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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
DUPLEX PRODUCTS INC.
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(NAME OF SUBJECT COMPANY)
DUPLEX PRODUCTS INC.
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(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, $1.00 PAR VALUE
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(TITLE OF CLASS OF SECURITIES)
26609310
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(CUSIP NUMBER OF CLASS OF SECURITIES)
MARK A. ROBINSON, ESQ.
GENERAL COUNSEL AND SECRETARY
DUPLEX PRODUCTS INC.
1947 BETHANY ROAD
SYCAMORE, ILLINOIS 60178
TELEPHONE: (815) 895-2101
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICE AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
WITH A COPY TO:
CHARLES F. THOMAS, ESQ.
HINSHAW & CULBERTSON
220 EAST STATE STREET
P.O. BOX 1389
ROCKFORD, ILLINOIS 61105
TELEPHONE: (815) 963-8488
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ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Duplex Products Inc., a
Delaware corporation (the "Company"). The address of the Company's principal
executive offices is 1947 Bethany Road, Sycamore, Illinois 60178. The class
of equity securities to which this Statement relates is all of the outstanding
shares of Common Stock, par value $1.00 per share (the "Common Stock"), of the
Company, together with the associated preferred stock purchase rights issued
pursuant to the Rights Agreement dated June 8, 1989, between the Company and
Harris Trust and Savings Bank (the Common Stock and the associated preferred
stock purchase rights are collectively referred to as the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Solicitation/Recommendation Statement on Schedule 14D-9 relates
to the offer by Delaware Acquisition Co., a Delaware corporation, and its
parent, The Reynolds and Reynolds Company, an Ohio corporation, both having
their principal corporate offices at 115 South Ludlow Street, Dayton, Ohio
45402 (hereinafter collectively referred to as the "Purchaser" or the
"Purchaser Companies"), to purchase all outstanding Shares, at $12.00 per
Share, net to the seller in cash, on the terms and subject to the conditions
set forth in the Offer to Purchase dated April 22, 1996 (the "Offer to
Purchase") and in the related Letter of Transmittal, copies of which are
attached hereto as Exhibits (c)(1) and (c)(2), respectively (which, as amended
from time to time together constitute the "Offer"). The information set forth
under "Introduction" in the Offer to Purchase, and in Section 1 ("Terms of the
Offer") of the Offer to Purchase is incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND.
(a) This Statement is filed by, Duplex Products Inc., whose business
address is 1947 Bethany Road, Sycamore, Illinois 60178.
(b) The Company and the Purchaser have entered into certain agreements
relating to the Offer. These agreements are summarized in the Offer to
Purchase attached to this Statement as Exhibit (c)(1). The information set
forth under "Introduction" and in Section 11 ("Purpose of the Offer; Plans for
the Company; Merger Agreement; Tender Agreement and Expressions of Intent;
Employment and Consulting Agreements; and Other Agreements") of the Offer to
Purchase is incorporated herein by reference. Certain agreements between the
Company and its executive officers, directors and affiliates are described in
the Company's Proxy Statement dated February 6, 1996 (the "Proxy Statement").
The information set forth in the Section entitled "Employment Contracts and
Termination, Severance, and Change of Control Arrangements" in the Proxy
Statement is incorporated herein by this reference. In addition to the
agreements described in the Proxy Statement, the Company entered into
agreements with David B. Preston, Mark A. Robinson and Marc A. Loomer under
which each was offered a severance of one year's salary in the event that a
change of control occurred with the Company and these individual's respective
employment was subsequently terminated. Under the terms of these agreements,
these individuals are also entitled to a share in a retention pool if they
remain with the Company until such time as a change of control occurs. The
retention pool allocated to each of these individual employees is as follows:
David B. Preston - $125,000; Mark A. Robinson - $225,000; and Marc A. Loomer -
$175,000. Andrew A. Campbell and James R. Ramig are also included in said
retention pool and will receive $160,000 and $100,000 respectively if they
remain with the Company until such time as a change of control occurs.
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ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) The Company is filing this Statement in response to the Offer by
the Purchaser to purchase the Shares, and the Company advises its security
holders to accept the Offer.
(b) The Company's position to recommend that its security holders
accept the Offer of the Purchaser to purchase the Shares is based upon its
evaluation of the Company within the business forms industry during this
decade. At the beginning of 1990, it was evident to the Board of Directors of
the Company (the "Board") that the business forms industry was in a period of
substantial change. Certain changes related to developing technology in
business printing and information systems. Other changes resulted simply from
the desire and expectation of customers that better ways be found to manage
their business forms process.
During the early 1990's, the Company operated with gradually declining
revenues after its most successful year ever when in 1989 it had reported sales
of $326 million and net earnings of $14.7 million. In 1990, and with
increasing urgency thereafter, the Board discussed with management the
declining trend of revenue and net income. Also in 1990, the Company added two
outside members to the Board, creating for the first time a Board with a
majority of outside members.
Important business related to business forms management and inventory
was being added during the early 1990's. However, it was not sufficient to
increase either the revenue or income line of the Company. Management
introduced a plan to acquire other companies in a consolidating industry to
grow revenue and better utilize plant facilities.
Late in 1991, the Board changed the senior operating management.
Early in 1992, David Eskra, a Board member and former chief executive officer
of Pansophic, Inc., was appointed interim President and CEO of the Company. He
was given responsibility to begin the improvement of operations and find a new
operating executive to assist in the task of growing the Company in a rapidly
changing environment.
An executive search led to Ben L. McSwiney. On September 20, 1992,
Mr. McSwiney became President and a member of the Board as Mr. Eskra assumed
the Chairman and CEO positions. Carl L. Peterson, previously President and
CEO, resigned as Chairman. On December 10, 1992, Mr. McSwiney was appointed
CEO.
Mr. McSwiney brought with him some background in the industry, a new
management group and the intention to put the Company in new businesses related
to management information systems. The Company developed an emphasis on
serving the financial industry to the exclusion of former businesses (with the
exception of certain large customers using the forms management capability of
the Company) and undertook a major reorganization of the sales organization and
its compensation programs, and initiated a substantial initiative into
electronic printing.
In June of 1995, following disappointing operating results, Mr.
McSwiney resigned as President, CEO and as a member of the Board. Andrew A.
Campbell, Vice President and Chief Financial Officer, was appointed President
and member of the Board.
During the years 1990 to 1994, sales ranged from a high of $298
million to a low of $259 million (in 1993). For the first time in many years
in 1992, earnings became negative with a $563 thousand loss.
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From 1991 through 1994, the Company took annual restructuring charges of $2
million, $7 million, $1.5 million and $10.0 million respectively, as well
as a charge for accounting changes of $7.1 million. Gross sales rose to $276
million in 1995, a $10 million increase over 1994. During that same period,
net losses decreased to $1.8 million from $16.1 million (including the
restructuring charge taken and accounting changes made in 1994).
In late summer 1995, the Board started to explore strategic
alternatives. During this period, a private company in the industry approached
the Company. After an extensive series of meetings with that company and its
investment banker, they proposed a reverse merger with the Company through
which the privately held company would become a 45% shareholder of the Company.
The Board retained expert assistance to analyze the proposed reverse
merger and the ability of the Company as a stand-alone company to achieve their
business plan. A.T. Kearney, Inc. was retained to do an operational analysis.
Duff & Phelps Capital Markets Co. analyzed financial values of the Company
standing alone, and the proposed reverse merger. Both the operating analysis
and the financial valuation of the proposed reverse merger indicated little
benefits for the Company or its shareholders. The other party was encouraged
to make a cash tender offer to the Company. No offer was made.
Discussion continued through the late autumn of 1995 and winter of
1996 with a major industry company. Contacts were made by John Colman, a
Director acting at the direction of a Committee of the outside Directors of the
Board. Although these contacts were rejected by some parties, significant
interest by industry firms did occur. Discussions with two companies led to
tender offer proposals by each in March, 1996.
The review of the Company's business by the Board on February 1, 1996,
confirmed that the $8 billion forms industry was experiencing continuing
decline at the current rate of approximately 2% per year. The Company, given
its product mix and some problems with its sales organization, had a declining
forms business of about 6% per year with margins lower than most of the
industry. Problems in the Company sales organization made it increasingly
difficult to meet changing market requirements. Over the past five years,
seven major business forms companies in the public market have reported better
results than the Company.
In summary, Duplex has the financial strength to remain a marginal
player for some period. However, it does not have the organizational resources
to reposition itself to become a major industry company. Large investments in
new technologies would be required to position the Company as a competitive
entity in the future. The Board is of the opinion that it has attractive
components to fit with a larger industry company. In the absence of such a
merger of interests, the Company would be expected to continue its decline,
probably at an accelerating pace, with adverse results for the shareholders.
For these reasons, the Board of Directors is recommending that the
shareholders of Duplex Products Inc. accept the offer of Purchaser to purchase
the shares pursuant to the Offer.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company has not retained, nor will it pay any fees or commissions
to any broker, dealer or other person for soliciting or making recommendations
to security holders in connection with the Offer.
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ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Neither the Company, nor any executive officer, director, or
affiliate have engaged in any transactions relating to the Shares within the
sixty (60)-day period prior to filing this Statement.
(b) To the extent known by the Company, the executive officers,
directors and affiliates of the Company presently intend to accept the Offer of
the Purchaser in connection with the sale of all Shares held by such persons,
or beneficially owned by such persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) The Offer has been made pursuant to an Agreement and Plan of
Merger, dated as of April 20, 1996 (the "Merger Agreement"), by and among the
Purchaser Companies and the Company. The Merger Agreement provides that, among
other things, as soon as practicable after the purchase of the Shares pursuant
to the Offer and the satisfaction of the other conditions set forth in the
Merger Agreement and in accordance with the relevant provisions of the General
Corporation Law of the State of Delaware, including provisions under Section
203 of the General Corporation Law of the State of Delaware relating to the
required vote of unaffiliated shareholders, Delaware Acquisition Co. will be
merged with and into the Company (the "Merger"). Following consummation of the
Merger, the Company will continue as the surviving corporation and will be the
wholly owned subsidiary of The Reynolds and Reynolds Company. At the effective
time of the Merger, all issued and outstanding Shares immediately prior to the
effective time (other than Shares held in the treasury of the Company or held
by security holders who shall have demanded and perfected appraisal rights
under Section 262 of the General Corporation Law of the State of Delaware) will
be converted into the right to receive the offer price under the Offer, without
interest. The information set forth under "Introduction" in the Offer to
Purchase is incorporated herein by reference.
(b) There are no other transactions, board resolutions, agreements in
principle, or signed contracts in response to the tender offer, other than
those described pursuant to Item 3(b) of this Statement, which relates to or
would result in an extraordinary transaction relating to the Shares or the
assets of the Company.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The information in this Statement and the documents accompanying this
Statement as Exhibits fully encompass the Company's recommendation to its
security holders in connection with the Offer.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) Recommendation Letter sent to Company security holders on
April 22, 1996.
(b) Not Applicable
(c)(1) Form of Offer to Purchase, dated April 22 , 1996.
(c)(2) Form of Letter of Transmittal.
(c)(3) 1996 Annual Proxy Statement, dated February 6, 1996.
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(c)(4) Agreement and Plan of Merger, dated as of April 20, 1996.
(c)(5) Consulting and Non-Competition Agreement, dated as of April
20, 1996, between the Reynolds and Reynolds Company and Andrew A.
Campbell.
(c)(6) Consulting and Non-Competition Agreement, dated as of April
20, 1996, between the Reynolds and Reynolds Company and James R.
Ramig.
(c)(7) Employment and Non-Competition Agreement, dated as of April
20, 1996, between the Company and Marc A. Loomer.
(c)(8) Employment and Non-Competition Agreement, dated as of April
20, 1996, between the Company and David B. Preston.
(c)(9) Employment and Non-Disclosure Agreement, dated as of April 20,
1996, between the Company and Mark A. Robinson.
(c)(10) Confidentiality Agreement, dated March 3, 1996, by and between
The Reynolds and Reynolds Company and the Company, as amended by
letter dated March 7, 1996 and letter dated April 16, 1996.
(c)(11) Severance Agreement dated November 14, 1995, between the
Company and Andrew A. Campbell; Letter Agreement dated March 13, 1996.
(c)(12) Severance Agreement dated October 2, 1995, between the Company
and James R. Ramig; Letter Agreement dated March 13, 1996.
(c)(13) Agreement dated January 26, 1996, between the Company and Mark
A. Robinson; Letter Agreement dated March 13, 1996.
(c)(14) Agreement dated January 26, 1996, between the Company and
David B. Preston; Letter Agreement dated March 13, 1996.
(c)(15) Agreement dated January 26, 1996, between the Company and Marc
A. Loomer; Letter Agreement dated March 13, 1996.
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SIGNATURE. After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Dated: DUPLEX PRODUCTS INC.
By: /s/ Andrew A. Campbell
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Name: Andrew A. Campbell
Title: President
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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(a) Recommendation Letter sent to Company security holders on April 22, 1996.
(b) Not Applicable
(c)(1) Form of Offer to Purchase, dated April 22, 1996.
(c)(2) Form of Letter of Transmittal.
(c)(3) 1996 Annual Proxy Statement, dated February 6, 1996.
(c)(4) Agreement and Plan of Merger, dated as of April 20, 1996.
(c)(5) Consulting and Non-Competition Agreement, dated as of April 20, 1996, between the
Reynolds and Reynolds Company and Andrew A. Campbell.
(c)(6) Consulting and Non-Competition Agreement, dated as of April 20, 1996, between the
Reynolds and Reynolds Company and James R. Ramig.
(c)(7) Employment and Non-Competition Agreement, dated as of April 20, 1996, between the
Company and Marc A. Loomer.
(c)(8) Employment and Non-Competition Agreement, dated as of April 20, 1996, between the
Company and David B. Preston.
(c)(9) Employment and Non-Disclosure Agreement, dated as of April 20, 1996, between the
Company and Mark A. Robinson.
(c)(10) Confidentiality Agreement, dated March 3, 1996, by and between The Reynolds and
Reynolds Company and the Company, as amended by letter dated March 7, 1996 and letter
dated April 16, 1996.
(c)(11) Severance Agreement dated November 14, 1995, between the Company and Andrew A.
Campbell; Letter Agreement dated March 13, 1996.
(c)(12) Severance Agreement dated October 2, 1995, between the Company and James R. Ramig;
Letter Agreement dated March 13, 1996.
(c)(13) Agreement dated January 26, 1996, between the Company and Mark A. Robinson; Letter
Agreement dated March 13, 1996.
(c)(14) Agreement dated January 26, 1996, between the Company and David B. Preston; Letter
Agreement dated March 13, 1996.
(c)(15) Agreement dated January 26, 1996, between the Company and Marc A. Loomer; Letter
Agreement dated March 13, 1996.
</TABLE>
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EXHIBIT (a)
April 22, 1996
To Our Shareholders:
I am pleased to inform you that on April 20, 1996,
Duplex Products Inc. entered into an Agreement and Plan of
Merger ("Merger Agreement") with The Reynolds and Reynolds
Company and its wholly owned subsidiary, Delaware
[DUPLEX LOGO] Acquisition Co., pursuant to which Delaware Acquisition Co.
has commenced a cash tender offer ("Offer") to purchase all
of the outstanding shares of Duplex Products Inc. together
with any associated stock purchase rights ("Share") for
$12.00 per share. Pursuant to the Merger Agreement, the
Offer will be followed by a merger in which all Shares will
be converted into the right to receive $12.00 per share in
cash, without interest. As a result of the Merger, Duplex
Products Inc. will be a wholly owned subsidiary of The
Reynolds and Reynolds Company.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT
THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST
INTERESTS OF THE SHAREHOLDERS OF DUPLEX PRODUCTS INC., HAS
UNANIMOUSLY APPROVED THE OFFER AND THE MERGER, AND
UNANIMOUSLY RECOMMENDS THAT THE DUPLEX PRODUCTS INC.
SHAREHOLDERS ACCEPT THE OFFER A ND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of
Directors gave careful consideration to a number of factors,
including among other things, the factors described in the
attached Schedule 14D-9 that is being filed today with the
Securities and Exchange Commission, and the opinion of Duff
& Phelps Capital Markets Co., a financial adivsor to Duplex
Products Inc., that the consideration to be received by the
holders of Duples Products Inc. common stock in the Offer
and the Merger is fair to such holders from a financial
point of view.
In addition to the attached Schedule 14D-9 relating to
the Offer, also enclosed is the Offer to Purchase, dated
April 22, 1996, of Delaware Acquisition Co., together with
related materials, including a Letter of Transmittal to be
used for tendering your Shares. These documents set forth
the terms and conditions of the Offer and Merger and provide
instructions as to how to tender your Shares. I urge you to
read the enclosed materials carefully.
Sincerely,
/s/ Andrew A. Campbell
ANDREW A. CAMPBELL
President
Duplex Products Inc.
DUPLEX PRODUCTS, INC.
P.O. BOX 1947
1947 BETHANY ROAD
SYCAMORE, ILLINOIS 60178
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EXHIBIT (c)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
DUPLEX PRODUCTS INC.
AT
$12.00 NET PER SHARE IN CASH
BY
DELAWARE ACQUISITION CO.
A WHOLLY OWNED SUBSIDIARY OF
THE REYNOLDS AND REYNOLDS COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, MAY 17, 1996, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES (AND THE ASSOCIATED RIGHTS) WHICH CONSTITUTE AT LEAST SEVENTY PERCENT
(70%) OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS. THE OFFER IS ALSO
SUBJECT TO OTHER TERMS AND CONDITIONS. SEE SECTION 14.
CERTAIN SHAREHOLDERS OF THE COMPANY HAVE EXPRESSED THEIR PRESENT INTENT TO
TENDER IN THE OFFER, UPON THE TERMS AND SUBJECT TO THE CONDITIONS THEREOF, ALL
SHARES OWNED BY SUCH SHAREHOLDERS (OR APPROXIMATELY 37% OF THE COMPANY'S
OUTSTANDING SHARES CALCULATED ON A FULLY DILUTED BASIS).
THE BOARD OF DIRECTORS OF DUPLEX PRODUCTS INC. UNANIMOUSLY HAS DETERMINED
THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF,
THE SHAREHOLDERS OF DUPLEX PRODUCTS INC., AND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
shares of common stock, par value $1.00 per share (the "COMMON STOCK") and the
associated Rights (as defined herein, and together with the Common Stock, the
"SHARES") should either (i) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver it together with the certificate(s) evidencing
tendered Shares, and any other required documents, to the Depositary or tender
such Shares pursuant to the procedures for book-entry transfer set forth in
Section 3 or (ii) request such shareholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such shareholder. A
shareholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if such shareholder
desires to tender such Shares.
A shareholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply with
the procedures for book-entry transfer described in this Offer to Purchase on or
prior to the Expiration Date, may tender such Shares by following the procedures
for guaranteed delivery set forth in Section 3.
Questions and requests for assistance, or for additional copies of this
Offer to Purchase, the Letter of Transmittal or other tender offer materials,
may be directed to the Information Agent at its address and telephone number set
forth on the back cover of this Offer to Purchase. A shareholder may also
contact brokers, dealers, commercial banks and trust companies for assistance
concerning the Offer.
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The Information Agent for the Offer is:
GEORGESON & COMPANY, INC.
APRIL 22, 1996
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TABLE OF CONTENTS
<TABLE>
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INTRODUCTION........................................................................ 1
1. TERMS OF THE OFFER.................................................................. 4
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES....................................... 5
3. PROCEDURES FOR TENDERING SHARES..................................................... 7
4. WITHDRAWAL RIGHTS................................................................... 9
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES............................................. 9
6. PRICE RANGE OF SHARES; DIVIDENDS.................................................... 10
7. CERTAIN INFORMATION CONCERNING THE COMPANY.......................................... 10
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT................................. 12
9. SOURCE AND AMOUNT OF FUNDS.......................................................... 14
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.................................. 15
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; MERGER AGREEMENT; TENDER AGREEMENT AND
EXPRESSIONS OF INTENT; EMPLOYMENT AND CONSULTING AGREEMENTS; AND OTHER AGREEMENTS... 16
12. DIVIDENDS AND DISTRIBUTIONS......................................................... 27
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE LISTING AND EXCHANGE ACT
REGISTRATION........................................................................ 28
14. CONDITIONS OF THE OFFER............................................................. 29
15. REGULATORY APPROVALS; STATE TAKEOVER LAWS........................................... 31
16. FEES AND EXPENSES................................................................... 34
17. MISCELLANEOUS....................................................................... 34
Schedule I. Directors and Executive Officers of Parent and Purchaser
</TABLE>
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TO THE HOLDERS OF COMMON STOCK OF DUPLEX PRODUCTS INC.:
INTRODUCTION
Delaware Acquisition Co. (the "PURCHASER"), a Delaware corporation and a
wholly owned subsidiary of The Reynolds and Reynolds Company, an Ohio
corporation ("PARENT"), hereby offers to purchase all outstanding shares of
common stock, par value $1.00 per share (the "COMMON STOCK"), of Duplex Products
Inc., a Delaware corporation (the "COMPANY"), and the associated Preferred Stock
Purchase Rights (the "RIGHTS" and, together with the Common Stock, the "SHARES")
issued pursuant to the Rights Agreement dated June 8, 1989 (the "RIGHTS
AGREEMENT") between the Company and Harris Trust and Savings Bank, at a price of
$12.00 per Share, net to the seller in cash, without interest thereon (the
"OFFER PRICE"), upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, as amended
from time to time, together constitute the "OFFER"). Until the Distribution Date
(as defined herein), the Rights will be evidenced by and trade with the
certificates evidencing the Common Stock. See Section 11 for a brief description
of the Rights Agreement and its application to the Offer and the Merger (as
defined herein).
Tendering Shareholder will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer. The Purchaser will pay all charges and expenses of Harris Trust Company
of New York, as Depositary (the "DEPOSITARY"), and Georgeson & Company, Inc., as
Information Agent (the "INFORMATION AGENT"), incurred in connection with the
Offer. See Section 16.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
5,236,895 SHARES (THE "MINIMUM CONDITION"), WHICH CONSTITUTE SEVENTY PERCENT
(70%) OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS. THE COMPANY HAS
INFORMED THE PURCHASER THAT, AS OF APRIL 19, 1996, THERE WERE 7,481,278 SHARES
ISSUED AND OUTSTANDING (THERE WERE ALSO 188,000 COMMON SHARES RESERVED FOR
ISSUANCE UPON EXERCISE OF THE OUTSTANDING OPTIONS GRANTED UNDER THE COMPANY'S
STOCK OPTION PLANS, HOWEVER, THOSE OPTIONS ARE TO BE CANCELLED PURSUANT TO THE
MERGER AGREEMENT; SEE SECTION 11). ASSUMING THE TENDER BY THE TENDERING
SHAREHOLDER OF APPROXIMATELY 2,244,383 SHARES, THE PURCHASER WILL NEED TO
PURCHASE AN ADDITIONAL 2,992,512 SHARES TO SATISFY THE MINIMUM CONDITION.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS, BY UNANIMOUS VOTE,
APPROVED EACH OF THE OFFER AND THE MERGER, HAS DETERMINED THAT EACH OF THE OFFER
AND THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Company has advised Parent that Duff & Phelps Capital Markets Company
has delivered to the Board its opinion as to the fairness of the $12.00 per
Share cash consideration to be received by the shareholders of the Company
pursuant to the Offer and the Merger. Copies of the opinion of Duff & Phelps
Capital Markets Company, which sets forth the factors considered and the
assumptions made by Duff & Phelps Capital Markets Company are contained in the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "SCHEDULE
14D-9"), which is being mailed to shareholders herewith.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of April 20, 1996 (the "MERGER AGREEMENT"), by and among Parent, the
Purchaser and the Company. The Merger Agreement provides that, among other
things, as soon as practicable after the purchase of Shares pursuant to the
Offer and the satisfaction of the other conditions set forth in the Merger
Agreement and in accordance with the relevant provisions of the General
Corporation Law of the State of Delaware ("DELAWARE LAW"), including provisions
under Section 203 of Delaware Law described below relating to the required vote
of unaffiliated
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shareholders, Purchaser will be merged with and into the Company (the "MERGER").
Following consummation of the Merger, the Company will continue as the surviving
corporation (the "SURVIVING CORPORATION") and will be a wholly owned subsidiary
of Parent. At the effective time of the Merger (the "EFFECTIVE TIME"), each
issued and outstanding Share, including the associated Rights, immediately prior
to the Effective Time (other than Shares held in the treasury of the Company or
held by shareholders who shall have demanded and perfected appraisal rights
under Section 262 of Delaware Law) will be converted into the right to receive
the Offer Price, without interest (the "MERGER CONSIDERATION"). The Merger
Agreement is more fully described in Section 11.
The Merger Agreement provides that, promptly upon the purchase by the
Purchaser of Shares pursuant to the Offer and from time to time thereafter, the
Purchaser shall be entitled to designate up to such number of directors, rounded
up to the next whole number, on the Board as will give the Purchaser
representation on the Board equal to the product of the total number of
directors on the Board multiplied by the percentage that the aggregate number of
Shares then beneficially owned by the Purchaser and its affiliates following
such purchase bears to the total number of Shares then outstanding. In the
Merger Agreement, the Company has agreed to use its best efforts promptly to
cause the Purchaser's designees to be elected as directors of the Company,
including increasing the size of the Board or securing the resignations of
incumbent directors or both.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including, if required by law, the approval and adoption of
the Merger Agreement by the requisite vote of the shareholders of the Company.
See Section 11. Under the Company's Restated Certificate of Incorporation and
Delaware Law, except as otherwise described below, the affirmative vote of the
holders of a majority of the outstanding Shares is required to approve and adopt
the Merger Agreement and the Merger. Consequently, if the Purchaser acquires
(pursuant to the Offer or otherwise) at least a majority of the then outstanding
Shares, the Purchaser will have sufficient voting power to approve and adopt the
Merger Agreement and the Merger without the vote of any other shareholder (note
that the Minimum Condition requires a higher percentage of the Shares be
tendered pursuant to the Offer and, if the Minimum Condition is not satisfied,
no assurance can be given that Purchaser will waive the Minimum Condition or
that the Company will grant the required consent to that waiver).
Under Delaware Law, if the Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Shares, the Purchaser will be
able to approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger, without a vote of the Company's shareholders. In
such event, Parent, the Purchaser and the Company have agreed to take, at the
request of the Purchaser, all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after such acquisition,
without a meeting of the Company's shareholders. If, however, the Purchaser does
not acquire at least 90% of the then outstanding Shares pursuant to the Offer or
otherwise and a vote of the Company's shareholders is required under Delaware
Law, a significantly longer period of time will be required to effect the
Merger. See Section 11.
Immediately after the execution of the Merger Agreement, Smith (Donald) &
Company, Inc. entered into a Tender Agreement, dated as of April 20, 1996, with
Parent and the Purchaser (the "TENDER AGREEMENT"). A total of 375,300 Shares, or
approximately 5% of the outstanding Shares calculated on a fully diluted basis,
are covered by the Tender Agreement. Pursuant to the Tender Agreement, the
shareholder has agreed to validly tender pursuant to the Offer and not withdraw
all Shares which are owned of record or beneficially by it prior to the
Expiration Date (as defined in Section 1 below). The Tender Agreement is more
fully described in Section 11. In addition to the Tender Agreement, certain
other shareholders owning collectively 2,419,158 Shares, or approximately 32% of
the outstanding Shares calculated on a fully diluted basis, have expressed their
present intention to tender their Shares pursuant to the Offer.
Parent and Andrew A. Campbell, President of the Company ("CAMPBELL"), have
entered into a consulting and non-competition agreement dated as of April 20,
1996 (the "CAMPBELL CONSULTING AGREEMENT"), pursuant to which Parent has agreed
to retain Campbell as a consultant for a period of two months from consummation
of the Offer. The Campbell Consulting Agreement replaces a severance agreement
and
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<PAGE> 5
other arrangements between Campbell and the Company which would have provided to
Campbell certain "change of control" and severance compensation and benefits.
The Campbell Consulting Agreement is more fully described in Section 11.
Parent and James R. Ramig, Vice President -- Finance and Administration and
Chief Financial Officer of the Company ("RAMIG"), have entered into a consulting
and non-competition agreement dated as of April 20, 1996 (the "RAMIG CONSULTING
AGREEMENT"), pursuant to which Parent has agreed to retain Ramig as a consultant
for a period of three months from consummation of the Offer. The Ramig
Consulting Agreement replaces a severance agreement and other arrangements
between Ramig and the Company which would have provided to Ramig certain "change
of control" and severance compensation and benefits. The Ramig Consulting
Agreement is more fully described in Section 11.
The Company and Marc A. Loomer, Vice President, Operations of the Company
("LOOMER"), have entered into an employment and non-competition agreement dated
as of April 20, 1996 (the "LOOMER EMPLOYMENT AGREEMENT"), pursuant to which the
Company has agreed to retain Loomer as an employee for a period of one year from
consummation of the Offer and to provide certain other benefits. The Loomer
Employment Agreement replaces a severance agreement and other arrangements
between Loomer and the Company which would have provided to Loomer certain
"change of control" and severance compensation and benefits. The Loomer
Employment Agreement is more fully described in Section 11.
The Company and David B. Preston, Vice President, Sales of the Company
("PRESTON"), have entered into an employment and non-competition agreement dated
as of April 20, 1996 (the "PRESTON EMPLOYMENT AGREEMENT"), pursuant to which the
Company has agreed to retain Preston as an employee for a period of one year
from consummation of the Offer and to provide certain other benefits. The
Preston Employment Agreement replaces a severance agreement and other
arrangements between Preston and the Company which would have provided to
Preston certain "change of control" and severance compensation and benefits. The
Preston Employment Agreement is more fully described in Section 11.
The Company and Mark A. Robinson, Vice President, General Counsel and
Secretary of the Company ("ROBINSON"), have entered into an employment and
non-disclosure agreement dated as of April 20, 1996 (the "ROBINSON EMPLOYMENT
AGREEMENT"), pursuant to which the Company has agreed to retain Robinson as an
employee for a period of one year from consummation of the Offer and to provide
certain other benefits. The Robinson Employment Agreement replaces a severance
agreement and other arrangements between Robinson and the Company which would
have provided to Robinson certain "change of control" and severance compensation
and benefits. The Robinson Employment Agreement is more fully described in
Section 11.
All of the Campbell Consulting Agreement, the Ramig Consulting Agreement,
the Loomer Employment Agreement, the Preston Employment Agreement, and the
Robinson Employment Agreement are expressly conditioned upon consummation of the
Offer.
Pursuant to the Merger Agreement, the Company has amended the Rights
Agreement (the "RIGHTS AMENDMENT") in order to (i) prevent the Merger Agreement,
the Tender Agreement, or the consummation of any of the transactions
contemplated thereby, including without limitation, the Offer and the Merger,
from resulting in the issuance of Rights or being deemed a trigger event under
the terms of the Rights Agreement and to (ii) provide that neither Parent nor
the Purchaser will be deemed to be an Acquiring Person (as defined in the Rights
Agreement) by reason of the transactions expressly provided for in the Merger
Agreement and the Tender Agreement. The Rights Amendment will render the Rights
inoperative with respect to any acquisition of Shares by Parent, the Purchaser
or any of their affiliates pursuant to the Merger Agreement and/or the Tender
Agreement. Additionally, the Rights Amendment provides that the Rights Agreement
will terminate immediately prior to the purchase of Shares by Purchaser pursuant
to the Offer.
The Company has informed the Purchaser that, as of April 19, 1996, there
were 7,481,278 Shares issued and outstanding. As a result, as of such date, the
Minimum Condition would be satisfied if the Purchaser acquires 5,236,895 Shares
(as of April 19, 1996 there were also 188,000 Shares reserved for issuance upon
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<PAGE> 6
exercise of the outstanding options granted under the Company's option plans;
however, pursuant to the Merger Agreement those options are to be cancelled --
see Section 11).
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and conditions
of any extension or amendment), the Purchaser will accept for payment and pay
for all Shares validly tendered prior to the Expiration Date (as hereinafter
defined) and not withdrawn in accordance with Section 4. The term "EXPIRATION
DATE" means 12:00 Midnight, New York City time, on Friday, May 17, 1996, unless
and until the Purchaser, in its sole discretion (but subject to the terms of the
Merger Agreement), shall have extended the period of time during which the Offer
is open, in which event the term "Expiration Date" shall mean the latest time
and date at which the Offer, as so extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition. If the Minimum Condition is not satisfied or any or all of
the other events set forth in Section 14 shall have occurred or shall be
determined by the Purchaser to have occurred prior to the Expiration Date, the
Purchaser reserves the right (but shall not be obligated) to (i) decline to
purchase any of the Shares tendered in the Offer and terminate the Offer, and
return all tendered Shares to the Tendering Shareholder, (ii) except for the
Minimum Condition, waive or amend any or all conditions to the Offer, to the
extent permitted by applicable law and the provisions of the Merger Agreement,
and, subject to complying with applicable rules and regulations of the
Securities and Exchange Commission (the "COMMISSION"), purchase all Shares
validly tendered, or (iii) extend the Offer and, subject to the right of
shareholders to withdraw Shares until the Expiration Date, retain the Shares
which have been tendered during the period or periods for which the Offer is
extended.
The Purchaser expressly reserves the right, in its sole discretion, at any
time and from time to time, to extend for any reason the period of time during
which the Offer is open, including the occurrence of any of the events specified
in Section 14, by giving oral or written notice of such extension to the
Depositary. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer, subject to the rights of a tendering
shareholder to withdraw its Shares. See Section 4.
Subject to the applicable regulations of the Commission, the Purchaser also
expressly reserves the right, in its sole discretion (but subject to the terms
of the Merger Agreement), at any time and from time to time, (i) to delay
acceptance for payment of, or, regardless of whether such Shares were
theretofore accepted for payment, payment for, any Shares pending receipt of any
regulatory approval specified in Section 15 or in order to comply in whole or in
part with any other applicable law, (ii) to terminate the Offer and not accept
for payment any Shares if any of the conditions referred to in Section 14 has
not been satisfied or upon the occurrence of any of the events specified in
Section 14 and (iii) to waive any condition or otherwise amend the Offer in any
respect by giving oral or written notice of such delay, termination, waiver or
amendment to the Depositary and by making a public announcement thereof.
The Merger Agreement provides that, without the consent of the Company, the
Purchaser will not decrease the Offer Price, decrease the number of Shares
sought in the Offer, waive the Minimum Condition, change the form of
consideration payable in the Offer, or modify or add to the stated conditions,
except that if on the Expiration Date (as duly extended, if applicable), all
conditions to the Offer shall not have been satisfied or waived, the Offer may
be extended from time to time until June 15, 1996. In addition, the Merger
Agreement provides that without the consent of the Company, the Offer Price may
be increased and the Offer may be extended to the extent required by law in
connection with such an increase in the Offer Price.
The Purchaser acknowledges that (i) Rule 14e-1(c) under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT") requires the Purchaser to
pay the consideration offered or return the Shares
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<PAGE> 7
tendered promptly after the termination or withdrawal of the Offer, and (ii) the
Purchaser may not delay acceptance for payment of, or payment for (except as
provided in clause (i)of the first sentence of the second preceding paragraph),
any Shares upon the occurrence of any of the conditions specified in Section 14
without extending the period of time during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, with such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d)
and 14e-1 under the Exchange Act, which require that material changes be
promptly disseminated to shareholders in a manner reasonably designed to inform
them of such changes) and without limiting the manner in which the Purchaser may
choose to make any public announcement, the Purchaser shall have no obligation
to publish, advertise or otherwise communicate any such public announcement
other than by issuing a press release to the Dow Jones News Service.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Purchaser will extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, the Purchaser should decide to decrease the number of Shares being sought
or to increase or decrease the consideration being offered in the Offer, such
decrease in the number of Shares being sought or such increase or decrease in
the consideration being offered will be applicable to all shareholders whose
Shares are accepted for payment pursuant to the Offer and, if at the time notice
of any such decrease in the number of Shares being sought or such increase or
decrease in the consideration being offered is first published, sent or given to
holders of such Shares, the Offer is scheduled to expire at any time earlier
than the period ending on the tenth business day from and including the date
that such notice is first so published, sent or given, the Offer will be
extended at least until the expiration of such ten business day period. For
purposes of the Offer, a "BUSINESS DAY" means any day other than a Saturday,
Sunday or federal holiday and consists of the time period from 12:01 a.m.
through 12:00 Midnight, New York City time.
The Company has provided the Purchaser with the Company's shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal,
and other relevant materials, will be mailed to record holders of Shares whose
names appear on the Company's shareholder list and will be furnished, for
subsequent transmittal to beneficial owners of Shares, to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the shareholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), the
Purchaser will purchase, by accepting for payment, and will pay for, all Shares
validly tendered prior to the Expiration Date (and not properly withdrawn in
accordance with Section 4) promptly after the later to occur of (i) the
Expiration Date and (ii) the satisfaction or waiver of the conditions set forth
in Section 14. Subject to applicable rules of the Commission and the terms of
the Merger Agreement, the Purchaser expressly reserves the right, in its
discretion, to delay acceptance for payment of, or payment for, Shares pending
receipt of any regulatory approvals specified in Section 15. See Section 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) the certificates
evidencing such Shares (the "SHARE CERTIFICATES") or timely confirmation of a
book-entry transfer (a "BOOK-ENTRY CONFIRMATION") of such Shares, if such
procedure is available, into the Depositary's account at The Depository Trust
Company or the Philadelphia Depository Trust Company (each a "BOOK-ENTRY
TRANSFER FACILITY" and, collectively, the "BOOK-ENTRY TRANSFER FACILITIES")
pursuant to the procedures set forth in Section 3, (ii) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, and
(iii) any other documents required by the Letter of Transmittal.
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<PAGE> 8
The term "AGENT'S MESSAGE" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
On April 23, 1996, Parent anticipates filing with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "ANTITRUST DIVISION") a Premerger Notification and Report Form under the
HSR Act in connection with the purchase of Shares pursuant to the Offer.
Accordingly, it is anticipated that the waiting period under the HSR Act
applicable to the Offer will expire at 11:59 p.m., New York City time, on May 8,
1996. Prior to the expiration or termination of such waiting period, the FTC or
the Antitrust Division may extend such waiting period by requesting additional
information or documentary material from Parent. If such a request is made with
respect to the purchase of Shares in the Offer, the waiting period will expire
at 11:59 p.m., New York City time, on the tenth calendar day after substantial
compliance by Parent with such a request. Thereafter, the waiting period may
only be extended by court order. The waiting period under the HSR Act may be
terminated prior to its expiration by the FTC and the Antitrust Division. Parent
will request early termination of the waiting period, although there can be no
assurance that this request will be granted. Pursuant to the Merger Agreement,
Purchaser may, but need not, extend the Offer until the applicable waiting
period under the HSR Act shall have expired or been terminated. See Section 15
for additional information regarding the HSR Act.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, tendered Shares if, as and when the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of such Shares for payment. Payment for Shares accepted pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for Tendering Shareholder for the purpose of
receiving payments from the Purchaser and transmitting payments to such
Tendering Shareholder. Under no circumstances will interest on the purchase
price for Shares be paid by the Purchaser, regardless of any delay in making
such payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
shareholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure
set forth in Section 3, such Shares will be credited to an account maintained at
such Book-Entry Transfer Facility), as promptly as practicable following the
expiration, termination or withdrawal of the Offer.
If, prior to the Expiration Date, the Purchaser increases the consideration
to be paid per Share pursuant to the Offer, the Purchaser will pay such
increased consideration for all such Shares purchased pursuant to the Offer,
whether or not such Shares were tendered prior to such increase in
consideration.
Shareholders of the Company will be required to tender one Right for each
Share tendered in order to effect a valid tender of such Share. If Rights
Certificates have been distributed to holders of Shares prior to the
consummation of the Offer, Rights Certificates representing a number of Rights
equal to the number of Shares being tendered must be delivered to the Depositary
in order for such Shares to be validly tendered. If Rights Certificates have not
been distributed prior to the time Shares are accepted for payment by the
Purchaser, a tender of Shares will also constitute a tender of the associated
Rights.
The Purchaser reserves the right to transfer or assign, in whole at any
time, or in part from time to time, to one or more of its affiliates, the right
to purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of Tendering
Shareholder to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
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<PAGE> 9
3. PROCEDURES FOR TENDERING SHARES.
VALID TENDER OF SHARES. In order for Shares to be validly tendered
pursuant to the Offer, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message in connection with a book-entry delivery of Shares, and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either (i) the Share Certificates evidencing tendered Shares
must be received by the Depositary at such address or Shares must be tendered
pursuant to the procedure for book-entry transfer described below and a
Book-Entry Confirmation must be received by the Depositary, in each case prior
to the Expiration Date, or (ii) the tendering shareholder must comply with the
guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at each Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at a Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of
Shares may be effected through book-entry transfer at a Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message and any other required documents,
must, in any case, be transmitted to and received by the Depositary at one of
its addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date or the tendering shareholder must comply with the guaranteed
delivery procedures described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Medallion Signature Guarantee
Program, or by any other "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing being
referred to as an "ELIGIBLE INSTITUTION"), except in cases where Shares are
tendered (i) by a registered holder of Shares who has not completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. If a Share Certificate is registered in the name of a
person other than the person who or which signs the Letter of Transmittal, or if
payment is to be made, or a Share Certificate not accepted for payment or not
tendered is to be returned to a person other than the registered holder(s), then
the Share Certificate must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear on the Share Certificate, with the signature(s) on such Share Certificate
or stock powers guaranteed by an Eligible Institution. See Instructions 1 and 5
of the Letter of Transmittal.
If a Share Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Share
Certificate not accepted for payment or not tendered is to be returned, to a
person other than the registered holder(s), then the Share Certificate must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the Share
Certificate, with the signature(s) on such Share Certificate or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
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<PAGE> 10
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer cannot be
completed on or prior to the Expiration Date, such Shares may nevertheless be
tendered if all the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary as provided below prior to the Expiration Date;
and
(iii) in the case of a guarantee of Delivery, the Share Certificates
for all tendered Shares, in proper form for transfer, or a Book-Entry
Confirmation, together with a properly completed and duly executed Letter
of Transmittal (or manually signed facsimile thereof) with any required
signature guarantee and any other documents required by such Letter of
Transmittal, are received by the Depositary within three American Stock
Exchange ("AMEX") trading days after the date of execution of the Notice of
Guaranteed Delivery.
Any Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares purchased
pursuant to the Offer will, in all cases, be made only after timely receipt by
the Depositary of (i) the Share Certificates evidencing such Shares, or a
Book-Entry Confirmation of the delivery of such Shares, as applicable, (ii) a
properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) and (iii) any other documents required by the Letter of
Transmittal.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser, in its sole discretion, whose determination will be
final and binding on all parties. The Purchaser reserves the absolute right to
reject any or all tenders of any Shares determined by it not to be in proper
form or if the acceptance for payment of, or payment for, such Shares may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right, in its sole discretion, to waive any of the conditions of
the Offer or any defect or irregularity in any tender with respect to Shares of
any particular shareholder, whether or not similar defects or irregularities are
waived in the case of other shareholders. No tender of Shares will be deemed to
have been validly made until all defects and irregularities have been cured or
waived.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. None of Parent, the Purchaser, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in tenders or will incur any liability for failure to
give any such notification.
APPOINTMENT AS PROXY. By executing a Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of the Purchaser
as such shareholder's proxies, each with full power of substitution, to the full
extent of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by the Purchaser (and any and all non-cash
dividends, distributions, rights, other Shares, or other securities issued or
issuable in respect of such Shares on or after April 22, 1996). All such proxies
shall be considered coupled with an interest in the tendered Shares. This
appointment will be effective if, when, and only to the extent that, the
Purchaser accepts such Shares for payment pursuant to the Offer. Upon such
acceptance for payment, all prior proxies given by such shareholder with respect
to such Shares and other securities will, without further action, be revoked,
and no subsequent proxies may be given. The designees of the Purchaser will,
with respect to the Shares and other securities for which the appointment is
effective, be empowered to exercise all voting and other rights of such
shareholder as they in their sole
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<PAGE> 11
discretion may deem proper at any annual, special, adjourned or postponed
meeting of the Company's shareholders, by written consent or otherwise, and the
Purchaser reserves the right to require that, in order for Shares or other
securities to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment of such Shares the Purchaser must be able to exercise
full voting rights with respect to such Shares.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT TO
CERTAIN SHAREHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE
OFFER, EACH SUCH SHAREHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH SHAREHOLDER'S
CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH SHAREHOLDER IS NOT
SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE
FORM W-9 IN THE LETTER OF TRANSMITTAL. IF BACKUP WITHHOLDING APPLIES WITH
RESPECT TO A SHAREHOLDER, THE DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF ANY
PAYMENTS MADE TO SUCH SHAREHOLDER. SEE INSTRUCTION 9 OF THE LETTER OF
TRANSMITTAL.
The Purchaser's acceptance for payment of Shares tendered pursuant to the
Offer will constitute a binding agreement between the tendering shareholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable except that such Shares may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after June 20, 1996, or
at such later time as may apply if the Offer is extended.
If the Purchaser extends the Offer, is delayed in its acceptance for
payment of Shares or is unable to accept Shares for payment pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent that
Tendering Shareholder is entitled to withdrawal rights as described in this
Section 4. Any such delay will be by an extension of the Offer to the extent
required by law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If Share Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such Share Certificates, the serial numbers shown on such Share
Certificates must be submitted to the Depositary and the signature(s) on the
notice of withdrawal must be guaranteed by an Eligible Institution, unless such
Shares have been tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedure for book-entry transfer as set
forth in Section 3, any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of Parent, the
Purchaser, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
Any Shares properly withdrawn will thereafter be deemed to not have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares
pursuant to the Offer or in the Merger will be a taxable transaction for federal
income tax purposes and may
9
<PAGE> 12
also be a taxable transaction under applicable state, local or foreign tax laws.
In general, a shareholder will recognize gain or loss for federal income tax
purposes equal to the difference between the amount of cash received in exchange
for the Shares sold and such shareholder's adjusted tax basis in such Shares.
Assuming the Shares constitute capital assets in the hands of the shareholder,
such gain or loss will be capital gain or loss and will be long term capital
gain or loss if the holder has held the Shares for more than one year at the
time of the sale. Gain or loss will be calculated separately for each block of
Shares tendered pursuant to the Offer.
The foregoing discussion may not be applicable to certain types of
shareholders, including shareholders who acquired Shares pursuant to the
exercise of stock options or otherwise as compensation, individuals who are not
citizens or residents of the United States and foreign corporations, or entities
that are otherwise subject to special tax treatment under the Internal Revenue
Code of 1986, as amended.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. SHAREHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE
OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and principally
traded on the AMEX and quoted under the symbol DPX. The following table sets
forth, for the quarters indicated, the high and low sales prices per Share on
the AMEX as reported by the Dow Jones News Service.
<TABLE>
<CAPTION>
MARKET PRICE
--------------
HIGH LOW
---- ---
<S> <C> <C>
FISCAL YEAR ENDED OCTOBER 28, 1994:
First Quarter................................ $11 3/4 10
Second Quarter............................... 11 1/2 9 3/8
Third Quarter................................ 10 8 6/8
Fourth Quarter............................... 9 1/8 8 5/8
FISCAL YEAR ENDED OCTOBER 28, 1995:
First Quarter................................ 9 6/8 6 3/4
Second Quarter............................... 9 1/4 7 1/4
Third Quarter................................ 9 1/8 7 4/5
Fourth Quarter............................... 8 8 7/8
FISCAL YEAR ENDED OCTOBER 27, 1996:
First Quarter................................ 9 1/4 7 3/10
</TABLE>
On April 19, 1996, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, the reported closing
sales price of the Shares on the AMEX was $11 7/8 per Share. On April 19, 1996,
the last full trading day prior to the date of this Offer to Purchase, the
reported closing sales price of the Shares on the AMEX was $11 7/8 per Share.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company did not pay any dividends during the 1994 and 1995 fiscal years
and has not paid any dividends during the 1996 fiscal year.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning
the Company contained in this Offer to Purchase, including financial
information, has been taken from or based upon publicly available documents and
records on file with the Commission and other public sources. Neither Parent nor
the Purchaser assumes any responsibility for the accuracy or completeness of the
information concerning the Company contained in such documents and records or
for any failure by the Company to disclose events which may have occurred or may
affect the significance or accuracy of any such information but which are
unknown to Parent or the Purchaser.
10
<PAGE> 13
The Company is a Delaware corporation and its principal executive offices
are located at 1947 Bethany Road, Sycamore, Illinois 60178. The telephone number
of the Company at such offices is (815) 895-2101. The Company began operations
in 1947 as a designer and manufacturer of business forms primarily focused on
government markets. Over the years, the Company has broadened considerably the
scope of its products and services to keep pace with emerging technologies and
the changing information management requirements of businesses. Today the
Company serves both the business forms and information management needs of
customers in financial, industrial, retail and commercial markets, with the
primary objective of assisting them in improving the efficiency of their
operations and lowering their cost of processing business critical information.
FINANCIAL INFORMATION. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the financial statements contained in the
Company's Annual Report on Form 10-K for the fiscal year ended October 28, 1995
(the "COMPANY FORM 10-K"). More comprehensive financial information is included
in the Company Form 10-K and other documents filed by the Company with the
Commission. The financial information that follows is qualified in its entirety
by reference to the Company Form 10-K and other documents, including the
financial statements and related notes contained therein. The Company Form 10-K
and other documents may be examined and copies may be obtained from the offices
of the Commission in the manner set forth below.
DUPLEX PRODUCTS INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED
LAST SATURDAY OF
OCTOBER,
----------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
OPERATING STATEMENT DATA:
Net Sales................................................ $275,728 $265,791 $258,867
Cost of Goods Sold....................................... $210,931 $204,062 $194,977
Total Costs and Expenses................................. $ 68,733 $ 76,520 $ 62,539
Earnings (Loss) before income taxes and accounting
changes............................................... $ (3,042) $(14,747) $ 2,231
Net Earnings (Loss)...................................... $ (1,872) $(16,127) $ 2,454
PER SHARE INFORMATION
Net Earnings (Loss) per share............................ $ (0.25) $ (2.12) $ 0.32
BALANCE SHEET DATA:
Total Current Assets..................................... $ 96,246 $105,156 $108,584
Property, Plant, and Equipment, Net...................... $ 38,815 $ 37,000 $ 44,511
Total Assets............................................. $140,309 $146,208 $156,059
Total Current Liabilities................................ $ 31,799 $ 33,642 $ 25,212
Long-term Debt........................................... $ 4,695 $ 5,928 $ 7,150
Total Deferred Liabilities and Credits................... $ 6,177 $ 6,599 $ 6,434
Total Shareholders' Equity............................... $ 97,638 $100,039 $117,263
</TABLE>
The Company is subject to the information and reporting requirements of the
Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities, any material interests of such persons in
transactions with the Company and other matters is required to be disclosed in
proxy statements distributed to the Company's shareholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
also should be available for inspection and copying at prescribed rates at the
following regional offices of the Commission: Seven World Trade Center, New
York, New York 10048; and 500 West Madison Street, Suite 1400, Chicago,
11
<PAGE> 14
Illinois 60661. Copies of this material may also be obtained by mail, upon
payment of the Commission's customary fees, from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. Reports, proxy
statements and other information concerning the Company should also be available
for inspection at the offices of the AMEX, 86 Trinity Place, New York, New York
10006-1881. Except as otherwise noted in this Offer to Purchase, all of the
information with respect to the Company and its affiliates set forth in this
Offer to Purchase has been derived from publicly available information.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT.
THE PURCHASER. The Purchaser, a newly incorporated Delaware corporation,
has not conducted any business other than in connection with the Offer, the
Merger Agreement and the Tender Agreement. All of the issued and outstanding
shares of capital stock of the Purchaser are beneficially owned by Parent. The
principal executive offices of the Purchaser are located at 115 South Ludlow
Street, Dayton, Ohio 45402. The telephone number of the Purchaser at such
offices is (513) 443-2000.
PARENT. Parent is an Ohio corporation organized in 1889. The principal
executive offices of Parent are located at 115 South Ludlow Street, Dayton, Ohio
45402. The telephone number of Parent at such offices is (513) 443-2000.
Parent operates primarily in two business segments -- computer systems
(automotive and healthcare markets) and business forms.
Parent markets turnkey information management systems and professional
services primarily to automobile dealers and to physician groups and integrated
healthcare networks. The hardware sold is purchased from computer hardware
manufacturers which specialize in platforms for the UNIX operating system. With
a few exceptions, the application software products are owned by Parent and
licensed to users. Some of the software products include standard programs for
accounting, vehicle and parts inventory control and related billing, leasing,
finance and insurance, and manufacturer communications. Through various
subsidiaries, Parent provides financing for its computer systems primarily
through non-cancelable financing leases.
The business forms segment offers its products and services to
value-seeking customers in the automotive, healthcare and general business
segments. Products and services include standard and custom business forms,
forms management services, promotional items, custom designed filing systems,
dealership customer satisfaction measurement and management services, customer
prospecting and promotional mailing services.
Parent is subject to the information and reporting requirements of the
Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning Parent's directors and officers,
their remuneration, stock options granted to them, the principal holders of
Parent's securities, any material interests of such persons in transactions with
Parent and other matters is required to be disclosed in proxy statements
distributed to Parent's shareholders and filed with the Commission. These
reports, proxy statements and other information should be available for
inspection and copies may be obtained in the same manner as set forth for the
Company in Section 7. The Parent's Common Stock is listed on the NYSE, and
reports, proxy statements and other information concerning Parent should also be
available for inspection at the offices of the NYSE, 20 Broad Street, New York,
New York 10005.
Set forth below are certain selected consolidated financial data with
respect to Parent and its subsidiaries for Parent's last three fiscal years,
excerpted or derived from audited financial statements presented in Parent's
1995 Annual Report to Shareholders filed by Parent with the Commission. More
comprehensive financial information is included in such reports and other
documents filed by Parent with the Commission. The financial information summary
set forth below is qualified in its entirety by reference to those reports and
other documents which have been filed with the Commission and all the financial
information and related notes contained therein.
12
<PAGE> 15
THE REYNOLDS AND REYNOLDS COMPANY
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
FOR THE YEARS ENDED SEPTEMBER 30 1995 1994 1993 1992 1991
- ------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED
Net Sales and Revenues
Information systems............. $888,580 $789,306 $677,748 $625,634 $614,679
Financial services.............. 22,311 19,488 19,218 19,190 17,320
-------- -------- -------- -------- --------
Total net sales and revenues.... $910,891 $808,794 $696,966 $644,824 $631,999
======== ======== ======== ======== ========
Income Before Effect of Accounting
Changes............................ $ 78,594 $ 66,204 $ 52,522 $ 38,092 $ 24,634
Effect of Accounting Changes(1)...... (19,106) 1,100
-------- -------- -------- -------- --------
Net Income........................... $ 78,594 $ 66,204 $ 33,416 $ 39,192 $ 24,634
======== ======== ======== ======== ========
Earnings Per Common Share
Income before effect of
accounting changes............ $ 1.85 $ 1.51 $ 1.20 $ .81 $ .54
Effect of accounting
changes(1).................... (.44) .03
-------- -------- -------- -------- --------
Net income...................... $ 1.85 $ 1.51 $ .76 $ .84 $ .54
======== ======== ======== ======== ========
Return on Equity
Income before effect of
accounting changes............ 25.1% 23.8% 20.2% 14.8% 9.9%
Net income...................... 25.1% 23.8% 12.9% 15.3% 9.9%
Cash Dividends Per Class A Common
Share.............................. $ .40 $ .33 $ .26 $ .225 $ .21
Book Value Per Outstanding Common
Share.............................. $ 8.01 $ 6.94 $ 6.15 $ 5.90 $ 5.64
Assets
Information systems............. $489,501 $480,592 $407,761 $366,173 $375,535
Financial services.............. 265,965 204,107 162,790 155,672 159,582
-------- -------- -------- -------- --------
Total assets.................... $755,466 $634,699 $570,551 $521,845 $535,117
======== ======== ======== ======== ========
Long-Term Debt
Information systems............. $ 41,443 $ 41,014 $ 40,000 $ 28,284 $ 40,541
Financial services.............. 92,425 76,638 62,771 70,250 73,075
-------- -------- -------- -------- --------
Total long-term debt............ $133,868 $117,652 $102,771 $ 98,534 $113,616
======== ======== ======== ======== ========
Number of Employees.................. 6,036 5,478 5,636 4,995 5,225
INFORMATION SYSTEMS (with financial
services on an equity basis)
Current Ratio........................ 1.81 2.27 2.21 2.23 2.37
Net Property, Plant and Equipment.... $128,462 $117,485 $111,177 $105,014 $107,191
Total Debt........................... $ 51,649 $ 41,301 $ 40,000 $ 37,713 $ 54,573
Total Debt to Capitalization......... 13.4% 12.4% 13.2% 12.8% 17.5%
<FN>
- ---------------
(1) Represents the cumulative effect of accounting changes for the adoption of Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions" in 1993 and SFAS No. 109, "Accounting for Income Taxes" in 1992.
</TABLE>
13
<PAGE> 16
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of the Purchaser and Parent are set forth in Schedule I hereto.
Except as described in this Offer to Purchase, (i) none of the Purchaser,
Parent nor, to the best knowledge of the Purchaser and Parent, any of the
persons listed in Schedule I to this Offer to Purchase or any associate or
majority-owned subsidiary of the Purchaser, Parent or any of the persons so
listed beneficially owns or has any right to acquire, directly or indirectly,
any Shares and (ii) none of the Purchaser, Parent nor, to the best knowledge of
the Purchaser and Parent, any of the persons or entities referred to above nor
any director, executive officer or subsidiary of any of the foregoing has
effected any transaction in the Shares during the past 60 days except as set
forth in Schedule II hereto.
Except as provided in the Merger Agreement, the Tender Agreement and the
expressions of interest described in Section 11, and as otherwise described in
this Offer to Purchase, none of the Purchaser, Parent nor, to the best knowledge
of the Purchaser and Parent, any of the persons listed in Schedule I to this
Offer to Purchase, has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company, including,
but not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or voting of such securities, joint ventures, loan or
option arrangements, puts or calls, guaranties of loans, guaranties against loss
or the giving or withholding of proxies. Except as set forth in this Offer to
Purchase, since October 1, 1992, neither the Purchaser nor Parent nor, to the
best knowledge of the Purchaser and Parent, any of the persons listed on
Schedule I hereto, has had any business relationship or transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
October 1, 1992, there have been no contracts, negotiations or transactions
between any of the Purchaser, Parent, or any of their respective subsidiaries,
or, to the best knowledge of the Purchaser and Parent, any of the persons listed
in Schedule I to this Offer to Purchase, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
9. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Purchaser and Parent to
consummate the Offer and the Merger (including the cash out of stock options)
and to pay related fees and expenses (inclusive of estimated expenses of the
Company) is estimated to be approximately $92 million. The Purchaser will obtain
all of such funds from Parent or its affiliates. Parent will provide the $92
million for the foregoing transactions from its working capital and existing
credit facilities (collectively, the "CREDIT AGREEMENTS"). Parent's existing
credit facilities aggregate $110 million as follows: (a) $65 million -- NBD Bank
("NBD"); and (b) $15 million each with PNC Bank, Ohio, N.A. ("PNC"), Bank One,
Dayton, NA ("BANK ONE") and Bank of America Illinois ("B OF A").
Loans made under the Credit Agreements bear interest at the Parent's option
based on either (a) the London Inter-bank Offered Rate ("LIBOR") plus
3/5%- 5/8%, (b) each lender's prime rate, (c) each lender's certificate of
deposit ("CD") rate plus 1/2%- 3/4%, or (d) a competitive bid rate among NBD,
PNC and Bank One. The interest rate for LIBOR and CD loans varies with the
interest period chosen by Parent. Parent may choose 30, 60 or 90-day interest
periods for LIBOR and CD loans and up to 90 days for prime rate loans. The
current interest rate for 90-day LIBOR loans is approximately 5.875% per annum,
for 90-day CD loans is approximately 6.125% per annum and for prime rate loans
is 8.25% per annum. Parent pays a fee of 25 basis points per annum on the unused
portion of the Credit Agreements.
The NBD Credit Agreement will reduce to $30 million approximately six
months after consummation of the Offer. Each of the Credit Agreements provides
that any outstanding loan balances at termination of the revolving portion of
the Agreement shall be converted to 3-4 year quarterly amortizing term loans.
14
<PAGE> 17
The Credit Agreements include representations and warranties, covenants,
events of default and other terms customary to such financings. Each of the
Credit Agreements is attached as an exhibit to the Schedule 14D-1 filed by
Parent and the Purchaser in connection with the Offer.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
In late February, 1996, David J. Eskra, former Chairman of the Board and a
current Director of the Company approached Terry D. Carder, former Chairman of
the Board and Chief Executive Officer of Parent, to inquire into the potential
interest of Parent in pursuing discussions regarding the possible acquisition of
the Company by Parent. Mr. Eskra and Mr. Carder are neighbors.
Following that discussion, Mr. Carder contacted Mr. Robert C. Nevin,
President of Parent's Business Forms Division, to discuss Mr. Eskra's inquiry.
Mr. Nevin indicated that Parent might have an interest in pursuing discussions
and Mr. Carder reported that to Mr. Eskra in early March, 1996.
Mr. Eskra then contacted Mr. John C. Colman, a Director of the Company and
a member of the Company's Executive Committee. Mr. Colman contacted Mr. Nevin by
telephone to discuss a possible meeting between the parties to determine whether
discussions should proceed. The parties agreed to meet on March 16, 1996.
In anticipation of the March 16, 1996 meeting, Mr. Mark A. Robinson,
Secretary and General Counsel of the Company, sent by telecopier to Mr. Daniel
W. Dittman, Senior Vice President of Parent's Business Forms Division, on March
3, 1996, a proposed form of confidentiality undertaking by Parent. On March 7,
1996, Mr. Dittman signed and returned the March 3, 1996 letter to Mr. Robinson,
subject to the changes set forth in Mr. Dittman's letter of that date. Mr.
Robinson executed a copy of Mr. Dittman's letter agreeing to the proposed
changes and returned a signed copy to Mr. Dittman.
On March 16, 1996, Messrs. Nevin, Dittman, Dale L. Medford (Vice
President -- Finance and Chief Financial Officer of Parent) and Rodney A. Hedeen
(Senior Vice President and General Manager of Parent's Business Forms Division),
met with Messrs. Colman, Campbell, Robinson, Loomer, Preston and Ramig. At that
meeting, the Company presented Parent with a binder containing many of the
answers to the questions raised by Parent. The parties discussed various topics
related to the Company and its recent performance.
On March 21, 1996, Mr. Nevin and Mr. Colman spoke by telephone. Mr. Nevin
indicated that Mr. Colman could report to the Company's Board of Directors at
their March 22, 1996 meeting Reynolds' then-current intention to present to the
Company's Board of Directors in person during the week of April 1, 1996 a
proposal for the acquisition of the Company by Parent.
On March 23, 1996, Mr. Colman contacted Mr. Medford by telephone and
indicated that the matter had been discussed at the Company's Board of Directors
meeting on March 22. The parties subsequently agreed to meet on April 3, 1996
for the purpose of receiving Parent's proposal.
On April 3, 1996, Messrs. Nevin, Medford, Hedeen and Dittman, and outside
counsel for Parent, Jeffry A. Melnick, met with Messrs. Colman and Robinson and
John Bacon, a director of the Company. At that meeting, Parent reviewed a
structure for a proposed transaction. Messrs. Bacon, Colman and Robinson
determined that the offer was not within the range that would be acceptable to
the Company's Board of Directors and the meeting terminated.
On April 8, 1996, Mr. Colman contacted Mr. Nevin to determine whether
Parent wanted to submit a revised proposal. Over the next two days, the parties
exchanged several telephone conversations regarding various terms of Parent's
revised proposal. On April 10, 1996, Mr. Bacon communicated to Mr. Medford the
decision of the Company's Board of Directors to permit Parent to proceed with
due diligence based upon Parent's revised proposal.
From April 12 through April 19, Parent conducted an initial due diligence
investigation regarding the Company.
15
<PAGE> 18
Parent's Board of Directors met at 4:00 p.m. on April 19, 1996 to consider
the Offer and the Merger and the related transactions. At that meeting, the
Board approved the Offer and the Merger and the related transactions and
authorized appropriate officers of Parent to take such actions as necessary to
effect the same. By unanimous written consent dated as of April 19, 1996, the
Board of Directors of the Purchaser approved the Offer and the Merger and the
related transactions and authorized appropriate officers of Parent to take such
actions as necessary to effect the same.
The Company's Board of Directors met at 9:00 a.m. on April 20, 1996 to
consider the Offer and the Merger and the related transactions. At that meeting,
the Board unanimously approved the Offer and the Merger and the related
transactions and authorized appropriate officers of Parent to take such actions
as necessary to effect the same.
The parties executed the Merger Agreement and the other agreements and
documents described in this Offer on April 20, 1996.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; MERGER AGREEMENT; TENDER
AGREEMENT AND EXPRESSIONS OF INTENT; EMPLOYMENT AND CONSULTING
AGREEMENTS; AND OTHER AGREEMENTS.
PURPOSE OF THE OFFER. The purpose of the Offer, the Merger, the Merger
Agreement and the Tender Agreement is to enable Parent to acquire control of the
Company's Board of Directors and the entire equity interest in the Company. Upon
consummation of the Merger, the Company will become a wholly owned subsidiary of
Parent. The Offer is being made pursuant to the Merger Agreement.
PLANS FOR THE COMPANY. It is expected that, initially following the
Merger, the business and operations of the Company will, except as set forth in
this Offer to Purchase, be integrated into the operations of Parent as rapidly
as practicable following the Merger. In addition, Parent will continue to
evaluate the business and operations of the Company during the pendency of the
Offer and after the consummation of the Offer and the Merger and will take such
further actions as it deems appropriate under the circumstances then existing.
Parent intends to cause the Shares to be delisted from the American Stock
Exchange and deregistered under the Exchange Act as soon as practicable
following purchase of Shares pursuant to the Offer. As a result, there will
likely be no public market for the sale of Shares which are not so purchased.
Parent further anticipates that as soon as practicable following the Effective
Time, Parent will cause the Company, as the surviving corporation in the Merger,
to be merged into Parent or dissolved and liquidated in one or more liquidating
distributions. Further, Parent intends to sell those assets of the Company which
are not useful to the integrated operation.
MERGER AGREEMENT. THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE
MERGER AGREEMENT. THE SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
MERGER AGREEMENT WHICH IS INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH
HAS BEEN FILED WITH THE COMMISSION AS AN EXHIBIT TO THE SCHEDULE 14D-1. THE
MERGER AGREEMENT MAY BE EXAMINED AND COPIES MAY BE OBTAINED AT THE PLACE AND IN
THE MANNER SET FORTH IN SECTION 7 OF THIS OFFER TO PURCHASE.
The Offer. The Merger Agreement provides that the Purchaser will
commence the Offer and that, upon the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, the Purchaser will
purchase all Shares validly tendered pursuant to the Offer. The Merger Agreement
provides that, without the consent of the Company, the Purchaser will not
decrease the Offer Price, decrease the number of Shares sought in the Offer,
waive the Minimum Condition, change the form of consideration payable in the
Offer, or modify or add to the stated conditions, except that if on the
Expiration Date (as duly extended, if applicable), all conditions to the Offer
shall not have been satisfied or waived, the Offer may be extended from time to
time until June 15, 1996. In addition, the Merger Agreement provides that
without the consent of the Company, the Offer Price may be increased and the
Offer may be extended to the extent required by law in connection with such an
increase in the Offer Price.
16
<PAGE> 19
The Merger. The Merger Agreement provides that, subject to the terms
and conditions thereof, and in accordance with Delaware Law, at the Effective
Time, the Purchaser shall be merged with and into the Company. As a result of
the Merger, the separate corporate existence of the Purchaser will cease and the
Company will continue as the Surviving Corporation.
The respective obligations of Parent and the Purchaser, on the one hand,
and the Company, on the other hand, to effect the Merger are subject to the
conditions that: (i) the Agreement shall have been approved and adopted by the
requisite vote of the holders of Common Stock, if required by applicable law and
the Restated Articles of Incorporation, in order to consummate the Merger; (ii)
no statute, rule, order, decree or regulation shall have been enacted or
promulgated by any foreign or domestic government or any governmental agency or
authority of competent jurisdiction which prohibits the consummation of the
Offer, the Merger or the Tender Agreement or has the effect of making illegal
the purchase of Company Common Stock by Parent or the Purchaser and all foreign
or domestic governmental consents, orders and approvals required for the
consummation of the Offer and the Merger and the transactions contemplated by
the Agreement shall have been obtained and shall be in effect at the Effective
Time; (iii) no preliminary or permanent injunction or other order shall have
been issued by any court or by any governmental or regulatory agency, body or
authority which prohibits the consummation of the Offer or the Merger and the
transactions contemplated by the Merger Agreement and which is in effect at the
Effective Time, provided, however, that, in the case of a decree, injunction or
other order, each of the parties shall have used reasonable efforts to prevent
the entry of any such injunction or other order and to appeal as promptly as
possible any decree, injunction or other order that may be entered; and (iv)
Parent, the Purchaser or their affiliates shall have purchased shares of Common
Stock pursuant to the Offer.
The Merger Agreement provides that at the Effective Time, each issued and
outstanding share of Common Stock, including the associated Rights (other than
Shares that are owned by the Company as treasury stock and any Shares owned by
Parent, Purchaser or another wholly owned subsidiary of Purchaser) shall be
converted into the right to receive the Offer Price, without interest.
Pursuant to the Merger Agreement, each issued and outstanding share of
common stock, no par value, of the Purchaser shall be converted into one fully
paid and non-assessable share of common stock of the Surviving Corporation.
Pursuant to the Merger Agreement, the Board of Directors of the Company has
approved an amendment to the Rights Agreement (which shall be effected as soon
as possible but in any event not later than two (2) days after public
announcement of the Offer) (the "RIGHTS AMENDMENT") in order to (i) prevent the
Merger Agreement, the Tender Agreement, the expressions of intent described
below in this Section 11 or the consummation of any of the transactions
contemplated thereby, including without limitation, the Offer and the
consummation of the Offer and the Merger, from resulting in the issuance of
Rights or being deemed a trigger event under the terms of the Rights Agreement
and to (ii) provide that neither Parent nor the Purchaser will be deemed to be
an Acquiring Person (as defined in the Rights Agreement) by reason of the
transactions expressly provided for in the Merger Agreement and the Tender
Agreement. The Rights Amendment will render the Rights inoperative with respect
to any acquisition of Shares by Parent, the Purchaser or any of their affiliates
pursuant to the Merger Agreement the Tender Agreement and/or the expressions of
intent described below. Additionally, the Rights Amendment provides that the
Rights Agreement will terminate immediately prior to the purchase of Shares by
Purchaser pursuant to the Offer.
The Company's Board of Directors. The Merger Agreement provides that,
promptly upon the purchase of and payment for any Shares by Parent or any of its
subsidiaries which represents at least a majority of the outstanding Shares (on
a fully diluted basis), Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as is equal to the product of the total number of directors on such
Board (giving effect to the directors designated by Parent pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by the Purchaser, Parent or any of their affiliates bears to
the total number of Shares then outstanding. The Company shall, upon request of
the Purchaser, promptly either increase the size of its Board of Directors or,
at the Company's election, secure the resignations of such number of its
incumbent directors as is
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necessary to enable Parent's designees to be so elected to the Company's Board,
and shall cause Parent's designees to be so elected. The Merger Agreement also
provides that the Company shall cause persons designated by Parent to constitute
the same percentage (rounded up to the next whole number) as is on the Company's
Board of Directors of (i) each committee of the Company's Board of Directors,
(ii) each board of directors (or similar body) of each subsidiary of the Company
and (iii) each committee (or similar body) of each such board, in each case only
to the extent permitted by applicable law or the rules of any stock exchange on
which the Shares are listed. Notwithstanding the foregoing, until the Effective
Time, the Company shall use all reasonable efforts to retain as members of its
Board of Directors at least two directors who are directors of the Company on
the date of the Merger Agreement; provided, that subsequent to the purchase of
and payment for Shares pursuant to the Offer, Parent shall always have its
designees represent at least a majority of the entire Board of Directors. The
Company's obligation to appoint the Purchaser's designees to the Board of
Directors is subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder.
Shareholders Meeting. Pursuant to the Merger Agreement, the Company
will, if required by applicable law in order to consummate the Merger, duly
call, give notice of, convene and hold a special meeting of its shareholders
(the "SPECIAL MEETING") as soon as practicable following the acceptance for
payment and purchase of Shares by the Purchaser pursuant to the Offer for the
purpose of considering and taking action upon the Merger Agreement. The Merger
Agreement provides that the Company will, if required by applicable law in order
to consummate the Merger, prepare and file with the Commission a preliminary
proxy or information statement relating to the Merger and the Merger Agreement
and use its reasonable efforts (i) to obtain and furnish the information
required to be included by the Commission in the Proxy Statement (as defined
herein) and, after consultation with Parent, to respond promptly to any comments
made by the Commission with respect to the preliminary proxy or information
statement and cause a definitive proxy or information statement (the "PROXY
STATEMENT") to be mailed to its shareholders and (ii) to obtain the necessary
approvals of the Merger and the Merger Agreement by its shareholders. If the
Purchaser acquires at least a majority of the outstanding Shares, the Purchaser
will have sufficient voting power to approve the Merger, even if no other
shareholder votes in favor of the Merger. The Company has agreed, subject to the
fiduciary obligations of the Board under applicable law as advised by
independent counsel, to include in the Proxy Statement the recommendation of the
Board that shareholders of the Company vote in favor of the approval of the
Merger and the adoption of the Merger Agreement. Parent agrees that it will
vote, or cause to be voted, all of the Shares then owned by it, the Purchaser or
any of its other subsidiaries and affiliates in favor of the approval of the
Merger and the adoption of the Merger Agreement.
The Merger Agreement provides that in the event that Parent, the Purchaser
or any other subsidiary of Parent acquires at least 90% of the outstanding
Shares, pursuant to the Offer or otherwise, Parent, the Purchaser and the
Company agree, at the request of Parent and subject to the terms of the Merger
Agreement, to take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after such acquisition, without a
meeting of shareholders of the Company, in accordance with Delaware Law.
Interim Operations. In the Merger Agreement, the Company has agreed
that, except as expressly contemplated by the Merger Agreement or agreed to by
Parent, prior to the time the directors of the Purchaser have been elected to,
and shall constitute a majority of, the Board of Directors of the Company: (i)
the business of the Company and its subsidiaries shall be conducted only in the
ordinary and usual course and, to the extent consistent therewith, each of the
Company and its subsidiaries shall use its best efforts to preserve its business
organization intact and maintain its existing relations with customers,
suppliers, employees, creditors and business partners; (ii) the Company will
not, directly or indirectly, (a) sell, transfer or pledge or agree to sell,
transfer or pledge any Common Stock, preferred stock or capital stock of any of
its subsidiaries beneficially owned by it, either directly or indirectly; or (b)
split, combine or reclassify the outstanding Common Stock or any outstanding
capital stock of any of the subsidiaries of the Company; (iii) neither the
Company nor any of its subsidiaries shall (a) amend its articles of
incorporation or by-laws or similar organizational documents; (b) declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock; (c) issue, sell, pledge, dispose of
or encumber any
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<PAGE> 21
additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock of any class of the Company or its subsidiaries, other
than issuances pursuant to the exercise of Options (as defined in the Merger
Agreement) outstanding as of the date of the Merger Agreement; (d) transfer,
lease, license, sell, mortgage, pledge, dispose of, or encumber any material
assets other than in the ordinary and usual course of business and consistent
with past practice, or incur or modify any material indebtedness or other
liability, other than in the ordinary and usual course of business and
consistent with past practice; (e) redeem, purchase or otherwise acquire
directly or indirectly any of its capital stock; (f) grant any increase in the
compensation payable or to become payable by the Company or any of its
subsidiaries to any of its executive officers or key employees, or adopt any new
or amend or otherwise increase or accelerate the payment or vesting of the
amounts payable or to become payable under any existing bonus, incentive
compensation, deferred compensation, severance, profit sharing, stock option,
stock purchase, insurance, pension, retirement or other employee benefit plan
agreement or arrangement; (g) enter into any employment or severance agreement
with or, except in accordance with the existing written policies of the Company,
grant any severance or termination pay to any officer, director or employee of
the Company or any of its subsidiaries; (h) modify, amend or terminate any of
its material contracts or waive, release or assign any material rights or
claims, except in the ordinary course of business and consistent with past
practice; (i) permit any material insurance policy naming the Company as a
beneficiary or a loss payable payee to be cancelled or terminated without notice
to Parent, except in the ordinary course of business and consistent with past
practice; (j) incur or assume any long-term debt, or, except in the ordinary
course of business, incur or assume any short-term indebtedness in amounts not
consistent with past practice; (k) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person, except in the ordinary course of business
and consistent with past practice; (l) make any loans, advances or capital
contributions to, or investments in, any other person (other than to wholly
owned subsidiaries of the Company or customary loans or advances to employees in
accordance with past practice); (m) enter into any material commitment or
transaction (including, but not limited to, any borrowing, capital expenditure
or purchase, sale or lease of assets); (n) change any of the accounting
principles used by it unless required by generally accepted accounting
principles; (o) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction of any such claims, liabilities or
obligations, (1) in the ordinary course of business and consistent with past
practice, of claims, liabilities or obligations reflected or reserved against
in, or contemplated by, the consolidated financial statements (or the notes
thereto) of the Company and its consolidated subsidiaries, (2) incurred in the
ordinary course of business and consistent with past practice, or (3) which are
legally required to be paid, discharged or satisfied (provided that if such
claims, liabilities or obligations referred to in this clause (3) are legally
required to be paid and are also not otherwise payable in accordance with
clauses (1) or (2), the Company will notify Parent in writing if such claims,
liabilities or obligations exceed, individually or in the aggregate, $50,000 in
value, reasonably in advance of their payment); (p) adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
subsidiaries (other than the Merger); (q) take, or agree to commit to take, any
action that would make any representation or warranty of the Company contained
in the Merger Agreement inaccurate in any respect at, or as of any time prior
to, the Effective Time; or (r) enter into an agreement, contract, commitment or
arrangement to do any of the foregoing, or to authorize, recommend, propose or
announce an intention to do any of the foregoing.
No Solicitation. In the Merger Agreement, the Company has agreed that
neither the Company nor any of its subsidiaries or affiliates shall (and the
Company shall use its best efforts to cause its officers, directors, employees,
representatives and agents not to), directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Parent, or any of its affiliates or representatives) concerning any
merger, tender offer, exchange offer, sale of assets, sale of shares of capital
stock or debt securities or similar transactions involving the Company or any
subsidiary, division or operating or principal business unit of the Company (an
"ACQUISITION PROPOSAL"). The Company also agreed that it will immediately cease
any existing activities, discussions or negotiations with any parties conducted
prior to the date of the Merger Agreement with respect to any of the foregoing.
The Merger Agreement provides that the Company may, directly or
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<PAGE> 22
indirectly, provide access and furnish information to a third party and may
negotiate and participate in discussions and negotiations with such third party
concerning an Acquisition Proposal if the Board of Directors of the Company
reasonably believes such information or discussions will result in an
Acquisition Proposal and if the Board of Directors reasonably and in good faith
believes (and has received a written opinion to that effect from independent
counsel) that failing to take such action would constitute a breach of its
fiduciary duties and if such third party, as a condition to receipt of such
information, executes a confidentiality agreement no less restrictive than the
Confidentiality Agreement.
The Merger Agreement further provides that, neither the Board of Directors
of the Company nor any Committee thereof shall withdraw or modify in a manner
adverse to Parent the approval and recommendation of the Offer and the Merger
Agreement or approve or recommend any Acquisition Proposal, provided that the
Company may recommend to its shareholders an Acquisition Proposal and in
connection therewith withdraw or modify its approval or recommendation of the
Offer or the Merger if (i) the Board of Directors of the Company has reasonably
and in good faith determined that the Acquisition Proposal is a Superior
Proposal (as defined below) and the Board of Directors has received a written
opinion from independent legal counsel that failure to withdraw or modify its
recommendation of the Offer and the Merger and to terminate the Merger Agreement
pursuant to Section 7.1(e) of the Merger Agreement would constitute a breach of
the Board's fiduciary duties, (ii) all the conditions to the Company's right to
terminate the Agreement in accordance with Section 7.1(e) have been satisfied
(including the payment of the amount required by Section 8.1 of the Merger
Agreement), (iii) simultaneously with such withdrawal, modification or
recommendation, the Merger Agreement is terminated in accordance with Section
7.1(e) and (iv) the Acquisition Proposal does not provide for any breakup fee or
other inducement to the acquiror other than reimbursement of documented
out-of-pocket expenses incurred in connection with such Acquisition Proposal.
"SUPERIOR PROPOSAL" means a bona fide proposal made by a third party to
acquire all of the outstanding shares of the Company pursuant to a tender offer
or a merger, or to purchase all or substantially all of the assets of the
Company on terms which a majority of the members of the Board of Directors of
the Company determines in its good faith reasonable judgment (based on the
advice of its financial and legal advisors) to be more favorable to the Company
and its shareholders than the transactions contemplated hereby, and which does
not provide for any breakup fee or other inducement to the acquiror other than
reimbursement of documented out-of-pocket expenses incurred in connection with
the Superior Proposal.
The Company has also agreed to promptly advise Parent of any request for
information or of any Acquisition Proposal, or any proposal with respect to any
Acquisition Proposal, the material terms and conditions of such request or
takeover proposal, and the identity of the person making any such takeover
proposal or inquiry. The Company has committed to use its reasonable best
efforts to keep Parent informed of the status and details (including amendments
or proposed amendments) of any such request, takeover proposal or inquiry.
The Company has agreed that immediately following the purchase of Shares
pursuant to the Offer, the Company will request each person which has heretofore
executed a confidentiality agreement in connection with its consideration of
acquiring the Company or any portion thereof to return all confidential
information heretofore furnished to such person by or on behalf of the Company.
Directors' and Officers' Insurance and Indemnification. For two (2)
years from the Effective Time, the Surviving Corporation will either (i)
maintain in effect the Company's current directors' and officers' liability
insurance covering those persons who are currently covered on the date of the
Merger Agreement by the Company's directors' and officers' liability insurance
policy (the "INDEMNIFIED PARTIES"); provided, however, that in no event will
Parent be required to expend in any one year an amount in excess of 100% of the
annual premiums currently paid by the Company for such insurance; and; provided
further, that if the annual premiums of such insurance coverage exceed such
amount, the Surviving Corporation will be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such amount; provided
further, that the Surviving Corporation may substitute for such Company
policies, policies with at least the same coverage containing terms and
conditions which are no less advantageous and provided that said substitution
does not result in any gaps or lapses in coverage with respect to matters
occurring prior to the
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<PAGE> 23
Effective Time, or (ii) cause the Parent's directors' and officers' liability
insurance then in effect to cover those persons who are covered on the date of
the Merger Agreement by the Company's directors' and officers' liability
insurance policy with respect to those matters covered by the Company's
directors' and officers' liability policy.
Parent has agreed to (or to cause the Surviving Corporation to) indemnify
all Indemnified Parties to the fullest extent permitted by Delaware law and the
Company's Restated Certificate of Incorporation and By-laws with respect to all
acts and omissions arising out of such individuals' services as officers,
directors, employees or agents of the Company or any of its subsidiaries,
occurring prior to the Effective Time including, without limitation, the
transactions contemplated by the Merger Agreement. Without limitation of the
foregoing, in the event any such Indemnified Party is or becomes involved in any
capacity in any action, proceeding or investigation in connection with any
matter, including without limitation, the transactions contemplated by the
Merger Agreement, occurring prior to, and including, the Effective Time, Parent,
from and after the date of purchase of Shares pursuant to the Offer, will pay as
incurred such Indemnified Party's reasonable legal and other expenses (including
the cost of any investigation and preparation) incurred in connection therewith.
Compensation and Benefits. Parent has agreed that following the
Effective Time the employees of the Company and its Subsidiaries will continue
to be provided with employee benefit plans (other than stock option, employee
stock ownership or other plans involving the potential issuance of securities of
the Company or of Parent) which in the aggregate are substantially comparable to
those currently provided by the Company and its Subsidiaries to such employees.
Parent will, and will cause the Company as the surviving corporation to, honor
employee (or former employee) benefit obligations and contractual rights
existing as of the Effective Time and all employment, incentive and deferred
compensation or severance agreements, plans or policies adopted by the Board of
Directors of the Company (or any committee thereof) prior to the date hereof in
accordance with their terms other than stock option, employee stock ownership or
other plans involving the potential issuance of securities of the Company or of
Parent.
Options. Pursuant to the Merger Agreement, Parent and the Company have
agreed to take all actions necessary to provide that, effective as of the
Effective Time, (i) each outstanding employee stock option to purchase Shares
(an "EMPLOYEE OPTION") granted under the Company's 1984 Stock Option Plan or
1993 Incentive Stock Option Plan (the "OPTION PLANS"), whether or not then
exercisable or vested, shall become fully exercisable and vested, (ii) each
Option that is then outstanding shall be cancelled and (iii) in consideration of
such cancellation, and except to the extent that Parent or the Purchaser and the
holder of any such Option otherwise agree, the Company (or, at Parent's option,
the Purchaser) shall pay to such holders of Options an amount in respect thereof
equal to the product of (A) the excess, if any, of the Offer Price over the
exercise price thereof and (B) the number of Shares subject thereto (such
payment to be net of applicable withholding taxes). In the Merger Agreement, the
parties have agreed that if it is determined that compliance with any of the
foregoing would cause any individual subject to Section 16 of the Exchange Act
("SECTION 16") to become subject to the profit recovery provisions thereof, any
Options held by such individual will be cancelled or purchased, as the case may
be, as promptly as possible so as not to subject such individual to any
liability pursuant to Section 16, subject to receiving an agreement from the
holder of such Option not to exercise such Option after the Effective Time, and
such individual shall be entitled to receive from the Company, for each Share
subject to an Option an amount equal to the excess, if any, of the Offer Price
over the per Share exercise price of such Option. Notwithstanding the foregoing,
any payment to the holders of Options contemplated by the foregoing provisions
may be withheld in respect of any Option until any necessary consents or
releases are obtained. The Merger Agreement also provides that (i) the Option
Plans shall terminate as of the Effective Time and the provisions in any other
plan, program or arrangement, providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any of its
subsidiaries shall be deleted as of the Effective Time and (ii) the Company
shall use all reasonable efforts to ensure that following the Effective Time no
holder of Options or any participant in the Option Plans or any other plans,
programs or arrangements shall have any right thereunder to acquire any equity
securities of the Company, the Surviving Corporation or any subsidiary thereof.
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<PAGE> 24
The Merger Agreement also provides that all Shares previously issued in the
form of restricted stock under the Company's Restricted Stock Purchase Plan will
become fully and freely transferable pursuant to the Offer immediately prior to
the Effective Time.
Representations and Warranties. In the Merger Agreement, the Company
has made customary representations and warranties to Parent and the Purchaser
with respect to, among other things, its organization, capitalization, financial
statements, public filings, labor relations, conduct of business, employee
benefit plans, insurance, compliance with laws, litigation, tax matters, real
property, consent and approvals, opinions of financial advisors, vote required,
undisclosed liabilities and the absence of any undisclosed material adverse
changes in the Company since October 28, 1995.
Termination; Fees. The Merger Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
shareholders of the Company, (a) subject to the provisions of Section 1.3 of the
Merger Agreement, by mutual consent of the Company, on the one hand, and of
Parent and the Purchaser, on the other hand; (b)by either Parent, on the one
hand, or the Company, on the other hand, if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the acceptance for payment of,
or payment for, Shares pursuant to the Offer or the Merger and such order,
decree or ruling or other action shall have become final and nonappealable; (c)
by Parent, on the one hand, or the Company, on the other hand, if the Effective
Time shall not have occurred on or before June 15, 1996 unless the Effective
Time shall not have occurred because of a material breach of any representation,
warranty, obligation, covenant, agreement or condition set forth in the Merger
Agreement on the part of the party seeking to terminate the Merger Agreement;
(d) by Parent, on the one hand, or the Company, on the other hand, if the Offer
is terminated or expires in accordance with its terms without the Purchaser
having purchased any Common Stock thereunder due to a failure of any of the
conditions set forth in Annex A to the Merger Agreement (the "TENDER OFFER
CONDITIONS"; see Section 14) to be satisfied, unless such termination or
expiration has been caused by or results from the failure of the party seeking
to terminate the Merger Agreement to perform in any material respect any of its
respective covenants or agreements contained in the Merger Agreement; (e) by
either Parent, on the one hand, or the Company, on the other hand, if the Board
of Directors of the Company reasonably and in good faith determines that an
Acquisition Proposal is a Superior Proposal and the Board believes (and has
received a written opinion from independent legal counsel) that a failure to
terminate the Merger Agreement would constitute a breach of its fiduciary
duties; provided, however, the Company may not terminate the Merger Agreement
pursuant to this provision unless (i) the Company has notified Parent and the
Purchaser in writing promptly after receipt of any Acquisition Proposal and
following such notification by the Company, the Company has fully cooperated
with Parent, including, without limitation, informing Parent of the terms and
conditions of such Acquisition Proposal (and any modification thereto), and the
identity of the Person making such Proposal, with the intent of enabling the
parties hereto to agree to a modification of the terms and conditions of the
Merger Agreement so that the transactions contemplated hereby may be effected,
and (ii) prior to such termination, Parent has received the amount set forth in
Section 8.1(b) of the Merger Agreement by wire transfer in same day funds; and
(f) prior to the consummation of the Offer, by the Company, if (i) any of the
representations and warranties of Parent or the Purchaser contained in the
Merger Agreement were untrue or incorrect in any material respect when made or
have since become, and at the time of termination remain, incorrect in any
material respect, or (ii) Parent or the Purchaser shall have breached or failed
to comply in any material respect with any of their respective obligations under
the Merger Agreement.
In accordance with the Merger Agreement, upon termination there shall be no
liability on the part of Parent or the Company except (a) for fraud or for
material breach of the Merger Agreement and (b) if the Merger Agreement is
terminated by Parent because of the occurrence of any of the events set forth in
paragraphs (iv)(e) or (iv)(h) of the Tender Offer Conditions (i.e., if the
representations and warranties of the Company set forth in the Merger Agreement
shall not be true and correct in any material respect as of the date of
consummation of the Offer as though made on or as of such date, except (i) for
changes specifically permitted by the Merger Agreement and (ii) those
representations and warranties that address matters only as of a particular date
as true and correct as of such date, or the Company shall have breached or
failed in any material respect to perform or comply with any material
obligation, agreement or covenant required by the
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<PAGE> 25
Merger Agreement to be performed or complied with by it, or if the Company's
Board of Directors shall have withdrawn, or modified or changed in a manner
adverse to Parent or the Purchaser (including by amendment of the Schedule
14D-9) its recommendation of the Offer, the Merger Agreement, or the Merger, or
recommended another proposal or offer, or shall have resolved to do any of the
foregoing) or if the Merger Agreement is terminated by the Company in accordance
with Section 7.1(e) of the Merger Agreement (following receipt of a Superior
Proposal), then the Company shall, within two business days of such termination
(except as required to be earlier paid in accordance with Section 7.1(e)), pay
to Parent in same day funds the sum of $3,366,575.
TENDER AGREEMENT AND EXPRESSIONS OF INTENT. THE FOLLOWING IS A SUMMARY OF
THE MATERIAL TERMS OF THE TENDER AGREEMENT AND THE EXPRESSIONS OF INTENT
RECEIVED FROM CERTAIN SHAREHOLDERS. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE TENDER AGREEMENT AND THE WRITTEN EXPRESSIONS OF INTENT WHICH
ARE INCORPORATED HEREIN BY REFERENCE AND COPIES OF WHICH HAVE BEEN FILED WITH
THE COMMISSION AS EXHIBITS TO THE SCHEDULE 14D-1. THE TENDER AGREEMENT AND THE
WRITTEN EXPRESSIONS OF INTENT MAY BE EXAMINED AND COPIES MAY BE OBTAINED AT THE
PLACE AND IN THE MANNER AS SET FORTH IN SECTION 7 OF THIS OFFER TO PURCHASE.
Tender of Shares. Immediately after the execution of the Merger
Agreement, the Purchaser and a tendering shareholder (the "Tendering
Shareholder") entered into the Tender Agreement. Upon the terms and subject to
the conditions of such agreement, the Tendering Shareholder has agreed to
validly tender (and not to withdraw) pursuant to and in accordance with the
terms of the Offer, not later than the fifth business day after commencement of
the Offer, the number of Shares owned beneficially by it (or a total of 375,300
Shares, representing 5% of the outstanding Shares on a fully diluted basis). The
Tendering Shareholder further agreed that the transfer by the Tendering
Shareholder of its Shares to the Purchaser in the Offer will pass to and
unconditionally vest in the Purchaser good and valid title to such Shares.
Provisions Concerning the Shares. The Tendering Shareholder has agreed
that during the period commencing on the date of the Tender Agreement and
continuing until the first to occur of the Effective Time or termination of the
Merger Agreement in accordance with its terms, at any meeting of the Company's
shareholders or in connection with any written consent of the Company's
shareholders, the Tendering Shareholder will vote (or cause to be voted) the
Shares held of record or beneficially owned by such Tendering Shareholder,
whether issued, heretofore owned or hereinafter acquired, (i) in favor of the
Merger, the execution and delivery by the Company of the Merger Agreement and
the approval of the terms thereof and each of the other actions contemplated by
the Merger Agreement and the Tender Agreement and any actions required in
furtherance thereof; (ii) against any action or agreement that would result in a
breach in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or the Tender
Agreement (after giving effect to any materiality or similar qualifications
contained therein); and (iii) except as otherwise agreed to in writing in
advance by Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (B) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C) (1) any change in a majority of the persons who constitute
the Board of Directors of the Company; (2) any change in the present
capitalization of the Company or any amendment of the Company's Restated
Certificate of Incorporation or Bylaws; (3) any other material change in the
Company's corporate structure or business; or (4) any other action which, in the
case of each of the matters referred to in clauses (C)(1), (2) or (3), is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or materially adversely affect the Merger and the transactions
contemplated by the Tender Agreement and the Merger Agreement. The Tendering
Shareholder further agreed not to enter into any agreement or understanding with
any person or entity the effect of which would be inconsistent or violative of
the provisions and agreements described above.
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Other Covenants, Representations, Warranties. In connection with the
Tender Agreement, the Tendering Shareholder has made certain customary
representations, warranties and covenants, including with respect to (i)
ownership of the Shares, (ii) the Tendering Shareholder's authority to enter
into and perform its obligations under the Tender Agreement, (iii) the receipt
of requisite governmental consents and approvals, (iv) the absence of liens and
encumbrances on and in respect of the Tendering Shareholder's Shares, (v)
restrictions on the transfer of the Tendering Shareholder's Shares, and (vi) the
solicitation of Acquisition proposals.
Expressions of Intent. Tweedy, Browne Company L.P., TBK Partners L.P.,
Vanderbilt Partners, L.P., and Brinson Partners, Inc. have executed letters to
Parent confirming their present intention to tender Shares pursuant to the
Offer. Franklin Balance Sheet Investment Fund, The Franklin Microcap Value Fund,
Babson Enterprise Fund and David L. Babson & Company, Incorporated have orally
expressed their intention to tender Shares pursuant to the Offer.
EMPLOYMENT AND CONSULTING AGREEMENTS. THE FOLLOWING IS A SUMMARY OF THE
MATERIAL TERMS OF THE CAMPBELL CONSULTING AGREEMENT, THE RAMIG CONSULTING
AGREEMENT, THE LOOMER EMPLOYMENT AGREEMENT, THE PRESTON EMPLOYMENT AGREEMENT AND
THE ROBINSON EMPLOYMENT AGREEMENT (COLLECTIVELY, THE "EMPLOYMENT AGREEMENTS").
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE
EMPLOYMENT AGREEMENTS WHICH ARE INCORPORATED HEREIN BY REFERENCE AND COPIES OF
WHICH HAVE BEEN FILED WITH THE COMMISSION AS AN EXHIBIT TO THE SCHEDULE 14D-1.
THE EMPLOYMENT AGREEMENTS MAY BE EXAMINED AND COPIES MAY BE OBTAINED AT THE
PLACE AND MANNER AS SET FORTH IN SECTION 7 OF THIS OFFER TO PURCHASE.
CAMPBELL CONSULTING AGREEMENT. The Campbell Consulting Agreement (a)
replaces a severance agreement and certain other arrangements between the
Company and Campbell which, among other things, would provide Campbell certain
severance and other benefits following a "change of control", and (b) provides
for the engagement of Campbell by Parent for two (2) months following
consummation of the Offer to render certain advisory services. In consideration
of Campbell's termination of the prior agreements and arrangements with the
Company and the services to be rendered under the Campbell Consulting Agreement,
Campbell will be paid $500,000 upon consummation of the Offer and, subject to
certain conditions, an additional $137,000 on the two (2)-month anniversary of
consummation of the Offer. Campbell has also agreed not to disclose confidential
information of the Company and, under certain circumstances, not to compete with
Parent.
RAMIG CONSULTING AGREEMENT. The Ramig Consulting Agreement (a) replaces a
severance agreement and certain other arrangements between the Company and Ramig
which, among other things, would provide Ramig certain severance and other
benefits following a "change of control", and (b) provides for the engagement of
Ramig by Parent for three (3) months following consummation of the Offer to
render certain advisory services. In consideration of Ramig's termination of the
prior agreements and arrangements with the Company and the services to be
rendered under the Ramig Consulting Agreement, Ramig will be paid $270,000 upon
consummation of the Offer and, subject to certain conditions, an additional
$95,500 on the three (3)-month anniversary of consummation of the Offer. Ramig
has also agreed not to disclose confidential information of the Company and,
under certain circumstances, not to compete with Parent.
LOOMER EMPLOYMENT AGREEMENT. The Loomer Employment Agreement (a) replaces a
severance agreement and certain other arrangements between the Company and
Loomer which, among other things, would provide Loomer certain severance and
other benefits following a "change of control", and (b) provides for the
employment of Loomer by the Company for one (1) year following consummation of
the Offer. In consideration of Loomer's termination of the prior agreements and
arrangements with the Company and the services to be rendered under the Loomer
Employment Agreement, Loomer will be paid (x) an annual salary of $125,000, and
(y) a bonus of $225,000 ($175,000 of which will be paid upon consummation of the
Offer and, subject to certain conditions, the $50,000 balance of which will be
paid on the six (6)-month anniversary of consummation of the Offer). Loomer has
also agreed not to disclose confidential information of the
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<PAGE> 27
Company and, under certain circumstances, not to compete with the Company.
Loomer will also be entitled to a severance payment equal to $75,000 if his
employment is terminated under certain circumstances.
PRESTON EMPLOYMENT AGREEMENT. The Preston Employment Agreement (a) replaces
a severance agreement and certain other arrangements between the Company and
Preston which, among other things, would provide Preston certain severance and
other benefits following a "change of control", and (b) provides for the
employment of Preston by the Company for one (1) year following consummation of
the Offer. In consideration of Preston's termination of the prior agreements and
arrangements with the Company and the services to be rendered under the Preston
Employment Agreement, Preston will be paid (x) an annual salary of $140,000, and
(y) a bonus of $175,000 ($125,000 of which will be paid upon consummation of the
Offer and, subject to certain conditions, the $50,000 balance of which will be
paid on the six (6)-month anniversary of consummation of the Offer). Preston has
also agreed not to disclose confidential information of the Company and, under
certain circumstances, not to compete with the Company. Preston will also be
entitled to a severance payment equal to $90,000 if his employment is terminated
under certain circumstances.
ROBINSON EMPLOYMENT AGREEMENT. The Robinson Employment Agreement (a)
replaces a severance agreement and certain other arrangements between the
Company and Robinson which, among other things, would provide Robinson certain
severance and other benefits following a "change of control", and (b) provides
for the employment of Robinson by the Company for one (1) year following
consummation of the Offer. In consideration of Robinson's termination of the
prior agreements and arrangements with the Company and the services to be
rendered under the Robinson Employment Agreement, Robinson will be paid (x) an
annual salary of $105,000, and (y) a bonus of $275,000 ($225,000 of which will
be paid upon consummation of the Offer and, subject to certain conditions, the
$50,000 balance of which will be paid on the six (6)-month anniversary of
consummation of the Offer). Robinson has also agreed not to disclose
confidential information of the Company. Robinson will also be entitled to a
severance payment equal to $105,000 if his employment is terminated under
certain circumstances.
CONFIDENTIALITY AGREEMENT. THE FOLLOWING IS A SUMMARY OF THE MATERIAL
TERMS OF THE CONFIDENTIALITY AGREEMENT. THIS SUMMARY IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE CONFIDENTIALITY AGREEMENT WHICH IS INCORPORATED
HEREIN BY REFERENCE AND A COPY OF WHICH HAS BEEN FILED WITH THE COMMISSION AS AN
EXHIBIT TO THE SCHEDULE 14D-1. THE CONFIDENTIALITY AGREEMENT MAY BE EXAMINED AND
COPIES MAY BE OBTAINED AT THE PLACE AND MANNER AS SET FORTH IN SECTION 7 OF THIS
OFFER TO PURCHASE.
Parent entered into a Confidentiality Agreement, dated March 3, 1996 (as
amended by letters dated March 7, 1996 and April 16, 1996), with the Company
pursuant to which Parent has agreed, among other things, to keep confidential
certain non-public confidential or proprietary information of the Company
furnished to Parent by or on behalf of the Company and the Company has agreed,
among other things, to keep confidential certain non-public confidential or
proprietary information of the Parent furnished to the Company by or on behalf
of Parent.
RIGHTS AGREEMENT. THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS OF THE
RIGHTS AGREEMENT. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
RIGHTS AGREEMENT, A COPY OF WHICH HAS BEEN FILED WITH THE COMMISSION AS AN
EXHIBIT TO THE COMPANY'S CURRENT REPORT ON FORM 8-K, DATED JUNE 19, 1989, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 8-K. THE RIGHTS AGREEMENT
MAY BE EXAMINED AND COPIES MAY BE OBTAINED AT THE PLACE AND IN THE MANNER AS SET
FORTH IN SECTION 7 OF THIS OFFER TO PURCHASE.
On June 8, 1989, the Board of Directors of the Company declared a dividend
distribution of one Right for each outstanding share of Common Stock to
shareholders of record on June 23, 1989. The description and terms of the Rights
are set forth in a Rights Agreement (the "RIGHTS AGREEMENT") between the Company
and Harris Trust and Savings Bank, as Rights Agent (the "RIGHTS AGENT").
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The Rights are evidenced by a Common Stock certificate with a copy of the
Summary of Rights (as set forth in an exhibit to the Rights Agreement) attached
thereto. The Rights will separate from the Common Stock and a Distribution Date
(as defined in the Rights Agreement) will occur upon the earlier of (i) 15 days
following a public announcement that an Acquiring Person (as defined in the
Rights Agreement) has acquired, or obtained the right to acquire, beneficial
ownership of 25% or more of the outstanding shares of the Common Stock or (ii)
15 days following the commencement or announcement of an intention to commence a
tender offer or exchange offer by any person if, upon consummation thereof, such
person would be an Acquiring Person (the earlier of such dates being called the
"DISTRIBUTION DATE").
The Rights Agreement provides that, until the Distribution Date, (i) the
Rights will be transferred with and only with the Common Stock, (ii) new Common
Stock certificates issued after June 23, 1989 upon transfer or new issuance of
the Common Stock contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any of the Common Stock
certificates outstanding as of June 23, 1989 will also constitute the transfer
of the Rights associated with the Common Stock represented by such certificate.
The Rights Agreement provides that as soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("RIGHT
CERTIFICATES") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and such separate Right Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and the Rights
will expire on June 7, 1999, unless earlier redeemed by the Company as described
below.
The Rights Agreement provides that in the event that (i) the Company were
the surviving corporation in a merger and its Common Stock were not changed or
exchanged; (ii) an Acquiring Person engages in one of a number of self-dealing
transactions specified in the Rights Agreement; or (iii) an Acquiring Person
becomes the beneficial owner of 30% or more of the outstanding Shares, or (iv)
during such time as there is an Acquiring Person, an event occurs which results
in such Acquiring Person's ownership interest being increased by more than 1%,
then proper provision shall be made so that each holder of a Right will
thereafter have the right to receive, upon exercise, Common Stock (or, in
certain circumstances, cash, property or other securities of the Company) having
a value equal to two times the exercise price of the Right.
In the event (i) that the Company were acquired in a merger or other
business combination transaction in connection with which the Company is not the
surviving corporation (other than a merger described in the preceding
paragraph), or (ii) 50% or more of the Company's assets or earning power is sold
or transferred, each holder of a Right shall thereafter have the right to
receive, upon exercise, common stock of the acquiring company having a value
equal to two times the exercise price of the Right. Each of the events described
in this paragraph and the preceding constitutes a "TRIGGERING EVENT" under the
Rights Agreement.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of a least 1% in
such Purchase Price. Prior to a Triggering Event, fractional shares of the
Preferred Stock will not be issued and, in lieu thereof, an adjustment in cash
will be made based on the current market value of the Preferred Stock. Following
the occurrence of a Triggering Event, the Company shall not be required to issue
fractions of shares of Common Stock and, in lieu thereof, an adjustment in cash
will be made equal to the same fraction of the current market value of one share
of Common Stock.
At any time until fifteen days following a Stock Acquisition Date (as
defined in the Rights Agreement), the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $.05 per Right (the
"REDEMPTION PRICE"). Immediately upon the action of the Board of Directors of
the Company electing to redeem the Rights, the Company shall make announcement
thereof, and upon such election, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
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GENERAL. Under Delaware Law, the approval of the Board and the affirmative
vote of the holders of a majority of the outstanding Shares is required to
approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger. The Board of Directors of the Company has
unanimously approved and adopted the Merger Agreement and the transactions
contemplated thereby, and, unless the Merger is consummated pursuant to the
short-form merger provisions under Delaware Law described below, the only
remaining required corporate action of the Company is the approval and adoption
of the Merger Agreement and the transactions contemplated thereby by the
affirmative vote of the holders of a majority of the Shares. Accordingly, if the
Minimum Condition is satisfied, the Purchaser will have sufficient voting power
to cause the approval and adoption of the Merger Agreement and the transactions
contemplated thereby without the affirmative vote of any other shareholders of
the Company.
Under Delaware Law, if the Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the outstanding Shares, the Purchaser will be able to
approve the Merger without a vote of the Company's shareholders. In such event,
Parent, the Purchaser and the Company have agreed in the Merger Agreement to
take, at the request of the Purchaser, all necessary and appropriate action to
cause the Merger to become effective as soon as reasonably practicable after
such acquisition, without a meeting of the Company's shareholders. If, however,
the Purchaser does not acquire at least 90% of the outstanding Shares pursuant
to the Offer or otherwise and a vote of the Company's shareholders is required
under Delaware Law, a significantly longer period of time would be required to
effect the Merger.
Under Article IX of the Company's Restated Certificate of Incorporation
(the "COMPANY'S CHARTER"), the affirmative vote of the holders of not less than
75% of the outstanding voting Shares is required to, among other things, adopt
any agreement for, or to approve, the merger or consolidation of the Company or
any subsidiary with or into any Related Person (defined as any individual,
corporation, or other entity) if such person has or has the right to acquire
beneficial owner of 5% or more of the Shares. However, the Company's Charter
provides that the preceding provision is not applicable to a transaction which
has been approved by the unanimous vote of all of the Directors then in office.
In the Merger Agreement, the Company has represented that the Board of Directors
of the Company, by resolution, has unanimously approved the Merger and the
transactions contemplated thereby. Accordingly, the vote of the holders of not
less than 75% of the outstanding Shares, as set forth in Article IX of the
Company's Charter, is not applicable to the Offer, the Merger, or the
transactions contemplated thereby.
The Commission has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which the Purchaser
seeks to acquire the remaining Shares not held by it. The Purchaser believes,
however, that Rule 13e-3 will not be applicable to the Merger because it is
anticipated that the Merger will be effected within one year following
consummation of the Offer. Rule 13e-3 requires, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the proposed transaction and the consideration offered to
minority shareholders in such transaction, be filed with the Commission and
disclosed to shareholders prior to consummation of the transaction.
Except as noted in this Offer to Purchase, neither Parent nor the Purchaser
has any present plans or proposals that would result in an extraordinary
corporate transaction, such as a merger, reorganization, liquidation, relocation
of operations, or sale or transfer of assets, involving the Company or any
material changes in the Company's corporate structure or business.
12. DIVIDENDS AND DISTRIBUTIONS. As described above, the Merger Agreement
provides that, prior to the Effective Time, the Company will not (a) declare,
set aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock, subsidiaries of the Company and
dividends paid in respect of directors' qualifying shares which dividends are
the property of, and for the benefit of, the Company or its direct or indirect
wholly owned subsidiaries, (b) except as explicitly permitted by the Merger
Agreement, issue, sell, pledge, dispose of or encumber any additional shares of,
or securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire,
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any shares of capital stock of any class of the Company or its subsidiaries or
(c) redeem, purchase or otherwise acquire directly or indirectly any of its
capital stock.
If, on or after the date of the Merger Agreement, the Company should (a)
split, combine, redeem or reclassify any shares of its capital stock, (b)
purchase or acquire, or offer to purchase or acquire, any shares of its capital
stock or (c) issue or sell any shares of its capital stock (other than in
connection with the exercise of the Options outstanding on the date of the
Merger Agreement), or any of its other securities, or issue any securities
convertible into, or rights, warrants or options to purchase or subscribe to, or
enter into any arrangement or contract with respect to the issuance or sale of
any shares of its capital stock or any of its other securities, or make any
other changes in its capital structure, then subject to the provisions of
Section 14 below, Purchaser, in its sole discretion, may make such adjustments
as it deems appropriate in the Offer Price and other terms of the Offer,
including, without limitation, the number or type of securities offered to be
purchased.
If, on or after the date of the Merger Agreement, the Company should
declare, pay, set aside or make any cash dividend or make other distributions or
payments with respect to any shares of its capital stock, or issue with respect
to any shares of its capital stock any additional shares, shares of any other
class of capital stock, other securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to shareholders of record on a date prior to
the transfer of the Shares purchased pursuant to the Offer to the Purchaser on
the Company's stock transfer records, then, subject to the provisions of Section
14 below, (a) the Offer Price may, in the sole discretion of the Purchaser, be
reduced by the amount of any such cash dividend or cash distribution and (b) the
whole of any such noncash dividend, distribution or issuance to be received by
the Tendering Shareholder will (i) be received and held by the Tendering
Shareholder for the account of the Purchaser and will be required to be promptly
remitted and transferred by each tendering Shareholder to the Depositary for the
account of the Purchaser, accompanied by appropriate documentation of transfer,
or (ii) at the direction of the Purchaser, be exercised for the benefit of the
Purchaser, in which case the proceeds of each exercise will promptly be remitted
to the Purchaser Pending such remittance and subject to applicable law, the
Purchaser will be entitled to all rights and privileges as owner of any such
noncash dividend, distribution, issuance or proceeds and may withhold the entire
Offer Price or deduct from the Offer Price the amount or value thereof, as
determined by the Purchaser in its sole discretion.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the preceding paragraphs and nothing
herein shall constitute a waiver by the Purchaser or Parent of any of its rights
under the Merger Agreement or a limitation of remedies available to the
Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and will reduce the number of holders
of Shares, which could adversely affect the liquidity and market value of the
remaining Shares held by the public.
According to its published guidelines, the AMEX would consider delisting
the Shares if, among other things, the number of record holders of at least 100
Shares would fall below 300, the number of publicly held Shares (exclusive of
holdings of officers, directors, controlling shareholders or other family or
concentrated holdings) should fall below 200,000 or the aggregate market value
of publicly held Shares should fall below $1,000,000. If, as a result of the
purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet
the guidelines of the AMEX for continued listing and the listing of the Shares
is discontinued, the market for the Shares could be adversely affected.
If the AMEX were to delist the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price or other quotations would be reported by such exchange or
through the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or other sources. The extent of the public market therefor and
the availability of such
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quotations would depend, however, upon such factors as the number of
shareholders and/or the aggregate market value of such securities remaining at
such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration under the Exchange
Act as described below, and other factors. The Purchaser cannot predict whether
the reduction in the number of Shares that might otherwise trade publicly would
have an adverse or beneficial effect on the market price for or marketability of
the Shares or whether it would cause future market prices to be greater or less
than the Offer Price.
The Shares are currently "margin securities", as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "FEDERAL
RESERVE BOARD"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of such securities. Depending upon factors
similar to those described above regarding listing and market quotations,
following the Offer it is possible that the Shares might no longer constitute
"margin securities" for purposes of the margin regulations of the Federal
Reserve Board, in which event such Shares could no longer be used as collateral
for loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application of the Company to the Commission
if the Shares are not listed on a national securities exchange and there are
fewer than 300 record holders of the Shares. The termination of registration of
the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to holders of Shares and to the
Commission and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b), the requirement of
furnishing a proxy statement in connection with shareholders' meetings pursuant
to Section 14(a), and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions, no longer applicable to the Shares. In
addition, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act.
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be "margin securities" or be eligible for NASDAQ
reporting.
It is Parent's intention to cause the Shares to be deregistered under the
Exchange Act and delisted from the AMEX as soon as practicable after
satisfaction of the conditions for such deregistration.
14. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate the Offer as to any Shares not then paid for, if:
(i) any applicable waiting period under the HSR Act has not expired or
terminated;
(ii) the Minimum Condition has not been satisfied;
(iii) the Rights Agreement shall not have been amended in a manner
which renders the Rights inoperative with respect to any acquisition of
Shares by Parent or the Purchaser, or
(iv) at any time on or after April 20, 1996 and before the time of
payment for any such Shares, any of the following events shall occur or
shall be determined by the Purchaser to have occurred:
(a) there shall be threatened, instituted or pending any action
or proceeding by any Governmental Entity (i) challenging or seeking
to, or which could reasonably be expected to make illegal, impede,
delay or otherwise directly or indirectly restrain, prohibit or make
materially more costly the Offer or the Merger or seeking to obtain
material damages, (ii) seeking to prohibit or materially limit the
ownership or operation by Parent or Purchaser of all or any material
portion of the business or assets of the Company or any of its
subsidiaries taken as a whole or to compel Parent or Purchaser
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<PAGE> 32
to dispose of or hold separately all or any material portion of the
business or assets of Parent or Purchaser or the Company or any of its
subsidiaries taken as a whole, or seeking to impose any material
limitation on the ability of Parent or Purchaser to conduct its business
or own such assets, (iii) seeking to impose material limitations on the
ability of Parent or Purchaser effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to
vote any Shares acquired or owned by Purchaser or Parent on all matters
properly presented to the Company's stockholders, (iv) seeking to
require divestiture by Parent or Purchaser of any Shares, or (v)
otherwise materially adversely affecting the condition of the Company
and its subsidiaries taken as a whole;
(b) any court shall have entered an order which is in effect and
which (i) makes illegal, impedes, delays or otherwise directly or
indirectly restrains, prohibits or makes materially more costly the
Offer or the Merger, (ii) prohibits or materially limits the ownership
or operation by Parent or Purchaser of all or any material portion of
the business or assets of the Company or any of its subsidiaries taken
as a whole or compels Parent or Purchaser to dispose of or hold
separately all or any material portion of the business or assets of
Parent or Purchaser or the Company or any of its subsidiaries taken as a
whole, or imposes any material limitation on the ability of Parent or
Purchaser to conduct its business or own such assets, (iii) imposes
material limitations on the ability of Parent or Purchaser effectively
to exercise full rights of ownership of the Shares, including, without
limitation, the right to vote any Shares acquired or owned by Purchaser
or Parent on all matters properly presented to the Company's
stockholders, (iv) requires divestiture by Parent or Purchaser of any
Shares, or (v) otherwise materially adversely affects the Company and
its Subsidiaries taken as a whole; provided, however, that in the case
of a preliminary injunction to the effect described in this paragraph
(b), the provisions of this paragraph (b) shall not be deemed to have
been triggered until the earlier of (X) the date on which such
injunction becomes final or (Y) the Company ceases its efforts to have
such preliminary injunction dissolved;
(c) there shall be any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, enforced, promulgated, amended, issued or deemed applicable to
(i) Parent, Purchaser, the Company or any subsidiary of the Company or
(ii) the Offer or the Merger, by any legislative body, court, government
or governmental, administrative or regulatory authority or agency,
domestic or foreign, other than the routine application of the waiting
period provisions of the HSR Act to the Offer or to the Merger, which
could reasonably be expected to directly or indirectly result in any of
the consequences referred to in clauses (i) through (v) of paragraph (a)
above;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the American Stock
Exchange for a period in excess of three hours (excluding suspensions or
limitations resulting solely from physical damage or interference with
such exchanges not related to market conditions), (ii) a declaration of
a banking moratorium or any suspension of payments in respect of banks
in the United States (whether or not mandatory), (iii) a commencement of
a war, armed hostilities or other international or national calamity
directly or indirectly involving the United States, (iv) any limitation
(whether or not mandatory) by any foreign or United States governmental
authority on the extension of credit by banks or other financial
institutions, (v) any decline in either the Dow Jones Industrial Average
or the Standard & Poor's Index of 500 Industrial Companies by an amount
in excess of 20% measured from the close of business on April 19, 1996
or (vi) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
(e) the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and correct in any material
respect as of the date of consummation of the Offer as though made on or
as of such date, except (i) for changes specifically permitted by the
Merger Agreement and (ii) those representations and warranties that
address matters only as of a particular date as true and correct as of
such date, or the Company shall have breached or failed in any
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material respect to perform or comply with any material obligation,
agreement or covenant required by the Merger Agreement to be performed
or complied with by it;
(f) the Merger Agreement shall have been terminated in accordance
with its terms;
(g) (i) it shall have been publicly disclosed or Parent or the
Purchaser shall have otherwise learned that any person, entity or
"group" (as defined in Section 13(d)(3)of the Exchange Act), other than
Parent or its affiliates or any group of which any of them is a member,
shall have acquired beneficial ownership (determined pursuant to Rule
13d-3 promulgated under the Exchange Act) of more than 19.9% of any
class or series of capital stock of the Company (including the Shares),
through the acquisition of stock, the formation of a group or otherwise,
or shall have been granted an option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of more than 19.9% of any
class or series of capital stock of the Company (including the Shares);
or (ii) any person or group shall have entered into a definitive
agreement or agreement in principle with the Company with respect to a
merger, consolidation or other business combination with the Company;
(h) the Company's Board of Directors shall have withdrawn, or
modified or changed in a manner adverse to Parent or the Purchaser
(including by amendment of the Schedule 14D-9) its recommendation of the
Offer, the Merger Agreement, or the Merger, or recommended another
proposal or offer, or shall have resolved to do any of the foregoing;
(i) any change shall have occurred or been threatened (or any
condition, event or development shall have occurred or been threatened
involving a prospective change), that is reasonably likely to have a
material adverse effect on the business, properties, assets,
liabilities, operations, results of operations, conditions (financial or
otherwise) or prospects of the Company and its Subsidiaries taken as a
whole; or
(j) all consents, registrations, approvals, permits,
authorizations, notices, reports or other filings required to be
obtained or made by the Company, Parent or Purchaser with or from any
governmental or regulatory entity in connection with the execution,
delivery and performance of the Merger Agreement, the Offer and the
consummation of the transactions contemplated by the Merger Agreement
shall not have been made or obtained and such failure could reasonably
be expected to have a material adverse effect on the Company and any of
its Subsidiaries, taken as a whole, or could be reasonably likely to
prevent or materially delay consummation of the transactions
contemplated by the Merger Agreement. The foregoing conditions are for
the sole benefit of the Purchaser and Parent and may be waived by Parent
or the Purchaser, in whole or in part at any time and from time to time
in the sole discretion of Parent or the Purchaser; provided that the
Minimum Condition may not be waived without the written consent of the
Company. The failure by Parent or the Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
15. REGULATORY APPROVALS; STATE TAKEOVER LAWS.
GENERAL. Except as otherwise disclosed herein, based on a review of
publicly available information by the Company with the Commission, neither the
Purchaser nor Parent is aware of (i) any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the acquisition of Shares
by the Purchaser pursuant to the Offer or the Merger or (ii) any approval or
other action by any governmental, administrative or regulatory agency or
authority, domestic or foreign, that would be required for the acquisition or
ownership of Shares by the Purchaser as contemplated herein. Should any such
approval or other action be required, the Purchaser currently contemplates that
such approval or action would be sought. While the Purchaser does not currently
intend to delay the acceptance for payment of Shares tendered pursuant to the
Offer pending the outcome of any such matter, there can be no assurance that any
such approval or action, if needed, would be obtained or would be obtained
without substantial conditions or that adverse consequences might not result to
the business of the Company, the Purchaser or Parent or that certain parts of
the businesses of the Company, the Purchaser or
31
<PAGE> 34
Parent might not have to be disposed of in the event that such approvals were
not obtained or any other actions were not taken. The Purchaser's obligation
under the Offer to accept for payment and pay for Shares is subject to certain
conditions. See Section 14.
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission ("FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "ANTITRUST
DIVISION") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of Shares by the Purchaser pursuant to the Offer is
subject to the HSR Act requirements.
Under the provisions of the HSR Act applicable to the purchase of Shares
pursuant to the Offer, such purchase may not be made until the expiration of a
15-calendar day waiting period following the required filing under the HSR Act
by Parent, which Parent intends to make on April 23, 1996. Accordingly, if such
filing is made on April 23, 1996, the waiting period under the HSR Act will
expire at 11:59 P.M., New York City time, on May 8, 1996, unless early
termination of the waiting period is granted or Parent receives a request for
additional information of documentary material prior thereto. Pursuant to the
HSR Act, Parent has requested, and the Company intends to request, early
termination of the waiting period applicable to the Offer. There can be no
assurances, however, that the 15-day HSR Act waiting period will be terminated
early. If either the FTC or the Antitrust Division were to request additional
information or documentary material from Parent, the waiting period would expire
at 11:59 P.M., New York City time, on the tenth calendar day after the date of
substantial compliance by the Parent with such request. Thereafter, the waiting
period could be extended only by court order or by consent of Parent. If the
acquisition of Shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the purchase of and payment for Shares pursuant to the Offer
will be deferred until 10 days after the request is substantially complied with
unless the waiting period is terminated sooner by the FTC or the Antitrust
Division. See Section 2. Only one extension of such waiting period pursuant to a
request for additional information is authorized by the rules promulgated under
the HSR Act, except by court order. Although the Company is required to file
certain information and documentary material with the Antitrust Division and the
FTC in connection with the Offer, neither the Company's failure to make such
filings nor a request to the Company from the Antitrust Division or the FTC for
additional information or documentary material will extend the waiting period.
No separate HSR Act requirements with respect to the Merger, the Merger
Agreement and the Tender Agreement will apply if the 15-day waiting period
relating to the Offer (as described above) has expired or been terminated.
However, if the Offer is withdrawn or if the filing relating to the Offer is
withdrawn prior to the expiration or termination of the 15-day waiting period
relating to the Offer, the acquisition of Shares in the Merger pursuant to the
Merger Agreement may not be consummated until 30 calendar days after receipt by
the Antitrust Division and the FTC of the Notification and Report Forms of both
Parent and the Company unless the 30-day period is earlier terminated by the
Antitrust Division and the FTC. Within such 30-day period, the Antitrust
Division or the FTC may request additional information or documentary materials
from Parent and/or the Company, in which event, the acquisition of Shares
pursuant to the Merger may not be consummated until 20 days after such requests
are substantially complied with by both Parent and the Company. Thereafter, the
waiting periods may be extended only by court order or by consent.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
the Purchaser pursuant to the Offer. At any time before or after the Purchaser's
purchase of Shares, either the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the acquisition of Shares pursuant to the
Offer or seeking divestiture of Shares acquired by the Purchaser or divestiture
of substantial assets of Parent, the Company or any of their respective
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. Based upon an examination of publicly
available information relating to the businesses in which Parent and its
subsidiaries and the Company and its subsidiaries are involved, Parent and the
Purchaser believe that the Offer will not
32
<PAGE> 35
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if a challenge
is made, what the result will be.
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of Delaware Law prevents an
"interested shareholder" (generally a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock, or an affiliate
or associate thereof) from engaging in a "business combination" (defined to
include mergers and certain other transactions) with a Delaware corporation for
a period of three years following the date such person became an interested
shareholder unless, among other things, prior to such date the Board of
Directors of the corporation approved either the business combination or the
transaction in which the interested shareholder became an interested
shareholder. On April 20, 1996, prior to the execution of the Merger Agreement,
the Board of Directors of the Company, by unanimous vote of all directors
present at a meeting held on such date, (i) approved the Merger, (ii) approved
the Merger Agreement, the Tender Agreement and expressions of intent described
in Section 11, and the transactions contemplated thereby, as well as
negotiations between Parent and the Purchaser and the Tendering Shareholder with
respect thereto, (iii) determined that the Merger Agreement and the transactions
contemplated thereby, including each of the Offer and the Merger is fair to and
in the best interests of, the Shareholders of the Company and (iv) recommended
that the Shareholders of the Company accept the Offer and approve and adopt the
Merger Agreement and the transactions contemplated thereby. Accordingly, Section
203 is inapplicable to the Tender Agreement, the Offer, the Merger and
expressions of intent described in Section 11.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. The Purchaser does not know whether any of these laws will, by
their terms, apply to the Offer or the Merger and has not complied with any such
laws. Should any person seek to apply any state takeover law, the Purchaser will
take such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, the Purchaser might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer, and the Merger. In such case,
the Purchaser may not be obligated to accept for payment any Shares tendered.
See Section 14.
APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer. Holders of Shares will be entitled to appraisal rights in connection with
the Merger if at the record date with respect to the Merger certain requirements
are satisfied.
Under Section 262 of the Delaware Law, appraisal rights are not available
for the shares of any class or series of stock which, at the record date fixed
to determine the Shareholders entitled to receive notice of and to vote at the
meeting of Shareholders to act upon the agreement of merger, were either (i)
listed on a national securities exchange or designated as a national market
system security on an inter-dealer quotation system by the NASD or (ii) held of
record by more than 2,000 shareholders, unless the holders of such class or
series of stock are required by the terms of such agreement to accept for such
stock anything except (w) shares of stock of the corporation surviving or
resulting from such merger, (x) shares of stock of any other corporation which
at the effective date of the merger will be either listed on a national
securities exchange or designated as a national market system security on an
inter-dealer quotation system by the NASD or held of record by more than 2,000
shareholders, (y) cash in lieu of fractional shares of the corporations
described in clauses (w) and (x) or (z) any combination of the shares of stock
and cash in lieu of fractional shares described in clauses (w), (x) and (y).
Shareholders of the Company may have certain rights under Section 262 of the
Delaware Law to dissent and demand appraisal of, and payment in cash of the fair
value of, their Shares. Such rights, if the statutory procedures were complied
with, could lead to a judicial determination of the fair value (excluding any
element of value arising from the accomplishment or expectation of the Merger)
required to be paid in cash to such dissenting holders for their Shares. Any
such judicial determination of the fair value of Shares could be based upon
considerations other than, or in addition to, the price paid in the Offer and
the
33
<PAGE> 36
market value of the Shares, including asset values and the investment value of
the Shares. The value so determined could be more or less than the purchase
price per Share pursuant to the Offer or the consideration per Share to be paid
in the Merger.
The foregoing summary of the rights of objecting Shareholders does not
purport to be a complete statement of the procedures to be followed by
Shareholders desiring to exercise any available dissenters' rights. The
preservation and exercise of dissenters' rights require strict adherence to the
applicable provisions of the Delaware Law.
16. FEES AND EXPENSES. Except as set forth below, neither Parent nor the
Purchaser will pay any fees or commissions to any broker, dealer or other person
for soliciting tenders of Shares pursuant to the Offer.
The Purchaser has retained Georgeson & Company, Inc. to act as the
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, facsimile, telegraph and personal
interviews and may request brokers, dealers and other nominee shareholders to
forward materials relating to the Offer to beneficial owners of Shares. The
Information Agent will receive reasonable and customary compensation for its
services, will be reimbursed for certain reasonable out-of-pocket expenses and
will be indemnified against certain liabilities and expenses in connection
therewith, including certain liabilities under the federal securities laws.
In addition, Harris Trust Company of New York has been retained as the
Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith, including certain
liabilities under the federal securities laws. Brokers, dealers, commercial
banks and trust companies will be reimbursed by the Purchaser for customary
mailing and handling expenses incurred by them in forwarding offering material
to their customers.
17. MISCELLANEOUS. The Purchaser is not aware of any jurisdiction where
the making of the Offer is prohibited by any administrative or judicial action
pursuant to any valid state statute. If the Purchaser becomes aware of any valid
state statute prohibiting the making of the Offer or the acceptance of the
Shares pursuant thereto, the Purchaser will make a good faith effort to comply
with such state statute. If, after such good faith effort, the Purchaser cannot
comply with any such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such state.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of the Purchaser by one or more registered brokers or dealers
which are licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Parent and the Purchaser have filed with the Commission the Schedule 14D-1,
together with exhibits, pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. The Schedule 14D-1
and any amendments thereto, including exhibits, may be inspected at, and copies
may be obtained from, the same places and in the same manner as set forth in
Section 7 (except that they will not be available at the regional offices of the
Commission).
DELAWARE ACQUISITION CO.
April 22, 1996
34
<PAGE> 37
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth below is the name,
current business address, citizenship and the present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated, each person identified below is employed by Parent or
serves on the Board. The principal address of Parent and, unless otherwise
indicated below, the current business address for each individual listed below
is 115 S. Ludlow Street, Dayton, Ohio 45402. Each such person is a citizen of
the United States. Directors are identified by an asterisk.
<TABLE>
<CAPTION>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- --------------------------------------------------
<S> <C>
David R. Holmes* Chairman of the Board, President and Chief Executive Officer.
Richard H. Grant, Jr.* Chairman of the Steering Committee. Father of Richard H.
Grant, III.
Richard H. Grant, III* Private Investor since October, 1994. Before that he served
as Senior Vice President, International, Computer Systems
Division. Son of Richard H. Grant, Jr.
Joseph N. Bausman* President, Automotive Systems Division since February, 1995.
Before that he served as President, Computer Systems
Division.
Dr. David E. Fry* President and Chief Executive Officer, Northwood University.
Allan Z. Loren* Executive Vice President and Chief Information Officer of
American Express Company since May, 1994; President and CEO
of Galileo International (a global computer reservation
system company owned by 11 airlines) from January, 1993 to
May, 1994; President and CEO of Covia Partnership (computer
reservation system company) from January, 1991 to January,
1993 at which time Covia and Galileo merged; prior thereto
since 1987 served in two senior executive capacities at Apple
Computer, Inc., most recently as President of Apple USA.
Dave L. Medford* Vice President, Corporate Finance and Chief Financial
Officer.
Robert C. Nevin* President, Business Forms Division.
Gayle B. Price, Jr* Chairman and Chief Executive Officer, Price Brothers Company,
Manufacturer of Concrete Construction Materials
Kenneth W. Thiele* Private Investor based in Dayton, Ohio.
Martin D. Walker* Chairman and Chief Executive Officer of M.A. Hanna Company,
an International Specialty Chemicals Company.
H. John Proud President, Healthcare Systems Division since 1995. Before
that Senior Vice President and General Manager, Automotive
Computer Systems Group.
Michael J. Gapinski Treasurer and Assistant Secretary.
Adam M. Lutynski General Counsel and Secretary.
</TABLE>
<PAGE> 1
EXHIBIT (c)(2)
LETTER OF TRANSMITTAL
To Tender Shares of
Common Stock
(Including the Associated Rights)
of
DUPLEX PRODUCTS INC.
Pursuant to the Offer to Purchase
Dated April 22, 1996
of
DELAWARE ACQUISITION CO.
A Wholly Owned Subsidiary
of
THE REYNOLDS AND REYNOLDS COMPANY
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, MAY 17, 1996, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.0. Box 1010 New York, NY 10005 77 Water Street, 5th Floor
New York, NY 10268-1010 New York, NY
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(212) 701-7636
(212) 701-7637
Confirm by Telephone:
(212) 701-7624
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARE CERTIFICATE(S) AND SHARES(S) TENDERED
SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------
| TOTAL NUMBER OF |
| SHARES EVIDENCED |
SHARE | BY | NUMBER OF
CERTIFICATE | SHARE | SHARES
NUMBER(S)* | CERTIFICATE(S)* | TENDERED**
--------------|-------------------|---------------
--------------|-------------------|---------------
--------------|-------------------|---------------
--------------|-------------------|---------------
--------------|-------------------|---------------
Total Shares | |
- ----------------------------------------------------------------------------------------------------------
* Need not be completed by Shareholders delivering Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate
delivered to the Depositary are being tendered hereby. See Instruction 4.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined in Section 2 of the Offer to Purchase
(as defined below)) is utilized, if delivery of Shares is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
("DTC") or the Philadelphia Depository Trust Company ("PDTC") (each a
"BOOK-ENTRY TRANSFER FACILITY" and collectively, the "BOOK-ENTRY TRANSFER
FACILITIES") pursuant to the book-entry transfer procedure described in Section
3 of the Offer to Purchase. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Shareholders whose certificates evidencing Shares ("SHARE CERTIFICATES")
are not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) or who cannot complete
the procedure for delivery by book-entry transfer on a timely basis and who wish
to tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase. See Instruction 2.
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-----------------------------------------------------------------------------
Check box of Applicable Book-Entry Transfer Facility:
(CHECK ONE) / / DTC / / PDTC
Account Number:
---------------------------------
Transaction Code Number:
---------------------------------
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
---------------------------------------------------------------
Window Ticket No. (if any):
---------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
---------------------------------------------------------------
Name of Institution that Guaranteed Delivery:
---------------------------------------------------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH
IN THIS LETTER OF TRANSMITTAL CAREFULLY
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Delaware Acquisition Co., a Delaware
corporation ("PURCHASER") and a wholly owned subsidiary of The Reynolds and
Reynolds Company, an Ohio corporation, the above-described shares of common
stock, par value $1.00 per share (the "COMMON STOCK"), and the associated
preferred stock purchase rights issued pursuant to the Rights Agreement, dated
as of June 8, 1989, between Duplex Products Inc., a Delaware corporation (the
"COMPANY") and Harris Trust and Savings Bank as Rights Agent (the "RIGHTS" and,
together with the Common Stock, the "SHARES"), of the Company, pursuant to
Purchaser's offer to purchase all Shares at $12.00 per Share, net to the seller
in cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated April 22, 1996 (the "OFFER TO PURCHASE"), receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which together
constitute the "OFFER"). The undersigned understands that Purchaser reserves the
right to transfer or assign, in whole or from time to time in part, to one or
more of its affiliates, the right to purchase all or any portion of the Shares
tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all the Shares that
are being tendered hereby and all dividends, distributions (including, without
limitation, distributions of additional Shares) and rights declared, paid or
distributed in respect of such Shares on or after April 22, 1996 (collectively,
"DISTRIBUTIONS"), and irrevocably appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares and
all Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Share Certificates evidencing such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books maintained
by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Adam M. Lutynski and Dale L.
Medford, and each of them, as the attorneys and proxies of the undersigned, each
with full power of substitution, to vote in such manner as each such attorney
and proxy or his substitute shall, in his or her sole discretion, deem proper
and otherwise act (by written consent or otherwise) with respect to all the
Shares tendered hereby which have been accepted for payment by Purchaser prior
to the time of such vote or other action and all Shares and other securities
issued in Distributions in respect of such Shares, which the undersigned is
entitled to vote at any meeting of shareholders of the Company (whether annual
or special and whether or not an adjourned or postponed meeting) or consent in
lieu of any such meeting or otherwise. This proxy and power of attorney is
coupled with an interest in the Shares tendered hereby, is irrevocable and is
granted in consideration of, and is effective upon, the acceptance for payment
of such Shares by Purchaser in accordance with the terms of the Offer. Such
acceptance for payment shall revoke all other proxies and powers of attorney
granted by the undersigned at any time with respect to such Shares (and all
Shares and other securities issued in Distributions in respect of such Shares),
and no subsequent proxy or power of attorney shall be given or written consent
executed (and if given or executed, shall not be effective) by the undersigned
with respect thereto. The undersigned understands that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's acceptance of such
Shares for payment, Purchaser must be able to exercise full voting and other
rights with respect to such Shares and all Distributions, including, without
limitation, voting at any meeting of the Company's shareholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, and that when such Shares are accepted
for payment by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto and to all Distributions, free and clear of all
liens, restrictions, charges and encumbrances, and that none of such Shares and
Distributions will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver all additional documents deemed by the
Depositary or Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered
<PAGE> 4
hereby and all Distributions. In addition, the undersigned shall remit and
transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchase price
the amount or value of such Distribution as determined by Purchaser in its sole
discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. The undersigned recognizes that Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any Shares
from the name of the registered holder(s) thereof if Purchaser does not purchase
any of the Shares tendered hereby.
<PAGE> 5
- --------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased
or Share Certificates evidencing Shares not tendered or not purchased are to be
issued in the name of someone other than the undersigned, or if Shares tendered
hereby and delivered by book-entry transfer which are not purchased are to be
returned by credit to an account at one of the Book-Entry Transfer Facilities
other than that designated above.
Issue check and/or certificate(s) to:
Name _________________________________________________________________________
(PLEASE PRINT)
Address_______________________________________________________________________
______________________________________________________________________________
(INCLUDE ZIP CODE)
______________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
Check appropriate box:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
______________________________________________________________________________
(ACCOUNT NUMBER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased
or Share Certificates evidencing Shares not tendered or not purchased are to be
mailed to someone other than the undersigned, or to the undersigned at an
address other than that shown under "Description of Shares Tendered."
Mail check and/or certificate(s) to:
Name__________________________________________________________________________
(PLEASE PRINT)
Address_______________________________________________________________________
______________________________________________________________________________
(INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
<PAGE> 6
IMPORTANT
SHAREHOLDERS: SIGN HERE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated:
- ---------------, 1996
(Must be signed by registered holder(s) exactly as such registered holder(s)
name(s) appear(s) on Share Certificates or on a security position listing or by
a person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, please provide the
following information and see Instruction 5.)
Name(s)
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
Address:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
Taxpayer Identification or Social Security No.:
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
SPACE BELOW IS FOR USE BY FINANCIAL INSTITUTIONS ONLY
FINANCIAL INSTITUTIONS: PLACE MEDALLION SIGNATURE
GUARANTEE IN SPACE BELOW
Authorized Signature:
Name:
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm:
Address
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
Dated:
- ---------------, 1996
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. All signatures on this Letter of Transmittal
must be medallion guaranteed by a firm that is a member of the Medallion
Signature Guarantee Program, or by any other "eligible guarantor institution",
as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended (each of the foregoing being referred to as an "ELIGIBLE
INSTITUTION"), unless (i) this Letter of Transmittal is signed by the registered
holder(s) of the Shares (which term, for purposes of this document, shall
include any participant in a Book-Entry Transfer Facility whose name appears on
a security position listing as the owner of Shares) tendered hereby and such
holder(s) has (have) completed neither the box entitled "Special Payment
Instructions" nor the box entitled "Special Delivery Instructions" on the
reverse hereof or (ii) such Shares are tendered for the account of an Eligible
Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Share Certificates. This Letter
of Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if Shares are to be
delivered by book-entry transfer pursuant to the procedure set forth in Section
3 of the Offer to Purchase. Share Certificates evidencing all physically
tendered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer as well as a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature guarantees,
or an Agent's Message in the case of a book-entry delivery, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the reverse hereof prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase). If Share
Certificates are forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery. Shareholders whose Share Certificates are not immediately available,
who cannot deliver their Share Certificates and all other required documents to
the Depositary prior to the Expiration Date or who cannot complete the procedure
for delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Share Certificates evidencing all physically delivered Shares in
proper form for transfer by delivery, or a confirmation of a book-entry transfer
into the Depositary's account at a Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry delivery, an
Agent's Message), and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three American Stock
Exchange ("AMEX") trading days after the date of execution of such Notice of
Guaranteed Delivery, all as described in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering shareholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. Partial Tenders (not applicable to shareholders who tender by book-entry
transfer). If fewer than all of the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares that are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Share Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Share Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box
<PAGE> 8
entitled "Special Delivery Instructions" on the reverse hereof, as soon as
practicable after the expiration or termination of the Offer. All Shares
evidenced by Share Certificates delivered to the Depositary will be deemed to
have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will not
be necessary for transfer tax stamps to be affixed to the Share Certificates
evidencing the Shares tendered hereby.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
8. Questions and Requests for Assistance or Additional Copies. Questions
and requests for assistance may be directed to the Information Agent at its
addresses or telephone numbers set forth below. Additional copies of the Offer
to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery
may be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
9. Substitute Form W-9. Each tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such shareholder is not subject to backup withholding of federal income tax. If
a tendering shareholder has been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding, such shareholder must cross
out item (2) of the Certification box
<PAGE> 9
of the Substitute Form W-9, unless such shareholder has since been notified by
the Internal Revenue Service that such shareholder is no longer subject to
backup withholding. Failure to provide the information on the Substitute Form
W-9 may subject the tendering shareholder to 31 percent federal income tax
withholding on the payment of the purchase price of all Shares purchased from
such shareholder. If the tendering shareholder has not been issued a TIN and has
applied for one or intends to apply for one in the near future, such shareholder
should write "Applied For" in the space provided for the TIN in Part I of the
Substitute Form W-9, and sign and date the Substitute Form W-9. If "Applied For"
is written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31 percent on all payments of the purchase
price to such shareholder until a TIN is provided to the Depositary.
10. Lost, Destroyed or Stolen Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the Shareholder should
promptly notify the Depositary. The Shareholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND SHARE CERTIFICATES
OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS), OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER
TO PURCHASE).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
shareholder's correct TIN on Substitute Form W-9 below. If such shareholder is
an individual, the TIN is such shareholder's social security number. If the
Depositary is not provided with the correct TIN, the shareholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such shareholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding of 31 percent (as described
below).
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit an Internal Revenue Service Form W-8,
signed under penalties of perjury, attesting to such individual's exempt status.
A Form W-8 may be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31
percent of any payments made to the shareholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such shareholder is awaiting a TIN), and (b) that
(i) such shareholder has not been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such shareholder that such shareholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form
<PAGE> 10
W-9 for additional guidance on which number to report. If the tendering
shareholder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future, the shareholder should write "Applied
For" in the space provided for the TIN in Part I, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31 percent
of all payments of the purchase price to such shareholder until a TIN is
provided to the Depositary.
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
| |
| PART 1--Taxpayer Identification Number--For |
| all accounts, enter taxpayer identification |
| number at right. (For most individuals, this | _________________________________
| is your social security number. If you do not | Social Security Number
| have a number, see "Obtaining a Number" in the |
| enclosed Guidelines.) Certify by signing and | OR
| dating below. Note: If the account is in more | _________________________________
| than one name, see the chart in the enclosed | Employer Identification Number
| Guidelines to determine which number to give |
| the payer. |
| |
| ----------------------------------------------------------------------------------------
SUBSTITUTE |
FORM W-9 | PART 2--For Payees Exempt from Backup Withholding, see the enclosed Guidelines and
Department of the Treasury | complete as instructed therein.
Internal Revenue Service |
| CERTIFICATION--Under penalties of perjury, I certify that:
|
| (1) The number shown on this form is my correct Taxpayer Identification Number (or I
| am waiting for a number to be issued to me), and
|
Payer's Request for Taxpayer | (2) I am not subject to backup withholding either because I have not been notified by
Identification Number (TIN) | the Internal Revenue Service (the "IRS") that I am subject to backup withholding
| as a result of failure to report all interest or dividends, or the IRS has
| notified me that I am no longer subject to backup withholding.
|
| ----------------------------------------------------------------------------------------
|
| CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified
| by the IRS that you are subject to backup withholding because of underreporting
| interest or dividends on your tax return. However, if after being notified by the IRS
| that you were subject to backup withholding you received another notification from the
| IRS that you are no longer subject to backup withholding, do not cross out item (2).
| (See also instructions in the enclosed Guidelines.)
|
| SIGNATURE________________________________________________ DATE____________________
|
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31 PERCENT OF ANY PAYMENT MADE TO YOU PURSUANT TO THE OFFER. FOR
ADDITIONAL DETAILS, PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9.
The Information Agent for the Offer is:
(GEORGESON & COMPANY INC. LOGO)
Wall Street Plaza
New York, New York 10005
(212) 509-6240 (Collect)
Banks and Brokers Call collect: (212) 440-9800
CALL TOLL-FREE 1-800-223-2064
<PAGE> 1
EXHIBIT (c)(3)
DUPLEX PRODUCTS INC.
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 7, 1996
To the Shareholders:
Notice is hereby given that the 1996 Annual Meeting of Shareholders of
DUPLEX PRODUCTS INC. will be held in the Assembly Room on the sixth floor of The
Northern Trust Company, 50 South LaSalle Street, Chicago, Illinois, on Thursday,
March 7, 1996, at 10:00 a.m., CST, for the following purposes:
(1) To elect two Class II directors;
(2) To ratify the Board of Directors' selection of the Company's
independent auditors for fiscal year 1996; and
(3) To transact such other business as may properly come before the meeting
and any adjournments.
Shareholders of record at the close of business on January 5, 1996, are
entitled to notice of and to vote at the meeting and any adjournments.
You are urged to attend and participate in the meeting, no matter how many
shares you own. Meeting procedures allow every shareholder an opportunity to
comment and ask questions, while at the same time facilitating completion of the
business of the meeting in an orderly and timely fashion.
It is important that your shares be voted. Whether or not you expect to
attend the meeting, you are urged to complete, sign, and date the accompanying
proxy card and to return it promptly to the Company in the enclosed envelope. If
your shares are registered in different names or at different addresses, you
will receive more than one proxy card. You should return each proxy card so that
all of your shares are voted.
MARK A. ROBINSON
Secretary
February 6, 1996
<PAGE> 2
DUPLEX PRODUCTS INC.
1947 BETHANY ROAD
SYCAMORE, IL 60178
PROXY STATEMENT
FOR
1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 7, 1996
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of DUPLEX PRODUCTS INC. (hereinafter the
"Company") for use at the 1996 Annual Meeting of Shareholders (hereinafter the
"Annual Meeting") to be held on March 7, 1996, and at any adjournment thereof.
The Annual Meeting has been called for the purposes set forth in the Notice of
1996 Annual Meeting of Shareholders attached hereto.
Please complete, sign, and return the enclosed proxy. When such proxy is
properly executed and returned, the shares it represents will be voted at the
Annual Meeting in accordance with any directions noted thereon, or to the extent
that directions are not noted thereon, it will be voted (1) for the nominees of
Class II directors named therein, and (2) in favor of the ratification of the
selection of Grant Thornton LLP as independent auditors for fiscal year 1996.
Any Shareholder giving a proxy has the power to revoke it at any time before it
is voted by delivering written notice to the Secretary of the Company at the
Company's address listed above, by giving a later dated proxy, or by personally
appearing at the Annual Meeting and requesting revocation.
At the close of business on January 5, 1996, the record date for the
determination of shareholders entitled to vote at the Annual Meeting, there were
7,484,878 shares of the Company's common stock outstanding. Each share is
entitled to one vote. The holders of a majority of the issued and outstanding
shares must be present or represented by proxy in order for the Annual Meeting
to be held. Directors are elected by a plurality of votes cast. The selection of
Grant Thornton LLP requires a majority of the votes cast.
This proxy statement was first sent or delivered to shareholders on or
about February 6, 1996.
1
<PAGE> 3
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth, as of January 5, 1996, the names and
addresses of persons known to the Company to be beneficial owners of more than
five percent of the Company's common stock.
<TABLE>
<CAPTION>
COMMON STOCK OWNERSHIP
----------------------------------------
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS BENEFICIALLY OWNED OUTSTANDING SHARES
---------------------------------------------- ------------------ ------------------
<S> <C> <C>
Tweedy, Browne Company L.P. .................. 706,776 9.44%
TBK Partners, L.P.
Vanderbilt Partners, L.P.
52 Vanderbilt Avenue
New York, NY 10017
Brinson Partners.............................. 670,200 8.95%
Three First National Plaza
Chicago, IL 60602
Mitchell Hutchins Institutional Investors, 562,700 7.52%
Inc. .......................................
777 Mariner's Island Blvd., 4th Fl.
San Mateo, CA 94403
David L. Babson & Co., Inc.................... 536,700 7.17%
One Memorial Drive
Cambridge, MA 02142-1300
College Retirement Equities Fund.............. 446,600 5.97%
730 Third Avenue
New York, NY 10017
</TABLE>
The following table lists, as of January 5, 1996, the Company's common
stock owned by each director, each of the most highly compensated executive
officers, and all directors and executive officers as a group.
<TABLE>
<CAPTION>
COMMON STOCK OWNERSHIP
------------------------------------------------------------
NUMBER OF SHARES
-------------------------------------------
OBTAINABLE PERCENT OF
DIRECTLY THROUGH STOCK OUTSTANDING
NAME/GROUP OWNED OPTION EXERCISE TOTAL SHARES
- ------------------------------------------ -------- ---------------- ------- -----------
<S> <C> <C> <C> <C>
John A. Bacon, Jr......................... 925(1) -- 925 0.01%
Michael J. Birck.......................... -- -- -- --
Andrew A. Campbell........................ -- 75,000 75,000 1.00%
John C. Colman............................ -- -- -- --
David B. Preston.......................... -- 25,000 25,000 0.33%
David J. Eskra............................ 11,000 -- 11,000 0.15%
Marc A. Loomer............................ 13,204 25,000 38,204 0.51%
W. Robert Reum............................ -- -- -- --
All Directors and Executive Officers as a
group................................... 25,129 125,000 150,129 2.00%
</TABLE>
- -------------------------
(1) Excludes 600 shares owned by family members for which beneficial ownership
is disclaimed.
2
<PAGE> 4
ELECTION OF DIRECTORS
The Board of Directors is divided into three Classes with the term of
office of one Class expiring each year. Each Class is elected for a three year
term. The term of Class II directors expires at the 1996 Annual Meeting. The
Board of Directors' nominees for Class II directors are David J. Eskra and John
A. Bacon, Jr. Messrs. Eskra and Bacon were elected as Class II directors at the
1993 annual meeting for three year terms expiring at the 1996 Annual Meeting.
Messrs. Campbell and Colman were appointed by the Board of Directors on June 14,
1995, (to fill the vacancies created by the resignations of Ben L. McSwiney and
George S. Hoban). Mr. Colman was elected as a Class I director at the 1992
annual meeting for a three year term. However, Mr. Colman resigned from the
Board in January 1994. In June 1995, he accepted the appointment as a Class I
director for a term expiring at the 1998 Annual Meeting and as Chairman of the
Executive Committee. He previously served the Company as a director from
1978-1994.
As set forth on the proxy card, a shareholder may vote (1) for the nominees
or (2) against the nominees (by withholding authority). Unless otherwise
directed on the proxy card, the shares represented by the enclosed proxy will be
voted for the nominees of the Board of Directors.
If, at the time of the 1996 Annual Meeting, a nominee is unable or declines
to serve, the discretionary authority provided in the proxy will be exercised to
vote for a substitute. The Board of Directors has no reason to believe that any
substitute nominee will be required. Shareholders who wish to make additional
nominations may do so at the Annual Meeting.
The Board of Directors recommends that you vote in favor of its nominees.
NOMINEES AND DIRECTORS
The following table sets forth information on the business affiliations of
(1) the nominees for election as directors at the 1996 Annual Meeting (Class II)
and (2) the incumbent directors whose terms will expire at either the 1997
annual meeting (Class III) or the 1998 annual meeting (Class I).
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS, YEAR FIRST BOARD
COMPANY POSITIONS, AND ELECTED COMMITTEE
NAME AND AGE OTHER DIRECTORSHIPS DIRECTOR MEMBERSHIP
- --------------------------- ----------------------------------------------- ----------- ---------------
<S> <C> <C> <C>
Andrew A. Campbell (50).... President of the Company; 1995, Vice President 1995
(Class I) of Finance, Secretary, and Treasurer of the
Company; 1991-1994, Vice President, Finance,
and Chief Financial Officer of Simmons
Upholstered Furniture Inc., a furniture
manufacturer.
W. Robert Reum (53)........ Chairman of the Board, President, and Chief 1994 Audit,
(Class I) Executive Officer of the Interlake Corporation, Compensation,
a multinational manufacturer of special and Nominating
materials, aerospace components, and handling
and packaging equipment and materials;
Director, Amsted Industries.
John C. Colman (69)........ Private Investor/Consultant; Director, Premier 1978 Executive
(Class I) Industrial Corporation; Director, Orion Capital (Chair) and
Corporation. Nominating
David J. Eskra (54)........ Private Investor; 1994, Chairman of the Board 1990 Finance,
(Class II) and Chief Executive Officer of the Company; Compensation,
1992, Private Investor; 1989-1991, Chairman of Executive, and
the Board, President, and Chief Executive Nominating
Officer of Pansophic Systems Incorporated, a
computer software company.
John A. Bacon, Jr. (68).... Private Investor; Trustee of Stein Roe Variable 1967 Compensation
(Class II) Investment Trust; Trustee of Keyport Variable (Chair),
Investment Trust. Executive,
Finance, and
Nominating
Michael J. Birck (57)...... President, Chief Executive Officer, and 1990 Audit (Chair)
(Class III) Director of Tellabs, Inc., a manufacturer of and Nominating
telecommunications products; Director, USF&G
Corporation; Director, Molex, Inc.
</TABLE>
3
<PAGE> 5
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors had ten meetings during fiscal year 1995. Each
director attended all but one of the meetings that he was eligible to attend.
The Company has standing Audit, Compensation, Executive, Finance, and Nominating
Committees of the Board of Directors which perform the functions described
below.
The Audit Committee consisted of Messrs. Birck, Bacon, and Reum. Mr. Bacon
served on the Committee through March 1995. The Audit Committee reviews the
Company's financial reporting procedures and the effectiveness of its system of
internal controls. It meets with appropriate Company financial personnel,
including the Director of Internal Audit, and the independent auditors in
connection with these reviews. The Audit Committee recommends to the Board of
Directors, subject to ratification by the shareholders at the Annual Meeting,
the appointment of independent auditors. The Audit Committee also reviews and
evaluates the Company's insurance and risk management programs. The Audit
Committee met three times during fiscal year 1995. Mr. Birck attended each of
these meetings, while Mr. Bacon and Mr. Reum attended two of them.
The Compensation Committee consisted of Messrs. Bacon, Eskra, and Reum. The
Compensation Committee is responsible for making recommendations to the Board of
Directors relating to the compensation of the President and with reviewing
management decisions regarding compensation of other officers and key personnel,
as more fully outlined in the report of the Compensation Committee on page 6.
The Compensation Committee met twice during fiscal year 1995. All Committee
members attended each of these meetings.
The Executive Committee consisted of Messrs. Colman, Bacon, and Eskra. The
Executive Committee is charged with acting for the Board when action is required
between Board meetings, reviewing, and making recommendations with respect to
policy, and monitoring management and Company performance. The Executive
Committee did not meet separately during fiscal year 1995.
The Finance Committee consisted of Messrs. Bacon and Eskra. The Finance
Committee reviews and evaluates the Company's Employees' Savings and Profit
Sharing Plan and its investment managers, the investment of the Company's cash,
and changes in the Company's capital structure. The Finance committee met twice
during fiscal year 1995, and all Committee members attended both meetings.
The Nominating Committee consisted of all outside members of the Board. The
Nominating Committee is charged with making recommendations with respect to
Board Compensation and acting as a screening and nominating committee for
candidates considered for election to the Board. In this capacity, it concerns
itself with the composition of the Board with respect to depth of experience,
balance of professional interests, and other factors. The Nominating Committee
met once during fiscal year 1995; all Committee members attended the meeting.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company receive no additional
compensation for serving as directors. Non-employee directors receive fees of
$1,500 per month and $500 for each Board committee meeting attended. Fees are
payable in cash or can be deferred. Additional compensation may be paid for
services provided by directors on special projects. Directors' fees totaled
$136,833 for fiscal year 1995. Non-employee directors are also paid travel
expenses incurred in connection with attending Board meetings.
During fiscal year 1995, Mr. Colman, a director of the Company, acted as a
consultant to the Company, for which he was paid fees of $75,056. Mr. Colman
advised management regarding performance and the development of strategic
planning for the Company.
4
<PAGE> 6
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows the compensation of the most highly compensated
executive officers of the Company during the fiscal year ended October 28, 1995,
and the two prior fiscal years.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
NAME AND FISCAL ---------------------- (NUMBER OF ALL OTHER
PRINCIPAL POSITION(1) YEAR SALARY BONUS STOCK OPTIONS) COMPENSATION
- --------------------------------- ---- -------- ------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Andrew A. Campbell............... 1995 $192,002(2) $20,000 75,000 $ --
President 1994 -- -- -- --
(Since 6/14/95) 1993 -- --
Ben L. McSwiney.................. 1995 157,019(3) -- -- 1,642(4)
Former President 1994 224,500 -- -- 1,642(4)
(Resigned 6/14/95) 1993 23,590(3) -- 75,000 126(4)
Laurence J. Quinn................ 1995 111,580(5) -- -- 46,808(6)
Former Vice President, 1994 80,481 -- 35,000 --
Sales 1993 -- -- -- --
(Resigned 7/19/95)
Marc A. Loomer................... 1995 110,000 -- 15,000 10,965(7)
Vice President, 1994 100,224 -- 10,000 25,664(8)
Operations 1993 73,500 -- -- 7,797(9)
David B. Preston................. 1995 118,811 -- 25,000 33(4)
Vice President, Sales 1994 94,416 -- -- 1,400(10)
(Since 9/15/95) 1993 96,797 -- -- 27(4)
</TABLE>
- -------------------------
(1) This table includes all executive officers who served during fiscal year
1995. Mr. McSwiney served as President and Director until he left the
Company on June 14, 1995. Mr. Quinn served as Vice President, Sales, until
he left the Company on July 19, 1995.
(2) Mr. Campbell commenced his employment with the Company on November 15,
1994. Mr. Campbell's compensation is further discussed in the Compensation
Committee Report.
(3) Mr. McSwiney commenced his employment with the Company on September 20,
1993. The amount shown for fiscal year 1993 reflects compensation earned
for the part of the year during which he was employed at an annual salary
of $200,000. Inasmuch as Mr. McSwiney left the Company in fiscal year 1995,
the amount shown represents compensation earned for the part of the year
during which he was employed.
(4) This amount represents life insurance premiums.
(5) Mr. Quinn commenced his employment with the Company on April 25, 1994. The
amount shown for fiscal year 1994 reflects compensation earned for the part
of the year during which he was employed at an annual salary of $155,000.
Inasmuch as Mr. Quinn left the Company on July 19, 1995, the amount shown
represents compensation earned for the part of fiscal year 1995 during
which he was employed.
(6) Includes (a) amounts paid under Mr. Quinn's severance agreement of $45,506
which is discussed in detail under Employment and Termination Arrangements
on page 6 and (b) life insurance premiums of $1,302.
(7) Includes (a) life insurance premiums of $785, and (b) Mr. Loomer's
reportable income from his vested shares in the Company's Restricted Stock
Option Program of $10,180.
(8) Includes (a) life insurance premiums of $51, (b) Mr. Loomer's reportable
income from his vested shares in the Company's Restricted Stock Option
Program of $23,746, and (c) $1,867 of reportable income from the Company's
1994 automobile program.
5
<PAGE> 7
(9) Includes (a) life insurance premiums of $51, (b) Mr. Loomer's reportable
income from his vested shares in the Company's Restricted Stock Option
Program of $5,879, and (c) $1,867 reportable income from the Company's 1993
automobile program.
(10) Includes (a) life insurance premiums of $33 and (b) $1,367 reportable
income from the Company's 1994 automobile program.
(11) At the end of the fiscal year, Mr. Loomer's shares in the Restricted Stock
Purchase Plan had a value of $46,044.
STOCK OPTIONS
The following table provides information with respect to outstanding stock
options held by the named executive officers as of the end of fiscal year 1995.
At that date, the exercise price of all of these options was higher than the
closing price of the Company's common stock, and thus none of the options were
"in-the-money."
<TABLE>
<CAPTION>
OUTSTANDING STOCK OPTIONS AT
FISCAL YEAR-END 1995
-----------------------------
NAME EXERCISABLE NOT EXERCISABLE
- --------------------------------------------------------------------- ----------- ---------------
<S> <C> <C>
Andrew A. Campbell................................................... -- 25,000
Marc A. Loomer....................................................... 2,000 8,000
David B. Preston..................................................... -- 25,000
</TABLE>
During fiscal year 1995, stock options were issued to Mr. Campbell (25,000)
and Mr. Preston (25,000). No stock options were exercised by any of the named
executive officers, during fiscal year 1995.
EMPLOYMENT CONTRACTS AND TERMINATION, SEVERANCE, AND CHANGE OF CONTROL
ARRANGEMENTS
The Company entered into a Consulting Agreement, dated as of June 15, 1995,
with Mr. Colman pursuant to which Mr. Colman supplies the Company with
management consulting services. The Agreement is terminable upon the death or
incapacity of Mr. Colman, or upon receipt of five (5) days written notice from
either party. A one (1) year Covenant Not To Compete shall survive any
termination of the Agreement.
The Company entered into a Severance Agreement, dated as of November 14,
1994, with Mr. Campbell pursuant to which Mr. Campbell shall receive a severance
benefit equal to one year's base annual salary and a prorated share of any
earned incentive bonus in the event of a "Change of Control" of the Company or
upon a "Qualifying Termination," as such terms are defined in the Agreement. In
addition to the severance amount, Mr. Campbell will be entitled to payment for
individual outplacement services.
Mr. Quinn's departure from the Company on July 19, 1995, was governed by a
Covenant Not To Compete and Confidential Information Agreement. This agreement
provided for Mr. Quinn to receive an amount equal to one year's salary
($155,000) in twenty-six semi-monthly installments ending on July 18, 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW
OBJECTIVES. The Company's compensation program is intended to reward
executive officers for the achievement of the Company's business objectives and
to associate their performance with the interests of shareholders.
6
<PAGE> 8
COMPONENTS OF COMPENSATION. The major components of the Committee's
executive compensation program consist of base salary payments, incentive
bonuses, and stock options. The program also includes
medical and dental care plans.
COMPENSATION COMMITTEE RESPONSIBILITY. The Compensation Committee is
responsible for the establishment and administration of all significant
compensation programs, including those covering executive officers. Under the
Company's executive compensation program, the Compensation Committee, with
assistance from Company management, reviews and, when appropriate, approves, and
recommends to the Board of Directors changes in the components of the executive
compensation program based on their relationship to corporate performance and
various market factors. In administering the program, The Compensation Committee
also reviews the performance of the Company's executive officers and their
contributions to the Company's results to determine their compensation levels
under the various components of the program.
RELATIONSHIP OF EXECUTIVE COMPENSATION TO CORPORATE PERFORMANCE
BASE SALARY. Executive officers' salaries are established in accordance
with the Company's base salary plan. Salaries reflect the nature of the
employees' positions and responsibilities as well as external market conditions.
Salary adjustments are based on objective and subjective performance factors of
a financial and non-financial nature as deemed appropriate. These factors
include comparison of the Company's performance for the preceding year with both
internal expectations and results achieved by a peer group of comparably sized
companies.
BONUS PLAN. The Company's Bonus Plan was established to provide incentive
opportunities to executive officers and other key employees designated by the
Committee. Bonus opportunities are based on the Company's achievement of
explicit earnings goals. For fiscal year 1995, the Plan provided for bonuses to
be paid in Company common stock and cash to designated participants if the
Company recorded earnings before interest and taxes (EBIT) of not less than $3.3
million. Bonuses were to be paid exclusively in common stock until EBIT of $6.3
million was reached when 10% was to be paid in cash with increasing proportions
paid thereafter in cash as earnings increased. No bonuses were earned in fiscal
year 1995, however, Mr. Campbell was paid a starting bonus of $20,000 in January
1995.
STOCK OPTIONS. The 1993 Incentive Stock Option Plan (the "Stock Plan") was
adopted by the Board of Directors and approved by shareholders at the 1994
Annual Meeting of Shareholders on March 3, 1994. The Stock Plan provides for the
issuance of shares of the Company's common stock upon the exercise of stock
options granted to a broad range of management level employees at prices not
less than the fair market value of the stock as of the grant date. Unless
otherwise specified by the Compensation Committee at the time of grant, all or
any portion of the option shares may be exercised at any time during the period
which begins one year from the date of grant and ends ten years from the date of
grant. The Compensation Committee determines the participants to whom options
are granted and the number of shares for which options are exercisable. Through
the grant of stock options, the Compensation Committee intends to enable the
Company to secure the benefits of additional incentive inherent in ownership of
common stock by those employees who are important to the success and growth of
the Company's business. During fiscal 1995, stock options were granted to Mr.
Campbell (25,000 shares), and Mr. Preston (25,000 shares). After the 1995 fiscal
year end, additional stock options were granted to Mr. Campbell (50,000 shares)
and Mr. Loomer (15,000 shares).
EMPLOYEES' SAVINGS AND PROFIT SHARING PLAN. The Company's contributions to
its Employees' Savings and Profit Sharing Plan are at the discretion of the
Board of Directors. Under this Plan, annual Company contributions cannot exceed
15% of earnings before such contributions and federal income taxes. In addition,
Internal Revenue Code provisions require that annual contributions by the
Company cannot exceed 15% of employees' annual compensation otherwise paid or
accrued. Company contributions were not made to the Plan for fiscal year 1995.
7
<PAGE> 9
COMPENSATION OF PRESIDENT
Mr. McSwiney served as president until his resignation on June 14, 1995.
While he served, Mr. McSwiney was compensated based on policies similar to those
set forth herein. There was no severance agreement with Mr. McSwiney.
Mr. Campbell's salary, bonus, and stock option grants follow the policies
set forth above. In reviewing the base salary of Mr. Campbell for fiscal year
1995, the Compensation Committee considered the compensation of competitors'
chief executive officers in the business forms industry, the size and relative
performance of the Company compared with its competitors, fiscal 1995 objectives
for Mr. Campbell, and the Company's relative success in increasing shareholder
value. Mr. Campbell's base salary was maintained at the low end of the range of
competitors' salaries given the above criteria. If performance objectives had
been met, the incentive bonus would have been a significant component of total
compensation.
Submitted by the Compensation Committee of the Board of Directors.
John A. Bacon, Jr., Chairman
David J. Eskra
W. Robert Reum
8
<PAGE> 10
FIVE-YEAR PERFORMANCE GRAPH: 1990-1995
A comparison of five-year cumulative total return among Duplex common
stock, the American Stock Exchange index, and a peer group index is shown in the
following graph.
The annual changes depicted in the graph for the 1990 - 1995 period are
based on the assumption that $100 had been invested in Duplex common stock and
each index on October 27, 1990, and that all quarterly dividends were
reinvested.
<TABLE>
<CAPTION>
Measurement Period Duplex Prod- Peer Group
(Fiscal Year Covered) ucts Inc. Index (a) AMEX Index
<S> <C> <C> <C>
1990 100.0 100.0 100.0
1991 117.6 131.1 127.7
1992 112.8 124.1 126.3
1993 115.5 166.1 156.4
1994 105.0 177.4 153.8
1995 82.5 235.3 177.2
</TABLE>
(a) Composed of the following companies: American Business Products, Inc., Ennis
Business Forms, Inc., Moore Corporation Limited, New England Business
Service, Inc., The Reynolds and Reynolds Company, The Standard Register
Company, and Wallace Computer Services, Inc.
9
<PAGE> 11
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
The independent auditors selected by the Board of Directors and being
recommended to the shareholders for retention during fiscal year 1995 is the
firm of Grant Thornton LLP. Representatives of this firm are expected to be
present at the Annual Meeting. These representatives will have an opportunity to
make a statement if they desire to do so and will be available to respond to
shareholder questions.
The Board of Directors recommends a vote in favor of such ratification.
OTHER MATTERS
SHAREHOLDER PROPOSALS FOR 1997
Under the rules of the Securities and Exchange Commission, shareholder
proposals submitted for inclusion in next year's Proxy Statement must be
received by the Company no later than October 26, 1996.
REPORTING OF SECURITIES TRANSACTIONS
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's executive officers and directors and persons who own more than 10% of
the Company's stock file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the American Stock Exchange. Such persons
are also required to furnish the Company with copies of all Section 16(a)
reports they file. Based solely on the review of such filings provided to the
Company, the Company is not aware of any failure during fiscal year 1995 by its
executive officers or directors or 10% shareholders to comply with the reporting
requirements of Section 16(a), except that a Form 3 filing for Mr. Colman and a
Form 5 filing for Mr. Preston were made late due to a clerical oversight. None
of these individuals consummated any transactions involving the Company's
securities during fiscal year 1995.
OTHER BUSINESS
The Board of Directors is not aware of any business to be presented at the
Annual Meeting other than that described herein. If other matters properly come
before the Annual Meeting, it is the intention of the persons named in the
proxies to vote on behalf of the shareholders they represent in accordance with
their best judgment upon such matters.
MARK A. ROBINSON
Secretary
February 6, 1996
10
<PAGE> 1
EXHIBIT (c)(4)
AGREEMENT AND PLAN OF MERGER
among
THE REYNOLDS AND REYNOLDS COMPANY,
DELAWARE ACQUISITION CO.,
and
DUPLEX PRODUCTS INC.
dated as of
April 20, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
1. THE OFFER AND MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
--------------------
1.1 The Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------
1.2 Company Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------------
1.3 Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------
1.4 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
----------
1.5 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
--------------
1.6 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-------
1.7 Surviving Corporation Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . . 8
--------------------------------------------
1.8 Shareholders' Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
---------------------
1.9 Merger Without Meeting of Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
--------------------------------------
2. CONVERSION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
------------------------
2.1 Conversion of Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------------------
2.2 Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
------------------------
2.3 Company Option Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--------------------
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . 13
---------------------------------------------
3.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------
3.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------------
3.3 Authorization; Validity of Agreement; Company Action. . . . . . . . . . . . . . . . . . . . 15
----------------------------------------------------
3.4 Consents and Approvals; No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------------------------------------
3.5 SEC Reports and Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------------------------------------
3.6 Absence of Certain Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------------------------
3.7 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------------------------
3.8 Information in Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------------------
3.9 Employee Benefit Plans; ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-----------------------------
3.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
----------
3.11 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-------------------
3.12 Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-------------
3.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----
3.14 Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
---------------
3.15 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
--------------------
3.16 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
---------
3.17 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
---------
3.18 Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-------------
3.19 Opinions of Financial Advisors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------------------------------
3.20 Vote Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-------------
3.21 Title to Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-------------------
3.22 Intellectual Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-----------------------
3.23 Broker's or Finder's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-------------------------
3.24 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
---------------------
3.25 State Takeover Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-----------------------
3.26 Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
----------------
4. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. . . . . . . . . . . . . . . . . . . 30
----------------------------------------------------------
4.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
------------
4.2 Authorization; Validity of Agreement; Necessary Action. . . . . . . . . . . . . . . . . . . 30
------------------------------------------------------
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
4.3 Consents and Approvals; No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-------------------------------------
4.4 Information in Proxy Statement; Schedule 14D-9. . . . . . . . . . . . . . . . . . . . . . . 31
----------------------------------------------
4.5 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
---------
4.6 Purchaser's Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
----------------------
5. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
---------
5.1 Interim Operations of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
---------------------------------
5.2 Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
----------------
5.3 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-------
5.4 Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
---------------------
5.5 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
----------------------
5.6 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
-----------------
5.7 No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
---------------
5.8 Brokers or Finders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
------------------
5.9 Additional Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
---------------------
5.10 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
---------
5.11 Notification of Certain Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
-------------------------------
5.12 Directors' and Officers' Insurance and Indemnification. . . . . . . . . . . . . . . . . . . 38
------------------------------------------------------
6. CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------
6.1 Shareholder Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
--------------------
6.2 Statutes; Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
------------------
6.3 Injunctions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-----------
6.4 Purchase of Shares in Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
---------------------------
7. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-----------
7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-----------
7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
---------------------
8. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-------------
8.1 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-----------------
8.2 Amendment and Modification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
--------------------------
8.3 Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
------------------------------
8.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
-------
8.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
--------------
8.6 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
------------
8.7 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership. . . . . . . . . . . . . 44
-------------------------------------------------------------------
8.8 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
------------
8.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
-------------
8.10 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
----------
8.11 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--------
8.12 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
-----------------
</TABLE>
ii
<PAGE> 4
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Term Section No.
<S> <C>
Acquisition Proposal. . . . . . . . . . 5.7(b)
Agreement . . . . . . . . . . . . . . . Recitals
Appointment Date. . . . . . . . . . . . 5.1
Benefit Plans . . . . . . . . . . . . . 3.9(a)
Certificate of Merger . . . . . . . . . 1.5(a)
Certificates. . . . . . . . . . . . . . 2.2(b)
Claims. . . . . . . . . . . . . . . . . 3.24(b)
Closing . . . . . . . . . . . . . . . . 1.6
Closing Date. . . . . . . . . . . . . . 1.6
Code. . . . . . . . . . . . . . . . . . 3.9(b)
Company . . . . . . . . . . . . . . . . Introduction
Company Common Stock. . . . . . . . . . 1.1(a)
Company SEC Documents . . . . . . . . . 3.5
Confidentiality Agreement . . . . . . . 5.4
DGCL. . . . . . . . . . . . . . . . . . 1.4
Disclosure Letter . . . . . . . . . . . 3.4
Dissenting Stock. . . . . . . . . . . . 2.1(c)
Dissenting Stockholder. . . . . . . . . 2.1(c)
Duff & Phelps . . . . . . . . . . . . . 1.2(b)
Exchange Act . . . . . . . . . . . . . 1.1(a)
Effective Time. . . . . . . . . . . . . 1.5(a)
Environmental Claim . . . . . . . . . . 3.24(b)
Environmental Law . . . . . . . . . . . 3.24(b)
ERISA . . . . . . . . . . . . . . . . . 3.9(a)
ERISA Affiliate . . . . . . . . . . . . 3.9(a)
Exchange Act. . . . . . . . . . . . . . 1.1(a)
GAAP. . . . . . . . . . . . . . . . . . 3.5
Governmental Entity . . . . . . . . . . 3.4
Hazardous Substances. . . . . . . . . . 3.24(b)
HSR Act . . . . . . . . . . . . . . . . 3.4
Indemnified Parties . . . . . . . . . . 5.12(a)
Intellectual Property . . . . . . . . . 3.22
Know-how. . . . . . . . . . . . . . . . 3.22
Indenture . . . . . . . . . . . . . . . 3.2(a)
Material Agreements . . . . . . . . . . 3.4
Merger. . . . . . . . . . . . . . . . . 1.4
Merger Consideration. . . . . . . . . . 2.1(c)
Minimum Condition . . . . . . . . . . . 1.1(a)
1984 Option Plan. . . . . . . . . . . . 2.3(a)
1993 Option Plan. . . . . . . . . . . . 2.3(a)
1995 Financial Statements . . . . . . . 3.5
1995 Form 10-K. . . . . . . . . . . . . 3.5
NLRB. . . . . . . . . . . . . . . . . . 3.14
Offer . . . . . . . . . . . . . . . . . 1.1(a)
Offer Documents . . . . . . . . . . . . 1.1(d)
Offer Price . . . . . . . . . . . . . . 1.1(a)
Offer to Purchase . . . . . . . . . . . 1.1(b)
Option Plans. . . . . . . . . . . . . . 2.3(a)
Options . . . . . . . . . . . . . . . . 2.3(a)
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
Parent. . . . . . . . . . . . . . . . . Introduction
Paying Agent. . . . . . . . . . . . . . 2.2(a)
Payment Fund. . . . . . . . . . . . . . 2.2(d)
PBGC. . . . . . . . . . . . . . . . . . 3.9(e)
Permitted Investments . . . . . . . . . 2.2(d)
Preferred Stock . . . . . . . . . . . . 3.2(a)
Proxy Statement . . . . . . . . . . . . 1.8(a)
Purchaser . . . . . . . . . . . . . . . Introduction
Purchaser Common Stock. . . . . . . . . 2.1
Restricted Stock Plan . . . . . . . . . 2.3(b)
Rights. . . . . . . . . . . . . . . . . 1.1(a)
Rights Agreement. . . . . . . . . . . . 1.1(a)
Rights Amendment. . . . . . . . . . . . 1.2(e)
Schedule 14D-1. . . . . . . . . . . . . 1.1(d)
Schedule 14D-9. . . . . . . . . . . . . 1.2(c)
SEC . . . . . . . . . . . . . . . . . . 1.1(d)
Secretary of State. . . . . . . . . . . 1.5(a)
Securities Act. . . . . . . . . . . . . 3.4
Section 16. . . . . . . . . . . . . . . 2.3(a)
Service . . . . . . . . . . . . . . . . 3.9(d)
Shares. . . . . . . . . . . . . . . . . 1.1(a)
Special Meeting . . . . . . . . . . . . 1.8(a)
Subsidiary. . . . . . . . . . . . . . . 3.1
Superior Proposal . . . . . . . . . . . 5.7(b)
Surviving Corporation . . . . . . . . . 1.4
Taxes . . . . . . . . . . . . . . . . . 3.13(t)
Tax Return. . . . . . . . . . . . . . . 3.13(t)
Tender Agreements . . . . . . . . . . . 1.2(a)
Tender Offer Conditions . . . . . . . . 1.1(a)
Third Party Confidentiality Agreements. 5.7(d)
Transactions. . . . . . . . . . . . . . 1.2(a)
Trigger Event . . . . . . . . . . . . . 8.1(b)
Voting Debt . . . . . . . . . . . . . . 3.2(a)
</TABLE>
iv
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
THE REYNOLDS AND REYNOLDS COMPANY ("PARENT"), DELAWARE ACQUISITION CO. (the
"PURCHASER"), and DUPLEX PRODUCTS INC. (the "COMPANY") agree as follows:
RECITALS
Parent is an Ohio corporation. The Purchaser is a Delaware corporation and a
wholly owned subsidiary of Parent. The Company is a Delaware corporation.
The Boards of Directors of Parent, the Purchaser and the Company have
approved, and deem it advisable and in the best interests of their respective
shareholders to consummate, the acquisition of the Company by Parent upon the
terms and subject to the conditions set forth in this agreement (the
"AGREEMENT").
1. THE OFFER AND MERGER.
---------------------
1.1 THE OFFER.
(a) As promptly as practicable (but in no event later than five business
days after the public announcement of the execution hereof) and provided that
none of the events described in the attached Annex A has occurred and is then
continuing, the Purchaser shall commence (within the meaning of Rule 14d-2
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) an
offer (the "OFFER") to purchase for cash all of the issued and outstanding
common stock, par value $1.00 per share (either the "SHARES" or "COMPANY COMMON
STOCK"), of the Company (including the associated Preferred Stock Purchase
Rights (the "RIGHTS") issued pursuant to the Rights Agreement between the
Company and Harris Trust and Savings Bank, dated as of June 8, 1989, as amended
(the "RIGHTS AGREEMENT")), at a price of $12.00 per Share, net to the seller in
cash (such price, or such higher price per Share as may be paid in the Offer,
being referred to herein as the "OFFER PRICE"), subject to there being validly
tendered and not withdrawn prior to the expiration of the Offer, that number of
Shares which, together with the Shares beneficially owned by Parent or the
Purchaser, represent at least 70% of the Shares outstanding on a fully diluted
basis (the "MINIMUM CONDITION") and to the other conditions set forth in Annex
A (collectively, the "TENDER OFFER CONDITIONS").
(b) The Purchaser shall, on the terms and subject to the prior
satisfaction or waiver (subject to the limitations on waiver described in the
first sentence of Section 1.1(c)) of the Tender Offer Conditions, accept for
payment and pay for Shares tendered as soon as it is legally permitted to do so
under applicable law. The obligations of the Purchaser to commence the Offer
and to accept for payment and to pay for any Shares validly tendered on or
prior to the expiration of the Offer and not withdrawn shall be subject
1
<PAGE> 7
only to the Tender Offer Conditions. The Offer shall be made by means of an
offer to purchase (the "OFFER TO PURCHASE") containing the terms set forth in
this Agreement and the Tender Offer Conditions.
(c) (i) Any of the Tender Offer Conditions may be waived; provided,
however, that, without the consent of the Company, the Purchaser shall not
waive the Minimum Condition. The Tender Offer Conditions are for the sole
benefit of Parent and the Purchaser and may be asserted by Parent and the
Purchaser regardless of the circumstances giving rise to any such Tender Offer
Conditions and, subject to the preceding sentence, may be waived by Parent and
the Purchaser in whole or in part.
(ii) The Purchaser expressly reserves the right to modify the terms of
the Offer (except as provided in the following sentence), including, without
limitation, to extend the Offer beyond any scheduled expiration date; provided,
however, without the consent of the Company, the Purchaser shall not (A) reduce
the number of Shares to be purchased in the Offer, (B) reduce the Offer Price,
(C) modify or add to the Tender Offer Conditions or (D) change the form of
consideration payable in the Offer. Notwithstanding the preceding sentence,
if, as of the scheduled expiration date of the Offer (as the same may have been
duly extended), any of the Tender Offer Conditions shall not have been
satisfied, the Offer may be extended in Purchaser's sole discretion; provided,
however, that under any circumstance the Offer may not be extended beyond June
15, 1996. In addition, the Offer Price may be increased (any increase shall be
at Purchaser's sole discretion and Purchaser shall have no obligation to
increase the Offer Price) and the Offer may be extended to the extent required
by law in connection with such increase, in each case without the consent of
the Company.
(d) (i) As soon as practicable on the date the Offer is commenced, Parent
and the Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer (together with all amendments and supplements thereto and
including the exhibits thereto, the "SCHEDULE 14D-1"). The Schedule 14D-1 will
include, as exhibits, the Offer to Purchase and a form of letter of transmittal
and summary advertisement (collectively, together with any amendments and
supplements thereto, the "OFFER DOCUMENTS").
(ii) The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with
the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation
2
<PAGE> 8
is made by Parent or Purchaser with respect to information supplied by the
Company in writing for inclusion in the Offer Documents. Each of Parent and
the Purchaser further agrees to take all steps necessary to cause the Offer
Documents to be filed with the SEC and to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. Each of Parent and the Purchaser, on the one hand, and the Company, on
the other hand, agrees promptly to correct any information provided by it for
use in the Offer Documents if and to the extent that it shall have become false
and misleading in any material respect and the Purchaser further agrees to take
all steps necessary to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to holders of Shares, in each case as and
to the extent required by applicable federal securities laws. The Company and
its counsel shall be given the opportunity to review the Schedule 14D-1 before
it is filed with the SEC. In addition, Parent and the Purchaser agree to
provide the Company and its counsel in writing with any comments Parent, the
Purchaser or their counsel may receive from time to time from the SEC with
respect to the Offer Documents promptly after receipt of such comments.
1.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors, at a meeting duly called and held, has:
(i) determined by unanimous vote that each of this Agreement and the
transactions contemplated hereby, including the Offer and the Merger (as
defined in Section 1.4) is fair to and in the best interest of the holders of
the Company Common Stock (the Offer and the Merger are collectively referred
to in this Agreement as the "TRANSACTIONS");
(ii) approved by unanimous vote this Agreement and each of the
Transactions and, for the purposes of Section 203 of the DGCL (as defined in
Section 1.4), the tender agreements (or letters of intent to tender) to be
entered into immediately after this Agreement on the date hereof between
Parent, the Purchaser and one or more of Tweedy Browne & Company, LP, College
Retirement Equities Fund - Stock, Smith (Donald) & Company, Inc. Franklin
Balance Sheet Investment Fund, Delphi Management, David L. Babson & Company,
Inc., Babson Enterprise Fund, Brinson Partners, Brinson Post-Venture Fund and
The Franklin Microcap Value Fund (collectively, the "TENDER AGREEMENTS");
(iii) resolved to recommend that the shareholders of the Company accept
the Offer, tender their Shares thereunder to the Purchaser and approve and
adopt this Agreement and the Merger; provided, that such recommendation may be
withdrawn, modified or amended only under the circumstances described in
Section 5.7; and
3
<PAGE> 9
(iv) taken all other action necessary to render the Rights Agreement
inapplicable to the Transactions and the Tender Agreements.
The Company represents that the actions set forth in this Section 1.2(a) and
all other actions it has taken in connection therewith are, assuming the
accuracy of, and in reliance upon, the information received in writing from
Parent as to the ownership of Shares by Parent, Purchaser and their affiliates,
sufficient to render (i) Section 203 of the DGCL inapplicable to the
Transactions and the Tender Agreements and (ii) the super-majority voting
requirements set forth in the Company's Restated Certificate of Incorporation
inapplicable to this Agreement and the Transactions.
(b) The Company further represents that Duff & Phelps Capital Markets
Company ("DUFF & PHELPS") has delivered to the Company its opinion that the
consideration to be received by the holders of Company Common Stock pursuant
to the Offer and the Merger is fair to such holders from a financial point
of view, subject to the assumptions and qualifications set forth in such
opinion.
(c) (i) Concurrently with the commencement of the Offer, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "SCHEDULE 14D-9") which shall, subject to the fiduciary
duties of the Company's directors under applicable law (and the provisions of
Section 5.7) and to the provisions of this Agreement, contain the
recommendation referred to in clause (iii) of Section 1.2(a) hereof.
(ii) The Schedule 14D-9 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with
the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by the Company
with respect to information supplied by Parent or the Purchaser in writing for
inclusion in the Schedule 14D-9. The Company further agrees to take all steps
necessary to cause the Schedule 14D-9 to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required
by applicable federal securities laws. Each of the Company, on the one hand,
and Parent and the Purchaser, on the other hand, agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false and misleading in any material respect and the
Company further agrees to take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and to be disseminated to holders of
the Shares, in each case as and to the extent required by applicable federal
securities laws. Parent and
4
<PAGE> 10
its counsel shall be given the opportunity to review the Schedule 14D-9 before
it is filed with the SEC. The Company agrees to provide Parent and its counsel
with any comments the Company or its counsel may receive from the SEC with
respect to the Schedule 14D-9 promptly after receipt of such comments, and
shall provide Parent and its counsel with an opportunity to participate,
including by way of discussions with the SEC, in the response of the Company to
such comments. Notwithstanding anything to the contrary contained herein, the
subsequent withdrawal, modification or amendment of such recommendation under
the circumstances described in Section 5.7 shall not constitute a breach of
this Agreement.
(d) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date, and shall
furnish the Purchaser with such information and assistance as the Purchaser or
its agents may reasonably request in communicating the Offer to the
shareholders of the Company. Except for such steps as are necessary to
disseminate the Offer Documents, Parent and the Purchaser shall hold in
confidence the information contained in any of such labels and lists and the
additional information referred to in the preceding sentence, will use such
information only in connection with the Offer, and, if this Agreement is
terminated, will upon request of the Company deliver or cause to be delivered
to the Company all copies of such information then in its possession or the
possession of its agents or representatives.
(e) As promptly as practicable on or after the date hereof, but in no
event later than two days following announcement of the Offer, the Company will
amend the Rights Agreement, as necessary (the "RIGHTS AMENDMENT"), (i) to
prevent this Agreement, the Transactions or the Tender Agreements or the
consummation of any of the Transactions contemplated thereby, including without
limitation, the publication or other announcement of the Offer and the
consummation of the Offer and the Merger, from resulting in the distribution of
separate Rights certificates or the occurrence of a Distribution Date (as
defined therein) or being deemed a Triggering Event (as defined therein) and
(ii) to provide that neither Parent nor the Purchaser shall be deemed to be an
Acquiring Person (as defined therein) by reason of the transactions expressly
provided for in this Agreement and the Tender Agreements. The Company
represents that the Rights Amendment will be sufficient to render the Rights
inoperative with respect to any acquisition of Shares by Parent, the Purchaser
or any of their affiliates pursuant to this Agreement and/or the Tender
Agreements. As a result of the Rights Amendment, the Rights shall not be
exercisable upon or at any time after, the acceptance for payment of Shares
pursuant to the Offer and/or the purchase of Shares pursuant to the Tender
Agreements.
5
<PAGE> 11
1.3 DIRECTORS.
(a) Promptly upon the purchase of and payment for any Shares by Parent and
Purchaser which represents at least a majority of the outstanding shares of
Company Common Stock (on a fully diluted basis) Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as is equal to the product of the total
number of directors on such Board (giving effect to the directors designated by
Parent pursuant to this sentence) multiplied by the percentage that the
aggregate number of Shares beneficially owned by the Purchaser and Parent bears
to the total number of shares of Company Common Stock then outstanding. The
Company shall, upon request of the Purchaser, use its best efforts promptly
either to increase the size of its Board of Directors and/or, at the Company's
election, secure the resignations of such number of its incumbent directors as
is necessary to enable Parent's designees to be so elected to the Company's
Board, and shall cause Parent's designees to be so elected. At such time, the
Company shall also cause persons designated by Parent to constitute the same
percentage (rounded up to the next whole number) as is on the Company's Board
of Directors of (i) each committee of the Company's Board of Directors, (ii)
each board of directors (or similar body) of each Subsidiary (as defined in
Section 3.1) of the Company and (iii) each committee (or similar body) of each
such board, in each case only to the extent permitted by applicable law or the
rules of any stock exchange on which the Company Common Stock is listed.
Notwithstanding the foregoing, until the Effective Time (as defined in Section
1.5 hereof), the Company shall use all reasonable efforts to retain as a member
of its Board of Directors at least two directors who are directors of the
Company on the date hereof; provided, that subsequent to the purchase of and
payment for Shares pursuant to the Offer, Parent shall always have its
designees represent at least a majority of the entire Board of Directors. The
Company's obligations under this Section 1.3(a) shall be subject to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company
shall promptly take all actions required pursuant to such Section 14(f) and
Rule 14f-1 in order to fulfill its obligations under this Section 1.3(a),
including mailing to shareholders the information required by such Section
14(f) and Rule 14f-1 as is necessary to enable Parent's designees to be elected
to the Company's Board of Directors. Parent or the Purchaser will supply the
Company any information with respect to either of them and their nominees,
officers, directors and affiliates required by such Section 14(f)and Rule
14f-1. The provisions of this Section 1.3(a) are in addition to and shall not
limit any rights which the Purchaser, Parent or any of their affiliates may
have as a holder or beneficial owner of Shares as a matter of law with respect
to the election of directors or otherwise.
(b) From and after the time, if any, that Parent's designees constitute a
majority of the Company's Board of
6
<PAGE> 12
Directors, any amendment of this Agreement, any termination of this Agreement
by the Company, any extension of time for performance of any of the obligations
of Parent or the Purchaser hereunder, any waiver of any condition or any of the
Company's rights hereunder or other action by the Company hereunder may be
effected only by the action of a majority of the directors of the Company then
in office who were directors of the Company on the date hereof, which action
shall be deemed to constitute the action of the full Committee and the full
Board of Directors; provided, that if there shall be no such directors, such
actions may be effected by majority vote of the entire Board of Directors of
the Company.
1.4 THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.5 hereof), the Company and the
Purchaser shall consummate a merger (the "MERGER") pursuant to which (a) the
Purchaser shall be merged with and into the Company and the separate corporate
existence of the Purchaser shall thereupon cease, (b) the Company shall be the
successor or surviving corporation in the Merger and shall continue to be
governed by the laws of the State of Delaware under the name of "Duplex
Products Inc.", and (c) the separate corporate existence of the Company with
all its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger. Pursuant to the Merger, (x) the Restated Certificate
of Incorporation of the Company, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by law and such Restated
Certificate of Incorporation, and (y) the By-laws of the Company, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by law, the Restated
Certificate of Incorporation and such By-laws. The corporation surviving the
Merger is sometimes hereinafter referred to as the "SURVIVING CORPORATION."
The Merger shall have the effects set forth in the Delaware General
Corporation Law (the "DGCL").
1.5 EFFECTIVE TIME. Parent, the Purchaser and the Company will cause an
appropriate Certificate of Merger (the "CERTIFICATE OF MERGER") to be executed,
acknowledged and filed on the date of the Closing (as defined in Section 1.6)
(or on such other date as Parent and the Company may agree) with the Secretary
of State of the State of Delaware (the "SECRETARY OF STATE") as provided in the
DGCL. The Merger shall become effective on the date on which the Certificate
of Merger has been duly filed with the Secretary of State or such time as is
agreed upon by the parties and specified in the Certificate of Merger, and such
time is hereinafter referred to as the "EFFECTIVE TIME."
1.6 CLOSING. The closing of the Merger (the "CLOSING") will take place at
10:00 a.m. on a date to be specified by the parties, which shall be no later
than the fifth business day after satisfaction or waiver of all of the
conditions set forth in Section 6 hereof (the "CLOSING DATE"), at the Chicago,
Illinois
7
<PAGE> 13
offices of Hinshaw & Culbertson, unless another date or place is agreed to in
writing by the parties hereto.
1.7 SURVIVING CORPORATION DIRECTORS AND OFFICERS. The directors and
officers of the Purchaser at the Effective Time shall, from and after the
Effective Time, be the directors and officers, respectively, of the Surviving
Corporation until their successors shall have been duly elected or appointed or
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-laws.
1.8 SHAREHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the Merger, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special meeting of its
shareholders (the "SPECIAL MEETING") as soon as practicable following the
acceptance for payment and purchase of Shares by the Purchaser pursuant to
the Offer for the purpose of considering and taking action upon this
Agreement;
(ii) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement and use its reasonable
efforts (x) to obtain and furnish the information required to be included by
the SEC in the Proxy Statement (as defined below) and, after consultation
with Parent, to respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and cause a
definitive proxy or information statement (the "PROXY STATEMENT") to be
mailed to its shareholders and (y) to obtain the necessary approvals of the
Merger and this Agreement by its shareholders; and
(iii) include in the Proxy Statement the recommendation of the Board that
shareholders of the Company vote in favor of the approval of the Merger and
the adoption of this Agreement, subject, however, to the withdrawal,
modification or amendment of that recommendation under the circumstances
described in Section 5.7 of this Agreement.
(b) Parent agrees that it will vote, or cause to be voted, all of the
Shares then owned by it, the Purchaser or any of its other subsidiaries and
affiliates in favor of the approval of the Merger and the adoption of this
Agreement.
1.9 MERGER WITHOUT MEETING OF SHAREHOLDERS. Notwithstanding Section 1.8
hereof, in the event that Parent, the Purchaser or any other subsidiary of
Parent shall acquire at least 90% of the Company Common Stock, pursuant to the
Offer or otherwise, the
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parties hereto agree, at the request of Parent and subject to Section 6
hereof, to take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after such acquisition, without a
meeting of shareholders of the Company, in accordance with Section 253 of the
DGCL.
2. CONVERSION OF SECURITIES.
2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any shares of
Company Common Stock or common stock, no par value, of the Purchaser (the
"PURCHASER COMMON STOCK"):
(a) Purchaser Common Stock. Each issued and outstanding share of the
Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All shares of
Company Common Stock that are owned by the Company as treasury stock and any
shares of Company Common Stock owned by Parent, the Purchaser or any other
wholly owned Subsidiary (as defined in Section 3.1 hereof) of Parent shall be
cancelled and retired and shall cease to exist, and no stock of Parent or other
consideration shall be delivered in exchange therefor.
(c) Exchange of Shares. Each issued and outstanding share of Company
Common Stock, including the associated Rights (other than shares to be
cancelled in accordance with Section 2.1(b)) shall be converted into the right
to receive the Offer Price, payable to the holder thereof, without interest
(the "MERGER CONSIDERATION"), upon surrender of the certificate formerly
representing such share of Company Common Stock in the manner provided in
Section 2.2. All such shares of Company Common Stock, when so converted, shall
no longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration therefor upon the surrender of such
certificate in accordance with Section 2.2, without interest. Notwithstanding
anything in this Agreement to the contrary, but only to the extent required by
DGCL, shares of Company Common Stock that are issued and outstanding
immediately prior to the Effective Time and with respect to which the holders
comply with all the provisions of the DGCL concerning the right of holders of
Company Common Stock to dissent from the Merger and require appraisal of their
shares of Company Common Stock ("DISSENTING STOCK") shall not be converted into
the right to receive the Merger Consideration but shall become the right to
receive such consideration as may be determined to be due the holders of the
Dissenting Stock ("DISSENTING STOCKHOLDERS") pursuant to the DGCL; provided,
however, that (i) if any Dissenting Stockholder shall subsequently deliver a
written withdrawal of his or her demand for appraisal
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(with the written approval of the Surviving Corporation, if such withdrawal is
not tendered within 60 days after the Effective Time), or (ii) if any
Dissenting Stockholder fails to establish and perfect his or her entitlement to
appraisal rights as provided by the DGCL, or (iii) if within 120 days of the
Effective Time neither any Dissenting Stockholder nor the Surviving Corporation
has filed a petition demanding a determination of the value of all shares of
Company Common Stock outstanding at the Effective Time and held by Dissenting
Stockholders in accordance with the DGCL, then such Dissenting Stockholder or
Stockholders, as the case may be, shall forfeit the right to appraisal of such
shares and such shares shall thereupon be deemed to have been converted into
the right to receive, as of the Effective Time, the Merger Consideration,
without interest. The Company shall give Parent and the Purchaser (A) prompt
notice of any written demands for appraisal, withdrawals of demands for
appraisal and any other related instruments received by the Company, and (B)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal. The Company will not voluntarily make any payment with
respect to any demands for appraisal and will not, except with the prior
written consent of Parent, settle or offer to settle any such demand.
2.2 EXCHANGE OF CERTIFICATES.
(a) Paying Agent. Parent shall designate a bank or trust company to act
as agent for the holders of shares of Company Common Stock in connection with
the Merger (the "PAYING AGENT") to receive the funds to which holders of shares
of Company Common Stock shall become entitled pursuant to Section 2.1(c). Such
funds shall be invested by the Paying Agent as directed by Parent or the
Surviving Corporation.
(b) Exchange Procedures. (i) As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "CERTIFICATES"),
whose shares were converted pursuant to Section 2.1 into the right to receive
the Merger Consideration (A) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Paying Agent and
shall be in such form and have such other provisions as Parent and the Company
may reasonably specify) and (B) instructions for use in effecting the surrender
of the Certificates in exchange for payment of the Merger Consideration.
(ii) Upon surrender of a Certificate for cancellation to the Paying Agent
or to such other agent or agents as may be appointed by Parent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor the Merger Consideration for each
share of Company Common Stock formerly represented by such
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Certificate and the Certificate so surrendered shall forthwith be cancelled.
If payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other taxes required
by reason of the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such tax either has been
paid or is not applicable.
(iii) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof as determined in accordance with
this Section 2, provided that, the person to whom the Merger Consideration is
paid shall, as a condition precedent to the payment thereof, give the Surviving
Corporation a bond in such sum as it may direct or otherwise indemnify the
Surviving Corporation in a manner satisfactory to it against any claim that may
be made against the Surviving Corporation with respect to the Certificate
claimed to have been lost, stolen or destroyed.
(iv) Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this Section 2.2.
(c) Transfer Books; No Further Ownership Rights in Company Common Stock.
At the Effective Time, the stock transfer books of the Company shall be closed
and thereafter there shall be no further registration of transfers of shares of
Company Common Stock on the records of the Company. From and after the
Effective Time, the holders of Certificates evidencing ownership of shares of
Company Common Stock outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Section 2.
(d) Termination of Fund; No Liability. (i) Concurrently with the
Effective Time, Parent or the Purchaser shall deposit in trust with the Paying
Agent cash in United States dollars in an aggregate amount equal to the product
of (A) the number of shares of Company Common Stock outstanding immediately
prior to the Effective Time (less those shares to be cancelled in accordance
with Section 2.1(b) and any shares known at the time of such deposit to be
Dissenting Stock), multiplied by (B) the Merger
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Consideration (such amount being hereinafter referred to as the "PAYMENT
FUND"). The Payment Fund shall be invested by the Paying Agent as directed by
Parent in direct obligations of the United States, obligations for which the
full faith and credit of the United States is pledged to provide for the
payment of principal and interest, commercial paper rated of the highest
quality by Moody's Investors Services, Inc. or Standard & Poor's Ratings Group
or certificates of deposit, bank repurchase agreements or bankers' acceptances
of a commercial bank having at least $100,000,000 in assets (collectively,
"PERMITTED INVESTMENTS") or in money market funds which are invested in
Permitted Investments, and any net earnings with respect thereto shall be paid
to Parent as and when requested by Parent. The Paying Agent shall, pursuant to
irrevocable instructions, make the payments referred to in Section 2.1(c)
hereof out of the Payment Fund. The Payment Fund shall not be used for any
other purpose except as otherwise agreed to by Parent.
(ii) At any time following one hundred twenty (120) days after the
Effective Time, the Surviving Corporation shall be entitled to require the
Paying Agent to deliver to it the remaining balance of the Payment Fund
(including any interest received with respect thereto), and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
2.3 COMPANY OPTION PLANS.
(a) Parent and the Company shall take all actions necessary to provide
that, effective as of the Effective Time, (i) each outstanding employee stock
option to purchase Shares (an "OPTION") granted under the Company's 1984
Incentive Stock Option Plan (the "1984 OPTION PLAN") or the Company's 1993
Incentive Stock Option Plan (the "1993 OPTION PLAN" and collectively with the
1984 Option Plan, the "OPTION PLANS"), whether or not then exercisable or
vested, shall become fully exercisable and vested, (ii) each Option that is
then outstanding shall be cancelled and (iii) in consideration of such
cancellation, and except to the extent that Parent or the Purchaser and the
holder of any such Option otherwise agree, the Company (or, at Parent's option,
the Purchaser) shall pay to such holders of Options an amount in respect
thereof equal to the product of (A) the excess, if any, of the Offer Price over
the exercise price thereof and (B) the number of Shares subject thereto (such
payment to be net of applicable withholding taxes); provided that the foregoing
(x) shall be subject to the obtaining of any necessary consents of holders of
Options and the making of any necessary amendments to the Option Plans, it
being agreed that
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the Company and Parent will use all reasonable efforts to obtain any such
consents and make any such amendments, and (y) shall not require any action
that violates the Option Plans; provided, further, that if it is determined
that compliance with any of the foregoing would cause any individual subject to
Section 16 of the Exchange Act ("SECTION 16") to become subject to the profit
recovery provisions thereof, any Options held by such individual will be
cancelled or purchased, as the case may be, as promptly as possible so as not
to subject such individual to any liability pursuant to Section 16, subject to
receiving an agreement from the holder of such Option not to exercise such
Option after the Effective Time, and such individual shall be entitled to
receive from the Company, for each Share subject to an Option an amount equal
to the excess, if any, of the Offer Price over the per Share exercise price of
such Option. Notwithstanding the foregoing, any payment to the holders of
Options contemplated by this Section 2.3 may be withheld in respect of any
Option until any necessary consents or releases are obtained.
(b) Each Share previously issued in the form of restricted stock (both
"Restricted Shares" and "Investment Shares") under the Company's Restricted
Stock Purchase Plan (the "RESTRICTED STOCK PLAN") shall become fully and freely
transferable under the terms of the Offer immediately prior to the Effective
Time.
(c) Except as provided herein or as otherwise agreed to by the parties and
to the extent permitted by the Option Plans and the Restricted Stock Plan, (i)
the Option Plans and the Restricted Stock Plan shall terminate as of the
Effective Time and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any of its subsidiaries shall be deleted as of
the Effective Time and (ii) the Company shall take all actions necessary to
ensure that following the Effective Time, the Company will not be bound by any
Options, other options, warrants, rights or agreements which would entitle any
person (other than Parent or the Purchaser) to own or acquire any equity
securities of the Company, the Surviving Corporation or any subsidiary thereof
or to receive any payment in respect thereof.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Parent and the Purchaser as follows:
3.1 ORGANIZATION. Each of the Company and its Subsidiaries is a
corporation, partnership or other entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite corporate or other power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as now being conducted, except where the failure
to be so organized, existing and in good standing or to
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have such power, authority, and governmental approvals would not have a
material adverse effect on the Company and its Subsidiaries taken as a whole.
As used in this Agreement, the word "SUBSIDIARY" means, with respect to any
person, any corporation or other organization, whether incorporated or
unincorporated, of which (a) such person or any other Subsidiary of such person
is a general partner (excluding such partnerships where such person or any
Subsidiary of such person do not have a majority of the voting interest in such
partnership) or (b) at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such person or by any one or more of its Subsidiaries, or by such person and
one or more of its Subsidiaries. As used in this Agreement, any reference to
any event, change or effect being material or having a material adverse effect
on or with respect to any person (or group of persons taken as a whole) means
such event, change or effect is materially adverse to the consolidated
financial condition, businesses or results of operations of such person (or, if
used with respect thereto, of such group of persons taken as a whole). The
Company and each of its Subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not in the aggregate have
a material adverse effect on the Company and its Subsidiaries taken as a whole.
The only Subsidiary of the Company is Puerto Rico Envelopes, Inc.
3.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 20,000,000
shares of Company Common Stock and 1,000,000 preferred shares, $1.00 par value
(the "PREFERRED STOCK"). As of the date hereof, (i) 7,481,278 shares of
Company Common Stock are issued and outstanding, (ii) 753,190 shares of Company
Common Stock are issued and held in the treasury of the Company, and (iii)
188,000 shares of Company Common Stock are reserved for issuance upon exercise
of then outstanding Options granted under the Option Plans or rights granted
under the Restricted Stock Plan. As of the date hereof, there are no shares of
Preferred Stock issued and outstanding and 1,000,000 shares of Preferred Stock
were reserved for issuance upon exercise of the Rights. All the outstanding
shares of the Company's capital stock are, and all shares which may be issued
pursuant to the exercise of outstanding Options or Rights will be, when issued
in accordance with the respective terms thereof, duly authorized, validly
issued, fully paid and non-assessable. There are no bonds, debentures, notes
or other indebtedness having general voting rights (or convertible into
securities having such rights)("VOTING DEBT") of the Company or any of its
Subsidiaries issued and outstanding. Except as set forth
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above and except for the transactions contemplated by this Agreement, as of the
date hereof, (x) there are no shares of capital stock of the Company
authorized, issued or outstanding and (y) there are no existing options,
warrants, calls, preemptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character, relating to the issued or
unissued capital stock of the Company or any of its Subsidiaries, obligating
the Company or any of its Subsidiaries to issue, transfer or sell or cause to
be issued, transferred or sold any shares of capital stock or Voting Debt of,
or other equity interest in, the Company or any of its Subsidiaries or
securities convertible into or exchangeable for such shares or equity interests
or obligations of the Company or any of its Subsidiaries to grant, extend or
enter into any such option, warrant, call, subscription or other right,
agreement, arrangement or commitment. Except as contemplated by this
Agreement, there are no outstanding contractual obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any Shares
or the capital stock of the Company or any subsidiary or affiliate of the
Company or to provide funds to make any investment (in the form of a loan,
capital contribution or otherwise) in any Subsidiary or any other entity. After
the Effective Time, the Surviving Corporation will have no obligation to issue,
sell or transfer any shares of capital stock of the Surviving Corporation
pursuant to any Benefit Plan (as defined in Section 3.9(a)).
(b) All of the outstanding shares of capital stock of each of the
Subsidiaries are beneficially owned by the Company, directly or indirectly, and
all such shares have been validly issued and are fully paid and nonassessable
and are owned by either the Company or one of its Subsidiaries free and clear
of all liens, charges, claims or encumbrances.
(c) There are no voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the Subsidiaries. None of
the Company or its Subsidiaries is required to redeem, repurchase or otherwise
acquire shares of capital stock of the Company, or any of its Subsidiaries,
respectively, as a result of the transactions contemplated by this Agreement.
3.3 AUTHORIZATION; VALIDITY OF AGREEMENT; COMPANY ACTION.
(a) The Company has full corporate power and authority to execute and
deliver this Agreement and, subject to obtaining the necessary approval of its
shareholders with respect to the Merger, to consummate the Transactions. The
execution, delivery and performance by the Company of this Agreement, and the
consummation by it of the Transactions, have been duly authorized by its Board
of Directors and, except for those actions contemplated by Section 1.2(a) and
obtaining the approval of its shareholders as contemplated by Section 1.8, no
other corporate action on the part
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of the Company is necessary to authorize the execution and delivery by the
Company of this Agreement and the consummation by it of the Transactions. This
Agreement has been duly executed and delivered by the Company and is a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency or other similar laws, now or hereafter in
effect, affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(b) The Board of Directors of the Company has duly and validly approved
and taken all corporate action required to be taken by the Board of Directors
for the consummation of the Transactions, including the Offer, the acquisition
of Shares pursuant to the Offer, the Merger and the Tender Agreements,
including, but not limited to, all actions required to render Section 203 of
the DGCL, the super-majority voting provisions of Article IX of the Company's
Restated Certificate of Incorporation and the Rights Agreement inapplicable to
such transactions.
3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), the Securities Act of
1933, as amended (the "SECURITIES ACT"), state securities or blue sky laws,
applicable state takeover statutes and the DGCL, none of the execution,
delivery or performance of this Agreement by the Company or the consummation by
the Company of the Transactions or the compliance by the Company with any of
the provisions hereof will (a) conflict with or result in any breach of any
provision of the certificate of incorporation or by-laws or similar
organizational documents of the Company or of any of its Subsidiaries, (b)
require any filing with, or permit, authorization, consent or approval of, any
court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency (a "GOVERNMENTAL ENTITY"),
except where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings would not have a material adverse effect on
the Company and its Subsidiaries taken as a whole, (c) except for the those
agreements described in Section 3.4 of the disclosure letter prepared by the
Company for the benefit of Parent and the Purchaser in connection with the
transactions contemplated by this Agreement (the "DISCLOSURE LETTER"), result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound and
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which either (i) has been filed as an exhibit to the Company SEC Documents (as
defined in Section 3.5) or (ii) is otherwise material to the financial
condition, business or results of operations of the Company (such agreements,
contracts, etc. described in the foregoing clauses (i) and (ii) to be referred
to herein as the "MATERIAL AGREEMENTS") or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company, any
of its Subsidiaries or any of their properties or assets, except in the case of
(c) or (d) for such violations, breaches or defaults which would not,
individually or in the aggregate, have a material adverse effect on the Company
and its Subsidiaries taken as a whole, and which will not materially impair the
ability of the Company to consummate the transactions contemplated hereby and
to operate in the ordinary course of business after the Effective Time.
3.5 SEC REPORTS AND FINANCIAL STATEMENTS. The Company has filed with the
SEC, and has heretofore made available to Parent true and complete copies of,
all forms, reports, schedules, statements and other documents required to be
filed by it since November 1, 1992 under the Exchange Act or the Securities Act
(as such documents have been amended since the time of their filing,
collectively, the "COMPANY SEC DOCUMENTS"). As of their respective dates or,
if amended, as of the date of the last such amendment, the Company SEC
Documents, including, without limitation, any financial statements or schedules
included therein (a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (b) complied in all material respects with
the applicable requirements of the Exchange Act and the Securities Act, as the
case may be, and the applicable rules and regulations of the SEC thereunder.
None of the Subsidiaries is required to file any forms, reports or other
documents with the SEC pursuant to Section 12 or 15 of the Exchange Act. The
financial statements of the Company (the "1995 FINANCIAL STATEMENTS") included
in the Company's annual report on Form 10-K for the fiscal year ended October
28, 1995, as amended and subsequently restated (including the related notes
thereto) (the "1995 FORM 10-K")and in the quarterly report on Form 10-Q for the
fiscal quarter filed since the 1995 Form 10-K have been prepared from, and are
in accordance with, the books and records of the Company and its consolidated
subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto and
subject, in the case of quarterly financial statements, to normal and recurring
year-end adjustments) and fairly present the consolidated financial position
and the consolidated results of operations and cash flows (and changes in
financial position, if any) of the Company and its consolidated
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subsidiaries as at the dates thereof or for the periods presented therein.
3.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company SEC
Documents or in Section 3.6 of the Disclosure Letter, the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary
and usual course and there has not occurred (i) any events, changes, or effects
(including the incurrence of any liabilities of any nature, whether accrued,
contingent or otherwise) having, individually or in the aggregate, a material
adverse effect on the Company and its Subsidiaries, taken as a whole; (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to the equity interests of
the Company or of any of its Subsidiaries; or (iii) any change by the Company
or any of its Subsidiaries in accounting principles or methods, except insofar
as may be required by a change in GAAP.
3.7 NO UNDISCLOSED LIABILITIES. Except (a) as disclosed in the Company's
SEC Documents and (b) for liabilities and obligations incurred in the ordinary
course of business and consistent with past practice, since October 28, 1995,
neither the Company nor any of its Subsidiaries has incurred any liabilities or
obligations of any nature, whether accrued, contingent or otherwise, that have,
or would be reasonably likely to have, a material adverse effect on the Company
and its Subsidiaries taken as a whole or would be required by GAAP to be
reflected on a consolidated balance sheet of the Company and its Subsidiaries
(including the notes thereto). Section 3.7 of the Disclosure Letter sets forth
a list of all debt obligations of the Company (including capitalized leases),
and the total amounts of principal (both current and long-term portions) and
unpaid interest outstanding under the same (even if $0).
3.8 INFORMATION IN PROXY STATEMENT. The Proxy Statement (or any amendment
thereof or supplement thereto) will, at the date mailed to Company shareholders
and at the time of the meeting of Company shareholders to be held in connection
with the Merger, not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading, except that no representation is made by the Company with
respect to statements made therein based on information supplied by Parent or
the Purchaser in writing for inclusion in the Proxy Statement. The Proxy
Statement will comply in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder.
3.9 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 3.9(a) of the Disclosure Letter lists all material employee
benefit plans, arrangements, contracts or agreements (including employment
agreements and severance
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agreements) of any type, including but not limited to plans described in
section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and all retirement, savings and other pension plans, all health,
severance, insurance, disability and other employee welfare plans and all
incentive, vacation, accrued leave, sick pay, sick leave and other similar
plans, all bonus, stock option, stock purchase, restricted stock, incentive,
profit-sharing, deferred compensation, supplemental retirement, unemployment
benefit, severance and other employee benefit plans, programs or arrangements
(whether or not insured) and all material employment, consulting, termination,
or compensation agreements, in each case for the benefit of, or relating to
current employees and former employees or directors of the Company, whether or
not any such items are in writing or are exempt from the provisions of ERISA,
that have been established, maintained or contributed to or with respect to
which any potential material liability is borne by the Company, any of its
Subsidiaries or any trade or business, whether or not incorporated (an "ERISA
AFFILIATE"), that together with the Company would be deemed a "single employer"
within the meaning of section 4001(b)(15) of ERISA, or with respect to which
the Company or any of its Subsidiaries has or may have a liability
(collectively, the "BENEFIT PLANS"). Neither the Company nor any ERISA
Affiliate has any formal plan or commitment, whether legally binding or not, to
create any additional Benefit Plan or modify or change any existing Benefit
Plan that would affect any employee or terminated employee of the Company or
any Subsidiary.
(b) (i) Neither the Company nor any ERISA Affiliate has at any time
maintained, contributed to, had an obligation to contribute to, or otherwise
sponsored a "defined benefit plan," as defined in ERISA Section 3(35), a plan
subject to Section 412 of the Internal Revenue Code of 1986, as amended (the
"CODE"), or a "multiemployer plan," as defined in ERISA Section 4001(a)(3).
(ii) Neither the Company nor any ERISA Affiliate maintains any Benefit
Plan which is a "group health plan" (as such term is defined in Section
5000(b)(1) of the Code) that has not been administered and operated in all
material respects in compliance with the applicable requirements of Section 601
of ERISA and Section 4980B(f) of the Code and neither the Company nor any of
its subsidiaries is subject to any material liability as a result of such
administration and operation. Except as set forth in Section 3.9(b) of the
Disclosure Letter, neither the Company nor any ERISA Affiliate maintains any
Benefit Plan (whether qualified or nonqualified within the meaning of Section
401(a) of the Code) providing for retiree health and/or life benefits and
having material unfunded liabilities.
(iii) Except as set forth in Section 3.9(b) of the Disclosure Letter
neither the Company nor any ERISA Affiliate has any material unfunded
liabilities pursuant to any Benefit Plan that
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is not intended to be qualified under Section 401(a) of the Code.
(c) All Benefit Plans have at all times been maintained and operated in all
material respects in compliance with their terms and the requirements
prescribed by all applicable statutes, orders or governmental rules or
regulations with respect thereto, and the Company and its ERISA Affiliates have
performed all material obligations required to be performed by them under, and
are not in any material respect in default under or in violation of, any of
the Benefit Plans. No condition or circumstance exists that would prevent the
amendment or termination of any Benefit Plan.
(d) Except as set forth in Section 3.9(d) of the Disclosure Letter, each
Benefit Plan intended to be qualified under Section 401(a) of the Code has
heretofore been determined by the Internal Revenue Service (the "SERVICE") to
so qualify, and each trust created thereunder has heretofore been determined by
the Service to so qualify, and each trust created thereunder has heretofore
been determined by the Service to be exempt from tax under the provisions of
Section 501(a) of the Code and, to the best knowledge of the Company nothing
has occurred since the date of the most recent determination that would be
reasonably likely to cause any such Benefit Plan or trust to fail to qualify
under Section 401(a) or 501(a) of the Code.
(e) The Company has not incurred any material liability to the Pension
Benefit Guaranty Corporation ("PBGC") under Section 4001 et seq. of ERISA, and
no condition exists that could reasonably be expected to result in the Company
incurring material liability under Title IV of ERISA, either singly or as a
member of any trade or business, whether or not incorporated, under common
control of or affiliated with the Company, within the meaning of Section
414(b), (c), (m) or (o) of the Code. All premiums payable to the PBGC have
been paid when due.
(f) The Company has made available to Parent, copies of all material
documents in connection with each Benefit Plan including, without limitation
(where applicable), (i) all Benefit Plans as in effect on the date hereof,
together with all amendments thereto, including, in the case of any Benefit
Plan not set forth in writing, a written description thereof; (ii) all current
summary plan descriptions, summaries of material modifications and material
communications; (iii) all current trust agreements, declarations of trust and
other documents establishing other funding arrangements (and all amendments
thereto and the latest financial statements thereof); (iv) the most recent
Service determination letter, if applicable; (v) annual reports required to be
filed within the last year pursuant to ERISA or the Code with respect to the
Benefit Plans; (vi) the most recently prepared financial statements; and (vii)
all material contracts relating to each Benefit Plan, including, without
limitation, service provider agreements, insurance contracts, annuity
contracts, investment management
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agreements, subscription agreements, participation agreements, and
recordkeeping agreements.
(g) Neither the Company nor any of its ERISA Affiliates nor, to the best
knowledge of the Company, any of their respective directors, officers,
employees or other persons who participate in the operation of any Benefit Plan
or related trust or funding vehicle, has engaged in any transaction with
respect to any Benefit Plan or breached any applicable fiduciary
responsibilities or obligations under Title I of ERISA that would subject any
of them to a material tax, penalty or liability for prohibited transactions
under ERISA or the Code or would result in any material claim being made under,
by or on behalf of any such Benefit Plan by any party with standing to make
such claim.
(h) Full payment has been made of all amounts which the Company or any of
its ERISA Affiliates is required, under applicable law or under any Benefit
Plan or any agreement relating to any Benefit Plan to which the Company or any
of ERISA Affiliates is a party, to have paid as contributions thereto as of the
last day of the most recent fiscal year of such Benefit Plan ended prior to the
date hereof. Benefits under all Benefit Plans are as represented and have not
been increased subsequent to the date as of which documents have been provided.
(i) There are no actions, suits or claims pending, or to the best
knowledge of the Company, threatened or anticipated (other than routine claims
for benefits) with respect to any Benefit Plan.
(j) Except as set forth in Section 3.9(j) of the Disclosure Letter, no
Benefit Plan provides for the payment of severance benefits upon the
termination of an employee's employment. No compensation or benefit that is or
will be payable in connection with the Transactions contemplated by this
Agreement will be characterized as an "excess parachute payment" within the
meaning of Section 280G of the Code.
(k) The Company has not made any commitment to establish any new Benefit
Plan, to modify any Benefit Plan or to increase benefits or compensation of
employees or former employees of the Company (except for normal increases in
compensation consistent with past practices or as disclosed in Section 3.9(k)
of the Disclosure Letter), nor has any intention to do so been communicated to
employees or former employees of the Company.
3.10 LITIGATION. Except as disclosed in the Company SEC Documents, filed
prior to the date of this Agreement, there is no suit, claim, action,
proceeding or investigation pending or, to the best knowledge of the Company,
threatened against or affecting, the Company or any of its Subsidiaries which,
if concluded adversely to the Company or its Subsidiary, would have,
individually or in the aggregate, a material adverse effect on the Company and
its Subsidiaries, taken as a whole, or a material adverse effect on the
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ability of the Company to consummate the transactions contemplated by this
Agreement or to operate in the ordinary course of business after the Effective
Time.
3.11 CONDUCT OF BUSINESS. The business of the Company and each of its
Subsidiaries is not being conducted in default or violation of any term,
condition or provision of (a) its respective certificate of incorporation or
by-laws or similar organizational documents, (b) any Material Agreement or (c)
any federal, state, local or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit or license or
other governmental authorization or approval applicable to the Company or any
of its Subsidiaries, excluding from the foregoing clauses (b) and (c), defaults
or violations that would not, individually or in the aggregate, have a material
adverse effect on the Company and its Subsidiaries, taken as a whole. Except
as previously disclosed to Parent in writing, as of the date of this Agreement,
no investigation or review by any Governmental Entity or other entity with
respect to the Company or any of its Subsidiaries is pending or, to the best
knowledge of the Company, threatened, nor has any Governmental Entity or other
entity indicated an intention to conduct the same, other than, in each case,
those the outcome of which, as far as reasonably can be foreseen, in the future
will not, individually or in the aggregate have a material adverse effect on
the Company and its Subsidiaries, taken as a whole.
3.12 REIMBURSEMENT. The Company or its Subsidiaries, as the case may be, are
parties to such agreements with third party payors, including Medicaid, health
maintenance organizations, preferred provider organizations, insurance
companies and other payment sources, which are necessary to conduct their
respective businesses as of the date of this Agreement.
3.13 TAXES.
(a) The Company and its Subsidiaries have (i) duly filed (or there has
been filed on their behalf) with the appropriate governmental authorities all
Tax Returns (as hereinafter defined) required to be filed by them on or prior
to the date hereof, and such Tax Returns are true, correct and complete in all
material respects, and (ii) duly paid in full or made provision in accordance
with GAAP (or there has been paid or provision has been made on their behalf)
for the payment of all Taxes (as hereinafter defined) for all periods ending
through the date hereof.
(b) There are no material liens for Taxes upon any property or assets of
the Company or any Subsidiary thereof, except for liens for Taxes not yet due
and liens for Taxes the assessment of which is being contested in good faith
and with respect to which adequate reserves have been established in accordance
with GAAP (a list of such contests is set forth in Section 3.13(b) of the
Disclosure Letter).
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(c) Since October 28, 1994, neither the Company nor any of its
Subsidiaries has made any change in accounting methods, received a ruling from
any taxing authority or signed an agreement likely to have a material adverse
effect on the Company and its Subsidiaries taken as a whole.
(d) The Company and its Subsidiaries have complied in all material
respects with all applicable laws, rules and regulations relating to the
payment and withholding of Taxes (including, without limitation, withholding of
Taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions
under any foreign laws) and have, within the time and the manner prescribed
bylaw, withheld from employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over under
applicable laws.
(e) Except as described in Section 3.13(e) of the Disclosure Letter, no
federal, state, local or foreign audits or other administrative proceedings or
court proceedings are presently pending with regard to any Taxes or Tax Returns
of the Company or its Subsidiaries wherein an adverse determination or ruling
in any one such proceeding or in all such proceedings in the aggregate could
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole, and neither the Company nor its subsidiaries has received a written
notice of any pending audits or proceedings.
(f) The federal income Tax Returns of the Company and its Subsidiaries
have been examined by the Service (or the applicable statutes of limitation for
the assessment of federal income Taxes for such periods have expired) for all
periods through and including October 28, 1994, and no material deficiencies
were asserted as a result of such examinations which have not been resolved and
fully paid.
(g) There are no outstanding requests, agreements, consents or waivers to
extend the statutory period of limitations applicable to the assessment of any
Taxes or deficiencies against the Company or any of its Subsidiaries, and no
power of attorney granted by either the Company or any of its Subsidiaries with
respect to any Taxes is currently in force.
(h) Neither the Company nor any of its Subsidiaries is a party to any
agreement providing for the allocation or sharing of Taxes.
(i) Except as disclosed in Section 3.9(j) of the Disclosure Letter,
neither the Company nor its Subsidiaries is a party to any agreement, contract
or arrangement that could result, separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of Section 280G
of the Code.
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(j) Neither the Company nor any of its Subsidiaries has, with regard to
any assets or property held, acquired or to be acquired by any of them, filed a
consent to the application of Section 341(f) of the Code, or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as such term is defined in Section 341(f)(4) of the Code) owned by the
Company or any of its Subsidiaries.
(k) The deductibility of compensation paid by the Company and/or its
Subsidiaries will not be limited by Section 162(m) of the Code.
(l) None of the assets of the Company is property that the Company is
required to treat as being owned by any other person pursuant to the "safe
harbor lease" provisions of former Section 168(f)(8) of the Code.
(m) None of the assets of the Company directly or indirectly secures any
debt on interest which is tax-exempt under Section 103(a) of the Code.
(n) None of the assets of the Company is "tax-exempt use property" within
the meaning of Section 168(h) of the Code.
(o) The Company has not agreed to make nor is it required to make any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise.
(p) The Company has not participated in an international boycott within
the meaning of Section 999 of the Code.
(q) The Company is not and has not been a United States real property
holding corporation (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(r) The Company does not have and has not had a permanent establishment in
any foreign countries, as defined in any application tax treaty or commitment
between the United States and such foreign country.
(s) Except as set forth in Section 3.13(s) of the Disclosure Letter, the
Company is not a party to any joint venture, partnership or other arrangement
or contract that could be treated as a partnership for federal income tax
purposes.
(t) "TAXES" shall mean any and all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise,
real or personal property, sales, withholding, social security, occupation,
use, service, service use, license, net worth, payroll, franchise, transfer and
recording taxes, fees and charges, imposed by the Service or any taxing
authority (whether domestic or foreign including, without
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limitation, any state, county, local or foreign government or any subdivision
or taxing agency thereof (including a United States possession)), whether
computed on a separate, consolidated, unitary, combined or any other basis; and
such term shall include any interest whether paid or received, fines, penalties
or additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments. "TAX RETURN" shall mean
any report, return, document, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction (foreign or
domestic) with respect to Taxes, including, without limitation, information
returns, any documents with respect to or accompanying payments of estimated
Taxes, or with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration or other
information.
3.14 LABOR RELATIONS. There is no labor strike, slowdown or work stoppage or
lockout pending or to the Company's knowledge threatened against the Company or
any of its Subsidiaries. There is no unfair labor practice charge or complaint
against or pending before the National Labor Relations Board (the "NLRB") which
if decided adversely could have a material adverse effect on the Company and
its Subsidiaries, taken as a whole. There is no representation claim or
petition pending before the NLRB and no question concerning representation
exists with respect to the employees of the Company or its Subsidiaries. No
collective bargaining agreement is currently being negotiated by the Company or
any of its Subsidiaries and neither the Company nor any of its Subsidiaries is
a party to any collective bargaining agreement. Except as identified in
Section 3.14 of the Disclosure Letter, there exist no employment, consulting,
severance, indemnification or deferred compensation agreements between the
Company and any director, officer or employee of the Company or any agreement
that would give any person the right to receive any payment from the Company as
a result of the Transactions.
3.15 COMPLIANCE WITH LAWS. The Company and its Subsidiaries have complied in
a timely manner with all laws and governmental regulations and orders relating
to any of the Company or its Subsidiaries or the property owned, leased or used
by them, or applicable to their business, including, but not limited to, equal
employment opportunity, discrimination, occupational safety and health,
environmental, and antitrust laws, except where the failure to so comply would
not, individually or in the aggregate, have a material adverse effect on the
Company and its Subsidiaries, taken as a whole.
3.16 INSURANCE. As of the date hereof, the Company and each of its
Subsidiaries are insured by insurers, reasonably believed by the Company to be
of recognized financial responsibility and solvency, against such losses and
risks and in such amounts as are customary in the businesses in which they are
engaged. All material policies of insurance and fidelity or surety bonds are
in
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full force and effect. All necessary notifications of claims have been made to
insurance carriers other than those which will not have a material adverse
effect on the Company and its Subsidiaries, taken as a whole. Section 3.16 of
the Disclosure Letter contains a complete list of all material insurance
policies and fidelity or surety bonds maintained by the Company as of the date
of this Agreement.
3.17 CONTRACTS. Each Material Agreement is legally valid and binding and in
full force and effect, except where failure to be legally valid and binding and
in full force and effect would not have a material adverse effect on the
Company and its Subsidiaries taken as a whole, and there are no defaults
thereunder, except those defaults that would not have a material adverse effect
on the Company and its Subsidiaries taken as a whole. The Company has
previously made available for inspection by Parent or the Purchaser all
Material Agreements. Neither the Company nor any of its Subsidiaries is a
party to or bound by the terms of any agreement, contract or commitment (a) to
obtain all or a substantial portion of its supply of any material good or
service from any other person (or group of persons), (b) to maintain the
confidentiality of any non-public information of another person; or (c) to
refrain from competing or otherwise offering its services or products to any
other person.
3.18 REAL PROPERTY. The Company and the Subsidiaries, as the case may be,
have sufficient title or leaseholds to real property to conduct their
respective businesses as currently conducted with only such exceptions as
individually or in the aggregate would not have a material adverse effect on
the Company and the Subsidiaries, taken as a whole.
3.19 OPINIONS OF FINANCIAL ADVISORS. The Company has received an opinion
from Duff & Phelps to the effect that the consideration to be received by the
shareholders of the Company pursuant to the Offer and the Merger is fair to
such shareholders from a financial point of view, and a complete and correct
signed copy of such opinion will be promptly delivered to Parent.
3.20 VOTE REQUIRED. Unless the Merger is consummated in accordance with the
provisions of Section 253 of the DGCL, the affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock are the only votes
of the holders of any class or series of the Company's capital stock necessary
to approve the Merger.
3.21 TITLE TO PROPERTIES. The Company and each of its Subsidiaries has good,
valid and marketable title to (a) all its material tangible properties and
assets (real and personal), including, without limitation, all material
properties and assets reflected in the consolidated balance sheet as of October
28, 1995 except as indicated in the notes thereto and except for properties and
assets reflected in the consolidated balance sheet as of
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October 28, 1995 which have been sold or otherwise disposed of in the ordinary
course of business, and (b) all material tangible properties and assets
purchased by the Company and any of its Subsidiaries since October 28, 1995
except for such properties and assets which have thereafter been sold or
otherwise disposed of in the ordinary course of business; in each case subject
to no encumbrance, lien, charge or other restriction of any kind or character,
except for (w) liens reflected in the consolidated balance sheet as of October
28, 1995, (x) liens consisting of zoning or planning restrictions, easements,
permits and other restrictions or limitations on the use of real property or
irregularities in title thereto which do not materially detract from the value
of, or impair the use of, such property by the Company or any of its
subsidiaries in the operation of its respective business, (y) liens for current
taxes, assessments or governmental charges or levies on such property not yet
due and delinquent and (z) mechanics, materialmen's and other similar liens
imposed by law and incurred in the ordinary course of business.
3.22 INTELLECTUAL PROPERTIES. (a) In the operation of its business, the
Company and its Subsidiaries have used, and currently use, domestic and foreign
patents, patent applications, patent licenses, software licenses, know-how
licenses, trade names, trademarks, copyrights, service marks, trademark
registrations and applications, service mark registrations and applications,
copyright registrations and applications, (collectively, the "INTELLECTUAL
PROPERTY") and unpatented inventions, trade secrets and other confidential
proprietary information (collectively, the "KNOW-HOW").
(b) Section 3.22 of the Disclosure Letter contains an accurate and
complete list of all Intellectual Property which, to the best knowledge of the
Company, is of material importance to the operation of the business of the
Company or any of its Subsidiaries. Unless otherwise indicated in Section 3.22
of the Disclosure Letter, the Company (or the Subsidiary indicated) owns the
entire right, title and interest in and to the Intellectual Property listed on
Section 3.22 of the Disclosure Letter used in the operation of its business
(including, without limitation, the exclusive right to use and license the
same) and each item constituting part of the Intellectual Property which is
owned by the Company or a Subsidiary and listed on Section 3.22 of the
Disclosure Letter has been, to the extent indicated in Section 3.22 of the
Disclosure Letter, duly registered with, filed in or issued by, as the case may
be, the United States Patent and Trademark Office or such other government
entities, domestic or foreign, as are indicated in Section 3.22 of the
Disclosure Letter and such registrations, filings and issuances remain in full
force and effect. Except as stated in such Section 3.22 of the Disclosure
Letter, there are no pending or to the best knowledge of the Company,
threatened proceedings or litigation which would have a material adverse effect
on the Company's use of such Intellectual Property or other material adverse
claims affecting or with respect
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to the Intellectual Property or the Know-How. Section 3.22 of the Disclosure
Letter lists all notices or claims currently pending or received by the Company
or any of its subsidiaries during the past two years which claim infringement,
contributory infringement, inducement to infringe, misappropriation or breach
by the Company or any of its Subsidiaries of any domestic or foreign patents,
patent applications, patent licenses and know-how licenses, trade names,
trademark registrations and applications, service marks, copyrights, copyright
registrations or applications, trade secrets or other confidential proprietary
information. To the best knowledge of the Company, there exists no reasonable
basis upon which a claim may be asserted against the Company or any of its
Subsidiaries for infringement, contributory infringement, inducement to
infringe, misappropriation or breach of any domestic or foreign patents, patent
applications, patent licenses, know-how licenses, trade names, trademark
registrations and applications, common law trademarks, service marks,
copyrights, copyright registrations or applications, trade secrets or other
confidential proprietary information. To the best knowledge of the Company,
except as indicated on Section 3.22 of the Disclosure Letter, no person is
infringing the Intellectual Property or the Know-How.
3.23 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting on
behalf of the Company is, or will be, entitled to any fee, commission or
broker's or finder's fees from any of the parties hereto, or from any person
controlling, controlled by, or under common control with any of the parties
hereto, in connection with this Agreement or any of the Transactions.
3.24 ENVIRONMENTAL MATTERS. (a) Except as disclosed in the Company SEC
Documents or in Section 3.24 of the Disclosure Letter or as would not,
individually or in the aggregate, have a material adverse effect on the Company
and its Subsidiaries taken as a whole, (i) the Company and its Subsidiaries are
in compliance with all Environmental Laws (as defined in Section 3.24(b)); (ii)
Hazardous Substances (as defined in Section 3.24(b)) requiring remediation
under any Environmental Law have not been released or disposed of on any real
property owned or operated by the Company or any of its Subsidiaries; (iii) the
Company and its Subsidiaries are not subject to liability for any off-site
disposal or contamination; (iv) the Company and its Subsidiaries have not
received any Environmental Claims (as defined in Section 3.24(b)) under any
Environmental Law; and (v) there are no facts, conditions, occurrences or
circumstances regarding the Company, its Subsidiaries or any property owned or
operated by the Company or its subsidiaries that could reasonably be expected
(A) to form the basis of any Environmental Claim against the Company, its
Subsidiaries or any property owned or operated by the Company or its
Subsidiaries, or (B) to cause such property to be subject to any restrictions
on the ownership, use, or transferability of any such property under any
Environmental Law.
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(b) "ENVIRONMENTAL LAWS" means all federal, state and local statutory and
common laws, regulations or orders relating to pollution, protection of the
environment or human health and safety, including those relating to the
manufacture, production, distribution, use, treatment, storage, disposal,
transport or handling, emission, discharge or release of pollutants,
contaminants, chemicals, industrial, hazardous or toxic materials or wastes or
nuisance. "HAZARDOUS SUBSTANCE" means any hazardous or toxic material,
substance, waste, pollutant or contaminant as defined under any Environmental
Law, in any concentration, including, without limitation, any petroleum or
petroleum products, friable asbestos or polychlorinated biphenyls.
"ENVIRONMENTAL CLAIMS" means any and all administrative, regulatory or judicial
actions, suits, demand letters, claims, liens, notices of noncompliance or
violation, investigations or proceedings relating in any way to any
Environmental Law (hereinafter "CLAIMS"), including, without limitation, (i)
any and all Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to
any applicable Environmental Law and (ii) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Substances or arising from alleged
injury or threat of injury to human health, safety or the environment.
3.25 STATE TAKEOVER STATUTES. The Board of Directors of the Company has
approved the Offer, the Merger, this Agreement and the entering into, and
performance, by Parent and Purchaser of the Tender Agreements and such approval
is sufficient to render Section 203 of the DGCL inapplicable to the Offer, the
Merger, this Agreement and the entering into, and performance, by Parent and
the Purchaser of the Tender Agreements and the other transactions contemplated
by this Agreement and the Tender Agreements.
3.26 RIGHTS AGREEMENT. The Company and the Board of Directors of the
Company have taken and will, until the termination, if any, of this Agreement
pursuant to Section 7.1, maintain in effect all necessary action to (i) render
the Rights Agreement inapplicable with respect to the Offer, the Merger, this
Agreement, and the entering into, and performance, by Parent and the Purchaser
of the Tender Agreements and the other transactions contemplated by this
Agreement and (ii) ensure that (A) neither Parent nor the Purchaser nor any of
their Affiliates (as defined in the Rights Agreement) or Associates (as defined
in the Rights Agreement) is considered to be an Acquiring Person (as defined in
the Rights Agreement) and (B) the provisions of the Rights Agreement, including
the occurrence of a Distribution Date (as defined in the Rights Agreement), are
not and shall not be triggered by reason of the announcement or consummation of
the Offer, the Merger, the Tender Agreements or the consummation of any of the
other transactions contemplated by this Agreement or the Tender Agreements.
The Company has delivered to Parent a complete
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and correct copy of the Rights Agreement as amended and supplemented to the
date of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER.
Parent and the Purchaser represent and warrant to the Company as follows:
4.1 ORGANIZATION. Each of Parent and the Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate or other power
and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or
to have such power, authority, and governmental approvals would not have a
material adverse effect on Parent and its Subsidiaries taken as a whole.
Parent and each of its Subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not, in the aggregate,
have a material adverse effect on Parent and its Subsidiaries, taken as a
whole.
4.2 AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION. Each of Parent
and the Purchaser has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the consummation of
the Offer and the Merger and of the other transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Parent
and the Purchaser and no other corporate proceedings on the part of Parent and
the Purchaser are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by Parent and the Purchaser, as the case may be, and, assuming this
Agreement constitutes a valid and binding obligation of the Company,
constitutes a valid and binding obligation of each of Parent and the Purchaser,
as the case may be, enforceable against them in accordance with its respective
terms, except that (a) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the Securities Act, the HSR Act,
the DGCL, state securities
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or blue sky laws and applicable state takeover laws, neither the execution,
delivery or performance of this Agreement by Parent and the Purchaser nor the
consummation by Parent and the Purchaser of the transactions contemplated
hereby nor compliance by Parent and the Purchaser with any of the provisions
hereof will (a) conflict with or result in any breach of any provision of the
respective certificate of incorporation or by-laws of Parent and the Purchaser,
(b) require any filing with, or permit, authorization, consent or approval of,
any Governmental Entity (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not have a
material adverse effect on Parent and its Subsidiaries taken as a whole), (c)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, lease, contract, agreement or
other instrument or obligation to which Parent or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
or (d) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its Subsidiaries or any of their properties or
assets, except in the case of (c) and (d) for violations, breaches or defaults
which would not, individually or in the aggregate, have a material adverse
effect on Parent and its Subsidiaries taken as a whole.
4.4 INFORMATION IN PROXY STATEMENT; SCHEDULE 14D-9. None of the information
supplied by Parent or the Purchaser for inclusion or incorporation by reference
in the Proxy Statement or the Schedule 14D-9 will, at the date mailed to
shareholders and at the time of the meeting of shareholders to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
4.5 FINANCING. Either Parent or the Purchaser has sufficient funds
available (through existing credit arrangements or otherwise) to purchase all
of the Shares outstanding on a fully diluted basis and to pay all fees and
expenses related to the transactions contemplated by this Agreement.
4.6 PURCHASER'S OPERATIONS. The Purchaser was formed solely for the purpose
of engaging in the transactions contemplated hereby and has not engaged in any
business activities or conducted any operations other than in connection with
the transactions contemplated hereby.
5. COVENANTS.
5.1 INTERIM OPERATIONS OF THE COMPANY. The Company covenants and agrees
that, except (i) as expressly contemplated by this Agreement, or (ii) as agreed
in writing by Parent, after the date
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hereof, and prior to the time the directors of the Purchaser have been elected
to, and shall constitute a majority of, the Board of Directors of the Company
pursuant to Section 1.3 (the "APPOINTMENT DATE"):
(a) the business of the Company and its Subsidiaries shall be conducted
only in the ordinary and usual course and, to the extent consistent therewith,
each of the Company and its Subsidiaries shall use its best efforts to preserve
its business organization intact and maintain its existing relations with
customers, suppliers, employees, creditors and business partners;
(b) the Company will not, directly or indirectly, (i) sell, transfer or
pledge or agree to sell, transfer or pledge any Company Common Stock, Preferred
Stock or capital stock of any of its Subsidiaries beneficially owned by it,
either directly or indirectly; or (ii) split, combine or reclassify the
outstanding Company Common Stock or any outstanding capital stock of any of the
Subsidiaries of the Company;
(c) except for those actions contemplated in Section 1.2, neither the
Company nor any of its Subsidiaries shall: (i) amend its certificate of
incorporation or by-laws or similar organizational documents; (ii) declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock; (iii) issue, sell, pledge, dispose
of or encumber any additional shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any
kind to acquire, any shares of capital stock of any class of the Company or its
Subsidiaries, other than issuances pursuant to the exercise of Options
outstanding on the date hereof; (iv) transfer, lease, license, sell, mortgage,
pledge, dispose of, or encumber any material assets other than in the ordinary
and usual course of business and consistent with past practice, or incur or
modify any material indebtedness or other liability, other than in the ordinary
and usual course of business and consistent with past practice; or (v) redeem,
purchase or otherwise acquire directly or indirectly any of its capital stock;
(d) except as expressly provided in Section 2.3, neither the Company nor
any of its Subsidiaries shall: (i) grant any increase in the compensation
payable or to become payable by the Company or any of its Subsidiaries to any
of its executive officers or key employees or (A) adopt any new, or (B) amend
or otherwise increase, or accelerate the payment or vesting of the amounts
payable or to become payable under any existing, bonus, incentive compensation,
deferred compensation, severance, profit sharing, stock option, stock purchase,
insurance, pension, retirement or other employee benefit plan agreement or
arrangement; or (ii) enter into any employment or severance agreement with or,
except in accordance with the existing written policies of the Company, grant
any severance or termination pay to any officer, director or employee of the
Company or any its Subsidiaries;
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(e) neither the Company nor any of its Subsidiaries shall modify, amend or
terminate any Material Agreement or waive, release or assign any material
rights or claims, except in the ordinary course of business and consistent with
past practice;
(f) neither the Company nor any of its Subsidiaries shall permit any
material insurance policy naming it as a beneficiary or a loss payable payee to
be cancelled or terminated without notice to Parent, except in the ordinary
course of business and consistent with past practice;
(g) neither the Company nor any of its Subsidiaries shall: (i) incur or
assume any long-term debt, or except in the ordinary course of business, incur
or assume any short-term indebtedness in amounts not consistent with past
practice; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations
of any other person, except in the ordinary course of business and consistent
with past practice; (iii) make any loans, advances or capital contributions to,
or investments in, any other person (other than to wholly-owned Subsidiaries of
the Company or customary loans or advances to employees in accordance with past
practice); or (iv) enter into any material commitment or transaction (including,
but not limited to, any borrowing, capital expenditure or purchase, sale or
lease of assets);
(h) neither the Company nor any of its Subsidiaries shall change any of
the accounting principles used by it unless required by GAAP;
(i) neither the Company nor any of its Subsidiaries shall pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction of any such claims, liabilities or obligations, (i) in the
ordinary course of business and consistent with past practice, of claims,
liabilities or obligations reflected or reserved against in, or contemplated
by, the consolidated financial statements (or the notes thereto) of the Company
and its consolidated Subsidiaries, (ii) incurred in the ordinary course of
business and consistent with past practice or (iii) which are legally required
to be paid, discharged or satisfied (provided that if such claims, liabilities
or obligations referred to in this clause (iii) are legally required to be paid
and are also not otherwise payable in accordance with clauses (i) or (ii)
above, the Company will notify Parent in writing if such claims, liabilities or
obligations exceed, individually or in the aggregate, $50,000 in value,
reasonably in advance of their payment);
(j) neither the Company nor any of its Subsidiaries will adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other
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reorganization of the Company or any of its Subsidiaries (other than the
Merger);
(k) neither the Company nor any of its Subsidiaries will take, or agree to
commit to take, any action that would make any representation or warranty of
the Company contained herein inaccurate in any respect at, or as of any time
prior to, the Effective Time; or
(l) neither the Company nor any of its Subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing, or
to authorize, recommend, propose or announce an intention to do any of the
foregoing.
5.2 RIGHTS AGREEMENT. Except for the amendments contemplated by Section
1.2(d) hereof or amendments approved in writing by Parent or the Purchaser, the
Company will not, following the date hereof, amend the Rights Agreement in any
manner. In addition, the Company covenants and agrees that it will not redeem
the Rights unless such redemption is consented to in writing by Parent prior to
such redemption.
5.3 HSR ACT. The Company and Parent shall take all reasonable actions
necessary to file as soon as practicable notifications under the HSR Act and to
respond as promptly as practicable to any inquiries received from the Federal
Trade Commission and the Anti-trust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters.
5.4 ACCESS TO INFORMATION. Upon reasonable notice, the Company shall (and
shall cause each of its Subsidiaries to) afford to the officers, employees,
accountants, counsel, financing sources and other representatives of Parent,
access, during normal business hours during the period prior to the Appointment
Date, to all its properties, books, contracts, commitments and records and,
during such period, the Company shall (and shall cause each of its Subsidiaries
to) furnish promptly to the Parent (a) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws, and (b) all
other information concerning its business, properties and personnel as Parent
may reasonably request. After the Appointment Date, the Company shall provide
Parent and such persons as Parent shall designate with all such information, at
such time, as Parent shall request. Unless otherwise required by law and until
the Appointment Date, Parent will hold any such information which is nonpublic
in confidence in accordance with the provisions of the letter agreement between
the Company and the Parent (the "CONFIDENTIALITY AGREEMENT") dated as of March
3, 1996, as amended by letter dated as of March 7, 1996 and letter dated April
16, 1996.
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5.5 CONSENTS AND APPROVALS. Each of the Company, Parent and the Purchaser
will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to this Agreement and the
transactions contemplated hereby (which actions shall include, without
limitation, furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
will promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of their
Subsidiaries in connection with this Agreement and the transactions
contemplated hereby. Each of the Company, Parent and the Purchaser will, and
will cause its Subsidiaries to, take all reasonable actions necessary to obtain
(and will cooperate with each other in obtaining) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity or other
public or private third party required to be obtained or made by Parent, the
Purchaser, the Company or any of their Subsidiaries in connection with the
Merger or the taking of any action contemplated thereby or by this Agreement.
5.6 EMPLOYEE BENEFITS. Parent agrees that following the Effective Time the
employees of the Company and its Subsidiaries will continue to be provided with
employee benefit plans (other than stock option, employee stock ownership or
other plans involving the potential issuance of securities of the Company or of
Parent) which in the aggregate are substantially comparable to those currently
provided by the Company and its Subsidiaries to such employees. Parent will,
and will cause the Surviving Corporation to, honor employee (or former
employee) benefit obligations and contractual rights existing as of the
Effective Time and all employment, incentive and deferred compensation or
severance agreements, plans or policies adopted by the Board of Directors of
the Company (or any committee thereof) prior to the date hereof in accordance
with their terms other than stock option, employee stock ownership or other
plans involving the potential issuance of securities of the Company or of
Parent.
5.7 NO SOLICITATION. (a) Neither the Company nor any of its Subsidiaries,
shall, directly or indirectly, take (and the Company shall not authorize or
permit its or its subsidiaries, officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants or
other agents or affiliates, to so take) any action to (i) solicit or initiate
the submission of any Acquisition Proposal (as defined in Section 5.7(b)), (ii)
enter into an agreement for the sale or other disposition by the Company or any
of its subsidiaries of a material amount of assets or a sale of shares of
capital stock whether by merger or other business combination or tender or
exchange offer or (iii) participate in any way in discussions or negotiations
with, or, furnish any information to, any person (other than Parent or the
Purchaser) in connection with, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal (and
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the Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing); provided, however, that the Company may
participate in discussions or negotiations with or furnish information to any
third party which proposes a transaction which the Board of Directors of the
Company reasonably believes will result in an Acquisition Proposal, if the
Board of Directors reasonably and in good faith believes (and has received a
written opinion to that effect from independent counsel) that failing to take
such action would constitute a breach of its fiduciary duties and if such third
party, as a condition to receipt of such information, executes a
confidentiality agreement no less restrictive than the Confidentiality
Agreement. In addition, neither the Board of Directors of the Company nor any
Committee thereof shall withdraw or modify in a manner adverse to Parent the
approval and recommendation of the Offer and this Agreement or approve or
recommend any Acquisition Proposal, provided that the Company may recommend to
its shareholders an Acquisition Proposal and in connection therewith withdraw
or modify its approval or recommendation of the Offer or the Merger if (i) the
Board of Directors of the Company has reasonably and in good faith determined
that the Acquisition Proposal is a Superior Proposal (as defined in Section
5.7(b)) and the Board of Directors has received a written opinion from
independent legal counsel that failure to withdraw or modify its recommendation
of the Offer and the Merger and to terminate this Agreement pursuant to Section
7.1(e) would constitute a breach of the Board's fiduciary duties, (ii) all the
conditions to the Company's right to terminate this Agreement in accordance
with Section 7.1(e) have been satisfied (including the payment of the amount
required by Section 8.1), (iii) simultaneously with such withdrawal,
modification or recommendation, this Agreement is terminated in accordance with
Section 7.1(e) and (iv) the Acquisition Proposal does not provide for any
breakup fee or other inducement to the acquiror other than reimbursement of
documented out-of-pocket expenses incurred in connection with such Acquisition
Proposal. Any actions permitted under, and taken in compliance with, this
Section 5.7 shall not be deemed a breach of any other covenant or agreement of
such party contained in this Agreement.
(b) "ACQUISITION PROPOSAL" shall mean any proposed merger or other
business combination, sale or other disposition of any material amount of
assets, sale of shares of capital stock, tender offer or exchange offer or
similar transactions involving the Company or any of its Subsidiaries.
"SUPERIOR PROPOSAL" shall mean a bona fide proposal made by a third party to
acquire all of the outstanding shares of the Company pursuant to a tender offer
or a merger, or to purchase all or substantially all of the assets of the
Company on terms which a majority of the members of the Board of Directors of
the Company determines in its good faith reasonable judgment (based on the
advice of its financial and legal advisors) to be more favorable to the Company
and its shareholders than the transactions contemplated hereby, and which does
not provide for
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any breakup fee or other inducement to the acquiror other than reimbursement of
documented out-of-pocket expenses incurred in connection with the Superior
Proposal.
(c) In addition to the obligations of the Company set forth in Section
5.7(a), the Company shall promptly advise Parent of any request for information
or of any Acquisition Proposal, or any proposal with respect to any Acquisition
Proposal, the material terms and conditions of such request or takeover
proposal, and the identity of the person making any such takeover proposal or
inquiry. The Company will use its reasonable best efforts to keep Parent
informed of the status and details (including amendments or proposed
amendments) of any such request, takeover proposal or inquiry.
(d) Immediately following the purchase of Shares pursuant to the Offer,
the Company will request each person (other than Purchaser or Parent) which has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Company or any portion thereof (the "THIRD PARTY
CONFIDENTIALITY AGREEMENTS") to return all confidential information heretofore
furnished to such person by or on behalf of the Company.
5.8 BROKERS OR FINDERS. Each of Parent and the Company represents, as to
itself, its Subsidiaries and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement and each of Parent
and the Company agrees to indemnify and hold the other harmless from and
against any and all claims, liabilities or obligations with respect to any
other fees, commissions or expenses asserted by any person on the basis of any
act or statement alleged to have been made by such party or its affiliates.
5.9 ADDITIONAL AGREEMENTS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations, or
to remove any injunctions or other impediments or delays, legal or otherwise,
to consummate and make effective the Merger and the other transactions
contemplated by this Agreement (including the provision of such certificates
and opinions of counsel as are reasonable and customary under the
circumstances). In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of the Company and Parent shall use all
reasonable efforts to take, or cause to be taken, all such necessary actions.
5.10 PUBLICITY. The initial press release with respect to the execution of
this Agreement shall be a joint press release
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acceptable to Parent and the Company. Thereafter, so long as this Agreement is
in effect, neither the Company, Parent nor any of their respective affiliates
shall issue or cause the publication of any press release or other announcement
with respect to the Merger, this Agreement or the other transactions
contemplated hereby without the prior consultation of the other party, except
as may be required by law or by any listing agreement with a national
securities exchange.
5.11 NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt notice
to Parent and Parent shall give prompt notice to the Company, of (a) the
occurrence, or non-occurrence of any event the occurrence, or non-occurrence of
which would cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at or prior to the Effective
Time and (b) any material failure of the Company or Parent, as the case may be,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 5.11 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
5.12 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION. (a) For two (2)
years from the Effective Time, the Surviving Corporation shall either (i)
maintain in effect the Company's current directors' and officers' liability
insurance covering those persons who are currently covered on the date of this
Agreement by the Company's directors' and officers' liability insurance policy
(a copy of which has been previously delivered to Parent) (the "INDEMNIFIED
PARTIES"); provided, however, that in no event shall Parent be required to
expend in any one year an amount in excess of 100% of the annual premiums
currently paid by the Company for such insurance which the Company represents
to be $74,000 for the twelve month period ended November 1, 1996; and; provided
further, that if the annual premiums of such insurance coverage exceed such
amount, the Surviving Corporation shall be obligated to obtain a policy with
the greatest coverage available for a cost not exceeding such amount; provided
further, that the Surviving Corporation may substitute for such Company
policies, policies with at least the same coverage containing terms and
conditions which are no less advantageous and provided that said substitution
does not result in any gaps or lapses in coverage with respect to matters
occurring prior to the Effective Time or (ii) cause the Parent's directors' and
officers' liability insurance then in effect to cover those persons who are
covered on the date of this Agreement by the Company's directors' and officers'
liability insurance policy with respect to those matters covered by the
Company's directors' and officers' liability policy.
(b) From and after the date of purchase of Shares pursuant to the Offer,
Parent shall (or shall cause the Surviving Corporation to) indemnify all
Indemnified Parties to the fullest extent permitted by Delaware law and the
Company's Restated
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Certificate of Incorporation and By-laws with respect to all acts and omissions
arising out of such individuals' services as officers, directors, employees or
agents of the Company or any of its subsidiaries, occurring prior to the
Effective Time including, without limitation, the transactions contemplated by
this Agreement. Without limitation of the foregoing, in the event any such
Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter, including without
limitation, the transactions contemplated by this Agreement, occurring prior
to, and including, the Effective Time, Parent, from and after the date of
purchase of Shares pursuant to the Offer, will pay as incurred such Indemnified
Party's reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith. Subject to
Section 5.12(c), Parent shall pay all reasonable expenses, including attorneys'
fees, that may be incurred by any Indemnified Party in enforcing this Section
5.12 or any action involving an Indemnified Party resulting from the
transactions contemplated by this Agreement.
(c) Any Indemnified Party wishing to claim indemnification under Section
5.12(b), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Parent thereof. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) Parent or the Surviving Corporation shall have
the right, from and after the purchase of Shares pursuant to the Offer, to
assume the defense thereof and Parent shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the
defense thereof, (ii) the Indemnified Parties will cooperate in the defense of
any such matter and (iii) Parent shall not be liable for any settlement
effected without its prior written consent; and provided further that Parent
shall not have any obligation hereunder to any Indemnified Party when and if a
court of competent jurisdiction shall ultimately determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
6. CONDITIONS. The respective obligation of each party to effect the Merger
shall be subject to the satisfaction on or prior to the Closing Date of each of
the following conditions.
6.1 SHAREHOLDER APPROVAL. This Agreement shall have been approved and
adopted by the requisite vote of the holders of Company Common Stock, if
required by applicable law and the Restated Articles of Incorporation, in order
to consummate the Merger.
6.2 STATUTES; CONSENTS. No statute, rule, order, decree or regulation shall
have been enacted or promulgated by any foreign or domestic government or any
governmental agency or authority of
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competent jurisdiction which prohibits the consummation of the Offer, the
Merger or the Tender Agreements or has the effect of making illegal the
purchase of Company Common Stock by Parent or the Purchaser and all foreign or
domestic governmental consents, orders and approvals required for the
consummation of the Offer, the Merger and the transactions contemplated by this
Agreement shall have been obtained and shall be in effect at the Effective
Time.
6.3 INJUNCTIONS. No preliminary or permanent injunction or other order
shall have been issued by any court or by any governmental or regulatory
agency, body or authority which prohibits the consummation of the Offer or the
Merger and the transactions contemplated by this Agreement and which is in
effect at the Effective Time, provided, however, that, in the case of a decree,
injunction or other order, each of the parties shall have used reasonable
efforts to prevent the entry of any such injunction or other order and to
appeal as promptly as possible any decree, injunction or other order that may
be entered.
6.4 PURCHASE OF SHARES IN OFFER. Parent, the Purchaser or their affiliates
shall have purchased shares of Company Common Stock pursuant to the Offer.
7. TERMINATION.
7.1 TERMINATION. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned, at any time prior to the Effective Time,
whether before or after approval of the Merger by the Company's stockholders:
(a) subject to the provisions of Section 1.3 hereof, by mutual consent of
the Company, on the one hand, and of Parent and the Purchaser, on the other
hand;
(b) by either Parent, on the one hand, or the Company, on the other hand,
if any Governmental Entity shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the acceptance for payment of, or payment for, Shares pursuant to
the Offer or the Merger and such order, decree or ruling or other action shall
have become final and nonappealable;
(c) by Parent, on the one hand, or the Company, on the other hand, if the
Effective Time shall not have occurred on or before June 15, 1996 unless the
Effective Time shall not have occurred because of a material breach of any
representation, warranty, obligation, covenant, agreement or condition set
forth in this Agreement on the part of the party seeking to terminate this
Agreement;
(d) by Parent, on the one hand, or the Company, on the other hand, if the
Offer is terminated or expires in accordance
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with its terms without the Purchaser having purchased any Common Stock
thereunder due to a failure of any of the conditions set forth in Annex A
hereto to be satisfied, unless such termination or expiration has been caused
by or results from the failure of the party seeking to terminate this Agreement
to perform in any material respect any of its respective covenants or
agreements contained in this Agreement;
(e) by either Parent, on the one hand, or the Company, on the other hand,
if the Board of Directors of the Company reasonably and in good faith
determines that an Acquisition Proposal is a Superior Proposal and the Board
believes (and has received a written opinion from independent legal counsel)
that a failure to terminate this Agreement would constitute a breach of its
fiduciary duties; provided, however, the Company may not terminate this
Agreement pursuant to this Section 7.1(e) unless (i) the Company has notified
Parent and the Purchaser in writing promptly after receipt of any Acquisition
Proposal and following such notification by the Company, the Company has fully
cooperated with Parent, including, without limitation, informing Parent of the
terms and conditions of such Acquisition Proposal (and any modification
thereto), and the identity of the Person making such Proposal, with the intent
of enabling the parties hereto to agree to a modification of the terms and
conditions of this Agreement so that the transactions contemplated hereby may
be effected, and (ii) prior to such termination, Parent has received the amount
set forth in Section 8.1(b) by wire transfer in same day funds; and
(f) prior to the consummation of the Offer, by the Company, if (i) any of
the representations and warranties of Parent or the Purchaser contained in
this Agreement were untrue or incorrect in any material respect when made or
have since become, and at the time of termination remain, incorrect in any
material respect, or (ii) Parent or the Purchaser shall have breached or failed
to comply in any material respect with any of their respective obligations
under this Agreement, including, without limitation, their obligation to
commence the Offer within the time period required by Section 1.1(a) of this
Agreement.
7.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 7.1, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become null
and void, and there shall be no liability on the part of the Parent or the
Company except (a) for fraud or for material breach of this Agreement and (b)
as set forth in this Section 7.2 and Section 8.1.
8. MISCELLANEOUS.
8.1 FEES AND EXPENSES. (a) Except as provided in Section 8.1(b) below, all
costs and expenses incurred in connection with this Agreement and the
consummation of the transactions
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contemplated hereby shall be paid by the party incurring such costs and
expenses.
(b) If this Agreement is terminated by Parent in accordance with Section
7.1(d) because of the occurrence of any of the events set forth in paragraphs
(iv)(e) or (iv)(h) of Annex A or if this Agreement is terminated by the Company
in accordance with Section 7.1(e), then the Company shall, within two business
days of such termination (except as required to be earlier paid in accordance
with Section 7.1(e)), pay to Parent in same day funds the sum of $3,366,575.
8.2 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement
may be amended, modified and supplemented in any and all respects, whether
before or after any vote of the shareholders of the Company contemplated
hereby, by written agreement of the parties hereto, by action taken by their
respective Boards of Directors (which in the case of the Company shall include
approvals as contemplated in Section 1.3(b)), at any time prior to the Closing
Date with respect to any of the terms contained herein; provided, however, that
after the approval of this Agreement by the shareholders of the Company, no
such amendment, modification or supplement shall reduce or change the Merger
Consideration.
8.3 REPRESENTATIONS AND WARRANTIES. The respective representations and
warranties of the Company, on the one hand, and Parent and the Purchaser, on
the other hand, contained herein or in any certificates or other documents
delivered prior to or at the Closing shall not be deemed waived or otherwise
affected by any investigation made by any party. Each and every such
representation and warranty shall expire with, and be terminated and
extinguished by, the Closing and thereafter none of the Company, Parent or the
Purchaser shall be under any liability whatsoever with respect to any such
representation or warranty. This Section 8.3 shall have no effect upon any
other obligation of the parties hereto, whether to be performed before or after
the Effective Time.
8.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or sent by an overnight courier service, such as Federal Express, to
the parties at the following addresses(or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
The Reynolds and Reynolds Company
115 South Ludlow Street
Dayton, Ohio 45402
ATTN: Adam M. Lutynski
Telecopy No. (513) 449-4123
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<PAGE> 48
with a copy to:
Coolidge Wall Womsley & Lombard
33 W. First Street, Suite 600
Dayton, Ohio 45402
ATTN: Jeffry A. Melnick
Telecopy No. (513) 449-5788
and
(b) if to the Company, to:
Duplex Products Inc.
1947 Bethany Road
Sycamore, Illinois 60178
ATTN: Mark A. Robinson, Esq.
Telecopy No. (815) 895-1091
with a copy to:
Hinshaw & Culbertson
220 East State Street
P.O. Box 1389
Rockford, Illinois 61105-1389
ATTN: Charles F. Thomas, Esq.
Telecopy No. (815) 965-9529
8.5 INTERPRETATION. When a reference is made in this Agreement to Sections,
such reference shall be to a Section of this Agreement unless otherwise
indicated. Whenever the words "include", "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The phrases "the date of this
Agreement", "the date hereof", and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to April 20, 1996. As used in
this Agreement, the term "affiliate(s)" shall have the meaning set forth in
Rule 12b-2 of the Exchange Act. References to a party's "knowledge" or the
"best knowledge" of a party or words of similar import shall mean to the actual
knowledge of the officers and directors of the applicable party after
reasonable inquiry into the subject matter. The term "person" shall mean and
include an individual, a partnership (limited, limited liability or general), a
limited liability company, a joint venture, a corporation, a trust, an
unincorporated organization, a group and a government or other department or
agency thereof.
8.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the
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<PAGE> 49
same agreement and shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
8.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; RIGHTS OF OWNERSHIP.
This Agreement, the Disclosure Letter, and the Confidentiality Agreement
(including the documents and the instruments referred to herein and therein):
(a) constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Sections 5.6 and 5.12 are
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
8.8 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated.
8.9 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the state of Delaware without giving effect to the
principles of conflicts of law thereof.
8.10 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the
other parties, except that the Purchaser may assign, in its sole discretion,
any or all of its rights, interest and obligations hereunder to Parent or to
any direct or indirect wholly owned Subsidiary of Parent. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
8.11 HEADINGS. The descriptive headings of the Sections of this Agreement are
inserted for convenience only, do not constitute a part of this Agreement and
shall not affect in any way the meaning or interpretation of this Agreement.
8.12 EXTENSION; WAIVER. Subject to the provisions of Sections 1.1 or 1.3
hereof, at any time prior to the Effective Time, the parties hereto, by action
taken by or on behalf of the respective Boards of Directors of the Company,
Parent or the Purchaser, may (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein by any
other applicable party or in any document, certificate or writing delivered
pursuant hereto by any other applicable party or
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<PAGE> 50
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of any party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf
of such party.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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<PAGE> 51
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
as of the 20th day of April, 1996.
THE REYNOLDS AND REYNOLDS COMPANY
ATTEST:
By_______________________ By______________________________
Name:____________________ Name:___________________________
Title:___________________ Title:__________________________
DELAWARE ACQUISITION CO.
By_______________________ By______________________________
Name:____________________ Name:___________________________
Title:___________________ Title:__________________________
DUPLEX PRODUCTS INC.
By_______________________ By______________________________
Name:____________________ Name:___________________________
Title:___________________ Title:__________________________
46
<PAGE> 52
ANNEX A
CONDITIONS TO THE TENDER OFFER
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate the Offer as to any Shares not then paid for, if:
(i) any applicable waiting period under the HSR Act has not expired or
terminated;
(ii) the Minimum Condition has not been satisfied;
(iii) the Rights Agreement shall not have been amended in a manner which
renders the Rights inoperative with respect to any acquisition of Shares by
Parent or the Purchaser, or
(iv) at any time on or after April 20, 1996 and before the time of payment
for any such Shares, any of the following events shall occur or shall be
determined by the Purchaser to have occurred:
(a) there shall be threatened, instituted or pending any action or
proceeding by any Governmental Entity (i) challenging or seeking to, or which
could reasonably be expected to make illegal, impede, delay or otherwise
directly or indirectly restrain, prohibit or make materially more costly the
Offer or the Merger or seeking to obtain material damages, (ii) seeking to
prohibit or materially limit the ownership or operation by Parent or Purchaser
of all or any material portion of the business or assets of the Company or any
of its subsidiaries taken as a whole or to compel Parent or Purchaser to
dispose of or hold separately all or any material portion of the business or
assets of Parent or Purchaser or the Company or any of its subsidiaries taken
as a whole, or seeking to impose any material limitation on the ability of
Parent or Purchaser to conduct its business or own such assets, (iii) seeking
to impose material limitations on the ability of Parent or Purchaser
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or owned by Purchaser
or Parent on all matters properly presented to the Company's stockholders, (iv)
seeking to require divestiture by Parent or Purchaser of any Shares, or (v)
otherwise materially adversely affecting the condition of the Company and its
subsidiaries taken as a whole;
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<PAGE> 53
(b) any court shall have entered an order which is in effect and which (i)
makes illegal, impedes, delays or otherwise directly or indirectly restrains,
prohibits or makes materially more costly the Offer or the Merger, (ii)
prohibits or materially limits the ownership or operation by Parent or
Purchaser of all or any material portion of the business or assets of the
Company or any of its subsidiaries taken as a whole or compels Parent or
Purchaser to dispose of or hold separately all or any material portion of the
business or assets of Parent or Purchaser or the Company or any of its
subsidiaries taken as a whole, or imposes any material limitation on the
ability of Parent or Purchaser to conduct its business or own such assets,
(iii) imposes material limitations on the ability of Parent or Purchaser
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or owned by Purchaser
or Parent on all matters properly presented to the Company's stockholders, (iv)
requires divestiture by Parent or Purchaser of any Shares, or (v) otherwise
materially adversely affects the Company and its Subsidiaries taken as a whole;
provided, however, that in the case of a preliminary injunction to the effect
described in this paragraph (b), the provisions of this paragraph (b) shall not
be deemed to have been triggered until the earlier of (X) the date on which
such injunction becomes final or (Y) the Company ceases its efforts to have
such preliminary injunction dissolved;
(c) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted, enforced,
promulgated, amended, issued or deemed applicable to (i) Parent, Purchaser, the
Company or any subsidiary of the Company or (ii) the Offer or the Merger, by
any legislative body, court, government or governmental, administrative or
regulatory authority or agency, domestic or foreign, other than the routine
application of the waiting period provisions of the HSR Act to the Offer or to
the Merger, which could reasonably be expected to directly or indirectly result
in any of the consequences referred to in clauses (i) through (v) of paragraph
(a) above;
(d) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the American Stock Exchange for a
period in excess of three hours (excluding suspensions or limitations resulting
solely from physical damage or interference with such exchanges not related to
market conditions), (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether or not
mandatory), (iii) a commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States, (iv) any limitation (whether or not mandatory) by any foreign or United
States governmental authority on the extension of credit by banks or other
financial institutions, (v) any decline in either the Dow Jones Industrial
Average or the Standard & Poor's Index of 500 Industrial Companies by an amount
in excess of 20% measured from the close of business on April 19, 1996 or (vi)
in the case of any of the
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<PAGE> 54
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(e) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct in any material respect as of
the date of consummation of the Offer as though made on or as of such date,
except (i) for changes specifically permitted by the Merger Agreement and (ii)
those representations and warranties that address matters only as of a
particular date are true and correct as of such date, or the Company shall have
breached or failed in any material respect to perform or comply with any
material obligation, agreement or covenant required by the Merger Agreement to
be performed or complied with by it;
(f) the Merger Agreement shall have been terminated in accordance with its
terms;
(g) (i) it shall have been publicly disclosed or Parent or the Purchaser
shall have otherwise learned that any person, entity or "group" (as defined in
Section 13(d)(3)of the Exchange Act), other than Parent or its affiliates or
any group of which any of them is a member, shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of more than 19.9% of any class or series of capital stock of the Company
(including the Shares), through the acquisition of stock, the formation of a
group or otherwise, or shall have been granted an option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of more than 19.9% of
any class or series of capital stock of the Company (including the Shares); or
(ii) any person or group shall have entered into a definitive agreement or
agreement in principle with the Company with respect to a merger, consolidation
or other business combination with the Company;
(h) the Company's Board of Directors shall have withdrawn, or modified or
changed in a manner adverse to Parent or the Purchaser (including by amendment
of the Schedule 14D-9) its recommendation of the Offer, the Merger Agreement,
or the Merger, or recommended another proposal (including a Superior Proposal)
or offer, or shall have resolved to do any of the foregoing;
(i) any change shall have occurred or been threatened (or any condition,
event or development shall have occurred or been threatened involving a
prospective change), that is reasonably likely to have a material adverse
effect on the business, properties, assets, liabilities, operations, results of
operations, conditions (financial or otherwise) or prospects of the Company and
its Subsidiaries taken as a whole; or
(j) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be obtained or made by the
Company, Parent or Purchaser with or from any Governmental Entity in connection
with the execution, delivery and performance of the Merger Agreement, the Offer
and the
A-3
<PAGE> 55
consummation of the transactions contemplated by the Merger Agreement shall not
have been made or obtained and such failure could reasonably be expected to
have a material adverse effect on the Company and any of its Subsidiaries,
taken as a whole, or could be reasonably likely to prevent or materially delay
consummation of the transactions contemplated by the Merger Agreement.
The foregoing conditions are for the sole benefit of the Purchaser and Parent
and may be waived by Parent or the Purchaser, in whole or in part at any time
and from time to time in the sole discretion of Parent or the Purchaser;
provided that the Minimum Condition may not be waived without the written
consent of the Company. The failure by Parent or the Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
A-4
<PAGE> 1
EXHIBIT (c)(5)
CONSULTING AND NON-COMPETITION AGREEMENT
----------------------------------------
The parties agree as follows:
RECITALS
--------
Consultant is currently employed by Duplex in the position of President.
Consultant and Duplex previously entered into the Severance Agreement which,
among other things, provided for certain compensation and severance benefits to
be paid to Consultant following a "change in control" of Duplex.
Reynolds and Duplex have entered into the Merger Agreement pursuant to which
Reynolds will commence the Offer to purchase all of the Shares.
It is the intention of Consultant and Reynolds that, on the Effective Date,
this Consulting Agreement shall become effective and supersede the Severance
Agreement and any other oral or written agreement, policy, plan, commitment or
other arrangement between Consultant and Duplex relating to employment or
severance.
Capitalized terms used in this Agreement have the meanings set forth in
Schedule 1.
1. RESIGNATION, WAIVER AND TERMINATION. Effective as of the Effective Date:
(a) Consultant resigns from any and all positions held with Duplex; (b)
Consultant releases Duplex from any and all claims, and waives any and all
rights, arising out of Consultant's employment and the termination of
Consultant's employment with Duplex; and (c) Consultant agrees to terminate and
render null and void the Severance Agreement. Nothing in this Agreement shall
affect the vesting of any stock options held by Consultant.
2. ENGAGEMENT. Reynolds hereby retains Consultant for the Term to render
consulting and advisory services to Reynolds with respect to Duplex as Reynolds
may reasonably request from time to time.
3. CONDITION PRECEDENT. This Agreement is conditioned upon the occurrence of
the Effective Date and shall become effective simultaneously with the closing
contemplated by the definition of "Effective Date".
4. DUTIES. During the Term, Consultant shall provide information, advice and
consultation with respect to Duplex and its business and such other services as
reasonably requested by Reynolds and upon reasonable advance notice by
Reynolds. Consultant shall provide such services at such locations as
Reynolds may reasonably request (Consultant acknowledges that Consultant will
not be provided any office space by Reynolds or Duplex).
5. COMPENSATION. As full and complete compensation for all services rendered
under this Agreement, Consultant shall receive the consideration described in
this Section 5.
5.1 Unused Vacation. Consultant shall be paid an amount equal to
Consultant's accrued but unused vacation as of the Effective Date (payable in a
lump sum on the Effective Date simultaneous with the closing contemplated by
the definition of that term).
5.2 Fixed Consideration. Consultant shall be paid the sum of $637,000
payable as described in this Section 5.2. The First Installment shall be paid
on the Effective Date simultaneous with the closing contemplated by the
definition of that term. Subject to the provisions of Section 10.2, the Second
Installment shall be payable on the two (2)-month anniversary of the Effective
Date.
5.3 Life Insurance. Consultant currently enjoys group term life insurance
provided by the Company in the amount of $750,000. Consultant shall procure
replacement term insurance in the same or a lesser amount and the Company shall
reimburse Consultant for the premiums actually paid by Consultant for such
replacement insurance for the one (1) year period ending on the first
anniversary of the Effective Date; provided, however, that the maximum amount
payable by the Company under this Section shall be 120% of the premium cost to
Duplex of the current term life insurance.
<PAGE> 2
Consultant is responsible for the payment of all applicable federal, state and
local taxes arising out of the compensation provided for in this Agreement, and
Consultant shall indemnify and hold harmless Reynolds, its successors and
assigns, from and against any and all taxes and any associated damage, loss,
cost or expense (including reasonable attorney's fees) arising out of, or
related to, such taxes, except for any taxes and related costs that may result
from the negligence or misconduct of Reynolds.
6. BUSINESS EXPENSES. During the Term, Consultant will be reimbursed monthly
for reasonable business expenses incurred for the benefit of Reynolds in the
performance of this Agreement. Consultant will account to Reynolds with enough
detail to entitle Reynolds to a federal income tax deduction for each of those
expenses, if deductible.
7. COVENANT NOT TO COMPETE; AGREEMENT NOT TO DISCLOSE.
7.1 COVENANT NOT TO COMPETE. Consultant covenants and agrees that
Consultant will not Directly or Indirectly Compete with Reynolds.
7.2 AGREEMENT NOT TO DISCLOSE. Consultant agrees to hold in strictest
confidence and not to use or disclose or make accessible to any person or
entity, without the prior written consent of an officer of Reynolds, any Duplex
Intellectual Property. Additionally, Consultant agrees not to make any
disparaging remarks concerning Reynolds, Duplex, or the transactions
contemplated by the Merger Agreement or to make any public statements
concerning the transactions contemplated by the Merger Agreement without
Reynolds prior written consent.
7.3 SEVERABILITY. If any court of competent jurisdiction determines that
any provision of this Section 7 is invalid or unenforceable, that determination
will not affect the other provisions of this Agreement. The invalid or
unenforceable provision will be modified to the minimum degree necessary to
make the affected provision valid and enforceable, and this Agreement will then
be enforced to the fullest extent possible.
7.4 ACKNOWLEDGEMENT. Consultant acknowledges that a breach of any
provision of this Section 7 cannot be compensated adequately by damages in an
action at law, and that a breach would cause Reynolds irreparable harm.
Consultant agrees that Reynolds will be entitled to temporary and permanent
injunctive and other equitable relief, provided that those equitable remedies
will be in addition to and not instead of other remedies available at law or in
equity to Reynolds as a result of a breach of this Section 7. Consultant
agrees that the duration, scope and subject matter of this Section are
reasonable in light of all of the facts and circumstances. To the extent
permitted by law, Consultant waives any defenses or
2
<PAGE> 3
objections related to the reasonableness of the duration, geographical scope
and subject matter of this Section 7. In no event shall the total of any and
all monetary damages recoverable from Consultant pursuant to this Agreement or
any breach thereof exceed the total amount paid to Consultant hereunder.
8. OWNERSHIP. Consultant understands that the Duplex Intellectual Property
is owned solely by Duplex (or third parties), and that Consultant may use
Duplex Intellectual Property only for the benefit of Reynolds or Duplex as
directed by an officer of Reynolds.
9. RELATIONSHIP. Consultant acknowledges that Consultant shall not be deemed
to be an employee of Reynolds. Consultant shall at all times be an independent
contractor and not a partner or joint venturer of Reynolds.
10. TERMINATION AND CONSEQUENCES .
10.1 CAUSES OF TERMINATION. The Term may be terminated by the parties as
follows:
(a) by Consultant upon five (5) days' prior written notice;
(b) by Consultant immediately upon written notice if Reynolds commits
a material breach of this Agreement and the breach is not cured within ten (10)
days after written notice from Consultant;
(c) upon the death or disability of Consultant;
(d) by Reynolds upon five (5) days' prior written notice; or
(e) by Reynolds immediately upon written notice if (i) Consultant
commits a material breach of this Agreement and that breach is not cured within
ten (10) days after written notice from Reynolds, or (ii) if Consultant commits
any act or omission involving willful misconduct, gross negligence, fraud,
material misrepresentation, material dishonesty, or deliberate or attempted
injury to Reynolds.
10.2 CONSEQUENCES OF TERMINATION. Upon termination under Section 10.1,
the Term will cease, and the parties' respective obligations under this
Agreement will cease, except: (a) if termination arises out of Sections
10.1(b), (c) or (d), Reynolds shall pay the Second Installment to Consultant on
the effective date of termination; (b) Reynolds will continue to be subject to
the provisions of Sections 6, 10, 11, 12 and 13; and (c) Consultant will
continue to be subject to the provisions of Sections 1, 7, 10, 12 and 13.
Payment by Reynolds of the amount due under clause (a) of the preceding
sentence shall constitute the sole and exclusive remedy of Consultant under
this Agreement or otherwise arising out of the engagement or termination of
Consultant (and will be subject
3
<PAGE> 4
to the execution by Consultant of a reasonably satisfactory release of claims
related thereto).
11. PROVISION OF OUTPLACEMENT SERVICES.
11.1 GENERALLY. For a period of twelve (12) months beginning on the
Effective Date, Reynolds shall provide Consultant with outplacement services.
Such services shall be provided by a mutually agreed upon firm. In all other
respects, the terms and conditions of the outplacement services, including
arrangements and amounts expended shall be determined by Reynolds (the parties
agree that the amount expended shall be fifteen percent (15%) of Consultant's
salary in effect prior to this Agreement). Reynolds shall reimburse Consultant
for job search related long distance telephone calls during the outplacement
services.
11.2 PAYMENT OPTION. Consultant shall have the option (which may be
exercised only by written notice to Reynolds prior to the Effective Date) to
receive a cash payment on the Effective Date equal to $37,500 in lieu of the
outplacement services and telephone expense reimbursement contemplated by
Section 11.1. If such option is exercised and payment made, Reynolds shall be
released from any further obligations under this Section 11.
12. GOVERNING LAW. This Agreement will be governed by the laws of the state
of Illinois with respect to contracts entered into and performed entirely
within that state.
13. MISCELLANEOUS.
13.1 NOTICES. All notices and other communications under this Agreement
will be in writing and will be deemed given and received: (a) on the date of
delivery when delivered by hand or when transmitted by a confirmed simultaneous
telecopy, (b) on the following business day when sent by receipted overnight
courier, or (c) three (3) business days after deposit in the United States Mail
when mailed by registered or certified mail, return receipt requested, first
class postage prepaid, if sent to the applicable addresses or telecopy numbers
listed in Schedule 2. Either party may change the address to which notices are
to be sent to it by giving written notice of that change of address to the
other party in the manner provided above for giving notices.
13.2 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any right of
the parties hereunder may be assigned or delegated, whether voluntarily or
involuntarily, without the prior written consent of the other party provided,
however, that no consent will be required in the event of the sale of
substantially all the assets of or a merger involving Reynolds or the
assignment by Reynolds of this Agreement to any parent, subsidiary or other
entity of which Reynolds (or Reynolds' parent) holds fifty percent (50%) or
more of the voting power. This Agreement will be binding on the parties to
this Agreement and their respective permitted successors, assigns and
transferees.
13.3 HEADINGS; SCHEDULES. The section, subsection and other headings in
this Agreement are inserted only for reference and are not a part of this
Agreement. The Schedules attached to this Agreement are a material part of
this Agreement and are incorporated into this Agreement by this reference.
13.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which will be considered one agreement
4
<PAGE> 5
and effective when one counterpart has been signed by each party and delivered
to the other party.
13.5 INTEGRATION OF AGREEMENT. This Agreement supersedes all prior
agreements, oral and written, between the parties or between Consultant and
Duplex about the subject matter of this Agreement (any other oral or written
agreement, policy, plan, commitment or other arrangement between Consultant and
Duplex relating to employment or severance). Neither this Agreement, nor any
provision of this Agreement, may be changed, waived, discharged, supplemented
or terminated orally, but only by a writing signed by the party against which
the enforcement is sought. In the case of Reynolds, the writing must be signed
by an officer of Reynolds.
13.6 WAIVER. Failure of either party to exercise its rights under the
terms of this Agreement on any one occasion will not be construed as a waiver
of any requirement of this Agreement or a waiver of that party's right to take
advantage of any subsequent or continued breach by the other party of any
agreement or covenant contained in this Agreement. Except as expressly
provided in this Agreement, all remedies provided in this Agreement will be in
addition to and not in substitution for any remedies otherwise available to the
aggrieved party.
13.7 CERTAIN TERMS. When used in this Agreement, (a) "including" means
"including, without limitation," whether or not that language is specifically
set forth, and will not be deemed to limit the range of possibilities to those
items specifically enumerated, and (b) "person" will be broadly interpreted to
include, without limitation, any corporation, partnership, association, limited
liability company, other association, trust or individual.
13.8 ARBITRATION. Any dispute or controversy arising out of this Agreement
or its performance shall be resolved by binding arbitration before a panel of
three(3) arbitrators in Dayton, Ohio pursuant to the rules of the American
Arbitration Association. The prevailing party's costs and expenses (including
reasonable attorney's fees) shall be borne by the other party.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
5
<PAGE> 6
The parties have signed this Agreement as of the 20th day of April, 1996.
REYNOLDS: CONSULTANT:
THE REYNOLDS AND REYNOLDS
COMPANY
By:______________________________ ______________________________
Print Name:______________________ Print Name:___________________
Print Title:_____________________
6
<PAGE> 7
SCHEDULE 1
Definitions
-----------
Capitalized terms shall have the meanings given them in the Merger
Agreement, or, if not defined in the Merger Agreement, the meanings set forth
below.
1. "MERGER AGREEMENT" means the Agreement and Plan of Merger dated April 20,
1996 among Reynolds, Delaware Acquisition Co. and Duplex.
2. "BUSINESS" means the manufacture, sale, distribution or marketing of
business forms and/or related services.
3. "COMPETE WITH REYNOLDS" means:
3.1 during the Term or the Post Termination Period, calling on,
soliciting, taking away, or accepting as a client or customer any person that
is presently or becomes a client or customer of Duplex during the Term or the
one-year period prior to the Effective Date;
3.2 during the two (2) month period immediately following the Effective
Date, entering into any business substantially similar to the Business, either
Directly or Indirectly (Reynolds acknowledges that Consultant shall be
permitted to interview for another position in the Business but that the
beginning date of employment or other relationship shall not be during the
Term); or
3.3 during the Term or the Post Termination Period, hiring or attempting
to hire, for Consultant's or another person's behalf, any employee who is then
an employee of Duplex or Reynolds.
4. "DIRECTLY OR INDIRECTLY" means:
4.1 acting as an agent, representative, consultant, officer, director,
independent contractor or employee of any person, or
4.2 participating in any such person as an owner, partner, limited
partner, joint venturer, creditor, stockholder, or member.
Direct or Indirect competition will not include the ownership of voting
securities or other equity interests representing less than 5% of the voting
power of an entity whose securities are traded on a national securities
exchange or in the over-the-counter market.
5. "EFFECTIVE DATE" means the date of closing of the purchase by Reynolds of
common stock of Duplex pursuant to the Offer.
6. "DUPLEX" means Duplex Products Inc.
7. "CONSULTANT" means Andrew A. Campbell.
8. "REYNOLDS" means The Reynolds and Reynolds Company.
<PAGE> 8
9. "DUPLEX INTELLECTUAL PROPERTY" means all confidential and/or proprietary
information of Duplex, including customer information, trade secrets and
know-how.
10. "SEVERANCE AGREEMENT" means a Severance Agreement dated as of November
14, 1995, an Agreement dated as of January 26, 1996 and a letter agreement
dated as of March 13, 1996 between Consultant and Duplex.
11. "FIRST INSTALLMENT" means a payment in the amount of $500,000.
12. "SECOND INSTALLMENT" means a payment in the amount of $137,000.
13. "POST TERMINATION PERIOD" means the period commencing upon the
termination of the Term and ending on the six (6)-month anniversary of the
Effective Date.
14. "TERM" means the two (2) month period commencing on the Effective Date.
2
<PAGE> 9
SCHEDULE 2
1. Notice Address and Telecopy Numbers.
1.1 If to Reynolds:
The Reynolds and Reynolds Company
115 South Ludlow Street
Dayton, Ohio 45402
Attn: Adam M. Lutynski
Telecopy No. (513) 449-4123
1.2 If to Consultant:
Andrew A. Campbell
14 Polo Drive
South Barrington, Illinois 60010
Telecopy number: 847-842-0544
<PAGE> 1
EXHIBIT (c)(6)
CONSULTING AND NON-COMPETITION AGREEMENT
----------------------------------------
The parties agree as follows:
RECITALS
--------
Consultant is currently employed by Duplex in the position of Vice President
of Finance and Chief Financial Officer.
Consultant and Duplex previously entered into the Severance Agreement.
Reynolds and Duplex have entered into the Merger Agreement pursuant to which
Reynolds will commence the Offer to purchase all of the Shares which, among
other things, provided for certain compensation and severance benefits to be
paid to Consultant following a "change in control" of Duplex.
It is the intention of Consultant and Reynolds, that on the Effective Date
this Consulting Agreement shall become effective and supersede the Severance
Agreement and any other oral or written agreement, policy, plan, commitment or
other arrangement between Consultant and Duplex relating to employment or
severance.
Capitalized terms used in this Agreement have the meanings set forth in
Schedule 1.
1. RESIGNATION, WAIVER AND TERMINATION. Effective as of the Effective Date:
(a) Consultant resigns from any and all positions held with Duplex; (b)
Consultant releases Duplex from any and all claims, and waives any and all
rights, arising out of Consultant's employment and the termination of
Consultant's employment with Duplex; and (c) Consultant agrees to terminate
and render null and void the Severance Agreement. Nothing in this Agreement
shall affect the vesting of any stock options held by Consultant.
2. ENGAGEMENT. Reynolds hereby retains Consultant for the Term to render
consulting and advisory services to Reynolds with respect to Duplex as Reynolds
may request from time to time.
3. CONDITION PRECEDENT. This Agreement is conditioned upon the occurrence of
the Effective Date and shall become effective simultaneously with the closing
contemplated by the definition of "Effective Date".
4. DUTIES. During the Term, Consultant shall provide information, advice and
consultation with respect to Duplex and its business and such other services
as reasonably requested by Reynolds and upon reasonable advance notice by
Reynolds. Consultant shall provide such services at such locations as
Reynolds may reasonably request. (Consultant acknowledges that Consultant will
not be provided any office space by Reynolds or Duplex).
5. COMPENSATION. As full and complete compensation for all services rendered
under this Agreement, Consultant shall receive the consideration described in
this Section 5.
5.1 UNUSED VACATION. Consultant shall be paid an amount equal to
Consultant's accrued but unused vacation as of the Effective Date (payable in a
lump sum on the Effective Date simultaneous with the closing contemplated by
the definition of that term).
5.2 FIXED CONSIDERATION. Consultant shall be paid the sum of $365,500
payable as described in this Section 5.2. The First Installment shall be paid
on the Effective Date simultaneous with the clsoing contemplated by the
definition of that term. Subject to the provisions of Section 10.2, the Second
Installment shall be payable on
<PAGE> 2
the three (3)-month anniversary of the Effective Date. Consultant is
responsible for the payment of all applicable federal, state and local taxes
arising out of the compensation provided for in this Agreement, and Consultant
shall indemnify and hold harmless Reynolds, its successors and assigns, from and
against any and all taxes and any associated damage, loss, cost or expense
(including reasonable attorney's fees) arising out of, or related to, such
taxes, except for any taxes that may result from the negligence or misconduct
of Reynolds.
6. BUSINESS EXPENSES; COBRA REIMBURSEMENT.
6.1 BUSINESS EXPENSES. During the Term, Consultant will be reimbursed
monthly for reasonable business expenses incurred for the benefit of Reynolds
in the performance of this Agreement. Consultant will account to Reynolds with
enough detail to entitle Reynolds to a federal income tax deduction for each of
those expenses, if deductible.
6.2 COBRA REIMBURSEMENT. To the extent permitted under the applicable
plans and applicable law, Consultant will continue to participate in the group
life, health and dental insurance plans maintained by Duplex, at the cost of
Duplex (Consultant shall be responsible for all deductibles, co-payments and the
like), for a period of one (1) year after the Effective Date, and, thereafter,
Consultant may elect continuation coverage under the applicable plans pursuant
to COBRA at Consultant's cost and to the extent permitted under applicable law.
However, if for any reason Consultant is not permitted to so participate in
those plans for the one year period following the Effective Date, then: (a)
non-COBRA plans - Reynolds will pay to Consultant on a monthly basis an amount
equal to the amount of the premiums that would have been paid by Duplex on
Consultant's behalf had Consultant participated in such plans during such
period; and (b) COBRA plans - Consultant will elect continuation coverage under
COBRA and Reynolds agrees that for the shorter of (i) one (1) year from the
Effective Date, or (ii) the period that Consultant is entitled to continuation
coverage under COBRA, Reynolds will reimburse Consultant for the premiums paid
by Consultant to maintain such continuation coverage.
7. COVENANT NOT TO COMPETE; AGREEMENT NOT TO DISCLOSE.
7.1 COVENANT NOT TO COMPETE. Consultant covenants and agrees that for
the six (6)-month period following the Effective Date, Consultant will not
Directly or Indirectly Compete with Reynolds.
7.2 AGREEMENT NOT TO DISCLOSE. Consultant agrees to hold in strictest
confidence and not to use or disclose or make accessible to any person or
entity, without the prior written consent of an officer of Reynolds, any
Reynolds Intellectual Property. Additionally, Consultant agrees not to make any
disparaging remarks concerning Reynolds, Duplex, or the transactions
contemplated by the Merger Agreement or to make any public statements
concerning the transactions contemplated by the Merger Agreement without
Reynolds prior written consent.
7.3 SEVERABILITY. If any court of competent jurisdiction determines that
any provision of this Section 7 is invalid or unenforceable, that determination
will not affect the other provisions of this Agreement. The invalid or
unenforceable provision will be modified to the minimum degree necessary to
make the affected provision valid and enforceable, and this Agreement will then
be enforced to the fullest extent possible.
7.4 ACKNOWLEDGEMENT. Consultant acknowledges that a breach of any
provision of this Section 7 cannot be compensated adequately by damages in an
action at law, and that a breach would cause Reynolds irreparable harm.
Consultant agrees that Reynolds will be
2
<PAGE> 3
entitled to temporary and permanent injunctive and other equitable relief,
provided that those equitable remedies will be in addition to and not instead
of other remedies available at law or in equity to Reynolds as a result of a
breach of this Section 7. Consultant agrees that the duration, scope and
subject matter of this Section are reasonable in light of all of the facts and
circumstances. To the extent permitted by law, Consultant waives any defenses
or objections related to the reasonableness of the duration, geographical scope
and subject matter of this Section 7. In no event shall the total of any and
all monetary damages recoverable from Consultant pursuant to this Agreement or
any breach thereof exceed the total amount paid to Consultant hereunder.
8. OWNERSHIP. Consultant understands that the Duplex Intellectual Property
is owned solely by Duplex (or third parties), and that Consultant may use
Duplex Intellectual Property only for the benefit of Reynolds or Duplex as
directed by an officer of Reynolds.
9. RELATIONSHIP. Consultant acknowledges that Consultant shall not be deemed
to be an employee of Reynolds. Consultant shall at all times be an independent
contractor and not a partner or joint venturer of Reynolds.
10. TERMINATION AND CONSEQUENCES .
10.1 CAUSES OF TERMINATION. The Term may be terminated by the parties as
follows:
(a) by Consultant upon five (5) days' prior written notice;
(b) by Consultant immediately upon written notice if Reynolds commits
a material breach of this Agreement and the breach is not cured within ten (10)
days after written notice from Consultant;
(c) upon the death or disability of Consultant;
(d) by Reynolds upon five (5) days' prior written notice; or
(e) by Reynolds immediately upon written notice if (i) Consultant
commits a material breach of this Agreement and that breach is not cured within
ten (10) days after written notice from Reynolds, or (ii) if Consultant commits
any act or omission involving willful misconduct, gross negligence, fraud,
material misrepresentation, material dishonesty, or deliberate or attempted
injury to Reynolds.
10.2 CONSEQUENCES OF TERMINATION. Upon termination under Section 10.1,
the Term will cease, and the parties' respective obligations under this
Agreement will cease, except: (a) if termination arises out of Sections
10.1(b), (c) or (d), Reynolds shall pay the Second Installment to Consultant on
the effective date of termination and Reynolds' obligations under Section 6.2
3
<PAGE> 4
shall survive; (b) Reynolds will continue to be subject to the provisions of
Sections 6.1, 10, 11, 12 and 13; and (c) Consultant will continue to be subject
to the provisions of Sections 1, 7, 10, 12 and 13. Payment by Reynolds of the
amount due under clause (a) of the preceding sentence shall constitute the sole
and exclusive remedy of Consultant under this Agreement or otherwise arising
out of the engagement or termination of Consultant (and will be subject to the
execution by Consultant of a reasonably satisfactory release of claims related
thereto).
11. OUTPLACEMENT SERVICES. Consultant acknowledges that Reynolds shall have
no obligation to provide outplacement or similar services.
12. GOVERNING LAW. This Agreement will be governed by the laws of the state
of Illinois with respect to contracts entered into and performed entirely
within that state.
13. MISCELLANEOUS.
13.1 NOTICES. All notices and other communications under this Agreement
will be in writing and will be deemed given and received: (a) on the date of
delivery when delivered by hand or when transmitted by a confirmed simultaneous
telecopy, (b) on the following business day when sent by receipted overnight
courier, or (c) three (3) business days after deposit in the United States Mail
when mailed by registered or certified mail, return receipt requested, first
class postage prepaid, if sent to the applicable addresses or telecopy numbers
listed in Schedule 2. Either party may change the address to which notices are
to be sent to it by giving written notice of that change of address to the
other party in the manner provided above for giving notices.
13.2 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any right of
the parties hereunder may be assigned or delegated, whether voluntarily or
involuntarily, without the prior written consent of the other party provided,
however, that no consent will be required in the event of the sale of
substantially all the assets of or a merger involving Reynolds or the
assignment by Reynolds of this Agreement to any parent, subsidiary or other
entity of which Reynolds (or Reynolds' parent) holds fifty percent (50%) or
more of the voting power. This Agreement will be binding on the parties to
this Agreement and their respective permitted successors, assigns and
transferees.
13.3 HEADINGS; SCHEDULES. The section, subsection and other headings in
this Agreement are inserted only for reference and are not a part of this
Agreement. The Schedules attached to this Agreement are a material part of
this Agreement and are incorporated into this Agreement by this reference.
13.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which will be considered one agreement
4
<PAGE> 5
and effective when one counterpart has been signed by each party and delivered
to the other party.
13.5 INTEGRATION OF AGREEMENT. This Agreement supersedes all prior
agreements, oral and written, between the parties (or between Consultant and
Duplex) about the subject matter of this Agreement (any other oral or written
agreement, policy, plan, commitment or other arrangement between Consultant and
Duplex relating to employment or severance). Neither this Agreement, nor any
provision of this Agreement, may be changed, waived, discharged, supplemented
or terminated orally, but only by a writing signed by the party against which
the enforcement is sought. In the case of Reynolds, the writing must be signed
by an officer of Reynolds.
13.6 WAIVER. Failure of either party to exercise its rights under the
terms of this Agreement on any one occasion will not be construed as a waiver
of any requirement of this Agreement or a waiver of that party's right to take
advantage of any subsequent or continued breach by the other party of any
agreement or covenant contained in this Agreement. Except as expressly
provided in this Agreement, all remedies provided in this Agreement will be in
addition to and not in substitution for any remedies otherwise available to the
aggrieved party.
13.7 CERTAIN TERMS. When used in this Agreement, (a) "including" means
"including, without limitation," whether or not that language is specifically
set forth, and will not be deemed to limit the range of possibilities to those
items specifically enumerated, and (b) "person" will be broadly interpreted to
include, without limitation, any corporation, partnership, association, limited
liability company, other association, trust or individual.
13.8 ARBITRATION. Any dispute or controversy arising out of this Agreement
or its performance shall be resolved by binding arbitration before a panel of
three (3) arbitrators in Dayton, Ohio pursuant to the rules of the American
Arbitration Association. The prevailing party's costs and expenses (including
reasonable attorney's fees) shall be borne by the other party.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
5
<PAGE> 6
The parties have signed this Agreement as of the 20th day of April, 1996.
REYNOLDS: CONSULTANT:
THE REYNOLDS AND REYNOLDS
COMPANY
By:______________________________ ______________________________
Print Name:______________________ Print Name:___________________
Print Title:_____________________
6
<PAGE> 7
SCHEDULE 1
Definitions
-----------
Capitalized terms shall have the meanings given them in the Merger
Agreement, or, if not defined in the Merger Agreement, the meanings set forth
below.
1. "MERGER AGREEMENT" means the Agreement and Plan of Merger dated April 20,
1996 among Reynolds, Delaware Acquisition Co. and Duplex.
2. "BUSINESS" means the manufacture, sale, distribution or marketing of
business forms and/or related services.
3. "COMPETE WITH REYNOLDS" means hiring or attempting to hire, for
Consultant's or another person's behalf, any person who is then an employee of
Duplex.
4. "DIRECTLY OR INDIRECTLY" means:
4.1 acting as an agent, representative, consultant, officer, director,
independent contractor or employee of any person, or
4.2 participating in any such person as an owner, partner, limited
partner, joint venturer, creditor, stockholder, or member.
Direct or Indirect competition will not include the ownership of voting
securities or other equity interests representing less than 5% of the voting
power of an entity whose securities are traded on a national securities
exchange or in the over-the-counter market.
5. "EFFECTIVE DATE" means the date of closing of the purchase by Reynolds of
common stock of Duplex pursuant to the Offer.
6. "DUPLEX" means Duplex Products Inc.
7. "CONSULTANT" means James R. Ramig.
8. "REYNOLDS" means The Reynolds and Reynolds Company.
9. "DUPLEX INTELLECTUAL PROPERTY" means all confidential and/or proprietary
information of Duplex, including customer information, trade secrets and
know-how.
10. "SEVERANCE AGREEMENT" means a Severance Agreement dated as of
October 2, 1995, Agreement dated as of January 26, 1996 and a letter agreement
dated as of March 13, 1996 between Consultant and Duplex.
11. "FIRST INSTALLMENT" means a payment in the amount of $270,000.
12. "SECOND INSTALLMENT" means a payment in the amount of $95,500.
<PAGE> 8
13. "TERM" means the three (3) month period commencing on the Effective
Date.
2
<PAGE> 9
SCHEDULE 2
1. Notice Address and Telecopy Numbers.
1.1 If to Reynolds:
The Reynolds and Reynolds Company
115 South Ludlow Street
Dayton, Ohio 45402
Attn: Adam M. Lutynski
Telecopy No. (513) 449-4123
1.2 If to Consultant:
James R. Ramig
14715 Golf Road
Orlando Park, Illinois 60462
Telecopy number: 708-349-3315
<PAGE> 1
EXHIBIT (c)(7)
EMPLOYMENT AND NON-COMPETITION AGREEMENT
----------------------------------------
The parties agree as follows:
RECITALS
--------
Capitalized terms used in this Agreement have the meanings set forth in
Schedule 1.
Employee is currently employed as the Vice President, Operations of the
Company.
Employee and the Company previously entered into the Prior Agreement which,
among other things, provided for certain compensation and severance benefits to
be paid to Employee following a "change of control" of the Company.
Reynolds and the Company desire that the Company employ Employee following
the Closing on the terms of this Agreement and that the Prior Agreement be
rendered null and void by this Agreement and Employee desires to be so employed
and to so terminate the Prior Agreement.
1. CONDITION PRECEDENT. This Agreement is conditioned upon and shall become
effective simultaneously with the Closing.
2. TERMINATION OF PRIOR AGREEMENT. Employee and the Company hereby agree to
terminate and render null and void the Prior Agreement simultaneously with the
Closing.
3. EMPLOYMENT AND TERM. The Company agrees to employ Employee for the Term
on the terms and subject to the conditions set forth in this Agreement.
4. DUTIES. During the Term, Employee will serve in the capacity described in
Schedule 2 and perform the duties described in Schedule 2. Employee will
devote all of Employee's working time, attention and efforts to the business
affairs and best interests of the Company and Reynolds.
5. COMPENSATION. The compensation of Employee during the Term will be as
described in Schedule 2. All such amounts are subject to all applicable
withholdings by the Company. Salary payments shall begin on the next regular
payment date after the Closing.
6. BUSINESS EXPENSES. During the Term, Employee will be reimbursed for
reasonable business expenses incurred for the benefit of the Company under the
Company's usual practices for similarly situated employees of the Company.
Employee will account to the Company with enough detail to entitle the Company
to a
<PAGE> 2
federal income tax deduction for each of those expenses, if deductible.
7. BENEFITS. In addition to the compensation described in Section 5 and
reimbursement of business expenses under Section 6, during the Term Employee
will be entitled to the benefits then-currently available to other similarly
situated employees of the Company, as the same may change from time to time,
provided Employee meets the applicable terms and conditions of those benefits.
8. COVENANT NOT TO COMPETE; AGREEMENT NOT TO DISCLOSE.
8.1 COVENANT NOT TO COMPETE. Employee covenants and agrees that during
the Term and the Post Termination Period, Employee will not Directly or
Indirectly Compete with the Company.
8.2 AGREEMENT NOT TO DISCLOSE. Employee agrees to hold in strictest
confidence and not to use or disclose or make accessible to any person or
entity, without the prior written consent of an officer of Reynolds, any
Company Intellectual Property. Additionally, Employee agrees not to make any
disparaging remarks concerning Reynolds, the Company, or the transactions
contemplated by the Offer or to make any public statements concerning the
transactions contemplated by the Offer without Reynolds' prior written consent.
8.3 SEVERABILITY. If any court of competent jurisdiction determines that
any provision of this Section is invalid or unenforceable, that determination
will not affect the other provisions of this Agreement. The invalid or
unenforceable provision will be modified to the minimum degree necessary to
make the affected provision valid and enforceable, and this Agreement will then
be enforced to the fullest extent possible.
8.4 ACKNOWLEDGEMENT. Employee acknowledges that a breach of any
provision of this Section cannot be compensated adequately by damages in an
action at law, and that a breach would cause the Company irreparable harm.
Employee agrees that the Company will be entitled to temporary and permanent
injunctive and other equitable relief, provided that those equitable remedies
will be in addition to and not instead of other remedies available at law or in
equity to the Company as a result of a breach of this Section. Employee agrees
that the duration, scope and subject matter of this Section 6 are reasonable in
light of all of the facts and circumstances. To the extent permitted by law,
Employee waives any defenses or objections related to the reasonableness of the
duration, geographical scope and subject matter of this Section.
9. OWNERSHIP. Employee understands that Company Intellectual Property is
owned solely by Company (or third parties) and that Employee may use Company
Intellectual Property only for the benefit of the Company as directed by an
officer of Reynolds.
2
<PAGE> 3
10. OWNERSHIP AND DISCLOSURE OF INVENTIONS.
10.1 OWNERSHIP. Employee agrees that all Company Inventions will belong
to the Company.
10.2 DISCLOSURE; RECORDS; RETURN OF DOCUMENTS. Employee will disclose
promptly and completely to the Company all Company Inventions. Upon the
Company's request at any time during or after the Term, Employee will
immediately return to the Company all of its documents, devices, data,
software, equipment, and other property, which are in Employee's possession,
custody or control, including any reproductions of those items.
10.3 FURTHER DOCUMENTATION. Employee will cooperate from time to time in
the transfer of the Company Inventions to the Company and will assist the
Company in prosecuting any applications, claims or rights of any kind involving
Company Inventions. This obligation applies at all times during and after the
Term.
10.4 ASSIGNMENT AND POWER OF ATTORNEY.
(a) If, under applicable law or judgment of a court of competent
jurisdiction, Company is not deemed to be the owner of any Company Inventions
upon creation, then Employee hereby irrevocably assigns and transfers to the
Company all right, title and interest to those Company Inventions, including
copyrights.
(b) Employee hereby assigns to the Company all claims of any nature
which Employee may now or hereafter have for infringement of any intellectual
property rights involving Company Inventions.
(c) Employee hereby appoints the Company and its officers and agents,
with full power of substitution, as Employee's true and lawful agent and
attorney-in-fact:
(1) to demand and receive from time to time embodiments of Company
Inventions and to give receipts and releases for and about Company Inventions;
(2) to institute and prosecute in the Employee's name or
otherwise, but at the expense and for the benefit of the Company, any and all
proceedings at law, in equity or otherwise, which the Company may deem proper
to collect, assert or enforce any claim, right or title of any kind in and to
the Company Inventions;
(3) to defend or compromise any and all actions, suits or
proceedings involving Company Inventions; and
(4) if the Company cannot for any reason, including mental or
physical incapacity, obtain Employee's signature to apply for or pursue any
intellectual property registration, to execute and file any applications and
documents and to do all other
3
<PAGE> 4
lawfully permitted acts to further the prosecution and issuance of letters
patent, copyright, trademark or other intellectual property registrations, or
transfers thereof with the same legal force and effect as if executed by
Employee.
The appointments made and the powers granted in this Section are coupled with
an interest and cannot be revoked by Employee for any reason.
11. TERMINATION AND CONSEQUENCES.
11.1 CAUSES OF TERMINATION. The Term may be terminated by the parties as
follows:
(a) by Employee upon 15 days' prior written notice;
(b) by Employee immediately upon written notice if either (i) the
Company commits a material breach of this Agreement and the breach is not cured
within 15 days after written notice from Employee, or (ii) in the event of a
Constructive Discharge;
(c) upon the death or disability of Employee (Employee will be deemed
disabled and Employee's employment terminated under this subsection (c) if
Employee is not able to perform Employee's required duties for a period of 30
consecutive days due to a disability and the Company reasonably determines that
it is unlikely that Employee will be able to return to full performance of
Employee's duties within 30 days after that);
(d) by the Company upon 15 days' prior written notice; or
(e) by the Company immediately upon written notice if Employee
commits a material breach of this Agreement and that breach is not cured within
15 days after written notice from the Company, or if Employee commits any act
involving willful misconduct, gross negligence, fraud, material
misrepresentation, material dishonesty, deliberate or attempted injury to the
Company or Reynolds, or refusal to follow the reasonable direction of
Employee's supervisor.
11.2 CONSEQUENCES OF TERMINATION. Upon termination under Section 11.1,
the Term will cease, and the parties' respective obligations under this
Agreement will cease, except:
(a) the Company will:
(1) remain liable to pay to Employee all amounts due or becoming
due and all benefits to be provided for the period up to the effective date of
termination under Sections 5, 6 and 7;
(2) if termination occurs under Section 11.1(b) or Section
11.1(d):
4
<PAGE> 5
(a) the Company shall on the effective date of termination pay
to Employee any balance of the Bonus which remains unpaid;
and
(b) the Company shall on the effective date of termination
pay to Employee an amount equal to one (1)-year's salary,
less $50,000; and
(3) continue to be subject to the provisions of Sections 11-14,
inclusive.
(b) Employee will continue to be subject to the provisions of Sections 8-14,
inclusive.
Payment by the Company of the amounts due under Section 11.2(a) shall
constitute the sole and exclusive remedy of Employee under this Agreement or
otherwise (including any severance policy then in effect) arising out of the
employment or termination of Employee and payment of such amounts shall be
conditioned upon the execution by Employee of a binding and confidential
release of all claims against the Company and/or Reynolds reasonably
satisfactory to the Company and Reynolds.
12. GOVERNING LAW. This Agreement will be governed by the laws of the state
of Illinois with respect to contracts entered into and performed entirely
within that state.
13. MISCELLANEOUS.
13.1 NOTICES. All notices and other communications under this Agreement
will be in writing and will be deemed given and received: (a) on the date of
delivery when delivered by hand or when transmitted by a confirmed simultaneous
telecopy, (b) on the following business day when sent by receipted overnight
courier, or (c) three (3) business days after deposit in the United States Mail
when mailed by registered or certified mail, return receipt requested, first
class postage prepaid, if sent to the applicable addresses or telecopy numbers
listed in Schedule 2. Either party may change the address to which notices are
to be sent to it by giving written notice of that change of address to the
other party in the manner provided above for giving notices.
13.2 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any right of
the parties hereunder may be assigned or delegated, whether voluntarily or
involuntarily, without the prior written consent of the other party provided,
however, that no consent will be required in the event of the sale of
substantially all the assets of or a merger involving the Company or the
assignment by the Company of this Agreement to Reynolds or to any parent,
subsidiary or other entity of which the Company (or the Company's parent) holds
fifty percent (50%) or more of the voting power.
5
<PAGE> 6
This Agreement will be binding on the parties to this Agreement and their
respective permitted successors, assigns and transferees and it is expressly
intended that Reynolds be a third party beneficiary of the rights of the
Company under this Agreement.
13.3 HEADINGS; SCHEDULES. The section, subsection and other headings in
this Agreement are inserted only for reference and are not a part of this
Agreement. The Schedules attached to this Agreement are a material part of
this Agreement and are incorporated into this Agreement by this reference.
13.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which will be considered one agreement and effective when
one counterpart has been signed by each party and delivered to the other party.
13.5 INTEGRATION OF AGREEMENT. This Agreement supersedes all prior
agreements, oral and written, between the parties about the subject matter of
this Agreement (including severance). Neither this Agreement, nor any
provision of this Agreement, may be changed, waived, discharged, supplemented
or terminated orally, but only by a writing signed by the party against which
the enforcement is sought. In the case of the Company, the writing must also
be signed by an officer of Reynolds.
13.6 WAIVER. Failure of either party to exercise its rights under the
terms of this Agreement on any one occasion will not be construed as a waiver
of any requirement of this Agreement or a waiver of that party's right to take
advantage of any subsequent or continued breach by the other party of any
agreement or covenant contained in this Agreement. Except as expressly
provided in this Agreement, all remedies provided in this Agreement will be in
addition to and not in substitution for any remedies otherwise available to the
aggrieved party.
13.7 CERTAIN TERMS. When used in this Agreement, (a) "including" means
"including, without limitation," whether or not that language is specifically
set forth, and will not be deemed to limit the range of possibilities to those
items specifically enumerated, and (b) "person" will be broadly interpreted to
include, without limitation, any corporation, partnership, association, limited
liability company, other association, trust or individual.
13.8 ARBITRATION. Any dispute or controversy arising out of this
Agreement or its performance shall be resolved by binding arbitration before a
panel of three (3) arbitrators in Dayton, Ohio pursuant to the rules of the
American Arbitration Association. The prevailing party's costs and expenses
(including reasonable attorney's fees) shall be borne by the other party.
14. REPLACEMENT TERMS.
14.1 OPTIONAL TERMINATION. If at any time after the six (6) - month
anniversary of the Closing but prior to the expiration of the Term, Employee
shall be dissatisfied with his employment, then, in that event and
notwithstanding anything in this Agreement to the contrary, Employee shall be
entitled to terminate this Agreement upon 15 days prior written notice to the
Company and on the effective date of termination Employee shall receive a
payment of $75,000 (for all other purposes of this Agreement such a termination
shall be deemed a termination pursuant to Section 11.1(a)).
14.2 REPLACEMENT TERMS. Following the six-month anniversary of the Closing
but prior to the 9-month anniversary of the Closing, the Company and Reynolds
shall propose to Employee in writing new terms of employment. Employee shall
have a period of 30 days following receipt of the written proposal to accept
(which must be evidenced by execution of a mutually satisfactory agreement)
such proposal (failure to execute such an agreement within the 30-day period
shall be deemed rejection of the proposal and a "Constructive Discharge" for
purposes of Section 11, and the Term shall cease
6
<PAGE> 7
upon expiration of such 30-day period). If the proposal is accepted it will
replace this Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
7
<PAGE> 8
The parties have signed this Agreement as of the 20th day of April, 1996.
DUPLEX PRODUCTS INC. EMPLOYEE:
By:______________________________ ______________________________
Print Name:______________________ Print Name:___________________
Print Title:_____________________
8
LOOMER3.AGR
<PAGE> 9
SCHEDULE 1
DEFINITIONS
-----------
1. "AGREEMENT" means this agreement.
2. "BONUS" means the bonus described in Section 3 of Schedule 2.
3. "CLOSING" means the closing of the purchase by Reynolds of common stock of
the Company pursuant to the Offer.
4. "COMPANY" means Duplex Products Inc.
5. "COMPANY INTELLECTUAL PROPERTY" means all information, documents,
drawings, customer lists, software, and ideas belong to the Company, its
customers, clients, vendors, suppliers, licensors, competitors, or alliances
which are disclosed to Employee or of which Employee becomes aware, during the
course of Employee's employment with the Company.
6. "COMPANY INVENTIONS" means any of the Inventions, whether or not embodied
in a tangible means of expression, which:
6.1 are in whole or in part conceived or made by Employee in the course
of Employee's employment with the Company or which result from any work
performed by Employee for the Company, or
6.2 are made through the use of any Company Intellectual Property or any
of the Company's equipment, facilities, supplies or time.
7 "COMPETE WITH THE COMPANY" means hiring or attempting to hire, for
Employee's or another person's behalf, any employee who is a plant supervision
employee of the Company at any time during (a) the Term, (b) the six (6)-month
period prior to the Closing or (c) the Post Termination Period.
8. "CONSTRUCTIVE DISCHARGE" means termination of the Term by Employee (in
his discretion) as described in Section 14.2 or following either: (a) a
material reduction in Employee's duties or responsibilities; or (b) relocation
of Employee's position to a location other than the Company's Sycamore,
Illinois headquarters.
<PAGE> 10
9. "DIRECTLY OR INDIRECTLY" means:
9.1 acting as an agent, representative, consultant, officer, director,
independent contractor or employee of any person, or
9.2 participating in any person as an owner, partner, limited partner,
joint venturer, creditor, stockholder, or member.
Direct or Indirect competition will not include the ownership of voting
securities or other equity interests representing less than 5% of the voting
power of an entity whose securities are traded on a national securities
exchange or in the over-the-counter market.
10. "EMPLOYEE" means Marc A. Loomer.
11. "INVENTIONS" means all inventions, discoveries, ideas, improvements,
trade secrets, patents, trademarks, service marks, concepts, computer software,
designs, drawings, specifications, techniques, know-how, other intellectual
property, derivatives of any of the above, and all copyright, trademark and
patent applications and registrations.
12. "MERGER AGREEMENT" means the Agreement and Plan of Merger among
Reynolds, Delaware Acquisition Co. and the Company dated as of April 20, 1996.
13. "OFFER" means the proposed tender offer by Reynolds for the common stock
of Duplex contemplated by the Merger Agreement.
14. "PRIOR AGREEMENT" means the agreement between the Company and Employee
dated as of January 26, 1996 as amended by letter dated March 13, 1996.
15. "POST TERMINATION PERIOD" means the period immediately following the
Term ending on the second (2nd) anniversary of the Closing.
16. "TERM" means the period commencing on the Closing and ending, unless
sooner terminated pursuant to Section 11.1, on the first anniversary of the
Closing.
2
<PAGE> 11
SCHEDULE 2
1. CAPACITY. Employee shall continue to be employed during the Term in the
same capacity as immediately prior to the Closing.
2. DUTIES. Those duties performed by Employee immediately prior to the
Closing.
3. COMPENSATION.
3.1 Salary. Until the first anniversary of the Closing, Employee shall
be paid an annual salary of $125,000 payable in accordance with the
Company's ordinary payment policy as the same may change from time to time.
3.2 Bonus. Employee shall be paid a bonus of $225,000, payable in two
(2) installments as follows: (a) $175,000 - simultaneous with the Closing; and
(b) $50,000 - on the six (6)-month anniversary of the Closing; provided,
however, that if Employee's employment is terminated pursuant to Section
11.1(a) or Section 11.1(e), Employee shall be deemed to have waived all rights
to the unpaid balance of the Bonus as of the effective date of termination.
4. NOTICE ADDRESS AND TELECOPY NUMBERS.
4.1 If to the Company:
Duplex Products Inc.
1947 Bethany Road
Sycamore, Illinois 60178
ATTN: President
Fax No. (815) 895-1091
with a copy to:
The Reynolds and Reynolds Company
115 S. Ludlow St.
Dayton, OH 45402
ATTN: Adam M. Lutynski
Fax No. (513) 449-4123
4.2 If to Employee:
Marc A. Loomer
801 Stevens Ave.
Sycamore, Illinois 60178
<PAGE> 1
EXHIBIT (c)(8)
EMPLOYMENT AND NON-COMPETITION DISCLOSURE AGREEMENT
---------------------------------------------------
The parties agree as follows:
RECITALS
--------
Capitalized terms used in this Agreement have the meanings set forth in
Schedule 1.
Employee is currently employed as the Vice President, Sales of the Company.
Employee and the Company previously entered into the Prior Agreement which,
among other things, provided for certain compensation and severance benefits to
be paid to Employee following a "change of control" of the Company.
Reynolds and the Company desire that the Company employ Employee following
the Closing on the terms of this Agreement and that the Prior Agreement be
rendered null and void by this Agreement and Employee desires to be so employed
and to so terminate the Prior Agreement.
1. CONDITION PRECEDENT. This Agreement is conditioned upon and shall become
effective simultaneously with the Closing.
2. TERMINATION OF PRIOR AGREEMENT. Employee and the Company hereby agree to
terminate and render null and void the Prior Agreement simultaneously with the
Closing.
3. EMPLOYMENT AND TERM. The Company agrees to employ Employee for the Term
on the terms and subject to the conditions set forth in this Agreement.
4. DUTIES. During the Term, Employee will serve in the capacity described in
Schedule 2 and perform the duties described in Schedule 2. Employee will
devote all of Employee's working time, attention and efforts to the business
affairs and best interests of the Company and Reynolds.
5. COMPENSATION. The compensation of Employee during the Term will be as
described in Schedule 2. All such amounts are subject to all applicable
withholdings by the Company. Salary payments shall begin on the next regular
payment date after the Closing.
6. BUSINESS EXPENSES. During the Term, Employee will be reimbursed for
reasonable business expenses incurred for the benefit of the Company under the
Company's usual practices for similarly situated employees of the Company.
Employee will account to the Company with enough detail to entitle the Company
to a
<PAGE> 2
federal income tax deduction for each of those expenses, if deductible.
7. BENEFITS. In addition to the compensation described in Section 5 and
reimbursement of business expenses under Section 6, during the Term Employee
will be entitled to the benefits then-currently available to other similarly
situated employees of the Company, as the same may change from time to time,
provided Employee meets the applicable terms and conditions of those benefits,
and, provided, further, that such benefits shall not, in the aggregate, be less
than currently provided by the Company (with the exception of stock options in
Company stock).
8. COVENANT NOT TO COMPETE; AGREEMENT NOT TO DISCLOSE.
8.1 COVENANT NOT TO COMPETE. Employee covenants and agrees that during
the Term and the Post Termination Period, Employee will not Directly or
Indirectly Compete with the Company.
8.2 AGREEMENT NOT TO DISCLOSE. Employee agrees to hold in strictest
confidence and not to use or disclose or make accessible to any person or
entity, without the prior written consent of an officer of Reynolds, any
Company Intellectual Property. Additionally, Employee agrees not to make any
disparaging remarks concerning Reynolds, the Company, or the transactions
contemplated by the Offer or to make any public statements concerning the
transactions contemplated by the Offer without Reynolds' prior written consent.
8.3 SEVERABILITY. If any court of competent jurisdiction determines that
any provision of this Section is invalid or unenforceable, that determination
will not affect the other provisions of this Agreement. The invalid or
unenforceable provision will be modified to the minimum degree necessary to
make the affected provision valid and enforceable, and this Agreement will then
be enforced to the fullest extent possible.
8.4 ACKNOWLEDGEMENT. Employee acknowledges that a breach of any
provision of this Section cannot be compensated adequately by damages in an
action at law, and that a breach would cause the Company irreparable harm.
Employee agrees that the Company will be entitled to temporary and permanent
injunctive and other equitable relief, provided that those equitable remedies
will be in addition to and not instead of other remedies available at law or in
equity to the Company as a result of a breach of this Section. Employee agrees
that the duration, scope and subject matter of this Section 6 are reasonable in
light of all of the facts and circumstances. To the extent permitted by law,
Employee waives any defenses or objections related to the reasonableness of the
duration, geographical scope and subject matter of this Section.
9. OWNERSHIP. Employee understands that Company Intellectual Property is
owned solely by Company (or third parties) and that Employee may use Company
Intellectual Property only for the benefit of the Company as directed by an
officer of Reynolds.
2
<PAGE> 3
10. OWNERSHIP AND DISCLOSURE OF INVENTIONS.
10.1 OWNERSHIP. Employee agrees that all Company Inventions will belong
to the Company.
10.2 DISCLOSURE; RECORDS; RETURN OF DOCUMENTS. Employee will disclose
promptly and completely to the Company all Company Inventions. Upon the
Company's request at any time during or after the Term, Employee will
immediately return to the Company all of its documents, devices, data,
software, equipment, and other property, which are in Employee's possession,
custody or control, including any reproductions of those items.
10.3 FURTHER DOCUMENTATION. Employee will cooperate from time to time in
the transfer of the Company Inventions to the Company and will assist the
Company in prosecuting any applications, claims or rights of any kind involving
Company Inventions. This obligation applies at all times during and after the
Term.
10.4 ASSIGNMENT AND POWER OF ATTORNEY.
(a) If, under applicable law or judgment of a court of competent
jurisdiction, Company is not deemed to be the owner of any Company Inventions
upon creation, then Employee hereby irrevocably assigns and transfers to the
Company all right, title and interest to those Company Inventions, including
copyrights.
(b) Employee hereby assigns to the Company all claims of any nature
which Employee may now or hereafter have for infringement of any intellectual
property rights involving Company Inventions.
(c) Employee hereby appoints the Company and its officers and agents,
with full power of substitution, as Employee's true and lawful agent and
attorney-in-fact:
(1) to demand and receive from time to time embodiments of Company
Inventions and to give receipts and releases for and about Company Inventions;
(2) to institute and prosecute in the Employee's name or
otherwise, but at the expense and for the benefit of the Company, any and all
proceedings at law, in equity or otherwise, which the Company may deem proper
to collect, assert or enforce any claim, right or title of any kind in and to
the Company Inventions;
(3) to defend or compromise any and all actions, suits or
proceedings involving Company Inventions; and
(4) if the Company cannot for any reason, including mental or
physical incapacity, obtain Employee's signature to apply for or pursue any
intellectual property registration, to execute and file any applications and
documents and to do all other
3
<PAGE> 4
lawfully permitted acts to further the prosecution and issuance of letters
patent, copyright, trademark or other intellectual property registrations, or
transfers thereof with the same legal force and effect as if executed by
Employee.
The appointments made and the powers granted in this Section are coupled with
an interest and cannot be revoked by Employee for any reason.
11. TERMINATION AND CONSEQUENCES.
11.1 CAUSES OF TERMINATION. The Term may be terminated by the parties as
follows:
(a) by Employee upon 15 days' prior written notice;
(b) by Employee immediately upon written notice if either (i) the
Company commits a material breach of this Agreement and the breach is not cured
within 15 days after written notice from Employee, or (ii) in the event of a
Constructive Discharge;
(c) upon the death or disability of Employee (Employee will be deemed
disabled and Employee's employment terminated under this subsection (c) if
Employee is not able to perform Employee's required duties for a period of 30
consecutive days due to a disability and the Company reasonably determines that
it is unlikely that Employee will be able to return to full performance of
Employee's duties within 30 days after that);
(d) by the Company upon 15 days' prior written notice; or
(e) by the Company immediately upon written notice if Employee
commits a material breach of this Agreement and that breach is not cured within
15 days after written notice from the Company, or if Employee commits any act
involving willful misconduct, gross negligence, fraud, material
misrepresentation, material dishonesty, deliberate or attempted injury to the
Company or Reynolds, or refusal to follow the reasonable direction of
Employee's supervisor.
11.2 CONSEQUENCES OF TERMINATION. Upon termination under Section 11.1,
the Term will cease, and the parties' respective obligations under this
Agreement will cease, except:
(a) the Company will:
(1) remain liable to pay to Employee all amounts due or becoming
due and all benefits to be provided for the period up to the effective date of
termination under Sections 5, 6 and 7;
(2) if termination occurs under Section 11.1(b) or Section
11.1(d):
4
<PAGE> 5
(a) the Company shall on the effective date of termination pay
to Employee any balance of the Bonus which remains unpaid;
and
(b) the Company shall on the effective date of termination
pay to Employee an amount equal to one (1)-year's salary,
less $50,000; and
(3) continue to be subject to the provisions of Sections 11-14,
inclusive.
(b) Employee will continue to be subject to the provisions of Sections 8-14,
inclusive.
Payment by the Company of the amounts due under Section 11.2(a) shall
constitute the sole and exclusive remedy of Employee under this Agreement or
otherwise (including any severance policy then in effect) arising out of the
employment or termination of Employee and payment of such amounts shall be
conditioned upon the execution by Employee of a binding and confidential
release of all claims against the Company and/or Reynolds reasonably
satisfactory to the Company and Reynolds.
12. GOVERNING LAW. This Agreement will be governed by the laws of the state
of Illinois with respect to contracts entered into and performed entirely
within that state.
13. MISCELLANEOUS.
13.1 NOTICES. All notices and other communications under this Agreement
will be in writing and will be deemed given and received: (a) on the date of
delivery when delivered by hand or when transmitted by a confirmed simultaneous
telecopy, (b) on the following business day when sent by receipted overnight
courier, or (c) three (3) business days after deposit in the United States Mail
when mailed by registered or certified mail, return receipt requested, first
class postage prepaid, if sent to the applicable addresses or telecopy numbers
listed in Schedule 2. Either party may change the address to which notices are
to be sent to it by giving written notice of that change of address to the
other party in the manner provided above for giving notices.
13.2 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any right of
the parties hereunder may be assigned or delegated, whether voluntarily or
involuntarily, without the prior written consent of the other party provided,
however, that no consent will be required in the event of the sale of
substantially all the assets of or a merger involving the Company or the
assignment by the Company of this Agreement to Reynolds or to any parent,
subsidiary or other entity of which the Company (or the Company's parent) holds
fifty percent (50%) or more of the voting power.
5
<PAGE> 6
This Agreement will be binding on the parties to this Agreement and their
respective permitted successors, assigns and transferees and it is expressly
intended that Reynolds be a third party beneficiary of the rights of the
Company under this Agreement.
13.3 HEADINGS; SCHEDULES. The section, subsection and other headings in
this Agreement are inserted only for reference and are not a part of this
Agreement. The Schedules attached to this Agreement are a material part of
this Agreement and are incorporated into this Agreement by this reference.
13.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which will be considered one agreement and effective when
one counterpart has been signed by each party and delivered to the other party.
13.5 INTEGRATION OF AGREEMENT. This Agreement supersedes all prior
agreements, oral and written, between the parties about the subject matter of
this Agreement (including severance). Neither this Agreement, nor any
provision of this Agreement, may be changed, waived, discharged, supplemented
or terminated orally, but only by a writing signed by the party against which
the enforcement is sought. In the case of the Company, the writing must also
be signed by an officer of Reynolds.
13.6 WAIVER. Failure of either party to exercise its rights under the
terms of this Agreement on any one occasion will not be construed as a waiver
of any requirement of this Agreement or a waiver of that party's right to take
advantage of any subsequent or continued breach by the other party of any
agreement or covenant contained in this Agreement. Except as expressly
provided in this Agreement, all remedies provided in this Agreement will be in
addition to and not in substitution for any remedies otherwise available to the
aggrieved party.
13.7 CERTAIN TERMS. When used in this Agreement, (a) "including" means
"including, without limitation," whether or not that language is specifically
set forth, and will not be deemed to limit the range of possibilities to those
items specifically enumerated, and (b) "person" will be broadly interpreted to
include, without limitation, any corporation, partnership, association, limited
liability company, other association, trust or individual.
13.8 ARBITRATION. Any dispute or controversy arising out of this
Agreement or its performance shall be resolved by binding arbitration before a
panel of three (3) arbitrators in Dayton, Ohio pursuant to the rules of the
American Arbitration Association. The prevailing party's costs and expenses
(including reasonable attorney's fees) shall be borne by the other party.
14. REPLACEMENT TERMS.
14.1 OPTIONAL TERMINATION. If at any time after the six (6) - month
anniversary of the Closing but prior to the expiration of the Term, Employee
shall be dissatisfied with his employment, then, in that event and
notwithstanding anything in this Agreement to the contrary, Employee shall be
entitled to terminate this Agreement upon 15 days prior written notice to the
Company and on the effective date of termination Employee shall receive a
payment of $90,000 (for all other purposes of this Agreement such a termination
shall be deemed a termination pursuant to Section 11.1(a)).
14.2 REPLACEMENT TERMS. Following the six-month anniversary of the Closing
but prior to the 9-month anniversary of the Closing, the Company and Reynolds
shall propose to Employee in writing new terms of employment. Employee shall
have a period of 30 days following receipt of the written proposal to accept
(which must be evidenced by execution of a mutually satisfactory agreement)
such proposal (failure to execute such an agreement within the 30-day period
shall be deemed rejection of the proposal and a "Constructive Discharge" for
purposes of Section 11, and the Term shall cease
6
<PAGE> 7
upon expiration of such 30-day period). If the proposal is accepted it will
replace this Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
7
<PAGE> 8
The parties have signed this Agreement as of the 20th day of April, 1996.
DUPLEX PRODUCTS INC. EMPLOYEE:
By:______________________________ ______________________________
Print Name:______________________ Print Name:___________________
Print Title:_____________________
8
PRESTN3.AGR
<PAGE> 9
SCHEDULE 1
DEFINITIONS
-----------
1. "AGREEMENT" means this agreement.
2. "BONUS" means the bonus described in Section 3 of Schedule 2.
3. "CLOSING" means the closing of the purchase by Reynolds of common stock of
the Company pursuant to the Offer.
4. "COMPANY" means Duplex Products Inc.
5. "COMPANY INTELLECTUAL PROPERTY" means all information, documents,
drawings, customer lists, software, and ideas belong to the Company, its
customers, clients, vendors, suppliers, licensors, competitors, or alliances
which are disclosed to Employee or of which Employee becomes aware, during the
course of Employee's employment with the Company.
6. "COMPANY INVENTIONS" means any of the Inventions, whether or not embodied
in a tangible means of expression, which:
6.1 are in whole or in part conceived or made by Employee in the course
of Employee's employment with the Company or which result from any work
performed by Employee for the Company, or
6.2 are made through the use of any Company Intellectual Property or any
of the Company's equipment, facilities, supplies or time.
7. "COMPETE WITH THE COMPANY" means:
7.1 calling on, soliciting, taking away, or accepting as a client or
customer any person that is presently or becomes a client or customer of the
Company during the Term or the six (6)-month period prior to the Closing; or
7.2 hiring or attempting to hire, for Employee's or another person's
behalf, any employee who is a sales-related employee of the Company at any
time during (a) the Term, (b) the six (6)-month period prior to the Closing or
(c) the Post Termination Period.
8. "CONSTRUCTIVE DISCHARGE" means termination of the Term by Employee (in his
discretion) as described in Section 14.2 or following either: (a) a material
reduction in Employee's duties or responsibilities; or (b) relocation of
Employee's position to a location other than the Company's Sycamore, Illinois
headquarters.
<PAGE> 10
9. "DIRECTLY OR INDIRECTLY" means:
9.1 acting as an agent, representative, consultant, officer, director,
independent contractor or employee of any person, or
9.2 participating in any person as an owner, partner, limited partner,
joint venturer, creditor, stockholder, or member.
Direct or Indirect competition will not include the ownership of voting
securities or other equity interests representing less than 5% of the voting
power of an entity whose securities are traded on a national securities
exchange or in the over-the-counter market.
10. "EMPLOYEE" means David B. Preston.
11. "INVENTIONS" means all inventions, discoveries, ideas, improvements,
trade secrets, patents, trademarks, service marks, concepts, computer software,
designs, drawings, specifications, techniques, know-how, other intellectual
property, derivatives of any of the those, and all copyright, trademark and
patent applications and registrations.
12. "MERGER AGREEMENT" means the Agreement and Plan of Merger among
Reynolds, Delaware Acquisition Co. and the Company dated as of April 20, 1996.
13. "OFFER" means the proposed tender offer by Reynolds for the common stock
of Duplex contemplated by the Merger Agreement.
14. "PRIOR AGREEMENT" means the agreement between the Company and Employee
dated as of January 26, 1996 as amended by letter dated March 13, 1996.
15. "POST TERMINATION PERIOD" means the period immediately following the
Term ending on the second (2nd) anniversary of the Closing.
16. "TERM" means the period commencing on the Closing and ending, unless
sooner terminated pursuant to Section 11.1, on the first anniversary of the
Closing.
2
<PAGE> 11
SCHEDULE 2
1. CAPACITY. Employee shall continue to be employed during the Term in the
same capacity as immediately prior to the Closing.
2. DUTIES. Those duties performed by Employee immediately prior to the
Closing.
3. COMPENSATION.
3.1 Salary. Until the first anniversary of the Closing, Employee shall
be paid an annual salary of $140,000, payable in accordance with the
Company's ordinary payment policy as the same may change from time to time.
3.2 Bonus. Employee shall be paid a bonus of $175,000, payable in two
(2) installments as follows: (a) $125,000 - simultaneous with the
Closing; and (b) $50,000 - on the six (6)-month anniversary of the Closing;
provided, however, that if Employee's employment is terminated pursuant to
Section 11.1(a) or Section 11.1(e), Employee shall be deemed to have waived all
rights to the unpaid balance of the Bonus as of the effective date of
termination.
4. NOTICE ADDRESS AND TELECOPY NUMBERS.
4.1 If to the Company:
Duplex Products Inc.
1947 Bethany Road
Sycamore, Illinois 60178
ATTN: President
Fax No. (815) 895-1091
with a copy to:
The Reynolds and Reynolds Company
115 S. Ludlow St.
Dayton, OH 45401
ATTN: Adam M. Lutynski
Fax No. (513) 449-4123
4.2 If to Employee:
David B. Preston
3611 Wildwood Ridge
Kingswood, Texas 77339
2
<PAGE> 1
EXHIBIT (c)(9)
EMPLOYMENT AND NON-DISCLOSURE AGREEMENT
----------------------------------------
The parties agree as follows:
RECITALS
--------
Capitalized terms used in this Agreement have the meanings set forth in
Schedule 1.
Employee is currently employed as the Vice President and General Counsel and
Secretary of the Company.
Employee and the Company previously entered into the Prior Agreement which,
among other things, provided for certain compensation and severance benefits to
be paid to Employee following a "change of control" of the Company.
Reynolds and the Company desire that the Company employ Employee following
the Closing on the terms of this Agreement and that the Prior Agreement be
rendered null and void by this Agreement and Employee desires to be so employed
and to so terminate the Prior Agreement.
1. CONDITION PRECEDENT. This Agreement is conditioned upon and shall become
effective simultaneously with the Closing.
2. TERMINATION OF PRIOR AGREEMENT. Employee and the Company hereby agree to
terminate and render null and void the Prior Agreement.
3. EMPLOYMENT AND TERM. The Company agrees to employ Employee for the Term
on the terms and subject to the conditions set forth in this Agreement.
4. DUTIES. During the Term, Employee will serve in the capacity described in
Schedule 2 and perform the duties described in Schedule 2. Employee will
devote all of Employee's working time, attention and efforts to the business
affairs and best interests of the Company and Reynolds.
5. COMPENSATION. The compensation of Employee during the Term will be as
described in Schedule 2. All such amounts are subject to all applicable
withholdings by the Company. Salary payments shall begin on the next regular
payment date after the Closing.
6. BUSINESS EXPENSES. During the Term, Employee will be reimbursed for
reasonable business expenses incurred for the benefit of the Company under the
Company's usual practices for similarly situated employees of the Company.
Employee will account to the Company with enough detail to entitle the Company
to a
<PAGE> 2
federal income tax deduction for each of those expenses, if deductible.
7. BENEFITS. In addition to the compensation described in Section 5 and
reimbursement of business expenses under Section 6, during the Term Employee
will be entitled to the benefits then-currently available to other similarly
situated employees of the Company, as the same may change from time to time,
provided Employee meets the applicable terms and conditions of those benefits,
and, provided, further, that such benefits shall not, in the aggregate, be less
than currently provided by the Company (with the exception of stock options in
Company stock).
8. AGREEMENT NOT TO DISCLOSE.
8.1 AGREEMENT NOT TO DISCLOSE. Employee agrees to hold in strictest
confidence and not to use or disclose or make accessible to any person or
entity, without the prior written consent of an officer of Reynolds, any
Company Intellectual Property. Additionally, Employee agrees not to make any
disparaging remarks concerning Reynolds, the Company, or the transactions
contemplated by the Offer or to make any public statements concerning the
transactions contemplated by the Offer without Reynolds' prior written consent.
8.2 SEVERABILITY. If any court of competent jurisdiction determines that
any provision of this Section is invalid or unenforceable, that determination
will not affect the other provisions of this Agreement. The invalid or
unenforceable provision will be modified to the minimum degree necessary to
make the affected provision valid and enforceable, and this Agreement will then
be enforced to the fullest extent possible.
8.3 ACKNOWLEDGEMENT. Employee acknowledges that a breach of any
provision of this Section cannot be compensated adequately by damages in an
action at law, and that a breach would cause the Company irreparable harm.
Employee agrees that the Company will be entitled to temporary and permanent
injunctive and other equitable relief, provided that those equitable remedies
will be in addition to and not instead of other remedies available at law or in
equity to the Company as a result of a breach of this Section. Employee agrees
that the duration, scope and subject matter of this Section are reasonable in
light of all of the facts and circumstances. To the extent permitted by law,
Employee waives any defenses or objections related to the reasonableness of the
duration and subject matter of this Section.
9. OWNERSHIP. Employee understands that Company Intellectual Property is
owned solely by Company (or third parties) and that Employee may use Company
Intellectual Property only for the benefit of the Company as directed by an
officer of Reynolds.
10. OWNERSHIP AND DISCLOSURE OF INVENTIONS.
2
<PAGE> 3
10.1 OWNERSHIP. Employee agrees that all Company Inventions will belong
to the Company.
10.2 DISCLOSURE; RECORDS; RETURN OF DOCUMENTS. Employee will disclose
promptly and completely to the Company all Company Inventions. Upon the
Company's request at any time during or after the Term, Employee will
immediately return to the Company all of its documents, devices, data,
software, equipment, and other property, which are in Employee's possession,
custody or control, including any reproductions of those items.
10.3 FURTHER DOCUMENTATION. Employee will cooperate from time to time in
the transfer of the Company Inventions to the Company and will assist the
Company in prosecuting any applications, claims or rights of any kind involving
Company Inventions. This obligation applies at all times during and after the
Term.
10.4 ASSIGNMENT AND POWER OF ATTORNEY.
(a) If, under applicable law or judgment of a court of competent
jurisdiction, Company is not deemed to be the owner of any Company Inventions
upon creation, then Employee hereby irrevocably assigns and transfers to the
Company all right, title and interest to those Company Inventions, including
copyrights.
(b) Employee hereby assigns to the Company all claims of any nature
which Employee may now or hereafter have for infringement of any intellectual
property rights involving Company Inventions.
(c) Employee hereby appoints the Company and its officers and agents,
with full power of substitution, as Employee's true and lawful agent and
attorney-in-fact:
(1) to demand and receive from time to time embodiments of Company
Inventions and to give receipts and releases for and about Company Inventions;
(2) to institute and prosecute in the Employee's name or
otherwise, but at the expense and for the benefit of the Company, any and all
proceedings at law, in equity or otherwise, which the Company may deem proper
to collect, assert or enforce any claim, right or title of any kind in and to
the Company Inventions;
(3) to defend or compromise any and all actions, suits or
proceedings involving Company Inventions; and
(4) if the Company cannot for any reason, including mental or
physical incapacity, obtain Employee's signature to apply for or pursue any
intellectual property registration, to execute and file any applications and
documents and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent, copyright, trademark or other
intellectual property
3
<PAGE> 4
registrations, or transfers thereof with the same legal force and effect as if
executed by Employee.
The appointments made and the powers granted in this Section are coupled with
an interest and cannot be revoked by Employee for any reason.
11. TERMINATION AND CONSEQUENCES.
11.1 CAUSES OF TERMINATION. The Term may be terminated by the parties as
follows:
(a) by Employee upon 15 days' prior written notice;
(b) by Employee immediately upon written notice if either (i) the
Company commits a material breach of this Agreement and the breach is not cured
within 15 days after written notice from Employee, or (ii) in the event of a
Constructive Discharge;
(c) upon the death or disability of Employee (Employee will be deemed
disabled and Employee's employment terminated under this subsection (c) if
Employee is not able to perform Employee's required duties for a period of 30
consecutive days due to a disability and the Company reasonably determines that
it is unlikely that Employee will be able to return to full performance of
Employee's duties within 30 days after that);
(d) by the Company upon 15 days' prior written notice; or
(e) by the Company immediately upon written notice if Employee
commits a material breach of this Agreement and that breach is not cured within
15 days after written notice from the Company, or if Employee commits any act
involving willful misconduct, gross negligence, fraud, material
misrepresentation, material dishonesty, deliberate or attempted injury to the
Company or Reynolds, or refusal to follow the reasonable direction of
Employee's supervisor.
11.2 CONSEQUENCES OF TERMINATION. Upon termination under Section 11.1,
the Term will cease, and the parties' respective obligations under this
Agreement will cease, except:
(a) the Company will:
(1) remain liable to pay to Employee all amounts due or becoming
due and all benefits to be provided for the period up to the effective date of
termination under Sections 5, 6 and 7;
(2) if termination occurs under Section 11.1(b) or Section
11.1(d):
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<PAGE> 5
(a) the Company shall on the effective date of termination pay
to Employee any balance of the Bonus which remains unpaid;
and
(b) the Company shall on the effective date of termination pay
to Employee an amount equal to one (1)-year's salary; and
(3) continue to be subject to the provisions of Sections 11-14,
inclusive.
(b) Employee will continue to be subject to the provisions of Sections 8-14,
inclusive.
Payment by the Company of the amounts due under Section 11.2(a) shall
constitute the sole and exclusive remedy of Employee under this Agreement or
otherwise (including any severance policy then in effect) arising out of the
employment or termination of Employee and payment of such amounts shall be
conditioned upon the execution by Employee of a binding and confidential
release of all claims against the Company and/or Reynolds reasonably
satisfactory to the Company and Reynolds.
12. GOVERNING LAW. This Agreement will be governed by the laws of the state
of Illinois with respect to contracts entered into and performed entirely
within that state.
13. MISCELLANEOUS.
13.1 NOTICES. All notices and other communications under this Agreement
will be in writing and will be deemed given and received: (a) on the date of
delivery when delivered by hand or when transmitted by a confirmed simultaneous
telecopy, (b) on the following business day when sent by receipted overnight
courier, or (c) three (3) business days after deposit in the United States Mail
when mailed by registered or certified mail, return receipt requested, first
class postage prepaid, if sent to the applicable addresses or telecopy numbers
listed in Schedule 2. Either party may change the address to which notices are
to be sent to it by giving written notice of that change of address to the
other party in the manner provided above for giving notices.
13.2 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any right of
the parties hereunder may be assigned or delegated, whether voluntarily or
involuntarily, without the prior written consent of the other party provided,
however, that no consent will be required in the event of the sale of
substantially all the assets of or a merger involving the Company or the
assignment by the Company of this Agreement to Reynolds or to any parent,
subsidiary or other entity of which the Company (or the Company's parent) holds
fifty percent (50%) or more of the voting power. This Agreement will be binding
on the parties to this Agreement and
5
<PAGE> 6
their respective permitted successors, assigns and transferees and it is
expressly intended that Reynolds be a third party beneficiary of the rights of
the Company under this Agreement.
13.3 HEADINGS; SCHEDULES. The section, subsection and other headings in
this Agreement are inserted only for reference and are not a part of this
Agreement. The Schedules attached to this Agreement are a material part of
this Agreement and are incorporated into this Agreement by this reference.
13.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which will be considered one agreement and effective when
one counterpart has been signed by each party and delivered to the other party.
13.5 INTEGRATION OF AGREEMENT. This Agreement supersedes all prior
agreements, oral and written, between the parties about the subject matter of
this Agreement (including severance). Neither this Agreement, nor any
provision of this Agreement, may be changed, waived, discharged, supplemented
or terminated orally, but only by a writing signed by the party against which
the enforcement is sought. In the case of the Company, the writing must also
be signed by an officer of Reynolds.
13.6 WAIVER. Failure of either party to exercise its rights under the
terms of this Agreement on any one occasion will not be construed as a waiver
of any requirement of this Agreement or a waiver of that party's right to take
advantage of any subsequent or continued breach by the other party of any
agreement or covenant contained in this Agreement. Except as expressly
provided in this Agreement, all remedies provided in this Agreement will be in
addition to and not in substitution for any remedies otherwise available to the
aggrieved party.
13.7 CERTAIN TERMS. When used in this Agreement, (a) "including" means
"including, without limitation," whether or not that language is specifically
set forth, and will not be deemed to limit the range of possibilities to those
items specifically enumerated, and (b) "person" will be broadly interpreted to
include, without limitation, any corporation, partnership, association, limited
liability company, other association, trust or individual.
13.8. ARBITRATION. Any dispute or controversy arising out of this
Agreement or its performance shall be resolved by binding arbitration before a
panel of three (3) arbitrators in Dayton, Ohio pursuant to the rules of the
American Arbitration Association. The prevailing party's costs and expenses
(including reasonable attorney's fees) shall be borne by the other party.
14. REPLACEMENT TERMS.
14.1 OPTIONAL TERMINATION. During the first six (6) months of the Term,
Employee will be based in Sycamore, Illinois subject to reasonable travel
requirements. If at any time after 90 days after the Closing but prior to the
expiration of the Term, Employee shall be dissatisfied with his employment,
then, in that event and notwithstanding anything in this Agreement to the
contrary, Employee shall be entitled to terminate this Agreement upon 15 days
prior written notice to the Company and on the effective date of termination
Employee shall receive a payment of $105,000 (for all other purposes of this
Agreement such a termination shall be deemed a termination pursuant to Section
11.1(a)).
14.2 REPLACEMENT TERMS. Following the six-month anniversary of the Closing
but prior to the 9-month anniversary of the Closing, the Company and Reynolds
shall propose to Employee in writing new terms of employment. Employee shall
have a period of 30 days following receipt of the written proposal to accept
(which must be evidenced by execution of a mutually satisfactory agreement)
such proposal (failure to execute such an agreement within the 30-day period
shall be deemed rejection of the proposal and a "Constructive Discharge" for
purposes of Section 11, and the Term shall cease
6
<PAGE> 7
upon expiration of such 30-day period). If the proposal is accepted it will
replace this Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
7
<PAGE> 8
The parties have signed this Agreement as of the 20th day of April, 1996.
DUPLEX PRODUCTS INC. EMPLOYEE:
By:______________________________ ______________________________
Print Name:______________________ Print Name:___________________
Print Title:_____________________
ROBIN3.AGR
<PAGE> 9
SCHEDULE 1
DEFINITIONS
-----------
1. "AGREEMENT" means this agreement.
2. "BONUS" means the bonus described in Section 3 of Schedule 2.
3. "CLOSING" means the closing of the purchase by Reynolds of common stock of
the Company pursuant to the Offer.
4. "COMPANY" means Duplex Products Inc.
5. "COMPANY INTELLECTUAL PROPERTY" means all information, documents,
drawings, customer lists, software, and ideas belong to the Company, its
customers, clients, vendors, suppliers, licensors, competitors, or alliances
which are disclosed to Employee or of which Employee becomes aware, during the
course of Employee's employment with the Company.
6. "COMPANY INVENTIONS" means any of the Inventions, whether or not embodied
in a tangible means of expression, which:
6.1 are in whole or in part conceived or made by Employee in the course
of Employee's employment with the Company or which result from any work
performed by Employee for the Company, or
6.2 are made through the use of any Company Intellectual Property or any
of the Company's equipment, facilities, supplies or time.
7. "CONSTRUCTIVE DISCHARGE" means termination of the Term by Employee (in his
discretion) as described in Section 14.2 or following either: (a) a material
reduction in Employee's duties or responsibilities; or (b) relocation of
Employee's position to a location other than the Company's Sycamore, Illinois
headquarters.
8. "DIRECTLY OR INDIRECTLY" means:
8.1 acting as an agent, representative, consultant, officer, director,
independent contractor or employee of any person, or
8.2 participating in any person as an owner, partner, limited partner,
joint venturer, creditor, stockholder, or member.
Direct or Indirect competition will not include the ownership of voting
securities or other equity interests representing less than 5% of the voting
power of an entity whose securities are traded on a national securities
exchange or in the over-the-counter market.
9. "EMPLOYEE" means Mark A. Robinson.
<PAGE> 10
10. "INVENTIONS" means all inventions, discoveries, ideas, improvements,
trade secrets, patents, trademarks, service marks, concepts, computer software,
designs, drawings, specifications, techniques, know-how, other intellectual
property, derivatives of any of the above, and all copyright, trademark and
patent applications and registrations.
11. "MERGER AGREEMENT" means the Agreement and Plan of Merger among
Reynolds, Delaware Acquisition Co. and the Company dated as of April 20, 1996.
12. "OFFER" means the proposed tender offer by Reynolds for the common stock
of Duplex contemplated by the Merger Agreement.
13. "PRIOR AGREEMENT" means the agreement between the Company and Employee
dated as of January 26, 1996 as amended by letter dated March 13, 1996.
14. "POST TERMINATION PERIOD" means the period immediately following the
Term ending on the second (2nd) anniversary of the Closing.
15. "TERM" means the period commencing on the Closing and ending, unless
sooner terminated pursuant to Section 11.1, on the first anniversary of the
Closing.
2
<PAGE> 11
SCHEDULE 2
1. CAPACITY. Employee shall continue to be employed during the Term in the
same capacity as immediately prior to the Closing.
2. DUTIES. Those duties performed by Employee immediately prior to the
Closing.
3. COMPENSATION.
3.1 Salary. Employee shall be paid an annual salary of $105,000,
payable in accordance with the Company's ordinary payment policy as the same
may change from time to time.
3.2 Bonus. Employee shall be paid a bonus of $275,000, payable in two
(2) installments as follows: (a) $$225,000 -simultaneous with the Closing; and
(b) $50,000 - on the six (6)-month anniversary of the Closing; provided,
however, that if Employee's employment is terminated pursuant to
Section 11.1(a) or Section 11.1(e), Employee shall be deemed to have waived
all rights to the unpaid balance of the Bonus as of the effective date of
termination.
4. NOTICE ADDRESS AND TELECOPY NUMBERS
4.1 If to the Company:
Duplex Products Inc.
1947 Bethany Road
Sycamore, Illinois 60178
ATTN: President
Fax No. (815) 895-1091
with a copy to:
The Reynolds and Reynolds Company
115 S. Ludlow St.
Dayton, OH 45402
ATTN: Adam M. Lutynski
Fax No. (513) 449-4123
4.2 If to Employee:
Mark A. Robinson
415 Wood Road
Rockford, Illinois 61107
Fax No. (815) 229-8633
2
<PAGE> 1
EXHIBIT (c)(10)
[DUPLEX LETTERHEAD]
VIA TELEFAX 513/290-7270
March 3, 1996
Mr. Daniel Dittman
The Reynolds and Reynolds Co.
3555 S. Kettering Blvd.
Moraine, Ohio 45439
RE: Confidentiality Agreement
Dear Dan:
In connection with our discussions regarding a proposed business transaction
involving Reynolds & Reynolds Co. ("Reynolds") and Duplex Products Inc. (the
"Company"), Reynolds has requested the opportunity to review documents,
records, and other information that the Company views as confidential or
proprietary (collectively, "Confidential Information"). While we understand
your desire to review and examine such Confidential Information, and have no
general objection to providing it under the circumstances, we believe it
appropriate that the Company obtain Reynolds' written agreement to maintain the
confidentiality of such Confidential Information before we make it available. I
am sure you can understand the Company tries to exert every possible effort to
minimize the risk that any of our plans, trade secrets, or other information
might be disclosed or utilized in any improper fashion.
Accordingly, the balance of this letter contains an agreement on the part of
Reynolds to preserve the confidentiality of information provided to it or any
of its agents or designees.
Out of respect for the Federal Trade Commission's watchful eye over exchanges
of information among competitors, we are reluctant to provide you, at this
time, with information relating to current prices, current customers, current
or future costs from which price can be derived or marketing plans. Reynolds
hereby agrees that it will not use any Confidential Information for purposes
including planning, marketing, product development or pricing. The Confidential
Information is being provided to Reynolds to enable it to consider the
desirability, feasibility and timing of a potential business transaction with
the Company. However, such Confidential Information would
<PAGE> 2
not be provided if Reynolds did not sign this Confidentiality Agreement, and it
is being provided in reliance upon this Confidentiality Agreement.
This Agreement relates to all Confidential Information provided by the Company
to Reynolds about the Company, its business and its share of the industry,
including, but not limited to, information regarding the Company's business;
plans; financial results and statements; markets; projected activities and
results of operations; customers, materials requirements and sources; contracts;
backlog; means; methods, and processes of manufacture and assembly; trade
secrets; customer lists and customer names and contacts; and stock ownership and
other financial information. Confidential Information shall also specifically
include any information relating to the fact that the Company and Reynolds have
entered into discussions about a possible business transaction.
Reynolds agrees that Confidential Information will be disclosed only to such of
its personnel, and to such of its outside experts and advisors, as (1)
reasonably need to know such information to advise Reynolds in connection with,
or to determine the value or desirability of entering into, a transaction of the
type under discussion with the Company, and (2) agree to be bound by the
provisions and restrictions regarding Confidential Information contained herein.
Reynolds will be, and will remain, fully responsible to the Company for any use
of Confidential Information by any person who receives it on Reynolds' behalf,
or to whom Reynolds or any such person discloses it, for any reason, in all
respects as though Reynolds had made such use of such information. Unless later
agreed to in writing to the contrary, Reynolds will disclose Confidential
Information only to its Executive officers, directors and acquisition and
finance staff. Reynolds' marketing and sales personnel shall be excluded from
access to any Confidential Information.
Furthermore, Reynolds agrees that all Confidential Information will be kept and
maintained confidential by Reynolds, will not be disclosed to any third person
(except as described in the preceding paragraph); will under no circumstances
(and without in any manner limiting the preceding clause) be disclosed to, or
utilized in connection with, any supplier, customer or competitor (present or
potential) of the Company (including any such person now or hereafter
controlled by Reynolds) and will not in any way be used, or be permitted to be
used, in a manner detrimental to the business or prospects of the Company. If
and when discussions related to the proposed business relationship between
Reynolds and the Company should be terminated, the foregoing restrictions shall
nonetheless continue and remain in effect, and Reynolds shall return to the
Company all copies of Confidential Information then held by Reynolds, its agents
and advisors, or shall certify to the Company's satisfaction that all such
copies have been destroyed, and neither Reynolds nor any of its agents or
advisors will retain any of the Confidential Information in their possession or
control.
Without limiting the foregoing, Reynolds further agrees that none of the
Confidential Information or any other information provided by the company to
Reynolds will be used by Reynolds, or disclosed to others for use, in connection
with purchasing, selling or trading in the Company's securities in any manner
that is in violation of legal or regulatory restrictions applicable from time to
time, and Reynolds acknowledges a duty not to purchase, sell or trade in
securities on the basis of any material
2
<PAGE> 3
"inside" information that is not publicly known, and shall so instruct any
employees, agents or advisors utilized.
The foregoing limitations will not apply to any information disclosed by the
Company to Reynolds that would otherwise be within the definition of
Confidential Information (1) if such information is generally and readily
available to the public, or can be demonstrated to have been independently
known by Reynolds at the time of its disclosure to Reynolds, or (2) after the
time, if any, that such information becomes generally and readily available to
the public, or can be demonstrated to have been independently disclosed to
Reynolds, without any utilization of Confidential Information disclosed to
Reynolds hereunder, and without any breach by Reynolds (or by any of Reynolds'
personnel or advisors) of the obligations binding on Reynolds and reflected
herein; or (3) after the expiration of three (3) years from the date hereof.
The furnishing of Confidential Information hereunder shall not obligate either
party to enter into any further agreement or negotiation with the other or to
refrain from entering into an agreement or negotiation with any other party.
Assuming that you agree to the foregoing, please sign below and on the enclosed
copy of this letter and return one copy to me promptly, whereupon it shall
become a binding agreement between Reynolds and the Company.
Except as may be required by law, without the prior written consent of the
other party, neither party hereto nor their respective representatives will
disclose to any person either the fact that discussions or negotiations are
taking place concerning a possible transaction between the Company and Reynolds
or any other terms, conditions or other facts with respect to any such possible
transaction, including the status thereof.
The Company does not make any representation or warranty with respect to the
accuracy or completeness of any Confidential Information, or any other
information provided to Reynolds, including specifically any financial
projections or other forward looking information, except such representations or
warranties as may be set forth in an acquisition executed by the Company and
Reynolds.
In the event Reynolds discloses, disseminates or releases any Confidential
Information, except as provided above, such disclosure, dissemination or
release will be deemed a material breach of this Agreement and the Company may
demand prompt return of all Confidential Information previously provided. The
parties acknowledge that any breach of the provisions of this Agreement would
cause the Company to suffer irreparable damage that could not be adequately
remedied at law. Therefore, the Company shall have the right to seek specific
performance or other injunctive relief to enjoin any breach, in addition to its
other rights and remedies available at law. Our agreement shall be construed
and enforced in accordance with the laws of Illinois.
If you should have any questions or concerns, please do not hesitate to call.
Any requests for clarification or for additional information should be directed
to the Company's Chief Financial
3
<PAGE> 4
Officer, James Ramig, or to me. My fax number is 815/895-1091.
Yours sincerely,
DUPLEX PRODUCTS INC.
/s/ Mark A. Robinson
- ----------------------------
By: Mark A. Robinson,
Secretary/General Counsel
AGREED AND CONFIRMED:
REYNOLDS & REYNOLDS CO.
BY:__________________________________________
ITS:_________________________________________
Date:______________, 1996
4
<PAGE> 5
[REYNOLDS & REYNOLDS LETTERHEAD]
VIA TELECOPY - (815) 895-1091
March 7, 1996
Mark A. Robinson, Esq.
Secretary and General Counsel
Duplex Products, Inc.
1947 Bethany Road
Sycamore, IL 60178
Re: Confidentiality Agreement
Dear Mark:
Thank you for your March 3, 1996 letter. The terms of that letter are
satisfactory to Reynolds subject to the following modifications:
1. Given that we are only at an initial exploratory phase, we understand your
reasons for not providing at this time information relating to current prices,
current customers, current or future costs from which price can be derived or
marketing plans. As we have discussed, if the transaction proceeds to the due
diligence phase, that investigation will be based upon a mutually satisfactory
schedule and methodology. During that phase, we will need to obtain the
pricing, customer, cost and marketing information at a time which is
satisfactory to you and which will provide us a reasonable time to digest and
evaluate that information.
2. Similarly, we understand your reason for wanting to exclude our sales and
marketing personnel from access to the Confidential Information at this time,
but, if we proceed to the due diligence phase as described, we will need to
share appropriate Confidential Information with certain of our sales and
marketing personnel who are part of our acquisition team. We propose a solution
similar to that for the cost and pricing information (i.e., we will not provide
any Confidential Information to sales and marketing personnel who are part of
our due diligence team until you have consented to that disclosure; provided,
that you will give your consent at a time which will provide such sales and
marketing personnel a reasonable time to digest and evaluate the applicable
Confidential Information).
3. We expect in the course of the discussions regarding the proposed
transaction that Reynolds will deliver documents, records and other information
that Reynolds views as confidential or proprietary. Accordingly, the agreement
should be deemed to be
<PAGE> 6
Mark A. Robinson, Esq.
Page 2
March 7, 1996
mutual in all respects, including reciprocal provisions in all respects with
regard to any such confidential or proprietary information and mirror-image
rights and obligations of Duplex to all rights and obligations of Reynolds
(including, without limitation, the prohibition on certain activities in
Reynolds' stock).
4. Information which is disclosed orally would only be deemed "Confidential
Information" if that information is later embodied in a tangible means of
expression which is delivered to the receiving party.
5. There should be an exception for compelled disclosure as follows:
"Notwithstanding anything to the contrary in this letter, in the event that
the party receiving any Confidential Information is requested or becomes
compelled (by oral questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process) to
disclose any of the Confidential Information or take any other action
prohibited by this letter, the receiving party will provide the disclosing
party with prompt written notice so that the latter may seek a protective
order or other appropriate remedy and/or waive compliance with the provisions
of this letter. In the event that such a protective order or other remedy is
not obtained or that the disclosing party waives compliance with the
provisions of this letter, the receiving party will furnish only that portion
of the Confidential Information or take only such action which is legally
required and will in good faith seek to obtain reasonable assurance that
confidential treatment will be accorded to the Confidential Information so
furnished."
6. Finally, we had a few technical corrections:
a. Reynolds' correct legal name is "The Reynolds and Reynolds Company."
b. The second and third sentences of the third paragraph on page one should
be reversed, and the words "any other" inserted after the word "for" and
before the word "purposes" in the former second sentence.
If the foregoing changes are acceptable, please execute this letter where
indicated below and return a copy to me by fax at (513 290-7270. Upon receipt
of that fax, the March 3 letter, as amended in
<PAGE> 7
Mark A. Robinson, Esq.
Page 3
March 7, 1996
the manner set forth in this letter, will thereby become a binding agreement of
Reynolds and Duplex. On the assumption that the changes will be acceptable, I
am also returning a copy of the March 3 letter executed on behalf of Reynolds.
Please call me (513-290-7270) if you have any questions. We look forward to
working with you.
Very truly yours,
THE REYNOLDS AND REYNOLDS COMPANY
By: /s/ Daniel W. Dittman
--------------------------------------
Daniel W. Dittman
Senior Vice President
Enclosure
AGREED AND ACCEPTED THIS 13TH DAY OF MARCH, 1996:
DUPLEX PRODUCTS, INC.
BY: /s/ Mark A. Robinson
----------------------------------
TITLE: Vice President/Secretary
-------------------------------
<PAGE> 8
Officer, James Ramig, or to me. My fax number is 815/895-1091.
Yours sincerely,
DUPLEX PRODUCTS INC.
/s/ Mark A. Robinson
By: Mark A. Robinson
Secretary/General Counsel
AGREED AND CONFIRMED:
REYNOLDS & REYNOLDS CO.
BY: /s/ Daniel W. Dittman, see attached letter
dated 3/7/96.
ITS: Sr. Vice President
---------------------
Date: 3/7, 1996
----
<PAGE> 9
April 16, 1996
[DUPLEX LOGO]
The Reynolds and Reynolds Company
115 S. Ludlow Street
Dayton, Ohio 45402
ATTN: Daniel W. Dittman
Re: Confidentiality Agreement dated as of March 3, 1996, as amended by letter
dated as of March 7, 1996 (the "Agreement").
Dear Dan:
This letter will confirm our discussions regarding an amendment to the
Agreement.
Duplex Products Inc. hereby consents, pursuant to Section 2 of the March 7
letter, to the sharing of Confidential Information with your sales and
marketing personnel. Except as amended in the preceding sentence, the Agreement
will not be amended or modified and shall remain in full force and effect.
Sincerly,
DUPLEX PRODUCTS INC.
/s/ Mark A. Robinson
By: Mark A. Robinson
Its: Vice President/General Counsel and Secretary
Agreed and accepted as of the 16th day of April, 1996
THE REYNOLDS AND REYNOLDS COMPANY
By: __________________________
Its: _________________________
DUPLEX PRODUCTS INC.
P.O. BOX 1947
1947 BETHANY ROAD
SYCAMORE, ILLINOIS 60178
<PAGE> 1
EXHIBIT (c)(11)
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is entered into as of the 14th
day of November, 1995, by and between DUPLEX PRODUCTS INC., a corporation,
("DUPLEX") and ANDREW CAMPBELL ("CAMPBELL").
WHEREAS, DUPLEX desires to hire CAMPBELL in the position of Vice
President and Chief Financial Officer.
WHEREAS, CAMPBELL desires employment with DUPLEX in the position of
Vice President and Chief Financial Officer.
NOW THEREFORE, in consideration of the promises set forth in this
Agreement, and in further consideration of CAMPBELL's employment by DUPLEX, the
parties agree as follows:
1. DEFINITIONS. The terms defined below shall have the following
meanings throughout this Agreement:
1.1 BASE ANNUAL SALARY. For purposes of this Agreement, "Base
Annual Salary" shall be equal to the greater of:
1.1.1 CAMPBELL's annual salary excluding bonuses or other
similar payments as of the date of a Change of Control; or
1.1.2 CAMPBELL's annual salary excluding bonuses or other
similar payments as of the date of a Qualifying Termination.
1.2 CHANGE OF CONTROL. A "Change of Control" shall exist upon the
first of the following to occur:
1
<PAGE> 2
1.2.1 Any tender offer, merger or other business combination,
sale of assets, contested election or any combination of the
foregoing transactions (a "Transaction"), which results in the
persons who were directors of DUPLEX before the Transaction
ceasing to constitute a majority of the Board of Directors of
DUPLEX or any successor to DUPLEX after the Transaction;
1.2.2 DUPLEX merges or consolidates with another corporation
and as a result of the merger or consolidation fifty percent
(50%) or less of the outstanding voting securities of the
surviving or resulting corporation shall then be owned in the
aggregate by former stockholders of DUPLEX;
1.2.3 A tender offer or exchange offer is made and
consummated for the ownership of securities of DUPLEX
representing more than fifty percent (50%) of the combined
voting power of DUPLEX's then outstanding voting securities;
or
1.2.4 DUPLEX transfers substantially all of its assets to
another corporation which is not a wholly-owned subsidiary of
DUPLEX.
1.3 QUALIFYING TERMINATION. A "Qualifying Termination" is a
termination of CAMPBELL's employment qualifying him for Severance
Consideration under this Agreement and shall mean:
1.3.1 Any termination of CAMPBELL's employment by DUPLEX or
any successor to DUPLEX without cause;
1.3.2 Any resignation from employment by CAMPBELL within 90
days following a Change of Control;
2
<PAGE> 3
1.3.3 Any significant diminution of CAMPBELL's
responsibilities as Vice President and Chief Financial
Officer of DUPLEX; or
1.3.4 Any reduction in CAMPBELL's Base Annual Salary.
1.4 SEVERANCE CONSIDERATION. "Severance Consideration" shall be
equal to one year's Base Annual Salary, plus a pro rata share of any
earned bonus based upon performance. Severance Consideration shall be
paid from the general assets of DUPLEX, or any successor of DUPLEX.
DUPLEX, or any successor of DUPLEX, shall not establish a separate
trust, account or plan for the payment of Severance Consideration.
2. PAYMENT OF SEVERANCE CONSIDERATION. If CAMPBELL's employment with
DUPLEX, or any successor of DUPLEX, is subject to a Qualifying Termination,
then DUPLEX, or any successor of DUPLEX, shall pay to CAMPBELL Severance
Consideration pursuant to the terms of this Agreement. Severance Consideration
shall be paid to CAMPBELL in substantially equal installments over the course
of 12 months in keeping with DUPLEX's standard payroll practice. In the event
of CAMPBELL's death prior to the entire Severance Consideration being paid, any
remaining amounts due shall be paid to CAMPBELL's estate in the same manner
provided for herein.
3. OUTPLACEMENT SERVICES. In addition to Severance Consideration, if
CAMPBELL experiences a Qualifying Termination, then DUPLEX, or any successor of
DUPLEX, shall provide CAMPBELL with outplacement services. Outplacement
services shall be provided by a firm mutually agreed upon by both CAMPBELL and
DUPLEX. In all other respects, the duration, arrangements and amounts expended
for such services shall be determined by DUPLEX, or any successor of DUPLEX;
provided, however, that such outplacement services shall continue for a minimum
of 6 months.
3
<PAGE> 4
4. WITHHOLDING OF TAXES. DUPLEX shall withhold from any Severance
Consideration payable under this Agreement all federal, state, city or other
taxes as may be required by law.
5. NOT AN EMPLOYMENT AGREEMENT. Nothing in this Agreement shall give
CAMPBELL any right to continued employment with DUPLEX or any successor of
DUPLEX, nor shall it give DUPLEX any rights to the continued performance of
duties by CAMPBELL for DUPLEX or any successor of DUPLEX.
6. NOTICES. Notices under this Agreement shall be in writing and shall
be deemed given when mailed by United States registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to DUPLEX to:
Duplex Products Inc.
1947 Bethany Road
Sycamore, Illinois 60178
Attention: Chairman of the Board
If to CAMPBELL to:
Andrew Campbell
______________________________________
______________________________________
or to such other address as either party may furnish to the other in writing,
except that notices of changes of address shall be effective only upon receipt.
7. APPLICABLE LAW. The performance and interpretation of this Agreement
shall be construed in accordance with the laws of the State of Illinois.
8. SEVERABILITY. If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the
invalidity or unenforceability of that provision
4
<PAGE> 5
shall not affect the validity or enforceability of any other provision of this
Agreement and all other provisions shall remain in full force and effect.
9. NO ASSIGNMENT. CAMPBELL's rights to receive payments or benefits
under this Agreement shall not be assignable or transferable whether by pledge,
creation of a security interest or otherwise. DUPLEX shall have no liability
to pay any amount so attempted to be assigned or transferred.
10. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of DUPLEX, its successors and assigns (including, without limitation,
any company into or with which DUPLEX may merge or consolidate). DUPLEX agrees
that it will not effect a Change of Control unless either: the person or
entity acquiring control of DUPLEX shall expressly assume by an instrument in
writing all duties and obligations of DUPLEX under this Agreement; or DUPLEX
shall provide for the payment in full of all amounts which are payable to
CAMPBELL under this Agreement.
11. AGREEMENT AND RELEASE. CAMPBELL's right to receive and DUPLEX's
obligation to pay Severance Consideration shall be contingent upon CAMPBELL
executing a binding agreement setting forth a release of any and all claims
arising from his employment and/or termination of employment with DUPLEX or any
successor of DUPLEX. Such agreement shall also contain covenants of
confidentiality and non-competition. Said non-competition covenant shall be
for a period of one year following a Qualifying Termination and shall provide,
in part, that CAMPBELL shall not, directly or indirectly, either for himself or
for any other person, firm, partnership, agency, corporation or other entity,
compete with DUPLEX, or any successor of DUPLEX, in its lines of business or
solicit, call upon, divert or take away or attempt to solicit,
5
<PAGE> 6
divert or take away from DUPLEX any customers of DUPLEX or any potential
customers of DUPLEX nor assist any other person or entity in doing so within
the United States of America.
12. ENTIRE AGREEMENT. This Agreement represents the entire agreement of
the parties regarding the severance pay arrangements between them. This
Agreement may not be modified except by a writing signed by both parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first written.
DUPLEX PRODUCTS INC.,
By: /s/ Ben McSwiney /s/ Andrew Campbell
----------------------------- ----------------------------
ANDREW CAMPBELL
Its: President & CEO
-----------------------------
6
<PAGE> 1
EXHIBIT (c)(12)
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is entered into as of the 2nd
day of October, 1995, by and between DUPLEX PRODUCTS INC., a corporation,
("DUPLEX") and JAMES R. RAMIG ("RAMIG").
WHEREAS, DUPLEX desires to hire RAMIG in the position of Vice President
of Finance and Administration and Chief Financial Officer.
WHEREAS, RAMIG desires employment with DUPLEX in the position of Vice
President of Finance and Administration and Chief Financial Officer.
NOW THEREFORE, in consideration of the promises set forth in this
Agreement, and in further consideration of RAMIG's employment by DUPLEX, the
promises set forth in this Agreement, and in further consideration of RAMIG's
employment by DUPLEX, the parties agree as follows:
1. DEFINITIONS. The terms defined below shall have the following
meanings throughout this Agreement:
1.1 BASE ANNUAL SALARY. For purposes of this Agreement, "Base
Annual Salary" shall be equal to the greater of:
1.1.1 RAMIG's annual salary excluding bonuses or other similar
payments as of the date of a Change of Control; or
1.1.2 RAMIG's annual salary excluding bonuses or other similar
payments as of the date of a Qualifying Termination.
1.2 CHANGE OF CONTROL. A "Change of Control" shall exist upon the
first of the following to occur:
1.2.1 Any tender offer, merger or other business combination,
sale of assets, contested election or any combination of
the foregoing transactions (a "Transaction"), which
results in the persons who were directors of DUPLEX
before the Transaction ceasing to constitute a majority
of the Board of Directors of DUPLEX or any successor to
DUPLEX after the Transaction;
1.2.2 DUPLEX merges or consolidates with another corporation
and as a result of the merger or consolidation fifty
percent (50%) or less of the outstanding voting
securities of the surviving or resulting corporation
shall then be owned in the aggregate by former
stockholders of DUPLEX;
<PAGE> 2
1.2.3 A tender offer or exchange offer is made and
consummated for the ownership of securities of DUPLEX
representing more than fifty percent (50%) of the
combined voting power of DUPLEX's then outstanding
voting securities; or
1.2.4 DUPLEX transfers substantially all of its assets to
another corporation which is not a wholly-owned
subsidiary of DUPLEX.
1.3 QUALIFYING TERMINATION. A "Qualifying Termination" is a
termination of RAMIG's employment qualifying him for
Severance Consideration under this Agreement and shall mean:
1.3.1 Any termination of RAMIG's employment by DUPLEX or any
successor to DUPLEX without cause. "Cause" shall mean
and include (i) misappropriation of any monies or assets
or propterties of Duplex, (ii) a material breach by
RAMIG of the terms of this Agreement or of the DUPLEX
Code of Ethics, a copy of which is attached, (iii) the
conviction of RAMIG of any felony or other serious crime
involing RAMIG's moral turpitude, (iv) failure by RAMIG
to devote his full business time to the Company
(including, without limitation, any voluntary
resignation by RAMIG), (v) willful violation of written
directions of the Board, the Chairman or the President,
provided that such written directions shall pertain to
duties within the scope of those assigned to RAMIG or
generally understood to be within such scope, (vi) any
willful action or inaction of RAMIG which, in the
opinion of the Board is likely to have a material
adverse effect on the Company and which constitutes
dereliction (willful neglect or abandonment of assigned
duties), malfeasance or misconduct, (vii) gross or
willful material misconduct as determined by the Board,
the Chairman or the CEO, or (viii) RAMIG's becoming
disabled during his employemnt hereunder so that he is
unable substantially to perform his services hereunder,
in the sole discretion of the President, for an
aggregate period of 180 days during any twelve-month
period, then the term of this Agreement may be
terminated by resolution of the Board within sixty days
after the expiration of such 180 days such termination
to be effective upon delivery of written notice to RAMIG
of the adoption of such resolution; provided, that RAMIG
shall be entitled to receive any accrued and unpaid
salary through such effective date of termination.
1.3.2 Any resignation from employment by RAMIG within 90 days
following a Change of Control;
1.3.3 Any significant diminution of RAMIG's responsibilities
as Vice President of Finance and Chief Financial Officer
of DUPLEX; or
1.3.4 Any reduction in RAMIG's Base Annual Salary.
<PAGE> 3
1.4 SEVERANCE CONSIDERATION. "Severance Consideration" shall be
equal to one year's Base Annual Salary, plus a pro rata share
of any earned bonus based upon performance. Severance
Consideration shall be paid from the general assets of DUPLEX,
or any successor of DUPLEX. DUPLEX, or any successor of DUPLEX,
shall not establish a separate trust, account or plan for the
payment of Severance Consideration.
2. PAYMENT OF SEVERANCE CONSIDERATION. If RAMIG's employment with
DUPLEX, or any successor of DUPLEX, is subject to a Qualifying
Termination, then DUPLEX, or any successor of DUPLEX, shall pay to
RAMIG Severance Consideration pursuant to the terms of this
Agreement. Severance Consideration shall be paid to RAMIG in
substantially equal installments over the course of 12 months in
keeping with DUPLEX's standard payroll practice. In the event of
RAMIG's death prior to the entire Severance Consideration being
paid, any remaining amounts due shall be paid to RAMIG's estate in
the same manner provided for herein.
3. OUTPLACEMENT SERVICES. In addition to Severance Consideration, if
RAMIG experiences a Qualifying Termination, then DUPLEX, or any
successor of DUPLEX, shall provide RAMIG with outplacement services.
Outplacement services shall be provided by a firm mutually agreed upon
by both RAMIG and DUPLEX. In all other respects, the duration,
arrangements and amounts expended for such services shall be determined
by DUPLEX, or any successor of DUPLEX; provided, however, that such
outplacement services shall continue for a minimum of six months.
4. WITHHOLDING OF TAXES. DUPLEX shall withhold from any Severance
Consideration payable under this Agreement all federal, state, city or
other taxes as may be required by law.
5. NOT AN EMPLOYMENT AGREEMENT. Nothing in this Agreement shall give
RAMIG any right to continued employment with DUPLEX or any successor of
DUPLEX, nor shall it give DUPLEX any rights to the continued
performance of duties by RAMIG for DUPLEX or any successor of DUPLEX.
6. NOTICES. Notices under this Agreement shall be in writing and shall be
deemed given when mailed by United States registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to DUPLEX to: If to RAMIG to:
Duplex Products Inc. James R. Ramig
1947 Bethany Road 14715 Golf Road
Sycamore, Illinois 60178 Orland Park, IL 60462
Attention: Chairman of the Board
or to such other address as either party may furnish to the other in writing,
except that notices of changes of address shall be effective only upon receipt.
<PAGE> 4
7. APPLICABLE LAW. The performance and interpretation of this Agreement
shall be construed in accordance with the laws of the State of
Illinois.
8. SEVERABILITY. If a court of competent jurisdiction determines that any
provision of this Agreement is invalid or unenforceable, then the
invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement and
all other provisions shall remain in full force and effect.
9. NO ASSIGNMENT. RAMIG's rights to receive payments or benefits under
this Agreement shall not be assignable or transferable whether by
pledge, creation of a security interest or otherwise. DUPLEX shall
have no liability to pay any amount so attempted to be assigned or
transferred.
10. SUCCESSORS. This Agreement shall be binding upon and insure to the
benefit of DUPLEX, its successors and assigns (including, without
limitation, any company into or with which DUPLEX may merge or
consolidate). DUPLEX agrees that it will not effect a Change of
Control unless either: the person or entity acquiring control of
DUPLEX shall expressly assume by an instrument in writing all duties
and obligations of DUPLEX under this Agreement; or DUPLEX shall provide
for the payment in full of all amounts which are payable to RAMIG under
this Agreement.
11. AGREEMENT AND RELEASE. RAMIG's right to receive and DUPLEX's
obligation to pay Severance Consideration shall be contingent upon
RAMIG executing a binding agreement setting forth a release of any and
all claims arising from his employment and/or termination of employment
with DUPLEX or any successor of DUPLEX. Such agreement shall also
contain covenants of confidentiality and non-competition. Said
non-competition covenant shall be for a period of one year following a
Qualifying Termination and shall provide, in part, that RAMIG shall
not, directly or indirectly, either for himself or for any other
person, firm, partnership, agency, corporation or other entity, compete
with DUPLEX, or any successor of DUPLEX, in its lines of business or
solicit, call upon, divert or take away or attempt to solicit, divert
or take away from DUPLEX any customers of DUPLEX or any potential
customers of DUPLEX nor assist any other person or entity in doing so
within the United States of America.
12. ENTIRE AGREEMENT. This Agreement represents the entire agreement of
the parties regarding the severance pay arrangements between them.
This Agreement may not be modified except by a writing signed by both
parties.
13. Payments comtempleted under this contract do not reduce or eliminate
any normal benefits/payments RAMIG may be entitled to as a result of
his termination.
<PAGE> 5
14. If either party is required to bring suit to enforce any of the
provisions of this Agreement, the prevailing party in such litigation
shall be entitled to receive, along with any other award of damages or
relief that the court may deem appropriate, reasonable attorney's fees,
court costs and litigation expenses.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year first written.
DUPLEX PRODUCTS, INC.
By: /s/ Andrew A. Campbell /s/ James R. Ramig
---------------------------------- --------------------------------
Andrew A. Campbell, President James R. Ramig
<PAGE> 6
AGREEMENT
---------
This Agreement entered into this 26th day of January, 1996, by and
between Duplex Products Inc., a corporation, ("Duplex"), and James Ramig
("Ramig").
WHEREAS, Ramig currently serves as Vice President and Chief Financial
Officer of Duplex; and,
WHEREAS, Duplex may from time to time be an acquisition target; and,
WHEREAS, it is in the best interests of the shareholders that key
management personnel remain in place throughout any acquisition activity and
devote their entire time and energies to their employment with Duplex and any
such acquisition activity; and,
WHEREAS, it is the desire of Duplex to give appropriate incentives and
protection to certain key executives in the event of any such activity so that
they can devote their entire time and energies to Duplex business without
distraction.
NOW, THEREFORE, in consideration of the promises set forth in this
Agreement, and in further consideration of Ramig's continued employment with
Duplex as Vice President and Chief Financial Officer, the parties hereto agree
as follows:
1. RETENTION POOL.
Duplex has created a Retention Pool to be used only if a transaction
is consummated with Miami Systems Corporation and/or Wallace Computer Systems
Inc., in which case Ramig will share in said Retention Pool as follows:
1.1 If Miami Systems Corporation effectuates a merger with Duplex,
or acquires 50% or more of the outstanding shares of Duplex,
or Wallace Computer Systems Inc. acquires 50% or more of the
outstanding shares of Duplex, and Ramig is still employed by
Duplex at the time either of the above referenced transactions
are consummated, then in that event, Ramig shall receive
$100,000.00 from said Retention Pool, in one lump sum payable
within ten (10) days after said transaction is consummated.
2. STOCK OPTIONS.
On January 4, 1996, Duplex through its Board of Directors adopted a
resolution that would cause all stock options issued under the 1984/1993
Incentive Stock Option program, owned by Ramig, no matter when granted that
would not otherwise vest, to vest 100% at the time of the consummation of
either of the transactions mentioned in paragraph 1 above herein with Miami
Systems Corporation or Wallace Computer Systems Inc.
<PAGE> 7
3. TIME DEVOTED TO DUPLEX.
The purpose of this Agreement is to provide Ramig with a financial
incentive that will provide Ramig with sufficient financial rewards in the
event a transaction is consummated with Miami Systems Corporation or Wallace
Computer Systems Inc., as described above herein, so that Ramig can devote his
entire time and energies to routine Duplex business as well as the consummation
of one of the transactions described above herein rather than being distracted
by other matters unrelated to the business of Duplex.
4. WITHHOLDING OF TAXES.
Duplex, or any successor of Duplex, shall withhold from any Retention
Pool payments payable under this Agreement all federal, state, city or other
taxes as may be required by law.
5. AMENDMENT.
This Agreement may not be modified except in writing signed by both
parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.
DUPLEX PRODUCTS INC.
BY: /s/ John A. Bacon /s/ James Ramig
-------------------------------- --------------------------------
John A. Bacon JAMES RAMIG
Compensation Committee Chairman
<PAGE> 1
EXHIBIT (c)(13)
AGREEMENT
---------
This Agreement ("Agreement") is entered into by and between Duplex
Products Inc., a corporation ("Duplex") and Mark A. Robinson ("Robinson").
WHEREAS, Robinson currently serves as General Counsel of Duplex; and,
WHEREAS, Duplex may from time to time be an acquisition target; and,
WHEREAS, it is in the best interests of the shareholders that key
management personnel remain in place throughout any acquisition activity and
devote their entire time and energies to their employment with Duplex and any
such acquisition activity; and,
WHEREAS, it is the desire of Duplex to give appropriate incentives and
protection to certain key executives in the event of any such activity so that
they can devote their entire time and energies to Duplex business without
distraction.
NOW, THEREFORE, in consideration of the promises set forth in this
Agreement, and in further consideration of Robinson's continued employment with
Duplex, the parties hereto agree as follows:
1. DEFINITIONS. The terms defined below shall have the following
meanings throughout this Agreement:
1.1 BASE ANNUAL SALARY. For purposes of this Agreement, "Base Annual
Salary" shall be equal to Robinson's annual salary excluding bonuses
or other similar payments as of the date of a Change of Control.
1.2. CHANGE IN CONTROL. A "Change in Control" shall exist upon the
first of any of the following to occur:
1.2.1. Any tender offer, merger or other business
combination, sale of assets, contested election or any
combination of the foregoing transactions (a "Transaction"),
which results in the persons who were directors of Duplex
before the Transaction ceasing to constitute a majority of the
Board of Directors of Duplex or any successor to Duplex after
the Transaction;
1.2.2. Duplex merges or consolidates with another corporation
and as a result of the merger or consolidation fifty percent
(50%) or less of the outstanding voting securities of the
surviving or resulting corporation shall then be owned in the
aggregate by former stockholders of Duplex;
1.2.3. A tender offer or exchange offer is made and
consummated for the ownership of securities of Duplex
representing more than fifty percent (50%) of the combined
voting power of Duplex's then outstanding voting securities;
or
<PAGE> 2
1.2.4. Duplex transfers substantially all of its assets to
another corporation which is not a wholly-owned subsidiary of
Duplex.
1.2.5. A Change of Control for the purposes of this Agreement
shall specifically include any transaction completed with
Miami Systems Corporation and/or Wallace Computer Systems
Inc..
1.3 SEVERANCE CONSIDERATION. "Severance Consideration" shall be
equal to one year's Base Annual Salary if the Severance occurs in the
first twelve (12) months immediately following a Change of Control.
Beginning the thirteenth (13th) month through the twenty-fourth
(24th) month after a Change of Control, said Severance Consideration
shall be reduced by 8.33% each month.
1.4 QUALIFYING TERMINATION. A "Qualifying Termination" is a
termination of Robinson's employment qualifying him for Severance
Consideration under this Agreement and shall mean:
1.4.1 Any termination of Robinson's employment by Duplex, or
any successor to Duplex, without cause, subsequent to and
within twenty-four (24) months of a Change of Control;
1.4.2 A reduction of Robinson's salary by Duplex, or any
successor to Duplex, by 20% per cent, or more, or his position
is changed from General Counsel, subsequent to and within
twenty-four (24) months of a Change of Control.
1.5 ENTIRE TIME AND ENERGIES. "Entire time and energies" shall mean
the normal and customary hours per week devoted to perform the duties
assigned to Robinson as General Counsel since he assumed said
position, and as compared to corporate executives in similar positions
with other similar companies.
2. PAYMENT OF SEVERANCE CONSIDERATION.
If a Qualifying Termination occurs and Robinson is entitled to
Severance Consideration, said Severance Consideration shall be paid
to Robinson as set forth in this Agreement, and shall be paid in one
lump sum within ten (10) days of said termination.
3. RETENTION POOL.
Duplex has created a Retention Pool to be used only if a transaction
is consummated with Miami Systems Corporation and/or Wallace Computer
Systems Inc., in which case Robinson will share in said Retention Pool
as follows:
3.1 If Miami Systems Corporation effectuates a merger with Duplex,
or acquires 50% or more of the outstanding shares of Duplex,
or Wallace Computer Systems Inc.
-2-
<PAGE> 3
acquires 50% or more of the outstanding shares of Duplex, and
Robinson is still employed by Duplex at the time either of the
above referenced transactions is consummated, then in that
event, Robinson shall receive $100,000.00 from said Retention
Pool, in one lump sum payable within ten (10) days after said
transaction is consummated.
4. STOCK OPTIONS.
On January 4, 1996, Duplex through its Board of Directors adopted a
resolution that would cause all stock options issued under the
1984/1993 Incentive Stock Option program, owned by Robinson, no matter
when granted that would not otherwise vest, to vest 100% at the time
of the consummation of either of the transactions mentioned in
paragraph 3 hereinabove with Miami Systems Corporation or Wallace
Computer Systems Inc.
5. WITHHOLDING OF TAXES.
Duplex, or any successor of Duplex, shall withhold from any Severance
Consideration payable under this Agreement all federal, state, city or
other taxes as may be required by law.
6. NOT AN EMPLOYMENT AGREEMENT.
Nothing in this Agreement shall give Robinson any right to continued
employment with Duplex, or any successor of Duplex, nor shall it give
Duplex any rights to the continued performance of duties by Robinson
to Duplex, or any successor of Duplex.
7. NOTICES.
Notices under this Agreement shall be in writing and shall be deemed
given when mailed by United States registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to Duplex, to:
Duplex Products Inc.
1947 Bethany Road
Sycamore, IL 60178
Attn: Chairman of the Board
-3-
<PAGE> 4
If to Robinson, to:
----------------------------
----------------------------
or to such other address as either party may furnish to the other in writing,
except that notices of changes of address shall be effective only upon receipt.
8. APPLICABLE LAW.
The performance and interpretation of this Agreement shall be
construed in accordance with the laws of the State of Illinois.
9. SEVERABILITY.
If a court of competent jurisdiction determines that any provision of
this Agreement is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement and all other
provisions shall remain in full force and effect.
10. NO ASSIGNMENT.
Robinson's rights to receive payments or benefits under this Agreement
shall not be assignable or transferable whether by pledge, creation of
a security interest or otherwise. Duplex shall have no liability to
pay any amount so attempted to be assigned or transferred.
11. SUCCESSORS.
This Agreement shall be binding upon and inure to the benefit of
Duplex, its successors and assigns (including, without limitation, any
company into or with which Duplex may merge or consolidate). Duplex
agrees that it will not effect a Change of Control unless either: the
person or entity acquiring control of Duplex shall expressly assume by
an instrument in writing all duties and obligations of Duplex under
this Agreement; or Duplex shall provide for the payment in full of all
amounts which are payable to Robinson under this Agreement.
12. CONFIDENTIALITY AND RELEASE.
Robinson's right to receive and Duplex's obligation to pay Severance
Consideration shall be contingent upon Robinson executing a binding
agreement setting forth a release of any and all claims arising from
his employment and/or termination of employment with
-4-
<PAGE> 5
Duplex or any successor of Duplex. Such agreement shall also contain
covenants of confidentiality.
13. ENTIRE AGREEMENT.
This Agreement represents the entire agreement of the parties
regarding the severance pay arrangements between them. This Agreement
may not be modified except in writing signed by both parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.
DUPLEX PRODUCTS INC.
BY: /s/ John A. Bacon /s/ Mark A. Robinson
-------------------------------------- -----------------------------------
John A. Bacon MARK A. ROBINSON
Compensation Committee Chairman January 26, 1996
-5-
<PAGE> 1
EXHIBIT (c)(14)
AGREEMENT
This Agreement ("Agreement") is entered into by and between Duplex Products
Inc., a corporation ("Duplex") and David Preston ("Preston").
WHEREAS, Preston currently serves as Vice President of Sales of Duplex;
and,
WHEREAS, Duplex may from time to time be an acquisition target; and,
WHEREAS, it is in the best interests of the shareholders that key
management personnel remain in place throughout any acquisition activity and
devote their entire time and energies to their employment with Duplex and any
such acquisition activity; and,
WHEREAS, it is the desire of Duplex to give appropriate incentives and
protection to certain key executives in the event of any such activity so that
they can devote their entire time and energies to Duplex business without
distraction.
NOW, THEREFORE, in consideration of the promises set forth in this
Agreement, and in further consideration of Preston's continued employment with
Duplex, the parties hereto agree as follows:
1. DEFINITIONS. The terms defined below shall have the following meanings
throughout this Agreement:
1.1 BASE ANNUAL SALARY. For purposes of this Agreement, "Base Annual
Salary" shall be equal to Preston's annual salary excluding bonuses or
other similar payments as of the date of a Change of Control.
1.2. CHANGE IN CONTROL. A "Change in Control" shall exist upon the first
of any of the following to occur:
1.2.1. Any tender offer, merger or other business combination, sale
of assets, contested election or any combination of the foregoing
transactions (a "Transaction"), which results in the persons who were
directors of Duplex before the Transaction ceasing to constitute a
majority of the Board of Directors of Duplex or any successor to
Duplex after the Transaction;
1.2.2. Duplex merges or consolidates with another corporation and as
a result of the merger or consolidation fifty percent (50%) or less of
the outstanding voting securities of the surviving or resulting
corporation shall then be owned in the aggregate by former
stockholders of Duplex;
1.2.3. A tender offer or exchange offer is made and consummated for
the ownership of securities of Duplex representing more than fifty
percent (50%) of the combined voting power of Duplex's then
outstanding voting securities; or
<PAGE> 2
1.2.4. Duplex transfers substantially all of its assets to another
corporation which is not a wholly-owned subsidiary of Duplex.
1.2.5. A Change of Control for the purposes of this Agreement shall
specifically include any transaction completed with Miami Systems
Corporation and/or Wallace Computer Systems Inc..
1.3 SEVERANCE CONSIDERATION. "Severance Consideration" shall be equal to
one year's Base Annual Salary if the Severance occurs in the first twelve
(12) months immediately following a Change of Control. Beginning the
thirteenth (13th) month through the twenty-fourth (24th) month after a
Change of Control, said Severance Consideration shall be reduced by 8.33%
each month.
1.4 QUALIFYING TERMINATION. A "Qualifying Termination" is a termination of
Preston's employment qualifying him for Severance Consideration under this
Agreement and shall mean:
1.4.1 Any termination of Preston's employment by Duplex, or any
successor to Duplex, without cause, subsequent to and within
twenty-four (24) months of a Change of Control;
1.4.2 A reduction of Preston's salary by Duplex, or any successor to
Duplex, by 20% per cent, or more, or his position is changed from Vice
President of Sales, subsequent to and within twenty-four (24) months
of a Change of Control.
1.5 ENTIRE TIME AND ENERGIES. "Entire time and energies" shall mean the
normal and customary hours per week devoted to perform the duties assigned
to Preston as Vice President of Sales since he assumed said position, and
as compared to corporate executives in similar positions with other similar
companies.
2. PAYMENT OF SEVERANCE CONSIDERATION.
If a Qualifying Termination occurs and Preston is entitled to Severance
Consideration, said Severance Consideration shall be paid to Preston as
set forth in this Agreement, and shall be paid in one lump sum within ten
(10) days of said termination.
3. RETENTION POOL.
Duplex has created a Retention Pool to be used only if a transaction is
consummated with Miami Systems Corporation and/or Wallace Computer Systems
Inc., in which case Preston will share in said Retention Pool as follows:
3.1 If Miami Systems Corporation effectuates a merger with Duplex, or
acquires 50% or more of the outstanding shares of Duplex, or Wallace
Computer Systems Inc. acquires 50% or more of the outstanding shares
of Duplex, and Preston is still
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<PAGE> 3
employed by Duplex at the time either of the above referenced
transactions is consummated, then in that event, Preston shall receive
$100,000.00 from said Retention Pool, in one lump sum payable within
ten (10) days after said transaction is consummated.
4. STOCK OPTIONS.
On January 4, 1996, Duplex through its Board of Directors adopted a
resolution that would cause all stock options issued under the 1984/1993
Incentive Stock Option program, owned by Preston, no matter when granted
that would not otherwise vest, to vest 100% at the time of the consummation
of either of the transactions mentioned in paragraph 3 hereinabove with
Miami Systems Corporation or Wallace Computer Systems Inc.
5. WITHHOLDING OF TAXES.
Duplex, or any successor of Duplex, shall withhold from any Severance
Consideration payable under this Agreement all federal, state, city or
other taxes as may be required by law.
6. NOT AN EMPLOYMENT AGREEMENT.
Nothing in this Agreement shall give Preston any right to continued
employment with Duplex, or any successor of Duplex, nor shall it give
Duplex any rights to the continued performance of duties by Preston to
Duplex, or any successor of Duplex.
7. NOTICES.
Notices under this Agreement shall be in writing and shall be deemed given
when mailed by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Duplex, to:
Duplex Products Inc.
1947 Bethany Road
Sycamore, IL 60178
Attn: President
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<PAGE> 4
If to Preston, to:
----------------------------------------
----------------------------------------
or to such other address as either party may furnish to the other in writing,
except that notices of changes of address shall be effective only upon receipt.
8. APPLICABLE LAW.
The performance and interpretation of this Agreement shall be construed in
accordance with the laws of the State of Illinois.
9. SEVERABILITY.
If a court of competent jurisdiction determines that any provision of this
Agreement is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement and all other
provisions shall remain in full force and effect.
10. NO ASSIGNMENT.
Preston's rights to receive payments or benefits under this Agreement shall
not be assignable or transferable whether by pledge, creation of a security
interest or otherwise. Duplex shall have no liability to pay any amount so
attempted to be assigned or transferred.
11. SUCCESSORS.
This Agreement shall be binding upon and inure to the benefit of Duplex,
its successors and assigns (including, without limitation, any company into
or with which Duplex may merge or consolidate). Duplex agrees that it will
not effect a Change of Control unless either: the person or entity
acquiring control of Duplex shall expressly assume by an instrument in
writing all duties and obligations of Duplex under this Agreement; or
Duplex shall provide for the payment in full of all amounts which are
payable to Preston under this Agreement.
12. CONFIDENTIALITY AND RELEASE.
Preston's right to receive and Duplex's obligation to pay Severance
Consideration shall be contingent upon Preston executing a binding
agreement setting forth a release of any and all claims arising from his
employment and/or termination of employment with
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<PAGE> 5
Duplex or any successor of Duplex. Such agreement shall also contain
covenants of confidentiality.
13. ENTIRE AGREEMENT.
This Agreement represents the entire agreement of the parties regarding the
severance pay arrangements between them. This Agreement may not be modified
except in writing signed by both parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year first above written.
DUPLEX PRODUCTS INC.
By: /s/ John A. Bacon /s/ David Preston
---------------------------------- -------------------------------------
John A. Bacon DAVID PRESTON
Compensation Committee Chairman
January 26, 1996
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<PAGE> 1
EXHIBIT (c)(15)
AGREEMENT
---------
This Agreement ("Agreement") is entered into by and between Duplex
Products Inc., a corporation ("Duplex") and Marc Loomer ("Loomer").
WHEREAS, Loomer currently serves as Vice President of Operations of
Duplex; and,
WHEREAS, Duplex may from time to time be an acquisition target; and,
WHEREAS, it is in the best interests of the shareholders that key
management personnel remain in place throughout any acquisition activity and
devote their entire time and energies to their employment with Duplex and any
such acquisition activity; and,
WHEREAS, it is the desire of Duplex to give appropriate incentives and
protection to certain key executives in the event of any such activity so that
they can devote their entire time and energies to Duplex business without
distraction.
NOW, THEREFORE, in consideration of the promises set forth in this
Agreement, and in further consideration of Loomer's continued employment with
Duplex, the parties hereto agree as follows:
1. DEFINITIONS. The terms defined below shall have the following
meanings throughout this Agreement:
1.1 BASE ANNUAL SALARY. For purposes of this Agreement, "Base Annual
Salary" shall be equal to Loomer's annual salary excluding bonuses or
other similar payments as of the date of a Change of Control.
1.2. CHANGE IN CONTROL. A "Change in Control" shall exist upon the
first of any of the following to occur:
1.2.1. Any tender offer, merger or other business
combination, sale of assets, contested election or any
combination of the foregoing transactions (a "Transaction"),
which results in the persons who were directors of Duplex
before the Transaction ceasing to constitute a majority of the
Board of Directors of Duplex or any successor to Duplex after
the Transaction;
1.2.2. Duplex merges or consolidates with another corporation
and as a result of the merger or consolidation fifty percent
(50%) or less of the outstanding voting securities of the
surviving or resulting corporation shall then be owned in the
aggregate by former stockholders of Duplex;
1.2.3. A tender offer or exchange offer is made and
consummated for the ownership of securities of Duplex
representing more than fifty percent (50%) of the combined
voting power of Duplex's then outstanding voting securities;
or
<PAGE> 2
1.2.4. Duplex transfers substantially all of its assets to
another corporation which is not a wholly-owned subsidiary of
Duplex.
1.2.5. A Change of Control for the purposes of this Agreement
shall specifically include any transaction completed with
Miami Systems Corporation and/or Wallace Computer Systems
Inc..
1.3 SEVERANCE CONSIDERATION. "Severance Consideration" shall be
equal to one year's Base Annual Salary if the Severance occurs in the
first twelve (12) months immediately following a Change of Control.
Beginning the thirteenth (13th) month through the twenty-fourth
(24th) month after a Change of Control, said Severance Consideration
shall be reduced by 8.33% each month.
1.4 QUALIFYING TERMINATION. A "Qualifying Termination" is a
termination of Loomer's employment qualifying him for Severance
Consideration under this Agreement and shall mean:
1.4.1 Any termination of Loomer's employment by Duplex, or
any successor to Duplex, without cause, subsequent to and
within twenty-four (24) months of a Change of Control;
1.4.2 A reduction of Loomer's salary by Duplex, or any
successor to Duplex, by 20% per cent, or more, or his position
is changed from Vice President of Operations subsequent to and
within twenty-four (24) months of a Change of Control.
1.5 ENTIRE TIME AND ENERGIES. "Entire time and energies" shall mean
the normal and customary hours per week devoted to perform the duties
assigned to Loomer as Vice President of Operations since he assumed
said position, and as compared to corporate executives in similar
positions with other similar companies.
2. PAYMENT OF SEVERANCE CONSIDERATION.
If a Qualifying Termination occurs and Loomer is entitled to Severance
Consideration, said Severance Consideration shall be paid to Loomer
as set forth in this Agreement, and shall be paid in one lump sum
within ten (10) days of said termination.
3. RETENTION POOL.
Duplex has created a Retention Pool to be used only if a transaction
is consummated with Miami Systems Corporation and/or Wallace Computer
Systems Inc., in which case Loomer will share in said Retention Pool
as follows:
3.1 If Miami Systems Corporation effectuates a merger with Duplex,
or acquires 50% or more of the outstanding shares of Duplex,
or Wallace Computer Systems Inc.
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<PAGE> 3
acquires 50% or more of the outstanding shares of Duplex, and
Loomer is still employed by Duplex at the time either of the
above referenced transactions is consummated, then in that
event, Loomer shall receive $100,000.00 from said Retention
Pool, in one lump sum payable within ten (10) days after said
transaction is consummated.
4. STOCK OPTIONS.
On January 4, 1996, Duplex through its Board of Directors adopted a
resolution that would cause all stock options issued under the
1984/1993 Incentive Stock Option program owned by Loomer, no matter
when granted that would not otherwise vest, to vest 100% at the time
of the consummation of either of the transactions mentioned in
paragraph 3 hereinabove with Miami Systems Corporation or Wallace
Computer Systems Inc.
5. WITHHOLDING OF TAXES.
Duplex, or any successor of Duplex, shall withhold from any Severance
Consideration payable under this Agreement all federal, state, city or
other taxes as may be required by law.
6. NOT AN EMPLOYMENT AGREEMENT.
Nothing in this Agreement shall give Loomer any right to continued
employment with Duplex, or any successor of Duplex, nor shall it give
Duplex any rights to the continued performance of duties by Loomer to
Duplex, or any successor of Duplex.
7. NOTICES.
Notices under this Agreement shall be in writing and shall be deemed
given when mailed by United States registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to Duplex, to:
Duplex Products Inc.
1947 Bethany Road
Sycamore, IL 60178
Attn: President
-3-
<PAGE> 4
If to Loomer, to:
------------------------------
------------------------------
or to such other address as either party may furnish to the other in writing,
except that notices of changes of address shall be effective only upon receipt.
8. APPLICABLE LAW.
The performance and interpretation of this Agreement shall be
construed in accordance with the laws of the State of Illinois.
9. SEVERABILITY.
If a court of competent jurisdiction determines that any provision of
this Agreement is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement and all other
provisions shall remain in full force and effect.
10. NO ASSIGNMENT.
Loomer's rights to receive payments or benefits under this Agreement
shall not be assignable or transferable whether by pledge, creation of
a security interest or otherwise. Duplex shall have no liability to
pay any amount so attempted to be assigned or transferred.
11. SUCCESSORS.
This Agreement shall be binding upon and inure to the benefit of
Duplex, its successors and assigns (including, without limitation, any
company into or with which Duplex may merge or consolidate). Duplex
agrees that it will not effect a Change of Control unless either: the
person or entity acquiring control of Duplex shall expressly assume by
an instrument in writing all duties and obligations of Duplex under
this Agreement; or Duplex shall provide for the payment in full of all
amounts which are payable to Loomer under this Agreement.
12. CONFIDENTIALITY AND RELEASE.
Loomer's right to receive and Duplex's obligation to pay Severance
Consideration shall be contingent upon Loomer executing a binding
agreement setting forth a release of any and all claims arising from
his employment and/or termination of employment with
-4-
<PAGE> 5
Duplex or any successor of Duplex. Such agreement shall also contain
covenants of confidentiality.
13. ENTIRE AGREEMENT.
This Agreement represents the entire agreement of the parties
regarding the severance pay arrangements between them. This Agreement
may not be modified except in writing signed by both parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.
DUPLEX PRODUCTS INC.
BY: /s/ John A. Bacon /s/ Marc Loomer
------------------------------------ ----------------------------------
John A. Bacon MARC LOOMER
Compensation Committee Chairman January 26, 1996
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