the
Acquiror), as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented shares of
Common Stock (the "Certificates") a form letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent) and instructions for use in effecting the surrender of the
Certificates for payment therefor. Upon surrender by such holder to the Exchange
Agent of a Certificate, together with such letter of transmittal duly executed,
the holder of such Certificate shall be entitled to receive in exchange
therefor, cash in an amount equal to the product of the number of shares of
Common Stock represented by such
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Certificate and the Price Per Share, and such Certificate shall forthwith be
cancelled. No interest will be paid or accrued on the cash payable upon the
surrender of the Certificates. If the payment is to be made to a person other
than the person in whose name a Certificate surrendered is registered, it shall
be a condition of payment that: (i) the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer; and (ii) the person
requesting such payment shall pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of the Certificate
surrendered or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. Until surrendered in accordance
with the provisions of this Section 2.4, each Certificate (other than
Certificates representing shares of Common Stock then owned of record by the
Parent or the Acquiror and other than Certificates representing Dissenting
Shares) shall represent for all purposes whatsoever only the right to receive
the Price Per Share in cash multiplied by the number of shares evidenced by such
Certificate, without any interest thereon.
2.4.3 After the Effective Time there shall
be no transfers on the stock transfer books of the Surviving Corporation of the
shares of Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for transfer or for any other reason,
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they shall be cancelled and exchanged for cash as provided
in this Article 2.
2.5 Stock Options. Each holder of an option, warrant, call,
subscription, stock appreciation right or other right or other agreement
obligating the Company to issue, transfer or sell, or securities or rights
convertible or exchangeable for, any shares of Common Stock (each, an "Option"),
which Option is outstanding immediately prior to the Effective Time, whether or
not then exercisable, shall be entitled to receive, and shall receive, in
settlement and cancellation thereof, an amount in cash equal to the product of:
(i) the difference between the Price Per Share and the exercise price of each
such Option; and (ii) the number of shares of Common Stock covered by such
Option. All payments in respect of Options shall be made as soon as practicable
after the Effective Time. Prior to the Effective Time, the Company shall use its
best efforts to cause each holder of an outstanding Option to consent to the
cancellation of all such Options in consideration solely for the payment
provided herein with respect to Options that are outstanding prior to the
Effective Time, and shall take such other action as may be necessary to carry
out the terms of this Section 2.5.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND THE ACQUIROR
The Parent and the Acquiror represent and warrant to the
Company as follows:
3.1 Organization. Each of the Parent and the Acquiror is a
corporation validly existing and in good standing under the laws of the State of
Delaware. The Acquiror is a newly formed, wholly owned subsidiary of the Parent
and, except for activities incident to the acquisition of the Company, the
Acquiror has not engaged in any business activities of any type or kind
whatsoever.
3.2 Authorization; Binding Agreement. Each of the Parent and
the Acquiror has the full legal power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the board of
directors of the Parent and the Acquiror, respectively, and no other proceedings
on the part of the Parent or the Acquiror are necessary to authorize the
execution and delivery of this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each of the Parent and the Acquiror and constitutes a legal, valid
and binding agreement of the Parent and the
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Acquiror, enforceable against each of them in accordance with its terms.
3.3 No Violations. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby nor
compliance by the Parent or the Acquiror with any of the provisions hereof will:
(i) conflict with or result in any breach of any provision of its Certificate of
Incorporation or By-Laws; (ii) require any consent, approval or notice under or
conflict with or result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which the Parent or the Acquiror is a party or by
which either of them or any material portion of their properties or assets may
be bound; or (iii) violate any order, writ, injunction, determination, award,
decree, law, statute, rule or regulation applicable to the Parent or the
Acquiror or any material portion of their properties or assets; provided that no
representation and warranty is made in the foregoing clauses (ii) and (iii) with
respect to matters that could not reasonably be expected to result in Material
Adverse Effect (as defined below) with respect to the Parent. For purposes of
this Agreement, "Material Adverse Effect" with respect to any person means a
material adverse effect on the business,
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assets, properties, condition (financial or otherwise), results of operations or
prospects of such person and its subsidiaries taken as a whole.
3.4 Proxy Statement; Other Information. None of the
information relating to each of the Parent and the Acquiror supplied or to be
supplied by it in writing for inclusion in the Proxy Statement will, at the time
the Proxy Statement is mailed, 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 not misleading and, at the time of the
meeting of stockholders to which the Proxy Statement relates, as then amended or
supplemented, the Parent and the Acquiror shall have provided to the Company
such information, if any, as shall be necessary to correct any statement
relating to the Parent or the Acquiror supplied by it in writing for inclusion
in the Proxy Statement that has become false or misleading in any earlier
communication with respect to the solicitation of any proxy for such meeting.
3.5 Governmental Approvals. No consent, approval or
authorization of or declaration or filing with any foreign, federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality (each, a "Governmental Entity") on the part of each of the
Parent and the Acquiror that has not been obtained or made is required in
connection with the execution or delivery by each of the Parent and the Acquiror
of
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this Agreement or the consummation by each of the Parent and the Acquiror of the
transactions contemplated hereby, other than: (i) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware; (ii) filings
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"); and (iii) consents, approvals, authorizations, declarations or
filings that, if not obtained or made, would not have a Material Adverse Effect
with respect to the Parent or prevent the Parent or the Acquiror from
consummating the transactions contemplated hereby.
3.6 Finders and Investment Bankers. Neither the Parent or the
Acquiror nor any of their respect officers or directors has employed any
investment banker, business consultant, broker or finder, except for Nomura
Wasserstein Perella Co., Ltd. ("NWP") and its affiliate, Wasserstein Perella &
Co., Inc. ("WP"), or incurred any liability for any investment banking, business
consultant, brokerage or finders' fees or commissions in connection with the
transactions contemplated hereby, except for fees payable to NWP, all of which
fees have been, or will be, paid by the Parent or its affiliate.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to the Parent and the
Acquiror as follows:
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4.1 Organization. Each of the Company and its subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of the Company and its subsidiaries is
duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing would not individually or in the aggregate have a Material Adverse
Effect with respect to the Company. The Company has heretofore delivered to the
Parent and the Acquiror accurate and complete copies of the Certificates of
Incorporation and By-Laws, or equivalent governing instruments, as currently in
effect, of the Company and each of its subsidiaries.
4.2 Capitalization. The authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock. As of the date hereof,
3,841,626 shares of Common Stock are outstanding and no shares are held in the
Company's treasury. No other capital stock of the Company is authorized or
issued. All issued and outstanding shares of Common Stock have been duly
authorized and are validly issued, fully paid, nonassessable and free of
preemptive
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rights. As of the date hereof, each of the Majority Stockholders is the record
and, to the knowledge of the Company, beneficial owner of the number of shares
of Common Stock set forth in the Stockholder Agreement executed and delivered by
such Majority Stockholder. Except for the Options granted to the directors of
the Company (which entitle the holders thereof to acquire, in the aggregate,
155,000 shares of Common Stock at an exercise price of $1.00 per share), at the
date hereof there are not, and at the Effective Time there will not be, any
existing Options. Schedule 4.2 sets forth a correct and complete list of (a) the
holders of Options, the number of Options held by each such holder, the number
of Options that are presently vested with respect to each such holder and a
schedule of the future vesting of all presently unvested Options with respect to
each such holder and (b) the holders of all prepetition disputed claims that are
unresolved as of the date hereof (the "Unresolved Claims"), the total amount of
each such Unresolved Claim, and the total number of shares of Common Stock that
would be issuable in full settlement of each such Unresolved Claim if such
Unresolved Claim were resolved for the full amount claimed.
4.3 Subsidiaries. Exhibit 22.01 to the Company's Annual Report
on Form 10-K for the fiscal year ended January 1, 1994 (the "1993 Form 10-K")
sets forth the name, jurisdiction of incorporation or organization and
percentages of outstanding capital stock owned, directly or
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18
indirectly, by the Company, with respect to each subsidiary of the Company.
Except for the Company's 49% ownership interest in Savin Coastal Valley, Inc.
and certain other equity interests that do not, in the aggregate, exceed
$100,000 in value, neither the Company nor any of its subsidiaries owns any
direct or indirect equity interest in any corporation (other than direct or
indirect subsidiaries of the Company), partnership, joint venture or other
entity, domestic or foreign. All of the outstanding shares of capital stock of
each of the Company's subsidiaries have been duly authorized and validly issued
and are fully paid and nonassessable. There are no irrevocable proxies or
similar obligations with respect to such capital stock and no equity securities
or other interests of any of the subsidiaries are or may become required to be
issued by reason of any options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any capital stock of any
subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any subsidiary is bound to issue additional shares of its
capital stock, or options, warrants or rights to purchase or acquire any
additional shares of its capital stock or securities convertible into or
exchangeable for such shares. All shares of capital stock of each of the
Company's subsidiaries are owned by the Company free and clear of any claim,
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19
lien, encumbrance, security interest or agreement with respect thereto, other
than the security interests granted to (a) Foothill Capital Corporation ("FCC")
pursuant to the Amended and Restated Loan and Security Agreement dated December
14, 1993 between the Company and FCC and the Loan and Security Agreement dated
February 7, 1994 between Savin Credit Corporation and FCC and (b) Internationale
Nederlanden Lease Structured Finance B.V. ("ING") pursuant to the Settlement,
Sale and Security Agreement, dated December 7, 1988 (the "ING Agreement"),
between the Company and ING (collectively, the "Creditors' Liens").
4.4 Authority Relative to this Agreement. The Company has
full legal power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board and no other proceedings on
the part of the Company or any subsidiary of the Company are necessary to
authorize the execution and delivery of this Agreement or to consummate the
transactions contemplated hereby (other than the adoption of this Agreement by
the stockholders of the Company in accordance with the DGCL and the Certificate
of Incorporation and By-Laws of the Company). This Agreement has been duly and
validly executed and delivered by the Company and, subject to the approval and
adoption of this Agreement by the stockholders of the Company, constitutes a
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20
legal, valid and binding agreement of the Company, enforceable against it in
accordance with its terms. The Board has unanimously declared the Restriction
Period (as defined in the Company's Certificate of Incorporation) terminated in
accordance with Section 8 of the Company's Certificate of Incorporation, but
only to the extent necessary to permit the consummation of the transactions
contemplated hereby and by the Stockholder Agreements in accordance with their
terms.
4.5 Consents and Approvals; No Violations. Except for
applicable requirements of the Exchange Act, the HSR Act and the filing and
recordation of appropriate merger documents as required by the DGCL, no filing
with, and no permit, authorization, consent or approval of, any Governmental
Entity is necessary for the consummation by the Company of the transactions
contemplated by this Agreement. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will: (i) conflict
with or result in any breach of any provision of the Certificates of
Incorporation or By-Laws or other governing instruments of the Company or any of
its subsidiaries; (ii) except as set forth on Schedule 4.5, require any consent,
approval or notice under or conflict with or result in a violation or breach of,
or constitute (with or without notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or
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21
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which any of
them or any material portion of their properties or assets may be bound; or
(iii) violate any order, writ, injunction, determination, award, decree, law,
statute, rule or regulation applicable to the Company or any of its subsidiaries
or any material portion of their properties or assets; provided that no
representation and warranty is made in the foregoing clauses (ii) and (iii) with
respect to matters that could not reasonably be expected to result in Material
Adverse Effect with respect to the Company.
4.6 Litigation. Except as disclosed in the SEC Filings (as
defined in Section 4.8) or as otherwise set forth on Schedule 4.6 hereto, as of
the date hereof there are no claims, actions, proceedings or, to the knowledge
of the Company, investigations pending or threatened against the Company or any
of its subsidiaries, or any properties or rights of the Company or any of its
subsidiaries, before any court or Governmental Entity that could reasonably be
expected to result in a Material Adverse Effect with respect to the Company. As
of the date hereof, neither the Company nor any of its subsidiaries nor any
property of any of them is subject to any order, judgment, injunction or decree.
A final order and judgment approving the settlement of the litigation captioned
as In re Savin Corporation Securities
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22
Litigation, Civil Action No. B-85-617 (AHN), in the United States District Court
for the District of Connecticut and dismissing such action with prejudice has
been entered by such Court.
4.7 Bankruptcy Matters. The Company has delivered to the
Parent and the Acquiror complete and correct copies of the Company's plan of
reorganization (the "Plan of Reorganization") and disclosure statement in the
Chapter 11 Case (as defined below), as amended, supplemented or modified to date
and as confirmed by the confirmation order of the bankruptcy court, dated as of
November 23, 1993, as entered on the docket of such court on November 24, 1993,
with respect thereto (the "Confirmation Order"), and of the Confirmation Order.
For purposes of this Agreement, "Chapter 11 Case" means Case No. 92 B 44809
(BRL) commenced by the Company and certain other debtors in the United States
Bankruptcy Court for the Southern District of New York for relief under chapter
11 of title 11 of the U.S. Code (the "Bankruptcy Code"). The Plan of
Reorganization became effective on December 14, 1993, and is in full force and
effect as confirmed by the Confirmation Order. No motion: (i) to modify the Plan
of Reorganization (whether under section 1127 of the Bankruptcy Code or
otherwise); (ii) to revoke confirmation (whether under section 1144 of the
Bankruptcy Code or otherwise); or (iii) to convert or dismiss the Chapter 11
Case (whether under section 1112 of the Bankruptcy Code or otherwise) is
pending. The
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23
Confirmation Order has become a "Final Order" as defined in the Plan of
Reorganization and is no longer subject to any appeal, rehearing, reargument,
certiorari or other review.
4.8 SEC Filings; Financial Statements. The Company has made
all filings required to be made with the SEC since September 30, 1991 and has
delivered to the Parent and the Acquiror correct and complete copies of its: (i)
Annual Reports on Form 10-K for the years ended December 31, 1992 and January 1,
1994, as filed with the SEC; (ii) proxy statements relating to all of the
Company's meetings of stockholders (whether annual or special) since September
30, 1993; and (iii) all other reports, statements and registration statements
(including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed
by the Company with the SEC since March 31, 1993 (collectively, the "SEC
Filings"). As of their respective dates, the SEC Filings (including all exhibits
and schedules thereto and documents incorporated by reference therein), did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company and its subsidiaries included or
incorporated by reference in the SEC Filings have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the
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24
notes thereto) and fairly present in all material respects the consolidated
assets, liabilities and financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and changes in cash for the periods then ended (subject, in the case
of any unaudited interim financial statements, to normal year-end adjustments,
which have not been or are not expected to be material).
4.9 Absence of Certain Changes or Events. Except as disclosed
in the SEC Filings or as set forth on Schedule 4.9, since July 2, 1994 there has
not been:
(i) any material adverse change in the business,
assets, properties, condition (financial or otherwise), results of operations or
prospects of the Company and its subsidiaries taken as a whole (the foregoing, a
"Material Adverse Change");
(ii) any damage, destruction or loss, whether
covered by insurance or not, having a Material Adverse Effect;
(iii) any change by the Company in accounting
principles or methods except insofar as may be required by a change in generally
accepted accounting principles;
(iv) any declaration, payment or setting aside for
payment of any dividend or any redemption, purchase or other acquisition of any
shares of capital stock or securities of the Company;
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25
(v) any return of any capital or other distribution
of assets to stockholders of the Company as such;
(vi) any direct or indirect purchase or other
acquisition of stock, other securities or other assets (other than purchases of
such other assets in the ordinary course of business and at arm's-length
purchase prices) of any person and any direct or indirect loan, advance (other
than advances to employees for travel expenses in the ordinary course of
business) or capital contribution to any person other than any joint venture or
partnership in which the Company or any of its subsidiaries, but no affiliate,
has an equity interest;
(vii) any incurrence of any obligation or liability,
including any borrowing or capital expenditure or commitment by the Company or
any of its subsidiaries (other than obligations, liabilities, borrowings and
capital expenditures or commitments through the date hereof in the ordinary
course of business and consistent with past practice);
(viii) any waiver by the Company or any of its
subsidiaries of any right of material value of its respective businesses;
(ix) any payment or commitment to pay by or on
behalf of the Company or any of its subsidiaries any severance or termination
pay to any officer, director, employee, consultant, agent or other
representative of the
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26
Company or any of its subsidiaries, other than in the ordinary course of
business;
(x) a grant of any general increase in the
compensation of its officers or employees (including any such increase pursuant
to any bonus, pension, profit-sharing or other plan or commitment) or any
increase in the compensation payable or to become payable to any such officer or
employee, except for annual increases in the ordinary course of business in
accordance with past practices and the Company's policies in existence as of the
date of this Agreement; or
(xi) any agreement to take, whether in writing or
otherwise, any action which, if taken prior to the date hereof, would have made
any representation or warranty in this Article 4 untrue or incorrect in any
material respect.
Since January 1, 1994, the Company and its subsidiaries have
conducted their respective businesses only in the ordinary course.
4.10 Governmental Authorization and Compliance with Laws.
Except as set forth on Schedule 4.10, the business of the Company and its
subsidiaries has been operated in compliance with all laws, ordinances,
regulations and orders of all Governmental Entities, except for violations which
do not and could not reasonably be expected to result in a Material Adverse
Effect with respect to the Company. Except as set forth on Schedule 4.10, the
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27
Company and its subsidiaries: (i) have all permits, certificates, licenses,
approvals and other authorizations (collectively, "Permits") required in
connection with the operation of their business; (ii) are not in violation of
any Permit applicable to any of them or to the operation of their business; and
(iii) no proceeding is pending or, to the knowledge of the Company, threatened
to revoke any Permit, except those the absence or possible violation of which
does not and could not reasonably be expected to result in a Material Adverse
Effect with respect to the Company.
4.11 Proxy Statement; Other Information. None of the
information relating to the Company and its subsidiaries included in the Proxy
Statement will, at the time the Proxy Statement is mailed, be false or
misleading with respect to any material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading or, at the time of the meeting of stockholders to which
the Proxy Statement relates, as then amended or supplemented, necessary to
correct any statement which has become false or misleading in any earlier
communication with respect to the solicitation of any proxy for such meeting.
The Proxy Statement will comply in all material respects as to form with the
requirements of the Exchange Act and the rules and regulations thereunder.
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28
4.12 Finders and Investment Bankers. Neither the Company nor
any of its officers or directors has employed any investment banker, business
consultant, broker or finder except for The Pendergast Group, Inc.
("Pendergast"), or incurred any liability for any investment banking, business
consultant, brokerage or finders' fees or commissions in connection with the
transactions contemplated hereby, except for fees payable to Pendergast pursuant
to the agreement, dated as of August 8, 1994, between Pendergast and the
Company, all of which fees have been, or will be, paid by the Company.
4.13 Employment and Similar Agreements and Arrangements.
Except as set forth on Schedule 4.13, there are no employment, consulting,
severance or indemnification arrangements, agreements or understandings between
the Company or any of its subsidiaries, on the one hand, and any Majority
Stockholders or directors or officers of the Company or any of its subsidiaries
or of any Majority Stockholder or any of its subsidiaries, on the other hand,
and no "change in control," "golden parachute" or like payments shall become
payable by the Company or any of its subsidiaries to any director or officer of
the Company or any of its subsidiaries as a result of the transactions
contemplated hereby.
4.14 Taxes.
4.14.1 The Company and its subsidiaries
have timely filed all federal, state, local and foreign tax
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returns, tax reports, and declarations of estimated tax, including, without
limitation, consolidated federal income tax returns of the Company and its
subsidiaries (collectively, "Tax Returns") required to be filed through the date
hereof or extensions therefor, and shall prepare and timely file, in a manner
consistent with prior years and applicable law and regulations, all Tax Returns
required to be filed on or before the day of the Effective Time, and all such
Tax Returns are or will be correct and complete in all material respects. The
Company and its subsidiaries have timely paid all Taxes (as defined in Section
4.14.11) that are due, or claimed or asserted by any taxing authority to be due,
from or with respect to any of them through the date hereof and shall timely pay
any Taxes required to be paid by any of them on or before the Effective Time,
except for those that are being contested in good faith by appropriate
proceedings and with respect to which appropriate reserves have been reflected
in the financial statements included in the 1993 Form 10-K or the notes thereto
(the "Financial Statements"). With respect to any period for which Tax Returns
have not yet been filed, or for which Taxes are not yet due or owing, the
Company has no liability for Taxes other than Taxes incurred in the ordinary
course of business or for which accruals were reflected in the Financial
Statements. The Company and its subsidiaries have made all required current
estimated Tax payments sufficient to avoid
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any underpayment penalties in excess of $10,000 in the aggregate.
4.14.2 There are no liens or other
encumbrances with respect to Taxes (other than Taxes not yet due and payable)
upon any of the assets of the Company or any of its subsidiaries except as noted
on Schedule 4.14.2.
4.14.3 The United States federal income
Tax Returns of the Company and its subsidiaries have not been audited or
examined by the United States Internal Revenue Service (the "IRS") since the tax
year ended April 30, 1983. The statute of limitations has expired with respect
to the Company's Federal Income Tax returns for the tax years ended December 31,
1990 and prior, with the exception of tax years in which net operating losses
were generated, to the extent of any utilization of such net operating losses.
The Company and its subsidiaries have had various audits by state and local
taxing jurisdictions. Such audits have been concluded with the exceptions noted
on Schedule 4.14.3. There are no outstanding agreements, waivers or arrangements
extending the statutory period of limitation applicable to any claim for, or the
period for the collection or assessment of, Taxes due from or with respect to
the Company for any taxable period, except as noted on Schedule 4.14.3. The
Company has previously delivered or made available to the Parent and the
Acquiror correct and complete copies of each of: (i) any audit reports issued
within the last three years relating to the
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United States federal, state, local or foreign Taxes due from or with respect to
the Company or any of its subsidiaries; and (ii) the United States federal Tax
Return, and state, local, and foreign Tax Returns for each of the last three
taxable years, filed by the Company or any of its subsidiaries. No closing
agreement pursuant to Section 7121 of the Internal Revenue Code of 1986, as
amended (the "Code") (or any predecessor provision) or any similar provision of
any state, local, or foreign law has been entered into by or with respect to the
Company or any of its subsidiaries. The Company has installment agreements with
various taxing authorities as set forth in Schedule 4.14.3.
4.14.4 No audit or other proceeding,
except as noted on Schedule 4.14.4, by any court, governmental authority, or
similar person is pending or, to the knowledge of the Company, threatened with
respect to any Taxes due from or with respect to the Company or any of its
subsidiaries or any Tax Return filed by or with respect to the Company or any of
its subsidiaries, except as noted on Schedule 4.14.4. No assessment of Tax is
proposed against the Company or any of its subsidiaries or any of their
respective assets except as noted in Section 4.14.4.
4.14.5 No election under any of
Section 108, 168, 338, 472, 1017, 1033, or 4977 of the Code (or any predecessor
provisions) has been made or filed by or with respect to the Company or any of
its subsidiaries. No consent to the application of Section 341(f)(2) of the Code
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32
(or any predecessor provision) has been made or filed by or with respect to any
of the properties of the Company or any of its subsidiaries. None of the
properties of the Company or any of its subsidiaries is an asset or property
that is or will be required to be treated as being owned by any person (other
than the Company or such subsidiary) pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately before the enactment of the Tax Reform Act of 1986.
4.14.6 Neither the Company nor any of its
subsidiaries has agreed to or is required to make any adjustment pursuant to
Section 481(a) of the Code (or any predecessor provision) by reason of any
change in any accounting method, and there is no application by the Company or
any of its subsidiaries pending with any taxing authority requesting permission
for any changes in any accounting method of the Company or any of its
subsidiaries. The IRS has not proposed any such adjustment or change in
accounting method.
4.14.7 To the best of the Company's
knowledge, neither the Company nor any of its subsidiaries has been or is in
violation (or with notice or lapse of time or both, would be in violation) of
any applicable law relating to the payment or withholding of Taxes relating to
employment. The Company and its subsidiaries, through the services of an outside
agent, have duly and timely withheld from employee salaries, wages, and other
compensation and
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paid over to the appropriate taxing authorities all material amounts required to
be so withheld and paid over for all periods under all applicable laws.
4.14.8 Neither the Company nor any of its
subsidiaries is a party to, is bound by or has any obligation under, any Tax
sharing agreement or similar contract.
4.14.9 There is no contract, plan or
arrangement covering any person that, individually or collectively, could give
rise to the payment of any amount that would not be deductible by the Company or
any of its subsidiaries by reason of Section 28OG of the Code.
4.14.10 Neither the Company nor any of its
subsidiaries is a "United States real property holding corporation," within the
meaning of Section 897(c)(2) of the Code.
4.14.11 For purposes of this Agreement,
"Tax" or "Taxes" shall mean:
(i) Any charge imposed by any foreign,
federal, state, county or local government or subdivision thereof with respect
to any income, profits, estimated, sales or use, excise, franchise, ad valorem,
severance, capital levy, production, transfer, withholding, business and
occupation, real or personal property, gross receipt, unemployment, FICA, FUTA,
and other payroll taxes; and
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(ii) Interest, additions and penalties (civil or
criminal) imposed in connection with any Tax and any interest in respect of any
such additions or penalties.
4.15 Employee Benefit Plans.
4.15.1 For purposes of this Agreement:
(i) "Benefit Plan" means any employee
benefit plan, arrangement, policy or commitment, including, without limitation,
any employment, consulting or deferred compensation agreement, executive
compensation, bonus, incentive, pension, profit-sharing, savings, retirement,
stock option, stock purchase or severance pay plan, any life, health, disability
or accidental death and dismemberment insurance plan, any holiday or vacation
practice or any other employee benefit plan within the meaning of section 3(3)
of ERISA, as to which the Company has any direct or indirect, actual or
contingent liability;
(ii) "Company Benefit Plan" means any
Benefit Plan that provides benefits with respect to current
or former Employees;
(iii) "Welfare Plan" means any Benefit Plan
that is a welfare plan within the meaning of and subject to
ERISA section 3(1);
(iv) "Retiree Welfare Plan" means any
Welfare Plan that provides benefits to current or former employees beyond their
retirement or other termination of service (other than coverage mandated by
COBRA, the cost of
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which is fully paid by the current or former employee or his dependents);
(v) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended;
(vi) "COBRA" means the provisions of Code section
4980B and Part 6 of Title I of ERISA;
(vii) "Employee" means any individual employed by
the Company or any of its subsidiaries; and
(viii) "PBGC" means the Pension Benefit Guaranty
Corporation.
4.15.2 Schedule 4.15.2 lists all Company
Benefit Plans. With respect to each such plan, the Company has delivered to the
Parent and the Acquiror correct and complete copies of: (i) all plan texts and
agreements and related trust agreements or annuity contracts; (ii) all summary
plan descriptions and material Employee communications; (iii) the most recent
annual report (including all schedules thereto); (iv) the most recent annual
audited financial statement and opinion applicable to a plan intended to qualify
under code section 401(a) or 403(a); (v) if the plan is intended to qualify
under Code section 401(a) or 403(a), the most recent determination letter, if
any, received from the IRS; and (vi) all material communications with any
governmental entity or agency (including, without limitation, the PBGC and the
IRS).
4.15.3 The Company has no direct or
indirect, actual or contingent liability with respect to any
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Benefit Plan other than to make payments pursuant to Company Benefit Plans in
accordance with the terms of such plans.
4.15.4 Each of the Company and its
subsidiaries has made all material payments due from it to date with respect to
each Benefit Plan.
4.15.5 All material amounts properly
accrued as liabilities to, or expenses of, any Benefit Plan that have not been
paid have been properly reflected on the Financial Statements.
4.15.6 There are no Benefit Plans that are
subject to any of Code section 412, ERISA section 302 or Title IV of ERISA.
4.15.7 Each Benefit Plan conforms in all
material respects to, and its administration is in all material respects in
compliance with, all applicable laws and regulations.
4.15.8 There are no actions, liens, suits
or claims pending or threatened (other than routine claims for benefits) with
respect to any Benefit Plan.
4.15.9 Each Benefit Plan which is intended
to qualify under Code section 401(a) or 403(a) so qualifies.
4.15.10 Each Benefit Plan which is a "group
health plan" (as defined in ERISA section 607(1)) has been operated in all
material respects in compliance with the provisions of COBRA and any applicable,
similar state law.
4.15.11 There is no contract or arrangement
in existence with respect to any Employee that would result
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in the payment of any amount that by operation of Code section 280G would not be
deductible to the Company or any of its subsidiaries.
4.15.12 No assets of the Company are
allocated to or held in a "rabbi trust" or similar funding
vehicle.
4.15.13 There are no Retiree Welfare Plans.
4.15.14 Except as disclosed on Schedule
4.15.14, there are no: (i) unfunded benefit obligations with respect to any
Employee that are not fairly reflected by reserves shown on the Financial
Statements; or (ii) reserves, assets, surpluses or prepaid premiums with respect
to any Welfare Plan.
4.15.15 The consummation of the
transactions contemplated by this Agreement will not: (i) entitle any current or
former Employee to severance pay, unemployment compensation or any similar
payment; (ii) accelerate the time of payment or vesting, or increase the amount
of any compensation due to, any current or former Employee; or (iii) constitute
or involve a prohibited transaction (as defined in ERISA section 406 or Code
section 4975), constitute or involve a breach of fiduciary responsibility within
the meaning of ERISA section 502(l) or otherwise violate Part 4 of Title I of
ERISA.
4.15.16 No Benefit Plan is a "multiple
employer plan" or a "multiemployer plan" within the meaning
of the Code or ERISA.
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4.15.17 No Benefit Plan that is or was
subject to Title IV of ERISA has been terminated; no filing of a notice of
intent to terminate such a Benefit Plan has been made; and the PBGC has not
initiated any proceeding to terminate any such Benefit Plan. No event has
occurred, and no condition or circumstance exists, that presents a material risk
that any Benefit Plan has or is likely to experience a "partial termination"
(within the meaning of Code section 411(d)(3)).
4.15.18 As of the Effective Time, the
Company, its subsidiaries and any entity under common control with the Company
within the meaning of Code section 414(b), (c), (m) or (o) has not incurred any
liability or obligation under the Worker Adjustment and Retraining Notification
Act, as it may be amended from time to time, and within the six-month period
immediately following the Effective Time, will not incur any such liability or
obligation if, during such six-month period, only terminations of employment in
the normal course of operations occur.
4.16 Liabilities. Except as disclosed in the SEC Filings or as
set forth on Schedule 4.16 or any other Schedule to this Agreement, the Company
and its subsidiaries do not have any material direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, choate or inchoate, liquidated or unliquidated, secured or
unsecured, accrued,
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absolute, contingent or otherwise ("Liabilities"), whether or not of a kind
required by generally accepted accounting principles to be set forth in a
financial statement, other than: (i) liabilities fully and adequately reflected
or reserved against on the Financial Statements; and (ii) liabilities incurred
in the ordinary course of business.
4.17 Environmental Matters. Except as set forth on Schedule
4.17, the Company and its subsidiaries are and have been in compliance with all
applicable federal, state, local and foreign laws, principles of common law,
regulations and codes, as well as orders, decrees, judgments or injunctions
issued, promulgated, approved or entered thereunder relating to pollution,
protection of the environment or public health and safety (collectively,
"Environmental Laws"), there is no civil, criminal or administrative judgment,
action, suit, demand, claim, hearing, notice of violation, investigation,
proceeding, notice or demand letter pending or, to its knowledge, threatened
against the Company or any of its subsidiaries pursuant to Environmental Laws
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect with respect to the Company and there are no past
or present events, conditions, circumstances, activities, practices, incidents,
agreements, actions or plans which may prevent compliance with, or which have
given rise to or will give rise to liabilities under,
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Environmental Laws that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Change with respect to the Company.
4.18 Contracts. Schedule 4.18 sets forth a list of all of the
following contracts and other agreements to which the Company or any of its
subsidiaries is a party or by or to which either the Company or any of its
subsidiaries or its or their assets or properties are bound or subject:
(i) customer contracts and agreements for
the sale of products which by their terms exceed one year
and which are in dollar amounts in excess of $300,000
annually;
(ii) supply contracts and agreements which
by their terms exceed one year and which are in dollar
amounts in excess of $500,000 annually;
(iii) contracts, severance agreements and
other agreements with any current or former holder of at least 5% of the Common
Stock or any officer, director, employee, consultant, agent or other
representative providing for payments or benefits of any kind in excess of
$100,000 in the aggregate;
(iv) contracts and other agreements with any
labor union or association representing any employee of the
Company or any of its subsidiaries;
(v) contracts, agreements or other
arrangements between the Company or any of its subsidiaries,
on the one hand, and any of the Majority Stockholders or any
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affiliate thereof (other than the Company or its
subsidiaries), on the other hand;
(vi) joint venture agreements;
(vii) contracts or other agreements under
which the Company or any of its subsidiaries agrees to indemnify any party
pursuant to which the Company could have indemnity obligations in excess of
$10,000 (other than standard purchase, lease or sale contracts entered into in
the ordinary course of business) or to share tax liability of any party;
(viii) contracts and other agreements
relating to the borrowing of money; and
(ix) any other material contract or other
agreement whether or not made in the ordinary course of
business.
There have been delivered or made available to the Parent and
the Acquiror correct and complete copies of all such contracts and other
agreements set forth on Schedule 4.18. All of such contracts and other
agreements are in full force and effect and neither the Company nor any
subsidiary of the Company is in default under any of them, nor, to the knowledge
of the Company, is any other party to any such contract or other agreement in
default thereunder, nor does any condition exist that with notice or lapse of
time or both would constitute a default thereunder, which has or could
reasonably be expected to have a Material Adverse Effect with respect to the
Company. Except as set
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forth on Schedule 4.18, no approval or consent of any person is needed in order
that any contracts and other agreements to which the Company or any of its
subsidiaries is a party or by or to which either the Company or any of its
subsidiaries or its or their assets or properties are bound or subject continue
in full force and effect following the consummation of the transactions
contemplated by this Agreement, except for those approvals or consents, the
failure to obtain which does not and could not reasonably be expected to have a
Material Adverse Effect with respect to the Company. None of the Company or any
of its subsidiaries, or to the Company's knowledge, any affiliate, is a party to
or bound by any contract or agreement which, individually or in the aggregate,
has or could reasonably be expected to have a Material Adverse Effect with
respect to the Company. Except as set forth on Schedule 4.18, no single supplier
or customer supplied or purchased, during the last 12 months more than 5% of the
products supplied to the Company and its subsidiaries taken as a whole or
purchased more than 5% of the products sold by the Company and its subsidiaries
taken as a whole. As of the date hereof, there are no disputes between the
Company and any of its suppliers or customers that have or could reasonably be
expected to have a Material Adverse Effect with respect to the Company.
4.19 Intangible Property. Schedule 4.19 sets
forth a list of all patents on record in the United States
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Patent and Trademark Office (the "PTO") issued to the Company or Savin Business
Machines Corporation and a list of all trademarks on record in the PTO
registered by the Company. To the best of the Company's knowledge, the Company
or its subsidiaries owns, or is licensed to, or otherwise has, the right to use
all of the patents, trademarks, service marks, trade names, copyrights and
franchises (collectively, "Intangible Property") required for the conduct of the
business of the Company or any of its subsidiaries, except for those rights, the
failure of which to have does not and could not reasonably be expected to have a
Material Adverse Effect with respect to the Company. Except as set forth on
Schedule 4.19, the rights of the Company or such subsidiary in such Intangible
Property are free and clear of any liens or other encumbrances and neither the
Company nor any of its subsidiaries has received written notice of any
adversely-held Intangible Property of any other person, or notice of any charge
or claim of any person relating to such Intangible Property or any process or
confidential information of the Company or its subsidiaries and the Company does
not know of any basis for any such charge or claim, except for such liens,
charges and claims that do not and could not reasonably be expected to have a
Material Adverse Effect with respect to the Company.
4.20 Real Estate. Schedule 4.20 sets forth a
list and summary description of: (i) all real property
owned by the Company or any of its subsidiaries and all
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buildings and other structures located on such real property; (ii) all leases,
subleases or other agreements under which the Company or any of its subsidiaries
is lessor or lessee of any real property; (iii) all options held by the Company
or any of its subsidiaries or contractual obligations on its part to purchase or
acquire any interest in real property; and (iv) all options granted by the
Company or any of its subsidiaries or contractual obligations on its part to
sell or dispose of any interest in real property. To the best of the Company's
knowledge, the Company or a subsidiary is the owner of record, lessee under the
leases or holder of the options, as the case may be, of each of the items set
forth on such Schedule (except as set forth in response to clause (iv) above).
To the best of the Company's knowledge, such leases, subleases and other
agreements are in full force and effect and neither the Company nor any of its
subsidiaries has received any notice of default thereunder. Except for the
Creditors' Liens, the leasehold interests of the Company and its subsidiaries
are subject to no lien or other encumbrance that has or could reasonably be
expected to have a Material Adverse Effect with respect to the Company and enjoy
a right of quiet possession as against any such lien or other encumbrance on the
property.
4.21 Insurance. A correct and complete list of
all insurance policies or binders held by or on behalf of
the Company or its subsidiaries or pursuant to which the
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business, properties or assets of the Company or its subsidiaries are insured is
set forth on Schedule 4.21 and the Company has heretofore delivered correct and
complete copies of such policies and binders to the Parent or the Acquiror. Such
policies or binders (as applicable) are in full force and effect and all
premiums due thereon have been paid.
4.22 Labor Controversies. There are no labor controversies
pending or, to the knowledge of the Company, threatened against the Company or
any of its subsidiaries that have or could reasonably be expected to have a
Material Adverse Effect with respect to the Company.
ARTICLE 5
COVENANTS
5.1 Conduct of Business of the Company. Except
as contemplated by this Agreement, during the period from
the date of this Agreement to the Effective Time, the
Company shall, and shall cause each of its subsidiaries to,
conduct its operations according to its ordinary course of
business and consistent with past practice, and the Company
shall, and shall cause each of its subsidiaries to, use its
best efforts to preserve intact its business organization,
to keep available the services of its officers and employees
and to maintain satisfactory relationships with licensors,
licensees, suppliers, contractors, distributors, customers
and others having business relationships with it. Without
limiting the generality of the foregoing, and except as
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otherwise expressly provided in this Agreement, prior to the Effective Time,
neither the Company nor any or its subsidiaries will, without the prior written
consent of the Acquiror:
(i) amend or propose to amend its
Certificate of Incorporation or By-Laws (or comparable
governing instruments);
(ii) authorize for issuance, issue, sell,
pledge, deliver or agree or commit to issue, sell, pledge or deliver (whether
through the issuance or granting of any options, warrants, commitments,
subscriptions, rights to purchase, awards or otherwise) any stock of any class
or any securities convertible into or exchangeable for share of stock of any
class of the Company or any of its subsidiaries, other than shares of Common
Stock issuable upon the exercise of the Options, upon the terms provided
therein, and other than shares of Common Stock issuable to holders of Unresolved
Claims in settlement thereof, upon the terms provided in the Plan of
Reorganization, which holders shall have received notice from the Company of the
existence of this Agreement and the transactions contemplated hereby (which
notice, at the Company's option, may consist, among other things, of delivery of
copies of all press releases issued by the Company prior to the date thereof
with respect to the Merger);
(iii) split, combine or reclassify any shares
of its capital stock or declare, pay or set aside any
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dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem, purchase or
otherwise acquire or offer to acquire any shares of its own capital stock or any
of its subsidiaries;
(iv) (a) except in the ordinary course of
business consistent with past practice, create, incur, assume, maintain or
permit to exist any short-term debt (including obligations in respect of capital
leases) in excess of the amount currently outstanding; (b) create, incur,
assume, maintain or permit to exist any long-term debt (including obligations in
respect of capital leases), except for long-term debt currently outstanding; (c)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, indirectly, contingently or otherwise) for the obligations of any
other person except wholly owned subsidiaries of the Company in the ordinary
course of business consistent with past practice; (d) make any loans, advances
or capital contributions to, or investments in, any other person in excess of
$30,000 in the aggregate (other than customary travel advances to employees or
subsidiaries made in the ordinary course of business consistent with past
practice, prepayments to suppliers of goods and services made in the ordinary
course of business and currently committed capital expenditures); or (e) incur
any material liability or obligation (absolute, accrued, contingent or
otherwise) other than in the ordinary course of business and
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consistent with past practice, or change any assumption
underlying, or methods of calculating, any bad debt,
contingency or other reserve;
(v) (a) except as set forth on Schedule 5.1,
increase in any manner the compensation of any of its directors or officers or
increase in any manner the compensation of any of its employees, except for
annual increases in the ordinary course of business consistent with past
practices and Company policies in existence on the date hereof; (b) pay or agree
to pay any pension, retirement allowance or other employee benefit not required
by any existing plan, agreement or arrangement to any such director, officer or
employee, whether past or present; (c) commit itself to any additional pension,
profit-sharing, bonus, incentive, deferred compensation, stock purchase, stock
option, stock appreciation right, group insurance, severance pay, retirement or
other employee benefit plan, agreement or arrangement, or to any employment or
consulting agreement with or for the benefit of any person, or to amend or
extend any of such plans or any of such agreements in existence on the date
hereof; provided that the Company may commit itself to, or amend, any of such
plans applicable to the employees of the Company generally if all such
commitments and amendments occurring at any one time do not and will not, in the
aggregate, increase the liabilities of the Company; or (d) except as set forth
on Schedule 5.1,
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make any payment or award under any executive compensation
plan of the Company;
(vi) except in the ordinary course of
business consistent with past practice, sell, transfer, mortgage, or otherwise
dispose of, or encumber, or agree to sell, transfer, mortgage or otherwise
dispose of or encumber, any assets or properties, real, personal or mixed;
(vii) enter into any other agreements,
commitments or contracts which, individually or in the aggregate, are material
to the Company and its subsidiaries taken as a whole (except agreements,
commitments or contracts for the purchase, sale or lease of goods or services,
consistent with past practice) or otherwise make any material change in: (a) any
existing material agreement, commitment or arrangement; or (b) the conduct of
the business or operations of the Company and its subsidiaries taken as a whole;
(viii) other than in the ordinary course of
business and consistent with past practice, make any material investment of a
capital nature either by purchase of stock or securities, contributions to
capital, property transfers or otherwise, or by the purchase of any property or
assets of any other individual, firm or corporation;
(ix) other than in the ordinary course of
business and consistent with past practice, waive any rights
of value or make any payment, direct or indirect, of any
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liability of the Company or any of its subsidiaries before
the same comes due in accordance with its terms; or
(x) agree, commit or arrange to do any of
the foregoing.
5.2 Notification of Certain Matters. The Company shall give
prompt notice to the Parent and the Acquiror of: (i) any notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default, received by the Company or any of its
subsidiaries subsequent to the date of this Agreement and prior to the Effective
Time, under any agreement or contract listed or required to be listed on
Schedule 4.18, which default has or could reasonably be expected to have a
Material Adverse Effect with respect to the Company; (ii) any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement; (iii) any notice or other communication from any regulatory authority
in connection with the transactions contemplated by this Agreement; (iv) any
Material Adverse Change or the occurrence of an event that could reasonably be
expected to result in any Material Adverse Change; and (v) any claims, actions,
proceedings or investigations commenced or, to the Company's knowledge,
threatened, involving or affecting the Company or any of its subsidiaries or any
of their property or assets, or, to the Company's knowledge, any employee,
consultant, director or officer, in
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his or her capacity as such, of the Company or any of its subsidiaries which, if
pending on the date hereof, would have been required to have been disclosed in
writing pursuant to Section 4.6 or which relates to the consummation of the
Merger.
5.3 Access and Information.
5.3.1 Between the date of this Agreement
and the Effective Time, the Company shall give the Parent and the Acquiror and
their respective authorized representatives (including their respective
accountants, financial advisors and legal counsel) at all reasonable times
access to all plants, offices, warehouses and other facilities and to all
contracts, agreements, commitments, books and records (including tax returns) of
the Company and its subsidiaries, will permit the Parent and the Acquiror to
make such inspections as they may reasonably require and will cause its officers
and those of its subsidiaries promptly to furnish the Parent or the Acquiror
with: (i) such financial and operating data and other information with respect
to the business and properties of the Company and its subsidiaries as the Parent
or the Acquiror may from time to time reasonably request; and (ii) a copy of
each report, 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. Notwithstanding the foregoing, the parties agree that prior to the date
hereof the Parent and the Acquiror have completed their due
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diligence review of the Company and that the right of access and information
granted to the Parent and the Acquiror pursuant to this Section 5.3.1 shall be
limited to: (i) specific matters that relate to a representation or warranty of
the Company hereunder as to the material accuracy of which the Parent or the
Acquiror shall have a reasonable basis for concern; (ii) specific matters that
relate to a covenant or agreement of the Company hereunder as to the material
performance of which by the Company the Parent or the Acquiror shall have a
reasonable basis for concern; (iii) specific matters that the Parent and the
Acquiror have a reasonable concern may constitute a Material Adverse Change with
respect to the Company; and (iv) matters that the Parent and the Acquiror may
reasonably need to know or understand prior to the Effective Time in connection
with the Parent's management and development of, and plans with respect to, the
Company and its subsidiaries and their assets from and after the Effective Time.
5.3.2 Except as the Company may otherwise
consent in writing, prior to the Effective Time, the Parent, the Acquiror and
their respective affiliates shall hold and shall cause its respective employees,
representatives, consultants and advisors to hold in strict confidence, unless
compelled to disclose by judicial or administrative process, or, in the opinion
of its counsel, by other requirements of law, all documents and information
concerning the Company and its subsidiaries and affiliates
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furnished to the Acquiror or its affiliates in connection with the transactions
contemplated by this Agreement (except to the extent that such information can
be shown to have been: (i) known by the Parent, the Acquiror or their affiliates
prior to its disclosure to any of them by the Company; (ii) in the public domain
through no fault of the Parent, the Acquiror or their affiliates; (iii) later
lawfully acquired by the Parent, the Acquiror or their affiliates from other
sources unless the Parent, the Acquiror or their affiliates knew such
information was obtained in violation of an agreement of confidentiality; or
(iv) was prepared independently by the Parent, the Acquiror or their affiliates
without violating this Agreement) and shall not release or disclose such
information to any other person, except its auditors, attorneys, financial
advisors and other consultants and advisors and lending institutions (including
banks) in connection with this Agreement (it being understood that such persons
shall be informed by the Parent or the Acquiror of the confidential nature of
such information and shall be directed by the Parent or the Acquiror to treat
such information confidentially). If the transactions contemplated by this
Agreement are not consummated, such confidence shall be maintained for three
years from the later of: (a) the date of this Agreement; or (b) the date this
Agreement is terminated (if ever) in accordance with Article 8, except to the
extent such information comes into the public domain under requirements
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of law or through no fault of the Parent or the Acquiror or their affiliates
and, if requested by the Company, the Parent and the Acquiror shall destroy or
return to the Company all copies of written information furnished by the Company
to the Parent or the Acquiror or their affiliates, agents, representatives or
advisors; provided, however, that the Parent may retain one copy of such
materials, under seal, in its Legal Department for use in the defense of any
litigation or claims under the terms hereof. If the Parent or the Acquiror shall
be required to make disclosure of any such information by operation of law, the
Parent or the Acquiror shall give the Company prior notice of the making of such
disclosure and shall use all reasonable efforts to afford the Company an
opportunity to contest the making of such disclosures.
5.4 Company Approval. The Company shall, to the extent
required by applicable law or as otherwise reasonably requested by the Acquiror,
take all steps necessary to duly call, give notice of, convene and hold a
meeting of its stockholders (including filing with the SEC and mailing to its
stockholders the Proxy Statement) as soon as practicable for the purpose of
adopting and approving this Agreement and the transactions contemplated hereby
and for such other purposes as may be necessary or desirable. The Board shall
recommend to its stockholders the adoption and approval of this Agreement and
the transactions contemplated hereby and use its reasonable best efforts to
obtain any necessary
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approval by its stockholders hereby, unless the Board shall determine in good
faith, following an appropriate review and based on the advice of the Board's
outside counsel, that such action would cause the Board to breach its fiduciary
duties under Delaware law.
5.5 Reasonable Commercial Efforts. Upon the terms and subject
to the conditions hereof, each of the parties hereto agrees to use all
reasonable commercial efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, including using all reasonable commercial efforts to: (i) obtain
all necessary consents, amendments to or waivers under the terms of any of the
Company's borrowing or other contractual arrangements required by the
transactions contemplated by this Agreement; (ii) to effect promptly all
necessary or appropriate registrations and filings, including, without
limitation, filings and submissions pursuant to the HSR Act and the DGCL; (iii)
subject to Article 9, to defend and to cooperate with each other in defending
any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby; and (iv) to fulfill or cause the fulfillment of the conditions to
Closing (as defined in Section 7.1). In case at any time after the Effective
Time any further action is
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necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each corporation which is a party to this Agreement
shall take all such necessary action. In the event the Parent exercises the
options granted to it pursuant to the Stockholder Agreements, the Company agrees
to cooperate in releasing the shares of Common Stock subject to such options
then held in escrow by the Company pursuant to Section 4 of the Company's
Certificate of Incorporation. The previous sentence shall survive the
termination of this Agreement.
5.6 Public Announcements. So long as this Agreement is in
effect, the Parent and the Acquiror, on the one hand, and the Company, on the
other hand, shall not, and shall cause their affiliates not to, issue or cause
the publication of any press release or any other announcement with respect to
the Merger or this Agreement without the consent of the other party, except
where such release or announcement is required by applicable law or pursuant to
any listing agreement with, or the rules or regulations of, any securities
exchange, in which case the party will use its best efforts to provide a copy of
the proposed press release or announcement to the other parties prior to its
being made available to the public.
5.7 Exchange Act Compliance. In consummating the
Merger, the Parent, the Acquiror and the Company shall
comply in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder.
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5.8 No Inconsistent Activities. The Company agrees that for
the period of time from the date hereof to and including the Effective Time, the
Company will not, and will not cause or permit any of its affiliates controlled
by it or any of its officers (including the Chairman of the Board), employees,
representatives or agents, and will direct and instruct its directors not to,
initiate or solicit, directly or indirectly, any inquiries or the making of any
proposal with respect to, or, except to the extent required in order for the
Board to act in a manner that is consistent with its fiduciary obligations under
Delaware law, as advised in writing by its outside counsel, engage in
discussions or negotiations with or provide any information to any person in
connection with: (i) the possible disposition of shares of Common Stock or of a
material portion of the assets, rights or operations of the Company; or (ii) any
business combination involving the Company (together, a "Transaction") or
otherwise facilitate any effort or attempt to do or seek any of the foregoing.
The Company immediately shall cease and terminate discussions or negotiations
with all parties other than the Parent and the Acquiror with respect to any
Transaction that have been conducted heretofore. If the Company shall decide in
accordance with its fiduciary obligations under Delaware law (upon the written
advice of outside counsel, as set forth above) to provide information to any
person other than the Parent or the Acquiror or their respective affiliates or
to
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enter into discussions or negotiations respecting a Transaction with any person
other than the Parent or the Acquiror or their respective affiliates, the
Company shall notify the Parent and the Acquiror immediately. Upon receipt of
such notification, the Parent and the Acquiror shall have the unilateral right
to terminate this Agreement and the sole remedy of the Parent and the Acquiror
shall be to receive the fee provided for in Section 5.9, subject to the terms
and conditions of Section 5.9. Any third party receiving any information in
respect of a Transaction shall be subject to confidentiality restrictions
substantially the same as those binding on the Parent and the Acquiror.
5.9 Termination Fee. Upon the occurrence of a
Termination Event (as defined below) the Company shall
promptly (and in any event within ten days after such
occurrence) pay to the Parent a fee equal to $1,000,000. A
"Termination Event" shall occur if:
(i) the Parent or the Acquiror terminates
this Agreement pursuant to Section 8.1(ii) based on a
material breach by the Company of Section 5.8;
(ii) a tender offer or exchange offer for
20% or more of the outstanding voting securities of the Company is commenced on
or before the date that is 120 days after the date hereof and the Board does not
within 10 business days after receipt of such offer unconditionally reject such
offer and recommend that the Company's stockholders reject such offer; and
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(iii) the Company enters into an agreement
on or before the date that is 165 days after the date hereof with any party
other than the Parent or the Acquiror respecting a Transaction (other than such
an agreement entered into after the date that is 120 days after the date hereof
respecting the issuance of shares of Common Stock that do not, in the aggregate,
constitute more than 5% of the outstanding shares of Common Stock or the sale of
assets of the Company that do not, in the aggregate, constitute more than 25% of
the total value of the Company's tangible assets as reflected on the most recent
financial statements of the Company, net of all reserves against such assets).
Except to the extent specifically provided in this Section,
the Parent and the Acquiror shall not be entitled, as a result of a Termination
Event, to any reimbursement of expenses incurred in connection with the
transactions contemplated hereby, it being understood that such fee is intended
in part to serve as such reimbursement in the event of a Termination Event. Upon
payment by the Company of the Termination Fee to the Parent, the Company shall
have no further liability with respect to the Termination Event to either the
Parent or the Acquiror for any (i) fees or expenses incurred by the Parent or
the Acquiror in connection with this Agreement and the transactions contemplated
hereby or (ii) damages or losses of any kind incurred by the Parent or the
Acquiror as a result of such
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termination. This Section shall survive the termination of
this Agreement.
5.10 Indemnification of Directors and Officers. The Surviving
Corporation shall indemnify and hold harmless each present or former director
and officer of the Company and its subsidiaries (the "Indemnified Persons"), as
provided in the Certificate of Incorporation and By-laws of the Company and
Section 145 of the DGCL, in each case as currently in effect. For a period of
three years after the Effective Time, the Surviving Corporation's certificate of
incorporation, as in effect at the Effective Time with respect to
indemnification of officers and directors, shall not be modified if such
modification would lessen or otherwise adversely affect the indemnification
provided thereunder, except as required by law. This Section 5.10 shall survive
the Merger and is intended to benefit each of the Indemnified Persons, each of
whom shall be entitled to enforce this Section 5.10 against the Surviving
Corporation.
5.11 Indemnification of Brokerage. The Parent and the
Acquiror, on the one hand, and the Company, on the other hand, each agree to
indemnify and save the other harmless from any claim or demand for commission or
other compensation by any broker, finder, agent or similar intermediary claiming
to have been employed by or on behalf on the Parent or the Acquiror or any of
their affiliates, on the one hand, or by the Company or any of its affiliates,
on
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the other hand, and to bear the cost of legal expenses incurred in defending any
such claim.
5.12 Escrow Agreement. If, immediately prior to the Closing,
any of the Unresolved Claims shall not have been resolved and satisfied through
the issuance of shares of Common Stock and/or if the Company shall elect to
cause a portion of the purchase price to be paid to the Escrow Agent (as defined
below) pursuant to Section 6.2, the Company shall execute and deliver an Escrow
Agreement (the "Escrow Agreement") in the form attached hereto as Exhibit A with
a person (the "Escrow Agent") designated by the Company and reasonably
satisfactory to the Parent and the Acquiror, and the Company shall issue to the
Escrow Agent, to hold and disburse as provided therein (a) the number of shares
of Common Stock equal to the sum of (i) the aggregate number of shares of Common
Stock issuable in full settlement of all then outstanding Unresolved Claims,
(ii) the aggregate number of shares of Common Stock that would be issuable to
the King Companies (as defined in the Plan of Reorganization), or their
assignees, pursuant to the Plan of Reorganization as a result of the settlement
in full of all the outstanding Unresolved Claims, and (iii) the number of shares
of Common Stock that, if issued and outstanding immediately prior to the
Effective Time, would be converted by virtue of the Merger into the right to
receive cash in an amount equal to the estimated fees, costs and expenses of
settlement of all then outstanding Unresolved Claims, which
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amount shall be agreed to in writing by the Company and the Parent, and (b) the
portion, if any, of the purchase price that the Company shall elect to pay to
the Escrow Agent pursuant to Section 6.2.
5.13 Consents and Waivers. The Company shall use its
reasonable best efforts to obtain all consents and waivers necessary under the
Foothill Capital Corporation ("Foothill") credit facilities of the Company and
Savin Credit Corporation and the ING Agreement with respect to the transactions
contemplated hereby. The Company's undertaking in this Section 5.13 to use
reasonable best efforts to obtain waivers and consents shall not obligate the
Company in connection with obtaining any such waiver or consent to pay money to
Foothill or ING or to agree to become bound by terms more burdensome to the
Company or any of its affiliates than the existing terms of the Foothill credit
facilities or the ING Agreement, as the case may be.
ARTICLE 6
CONDITIONS
6.1 Conditions to Each Party's Obligations. The
respective obligations of each party to effect the Merger
shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions:
(i) This Agreement shall have been adopted
by the affirmative vote of the stockholders of the Company
by the requisite vote in accordance with applicable law;
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(ii) No order, statute, rule, regulation,
executive order, stay, decree, judgment or injunction shall have been enacted,
entered, promulgated or enforced by any court or Governmental Entity that
prohibits or prevents the consummation of the Merger; provided that the Parent,
the Acquiror and the Company shall use their best efforts to have such order,
statute, rule, regulation, executive order, stay, decree, judgment or injunction
vacated; and
(iii) Any waiting period applicable to the
Merger under the HSR Act shall have expired or been terminated.
6.2 Conditions to Obligation of the Parent and
the Acquiror.
6.2.1 The obligation of the Parent and the
Acquiror to effect the Merger shall be subject to the fulfillment, at the
Effective Time, of the following additional conditions, any one or more of which
may be waived by the Parent and the Acquiror:
(i) The Company and each of the Majority
Stockholders shall have performed in all material respects its and their
covenants and obligations under this Agreement and their respective Stockholder
Agreements required to be performed on or prior to the Effective Time pursuant
to the terms hereof and thereof.
(ii) The representations and warranties of
the Company contained in this Agreement and of each of the
Majority Stockholders contained in their respective
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Stockholder Agreements shall be true and correct in all material respects on and
as of the Effective Time as if made on and as of such date (it being agreed that
where any such representation and warranty includes a Material Adverse Effect
exception or other materiality exception, such exception shall be deemed not to
exist for purposes of this Section 6.2.1(ii)).
(iii) There shall not have occurred after
the date hereof any Material Adverse Change. Notwithstanding any other provision
of this Agreement or any disclosure made by the Company to the Parent or the
Acquiror, for purposes of this Section 6.2.1(iii), each of the lawsuits
described on Schedule 4.6 claiming damages in excess of $500,000, net of amounts
to be paid or reimbursed pursuant to the Company's insurance policies and net of
amounts reserved by the Company against such lawsuits, in each case as of the
date hereof (the "Significant Lawsuits") shall be deemed to be an event that
occurred after the date hereof. If any Significant Lawsuit has not been resolved
as of the Closing on terms reasonably satisfactory to the Parent and the
Acquiror, based on the explanation of such Significant Lawsuit previously
provided by the Company, the Parent and the Acquiror shall have the right at the
Closing to claim that such Significant Lawsuit (individually or together with
any other Significant Lawsuits) constitutes a Material Adverse Change hereunder.
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(iv) All actions, proceedings, instruments
and documents required to carry out the transactions contemplated hereby or
incidental hereto, including all steps taken for compliance with the
requirements of the securities, antitrust and regulatory laws, and all other
related legal matters shall have been reasonably satisfactory to and approved by
Paul, Weiss, Rifkind, Wharton & Garrison, counsel for the Parent and the
Acquiror, and such counsel shall have been furnished with such certified copies
of such corporate actions and proceedings and such other instruments and
documents as it shall have reasonably requested, including an opinion of counsel
to the Company.
(v) The New York State Department of
Environmental Conservation's claims against the Company relating to the
Company's former property in Owego, New York shall have been finally resolved in
the manner contemplated by the Stipulation and Order with Respect to Claims of
the New York State Department of Environmental Conservation dated November 29,
1994 between NYSDEC and the Company, a true and correct copy of which has been
provided to the Parent.
6.2.2 Notwithstanding Section 6.2.1, if the
Parent or the Acquiror asserts that there has been one or more failures of any
condition set forth in Section 6.2.1(ii) and/or (iii) (other than with respect
to Sections 4.2, 4.4, 4.5(i) and 4.7 and other than as a result
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of any Significant Lawsuit) and such failures could not reasonably be expected
to result in a net reduction of $2,000,000 or more in either the value of the
Surviving Corporation to the Parent or the Acquiror or the net worth of the
Company from that shown on the July 2, 1994 balance sheet of the Company, such
failures shall not be deemed to constitute a failure of a condition if the
Company agrees to reduce the aggregate purchase price for all of the shares of
Common Stock hereunder in an amount equal to the amount by which the net
reduction in such value or net worth (whichever reduction is greater) exceeds
$500,000.
6.2.3 Notwithstanding Section 6.2.1, if the
Parent or the Acquiror asserts that there has been a failure of the condition
set forth in Section 6.2.1(iii) arising as a result of one or more Significant
Lawsuits, and asserts that a net reduction in value or net worth (whichever
reduction is greater) referred to in such paragraph has occurred, such failure
shall not be deemed to constitute a failure of a condition if (i) the Company
elects to cause a portion of the aggregate purchase price for all of the shares
of Common Stock equal to such asserted net reduction in value or net worth
(whichever reduction is greater) to be paid to the Escrow Agent to be held in
escrow and disbursed as provided in the Escrow Agreement with respect to such
Significant Lawsuits or (ii) the Company agrees to reduce the aggregate purchase
price for all of the shares of Common Stock hereunder in amount equal to such
net reduction in
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value or net worth (whichever is greater) or such other amount as may be agreed
in writing by the Parent, the Acquiror and the Company.
6.2.4 Notwithstanding Section 6.2.1, if the
Parent or the Acquiror asserts that there has been a failure of the condition
set forth in Section 6.2.1(iii) arising as a result of one or more lawsuits
filed against the Company subsequent to the date hereof claiming damages in
excess of $100,000 (the "Unscheduled Significant Lawsuits"), and asserts that a
net reduction in value or net worth (whichever reduction is greater) referred to
in such paragraph has occurred, such failure shall not be deemed to constitute a
failure of a condition if (i) the Parent, the Acquiror and the Company agree to
cause a portion of the aggregate purchase price for all of the shares of Common
Stock equal to such asserted net reduction in value or net worth (whichever
reduction is greater) to be paid to the Escrow Agent to be held in escrow and
disbursed as provided in the Escrow Agreement with respect to such Unscheduled
Significant Lawsuits or (ii) the Parent, the Acquiror and the Company agree to
reduce the aggregate purchase price for all of the shares of Common Stock
hereunder in amount equal to such net reduction in value or net worth (whichever
is greater) or such other amount as may be agreed in writing by the Parent, the
Acquiror and the Company.
6.3 Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger shall be
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subject to the fulfillment at or prior to the Effective Time of the following
additional conditions, any one or more of which may be waived by the Company:
(i) The Parent and the Acquiror shall have
performed in all material respects their covenants and obligations under this
Agreement required to be performed on or prior to the Effective Time pursuant to
the terms hereof;
(ii) The representations and warranties of
the Parent and the Acquiror contained in this Agreement shall be true and
correct in all material respects on and as of the Effective Time as if made on
and as of such date (it being agreed that where any such representation and
warranty includes a Material Adverse Effect exception or other materiality
exception, such exception shall be deemed not to exist for purposes of this
Section 6.3(ii)); and
(iii) All actions, proceedings, instruments
and documents required to carry out the transactions contemplated hereby or
incidental hereto, including all steps taken for compliance with the
requirements of the securities, antitrust and regulatory laws, and all other
related legal matters shall have been reasonably satisfactory to and approved by
Anderson Kill Olick & Oshinsky, P.C., counsel for the Company, and such counsel
shall have been furnished with such certified copies of such corporate actions
and proceedings and such other instruments and documents as it shall have
reasonably requested, including an opinion of counsel to the Parent and the
Acquiror.
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ARTICLE 7
CLOSING
7.1 Time and Place; Filing of Certificates of Merger. Subject
to the provisions of Article 6, the closing of the Merger (the "Closing") shall
take place in New York City at the offices of Paul, Weiss, Rifkind, Wharton &
Garrison, as soon as practicable but in no event later than 10:00 a.m., local
time, on the first business day after the date on which each of the conditions
set forth in Article 6 have been satisfied or waived by the party or parties
entitled to the benefit of such conditions; or at such other place, at such
other time, or on such other date as the Parent, the Acquiror and the Company
may mutually agree. The date on which the Closing actually occurs is herein
referred to as the "Closing Date."
7.2 Filing of Certificates of Merger. At the Closing, the
Parent, the Acquiror and the Company shall cause the Certificate of Merger to be
executed and filed with the Secretary of State of the State of Delaware as
provided in the DGCL, and shall take any and all other lawful actions and do any
and all other lawful things to cause the Merger to become effective.
ARTICLE 8
TERMINATION AND ABANDONMENT
8.1 Termination. This Agreement may be
terminated and the Merger contemplated hereby may be
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abandoned at any time prior to the Effective Time, whether before or after
approval by the stockholders of the Company:
(i) by mutual action of the Parent, the
Acquiror and the Company;
(ii) by the Parent or the Acquiror if the
Company or any of the Majority Stockholders shall have materially breached or
failed to perform in any material respect its covenants or obligations contained
herein or in their respective Stockholder Agreements;
(iii) by the Parent, the Acquiror or the
Company if a court of competent jurisdiction or other Governmental Entity shall
have issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable; and
(iv) by the Parent, the Acquiror or the
Company if the Effective Time shall not have occurred by the date that is 120
days after the date hereof.
8.2 Procedure and Effect of Termination. In the
event of termination and abandonment of the Merger by the
Parent or the Acquiror, on the one hand, or by the Company,
on the other hand, pursuant to Section 8.1, written notice
thereof shall forthwith be given to the other and this
Agreement shall terminate and the Merger shall be abandoned
without further action by any of the parties hereto. If
this Agreement is terminated as provided herein no party
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hereto shall have any liability or further obligation to any other party under
the terms of this Agreement except for the willful breach by any party hereto
and except as stated in Sections 5.3.2, 5.5, 5.8 and 5.9.
ARTICLE 9
MISCELLANEOUS
9.1 Certain Definitions.
9.1.1 For purposes of this
Agreement, the following terms shall have the meanings ascribed to them in this
Section 9.1.1:
(i) "person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or
any department or agency thereof;
(ii) "affiliate," with respect to any
person, shall mean and include any person controlling, controlled by or under
common control with such person, and shall also include any person 20% or more
of whose outstanding voting power is owned by the specified person either
directly or indirectly through subsidiaries; and
(iii) "subsidiary" of any specified person
shall mean any corporation 50 percent or more of the outstanding voting power of
which, or any partnership, joint venture or other entity 50 percent or more of
the total equity interest of which, is directly or indirectly owned by such
specified person. For purposes of this Agreement, all
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72
references to "subsidiaries" of a person shall be deemed to mean "subsidiary" if
such person has only one subsidiary.
9.1.2 For purposes of this
Agreement, the following terms shall have the meanings ascribed to them in the
Sections set forth opposite them below:
<TABLE>
<CAPTION>
Term Section
<S> <C>
1993 Form 10-K.........................................................................................4.3
Acquiror..........................................................................................Recitals
affiliate..............................................................................................9.1
Agreement.........................................................................................Recitals
Bankruptcy Code........................................................................................4.7
Benefit Plan........................................................................................4.15.1
Board..................................................................................................1.8
Certificate of Merger..................................................................................1.2
Certificates.........................................................................................2.4.2
Chapter 11 Case........................................................................................4.7
Closing................................................................................................7.1
Closing Date...........................................................................................7.1
COBRA...............................................................................................4.15.1
Code................................................................................................4.14.5
Common Stock...........................................................................................2.1
Company...........................................................................................Recitals
Company Benefit Plan................................................................................4.15.1
Confirmation Order.....................................................................................4.7
Constituent Corporations..........................................................................Recitals
Creditors' Liens.......................................................................................4.3
DGCL..............................................................................................Recitals
Dissenting Shares......................................................................................2.2
Effective Time.........................................................................................1.2
Employee............................................................................................4.15.1
Environmental Laws....................................................................................4.17
ERISA...............................................................................................4.15.1
Escrow Agent..........................................................................................5.12
Escrow Agreement......................................................................................5.12
Exchange Act...........................................................................................1.8
Exchange Fund........................................................................................2.4.1
Exchange Agent.......................................................................................2.4.1
FCC....................................................................................................4.3
Financial Statements................................................................................4.14.1
Foothill..............................................................................................5.13
Governmental Entity....................................................................................3.5
HSR Act................................................................................................3.5
Indemnified Persons...................................................................................5.11
ING....................................................................................................4.3
ING Agreement..........................................................................................4.3
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Intangible Property...................................................................................4.19
IRS.................................................................................................4.14.5
Liabilities...........................................................................................4.16
Majority Stockholders.............................................................................Recitals
Material Adverse Change................................................................................4.9
Material Adverse Effect................................................................................3.3
Merger............................................................................................Recitals
NOL's...............................................................................................4.14.3
NWP ...................................................................................................3.6
Option.................................................................................................2.5
Option Plan............................................................................................2.5
Parent............................................................................................Recitals
PBGC................................................................................................4.15.1
Pendergast............................................................................................4.12
Permits...............................................................................................4.10
person.................................................................................................9.1
Plan of Reorganization.................................................................................4.7
Price Per Share .....................................................................................2.1.1
Proxy Statement........................................................................................1.8
Retiree Welfare Plan................................................................................4.15.1
SEC Filings............................................................................................4.8
SEC....................................................................................................1.8
Significant Lawsuits............................................................................6.2.1(iii)
Stockholder Agreement.............................................................................Recitals
subsidiary.............................................................................................9.1
Surviving Corporation..................................................................................1.1
Tax................................................................................................4.14.11
Tax Returns.........................................................................................4.14.1
Termination Event......................................................................................5.9
Transaction............................................................................................5.8
Unresolved Claims......................................................................................4.2
Unscheduled Significant Lawsuits.....................................................................6.2.4
Welfare Plan........................................................................................4.15.1
</TABLE>
9.2 Amendment and Modification. Subject to
applicable law, this Agreement may be amended, modified or supplemented only by
a written agreement signed by the parties hereto at any time prior to the
Effective Time with respect to any of the terms contained herein; provided,
however, that, after this Agreement is adopted by the Company's stockholders
pursuant to Section 5.4, no such amendment or modification shall: (i) alter or
change the amount or kind of the consideration to be delivered to the
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74
stockholders of the Company; (ii) alter or change any term of the Certificate of
Incorporation of the Surviving Corporation; or (iii) alter or change any of the
terms or conditions of this Agreement if such alteration or change would
adversely affect the stockholders of the Company.
9.3 Waiver of Compliance; Consents. Any failure of the Parent
or the Acquiror, on the one hand, or the Company, on the other hand, to comply
with any obligation, covenant, agreement or condition herein may be waived by
the Parent, the Acquiror or the Company, respectively, only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or permits consent
by or on behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in this Section 9.3.
9.4 Survival. The respective representations and warranties of
the Parent, the Acquiror and the Company contained herein shall not survive the
Closing hereunder.
9.5 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by telecopier (with a confirmed receipt thereof) or registered or
certified mail (postage prepaid, return receipt requested),
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75
and on the next business day when sent by overnight courier service, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to the Parent, the Acquiror or the
Surviving Corporation, to:
Ricoh Corporation
Five Dedrick Place
West Caldwell, New Jersey 07006
Attention: David R.S. Kennedy, Esq.
Telecopier: (201) 808-7691 or
(201) 882-2134
with a copy to:
Paul, Weiss, Rifkind, Wharton &
Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Toby S. Myerson, Esq.
Telecopier: (212) 757-3990
(b) if to the Company, to:
Savin Corporation
333 Ludlow Street
Stamford, Connecticut 06904
Attention: D. Thomas Abbott
Telecopier: (203) 967-5005
with a copy to:
Anderson Kill Olick & Oshinsky
1251 Avenue of the Americas
New York, New York 10020
Attention: Michael W. Stamm, Esq.
Telecopier: (212) 278-1733
9.6 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder
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shall be assigned by any of the parties hereto without the prior written consent
of the other parties; provided, however, that the rights of the Acquiror may be
transferred in whole or in part to any wholly owned subsidiary of the Parent.
9.7 Expenses. 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 costs
or expenses.
9.8 Governing Law. This Agreement shall be governed by the
laws of the State of New York applicable to agreements made and to be performed
entirely within such State, without regard to the choice of law principles
thereof.
9.9 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.10 Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement.
9.11 Entire Agreement. This Agreement, including
the documents or instruments referred to herein, embodies
the entire agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There
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77
are no restrictions, promises, representations, warranties, covenants, or
undertakings, other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements, including without limitation, the
letter agreement, dated July 26, 1994, between the Company and the Parent, and
the understandings between the parties with respect to the subject matter
hereof.
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9.12 No Third Party Beneficiaries. Except as
expressly provided in Section 5.10, this Agreement is not
intended to, and does not, create any rights or benefits of
any party other than the parties hereto.
IN WITNESS WHEREOF, the Parent, the Acquiror and the Company
have caused this Agreement to be signed by their respective duly authorized
officers on the date first above written.
RICOH CORPORATION
By __________________________
Name:
Title:
SC ACQUISITION CORP.
By __________________________
Name:
Title:
SAVIN CORPORATION
By___________________________
Name:
Title:
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Exhibit 2
Janos Szekeres
70 Ocean Drive East
Stamford, Connecticut
December 21, 1994
Ricoh Corporation
Five Dedrick Place
West Caldwell, NJ 07006
Ladies and Gentlemen:
We understand that simultaneously herewith (i) Ricoh
Corporation (the "Parent"), SC Acquisition Corp., a wholly owned subsidiary of
Parent (the "Merger Sub"), and Savin Corporation (the "Company") are entering
into an Agreement and Plan of Merger (the "Merger Agreement") providing for the
acquisition of the Company by the Parent pursuant to a merger (the "Merger") of
the Merger Sub with and into the Company and (ii) the Parent and each of the
other stockholders of the Company listed on Schedule A to the Merger Agreement
(together with the undersigned, the "Lock-Up Stockholders") is entering into an
agreement substantially similar to this letter agreement (this "Stockholder
Agreement" and, together with the other such agreements, the "Stockholder
Agreements").
The undersigned is a stockholder of the Company and is
entering into this Stockholder Agreement to induce the Parent to enter into the
Merger Agreement.
The undersigned hereby agrees with the Parent as follows:
1. As of the date hereof, the undersigned is the record and
beneficial owner of 326,000 shares (together with any additional shares acquired
after the date hereof, the "Undersigned's Shares") of the Company's common
stock, par value $.001 per share ("Common Stock"), and that, except as set forth
on Schedule A attached hereto, the Undersigned's Shares are free and clear of
all liens, charges, encumbrances, voting agreements and commitments of any kind.
As of the date hereof, the undersigned does not own or hold any voting rights
with respect to any additional shares of Common Stock. The undersigned does not
have any options, warrants or rights to acquire additional shares of Common
Stock.
2. The undersigned agrees that it will not, directly or
indirectly, sell or otherwise transfer, pledge, encumber or dispose of, or enter
into any agreement or commitment to sell or otherwise transfer, pledge, encumber
or dispose of, any of the Undersigned's Shares or any interest therein or grant
any proxies or voting rights with respect thereto, other than pursuant to the
Merger.
NY2-23890.3
<PAGE>
Page 2
3. The undersigned, solely in its capacity as a stockholder of
the Company, agrees to cooperate fully with you in connection with the Merger,
to take promptly all such actions as may be necessary or appropriate to
facilitate the consummation of the Merger and not to take any action that would
impede, interfere with or attempt to discourage the consummation of the Merger.
The undersigned further agrees that it will not, nor will it cause or permit any
of its officers, directors, employees, investment bankers, financial advisors,
attorneys, accountants or other agents or representatives retained by or acting
for or on its behalf or any of its affiliates to, directly or indirectly,
initiate, solicit, encourage, participate in any negotiations regarding, furnish
any confidential information in connection with, endorse or otherwise cooperate
with, assist, participate in or facilitate the making of any proposal or offer
for, or that may reasonably be expected to lead to, an Acquisition Transaction
(as defined below), by any person, corporation, partnership or other entity or
group. As used in this letter agreement "Acquisition Transaction" means any
merger, consolidation or other business combination involving the Company, or
any acquisition in any manner of all or a substantial portion of the equity
(whether by tender offer or otherwise) of, or all or a substantial portion of
the assets of, the Company, whether for cash, securities or any other
consideration or combination thereof, other than pursuant to the transactions
contemplated by the Merger Agreement.
4. The undersigned grants to the Parent an exclusive and
irrevocable option (the "Option") to purchase the Undersigned's Shares at a
price per share (the "Option Price") equal to $41,500,000, less the aggregate
amount of all payments, if any, made by the Company prior to the Option Closing
Date to the holders of Stock Options (as defined below) in connection with any
redemption, cancellation or termination thereof, divided by the total of: (a)
the number of shares of Common Stock issued and outstanding immediately prior to
the closing of the purchase of the Undersigned's Shares pursuant to the Option
(the " Option Closing"); (b) the number of shares of Common Stock that are
issuable pursuant to the Company's plan of reorganization (the "Plan of
Reorganization") in settlement in full of all then outstanding prepetition
disputed claims against the Company that have not been resolved as of the Option
Closing (the "Unresolved Claims"); (c) the number of shares of Common Stock that
are issuable pursuant to all options, calls, subscriptions, stock appreciation
rights and other rights and agreements obligating the Company to issue, transfer
or sell, and securities and rights convertible or exchangeable for, any shares
of Common Stock, including, without limitation, any such rights, including
anti-dilution rights, pursuant to the Plan of Reorganization (collectively,
"Stock Options"), existing as of the Option
NY2-23890.3
<PAGE>
Page 3
Closing, whether or not such Stock Options are then exercisable; and (d) the
number of shares of Common Stock having a value (calculated assuming the Option
Price) in an amount equal to the reasonably estimated out-of-pocket costs and
expenses to be incurred by the Company in connection with the resolution of all
then outstanding Unresolved Claims at any time after the occurrence of any of
the following events:
(i) the failure of the Company to call a
special meeting of stockholders to approve the Merger Agreement for a date on or
before the date that is 120 days after the date hereof (the "Merger Termination
Date") or the adjournment of such meeting to a date after the Merger Termination
Date;
(ii) the failure of the Board of Directors
of the Company to recommend to the stockholders the adoption
and approval of the Merger Agreement or the withdrawal of
such recommendation after it has been made;
(iii) the breach by the undersigned of
paragraph 3 or 8 of this Stockholder Agreement;
(iv) the breach by any other Lock-Up
Stockholder of paragraph 3 or 8 of such stockholder's
Stockholder Agreement;
(v) the breach by the Company of Section 5.8
of the Merger Agreement;
(vi) any attempt by the undersigned to
revoke the proxy granted to the Parent herein or the failure by the undersigned
timely to deliver a valid proxy in the event the validity of the proxy granted
by the undersigned is called into doubt; or
(vii) any attempt by any other Lock-Up
Stockholder to revoke the proxy granted to the Parent under the Stockholder
Agreement to which such Lock-up Stockholder is party or the failure by such
Lock-Up Stockholder timely to deliver a valid proxy in the event the validity of
the proxy granted by such Lock-Up Stockholder thereunder is called into doubt.
5. Subject to paragraph 7 below, if the Parent wishes to
exercise the Option, the Parent shall send a written notice to the undersigned
at the above address specifying a place, time and date (no later than the date
that is 10 days after the date of such notice) for the closing of such purchase.
At a closing for the exercise of the Option: (i) the Parent shall pay the Option
Price with respect to each of the Undersigned's Shares (the "Purchase Price") to
the undersigned by (a) delivering to the
NY2-23890.3
<PAGE>
Page 4
undersigned a certified or bank check or checks payable to the undersigned or to
the order of such other person or entity as designated in writing by the
undersigned in the amount of 90% of the Purchase Price and by (b) delivering to
the Company, to be held in escrow as described below, a certified or bank check
or checks payable to the undersigned or to the order of such other person or
entity as designated in writing by the undersigned in the amount of 10% of the
Purchase Price (the "Escrowed Purchase Price"); and (ii) the undersigned shall
deliver to the Parent a duly executed certificate or certificates representing
all of the Undersigned's Shares, duly endorsed in blank or accompanied by
appropriate stock powers duly endorsed in blank, in each case with signature
guaranteed; provided that any applicable waiting period under the HSR Act shall
have expired. The Company shall hold the Escrowed Purchase Price until the
earlier of (i) the closing of the transactions contemplated by the Merger
Agreement or such similar transactions as may occur pursuant to paragraph 7
below and (ii) the 420th day to occur after the date hereof, at which time the
Company shall, subject to the following conditions, deliver the Escrowed
Purchase Price to the undersigned. If the aggregate purchase price under the
Merger Agreement is adjusted by agreement of the parties thereto, the Purchase
Price hereunder shall be adjusted in a corresponding manner, and the Company
shall (with the cooperation of the Parent in delivering appropriately
denominated replacement check(s) in exchange for the delivery by the Company of
the original check(s) to the Company) deliver a correspondingly smaller portion
of the Escrowed Purchase Price to the undersigned. If the parties to the Merger
Agreement agree to escrow a portion of the Purchase Price thereunder in
connection with any Significant Lawsuit (as defined in the Merger Agreement), a
portion of the Escrowed Purchase Price shall be placed in such escrow, subject
to the terms and conditions thereof, as if the undersigned were at such time a
stockholder of the Company.
6. If the Parent exercises the Option at a time when there are
outstanding any Unresolved Claims, the Parent covenants and agrees (i) at any
time that it has the right and authority to control the management of the
Company, to use its best efforts to cause the Company to resolve finally all
such Unresolved Claims as expeditiously and efficiently as reasonably
practicable and to keep a separate accounting of the amounts in which such
Unresolved Claims are finally resolved and all costs and expenses incurred by
the Company in connection with the resolution of such Unresolved Claims, and
(ii) to pay to the undersigned (or if the Merger has been consummated, to cause
the Company to pay to the undersigned) promptly following the final resolution
thereafter of all such Unresolved Claims, the undersigned's Pro Rata Share (as
defined below) of the Retained Claim Amount (as defined below), if any, with
respect to such
NY2-23890.3
<PAGE>
Page 5
Unresolved Claims. "Pro Rata Share" shall mean, with respect to the undersigned,
a fraction, the numerator of which shall equal the number of the Undersigned's
Shares purchased by the Parent pursuant to the Option and the denominator of
which shall equal the total of: (i) the number of shares of Common Stock issued
and outstanding immediately prior to the Option Closing; and (ii) the number of
shares of Common Stock that are issuable pursuant to all Stock Options
outstanding or existing as of the Option Closing, whether or not exercisable as
of the Option Closing. "Retained Claim Amount" shall mean, with respect to all
Unresolved Claims the amount, if any, by which the aggregate amount of such
Unresolved Claims stated in the Plan of Reorganization exceeds the sum of: (i)
consideration paid or issued by the Company in connection with the resolution of
such Unresolved Claims (including consideration in the form of shares of Common
Stock, which shall be valued for such purpose at the value attributed to such
shares in the Plan of Reorganization, and (ii) all out-of-pocket costs and
expenses incurred by the Company in connection with the resolution of such
Unresolved Claims.
7. The undersigned has granted the Option to the Parent to
induce the Parent to enter into and consummate the transactions contemplated by
the Merger Agreement. The Parent covenants and agrees with the undersigned not
to exercise the Option unless it simultaneously exercises each of the options
provided in the other Stockholder Agreements; provided that, so long as the
Parent shall have attempted in good faith to exercise such other options and
shall have been ready, subject to performance by the other parties to the other
Stockholder Agreements, to perform its own obligations thereunder (including the
payment of the option price contemplated thereby), the closing of the purchase
of the Undersigned's Shares pursuant to the Option shall not be contingent upon
the closing of the purchases by the Parent pursuant to such other options. In
addition, the Parent covenants and agrees with the undersigned that if the
Parent acquires the Undersigned's Shares pursuant to the Option or any of the
shares of Common Stock held by the other Lock-up Stockholders pursuant to the
options contained in the other Stockholder Agreements, (a) it will not
thereafter terminate the Merger Agreement unless (i) at any time thereafter that
a majority of the directors of the Company are persons not designated or
appointed by the Parent, the Company shall materially breach or fail to perform
in any material respect its covenants or obligations under the Merger Agreement
or (ii) the Effective Time (as defined in the Merger Agreement) shall not have
occurred by the date that is 240 days after the date hereof, (b) it will perform
its obligations under the Merger Agreement, and (c) if for any reason the
transactions contemplated by the Merger Agreement are not consummated and the
Merger Agreement is terminated, it shall as promptly as practicable but in no
event later than within
NY2-23890.3
<PAGE>
Page 6
180 days after the termination of the Merger Agreement either offer to the
Company and its stockholders to effect a merger in which the Acquiror or some
other transitory subsidiary of the Parent is merged with and into the Company
or, to the extent permitted by Delaware law, shall make a tender offer for all
of the shares of Common Stock not then held by it, in each case on terms and
conditions as nearly equivalent as possible to those contained in the Merger
Agreement. The provisions of this Section 7 are intended both for the benefit of
the undersigned and for the benefit of the Company and the other stockholders of
the Company, and may not be modified, waived or amended without the consent of
the Company.
8. The undersigned hereby agrees, at any meeting of the
stockholders of the Company and in any action by written consent of the
stockholders of the Company, to: (i) vote all of the shares of capital stock of
the Company then owned by the undersigned in favor of the approval and adoption
of the Merger Agreement; (ii) vote such shares against any action or agreement
that would result in a breach in any material respect of any covenant,
representation or warranty or any other obligation of the Company under the
Merger Agreement; and (iii) vote such shares against any action or agreement
that would impede, interfere with or attempt to discourage the Merger or the
other transactions contemplated by the Merger Agreement.
In furtherance of the foregoing, the undersigned hereby grants
the Parent, with full power of substitution in the premises, its proxy and power
of attorney to vote all of the Undersigned's Shares at any meeting of the
stockholders of the Company, and to execute written consents in order to take
such action without the necessity of a meeting of the stockholders of the
Company, in accordance with the provisions of the preceding paragraph.
The proxy and power of attorney granted herein shall be
irrevocable during the term of the Merger Agreement, shall be deemed to be
coupled with an interest and shall revoke all prior proxies granted by the
undersigned. The undersigned shall not grant any proxy to any person that
conflicts with the proxy granted herein, and any attempt to do so shall be void.
The power of attorney granted herein is a durable power of attorney and shall
survive the disability or incompetence of the undersigned.
9. The undersigned hereby waives its rights to appraisal under
Section 262 of the Delaware General Corporation Law with respect to any shares
of Common Stock owned by it in connection with the transactions contemplated by
the Merger Agreement.
NY2-23890.3
<PAGE>
Page 7
10. So long as the Merger Agreement is in effect, the
undersigned shall not, and shall cause its affiliates not to, issue or cause the
publication of any press release or any other announcement with respect to the
Merger, this letter agreement or the Merger Agreement without the consent of the
Parent, except where such release or announcement is required by applicable law,
in which case the undersigned will use its best efforts to provide a copy of the
proposed press release or announcement to the Parent prior to its being made
available to the public.
11. The undersigned agrees that damages would be an inadequate
remedy for the breach by it of this letter agreement and that, without limiting
any of your other rights, you shall be entitled to a temporary restraining order
and preliminary and permanent injunctive relief in order to enforce the
obligations and agreements of the undersigned contained herein.
12. The undersigned has been duly authorized to enter into
this Stockholder Agreement and the person executing and delivering this
Stockholder Agreement on behalf of the undersigned has been duly authorized to
do so. This letter agreement constitutes a legal, valid and binding agreement of
the undersigned, enforceable against the undersigned in accordance with its
terms.
13. This Stockholder Agreement, the Option and the obligations
of the undersigned hereunder shall terminate upon termination of the Merger
Agreement in accordance with its terms, provided, however, that in the event of
any termination of the Merger Agreement by the Company pursuant to Section
8.1(iv) of the Merger Agreement (which permits the Company to terminate the
Merger Agreement if the Effective Time shall not have occurred by the date that
is 120 days after the date hereof) this Stockholder Agreement, the Option and
the obligations of the undersigned hereunder shall terminate on the date 30 days
after the date of termination of the Merger Agreement. Any modification or
amendment of the Merger Agreement by the parties thereto shall not alter the
agreements and obligations of the undersigned contained herein, provided that
such modification or amendment does not change in any material adverse manner
the form or amount of consideration to be received by the undersigned in respect
of the Undersigned's Shares pursuant to the Merger.
14. This Stockholder Agreement shall be binding upon the
successors, assigns and affiliates of each party hereto and shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to the conflict of laws principles thereof.
NY2-23890.3
<PAGE>
Page 8
15. Any term or provision of this Stockholder Agreement that
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Stockholder Agreement or affecting the validity or enforceability of any of the
terms or provisions of this Stockholder Agreement in another jurisdiction.
16. This Stockholder Agreement constitutes the complete
agreement among the parties with respect to the subject matter hereof. This
Stockholder Agreement may not be modified, altered, amended or waived except by
an agreement in writing signed by you and the undersigned. If any of the other
Stockholder Agreements dated the date hereof between you and certain other
shareholders of the Company are amended, the undersigned shall have the right to
cause you to enter into a similar amendment to this Stockholder Agreement.
Please confirm that the foregoing correctly states
the understanding between us by signing and returning to us
NY2-23890.3
<PAGE>
a counterpart hereof. This letter agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of such
counterparts together shall constitute one and the same instrument.
Very truly yours,
JANOS SZEKERES
By: /s/ Donald Christ
Donald Christ, as
attorney-in-fact for
Janos Szekeres
Confirmed on the date first above written.
RICOH CORPORATION
By: /s/ R.S. Larchuk
R.S. Larchuk
Senior Vice President
Acknowledged and agreed
with respect to paragraphs
5 & 7 above:
SAVIN CORPORATION
By: /s/ D. Thomas Abbott
D. Thomas Abbott
Chairman
NY2-23890.3
<PAGE>
Exhibit 3
Schedule of other Majority Stockholders
executing a Letter Agreement substantially
in the form attached hereto as Exhibit 2
<TABLE>
<CAPTION>
Number of
Shares Subject
Stockholder Date of Agreement to the Agreement
<S> <C> <C>
King Holding December 21, 1994 1,013,583
Corporation
HCS Technology, N.V. December 21, 1994 600,000
Internationale December 21, 1994 600,000
Nederlanden Lease
Structured Finance,
B.V.
</TABLE>
NY1-76623.1
01/05/95 3:20PM
