SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 24, 1998
Fluke Corporation
(Exact Name of Registrant as Specified in Charter)
Washington 1-5590 91-0606624
(State of Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) (Identification Number)
6920 Seaway Boulevard, Everett, Washington 98203
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (425) 347-6100
Item 2. Acquisition or Disposition of Assets.
After the close of the market on April 24, 1998, Fluke Corporation
entered into a definitive agreement with Danaher Corporation in which
Fluke Corporation will become a wholly-owned subsidiary of Danaher
Corporation. The companies jointly issued the news release, attached
as
Exhibit 99.1 and incorporated herein, regarding the agreement.
Item 7. Exhibits
7.1 Agreement and Plan of Merger dated as of April 24, 1998 among
Danaher Corporation,Falcon Acquisition Corp. and Fluke Corporation
7.2 Stock Option Agreement dated April 24, 1998 between Fluke
Corporation and Danaher Corporation
7.3 Stockholders Support Agreement dated as of April 24, 1998 by and
among Danaher Corporation, David L. Fluke, John M. Fluke, Jr. and
Fluke Capital and Management Services Company
7.4 Stockholders Support Agreement dated as of April 24, 1998 by and
among Danaher Corporation and Stockholders
99.1 Press Release dated April 27, 1998 issued by Danaher Corporation
and Fluke Corporation
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Fluke Corporation
(Registrant)
Date 4/27/98 By /s/ Douglas G. McKnight
Douglas G. McKnight
Vice President, General
Counsel and Corporate
Secretary
AGREEMENT AND PLAN OF MERGER
Dated as of April 24, 1998
Among
DANAHER CORPORATION,
FALCON ACQUISITION CORP.
And
FLUKE CORPORATION
TABLE OF CONTENTS
ARTICLE I
The Merger
SECTION 1.1. The Merger
SECTION 1.2. Closing
SECTION 1.3. Effective Time
SECTION 1.4. Effects of the Merger
SECTION 1.5. Certificate of Incorporation and By-laws
SECTION 1.6. Directors
SECTION 1.7. Officers
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.1. Effect on Capital Stock
SECTION 2.2. Exchange of Certificates
ARTICLE III
Representations and Warranties
SECTION 3.1. Representations and Warranties of the Company
SECTION 3.2. Representations and Warranties of Parent and Sub
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.1. Conduct of Business
SECTION 4.2. No Solicitation
ARTICLE V
Additional Agreements
SECTION 5.1. Preparation of Form S-4 and the Proxy Statement;
Stockholders' Meeting
SECTION 5.2. Access to Information; Confidentiality
SECTION 5.3. Reasonable Efforts; Notification
SECTION 5.4. Stock Option Plans
SECTION 5.5. Benefit Plans and Employee Matters
SECTION 5.6. Indemnification, Exculpation and Insurance
SECTION 5.7. Letters of Accountants
SECTION 5.8. Fees and Expenses
SECTION 5.9. Public Announcements
SECTION 5.10. Affiliates; Accounting and Tax Treatment
SECTION 5.12. State Takeover Laws
SECTION 5.13. Coordination of Dividends
ARTICLE VI
Conditions Precedent
SECTION 6.1. Conditions to Each Party's Obligations to Effect the
Merger
SECTION 6.2. Additional Conditions to Obligations of Parent and Sub
SECTION 6.3. Additional Conditions to Obligations of the Company
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.1. Termination
SECTION 7.2. Effect of Termination
SECTION 7.3. Amendment
SECTION 7.4. Extension; Waiver
SECTION 7.5. Procedure for Termination, Amendment, Extension or
Waiver
ARTICLE VIII
General Provisions
SECTION 8.1. Nonsurvival of Representations and Warranties
SECTION 8.2. Notices
SECTION 8.3. Definitions
SECTION 8.4. Interpretation
SECTION 8.5. Counterparts
SECTION 8.6. Entire Agreement; No Third-Party Beneficiaries
SECTION 8.7. Governing Law
SECTION 8.8. Assignment
SECTION 8.9. Enforcement
EXHIBIT 5.10 FORM OF AFFILIATE LETTER
AGREEMENT AND PLAN OF MERGER, dated as of April 24, 1998, among DANAHER
CORPORATION, a Delaware corporation ("Parent"), FALCON ACQUISITION
CORP., a Washington corporation ("Sub") and a direct wholly owned
subsidiary of Parent, and FLUKE CORPORATION, a Washington corporation
(the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub
and the Company have approved the merger of Sub with and into the
Company (the "Merger"), upon the terms and subject to the conditions set
forth in this Agreement and in accordance with the Washington Business
Corporation Act (the "BCA"), whereby each issued and outstanding share
of Company Common Stock (as defined in Section 3.1(c)) other than shares
to be canceled in accordance with Section 2.1(b), will be converted into
the right to receive shares of common stock, par value $.01 per share,
of Parent ("Parent Common Stock");
WHEREAS, in connection with the execution of this Agreement,
Parent and the Company are entering on the date hereof into a stock
option agreement, with the Company as issuer and Parent as Grantee (the
"Stock Option Agreement");
WHEREAS, the Merger requires the approval of the holders of
two-thirds of the votes which the outstanding shares of the Company
Common Stock are entitled to cast on such matter voting as a single
class (the "Company Stockholder Approval");
WHEREAS, concurrently with the execution of this Agreement
and as an inducement to Parent to enter into this Agreement, certain
significant stockholders of the Company are entering into agreements
with Parent (collectively, the "Stockholder Support Agreements")
pursuant to which each such significant stockholder has, among other
things, agreed to vote his shares of Company Common Stock in favor of
the Merger;
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger;
WHEREAS, for Federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of
Sections 368(a)(1)(A) and (a)(2)(E) of the Internal Revenue Code of
1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the
Merger shall be accounted for as a "pooling-of-interests";
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the
parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the BCA,
Sub shall be merged with and into the Company at the Effective Time (as
hereinafter defined). Following the Merger, the separate corporate
existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to
and assume all the rights and obligations of the Company and of Sub in
accordance with the BCA.
SECTION 1.2. Closing. The closing of the Merger will take
place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Article VI (the "Closing Date"),
at the offices of Wachtell, Lipton, Rosen & Katz, New York, New York,
unless another time, date or place is agreed to in writing by the
parties hereto.
SECTION 1.3. Effective Time. Subject to the provisions of
this Agreement, as soon as practicable on or after the Closing Date, the
parties shall file articles of merger or other appropriate documents (in
any such case, the "Articles of Merger") executed in accordance with the
relevant provisions of the BCA and shall make all other filings or
recordings required under the BCA. The Merger shall become effective at
such time as the Articles of Merger are duly filed with the Washington
Secretary of State, or at such other time as Sub and the Company shall
agree should be specified in the Articles of Merger (the date and time
of such filing, or such later date or time as may be set forth therein,
being the "Effective Time").
SECTION 1.4. Effects of the Merger. The Merger shall have
the effects set forth in Section 11.060 of the BCA.
SECTION 1.5. Certificate of Incorporation and By-laws. (a)
The certificate of incorporation of Sub as in effect immediately prior
to the Effective Time shall be the certificate of incorporation of the
Surviving Corporation (except that such certificate of incorporation
shall be amended at the Effective Time to provide that the name of the
Surviving Corporation shall be "FLUKE CORPORATION"), until thereafter
changed or amended as provided therein or by applicable law.
(b) The by-laws of Sub as in effect at the Effective Time
shall be the by-laws of the Surviving Corporation, until thereafter
changed or amended as provided therein or by applicable law.
SECTION 1.6. Directors. The directors of Sub at the
Effective Time shall continue as the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified, as the case
may be.
SECTION 1.7. Officers. The officers of the Company
immediately prior to the Effective Time shall become the officers of the
Surviving Corporation, until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as
the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1. Effect on Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of
Parent, Sub, the Company, or the holders of any shares of Company Common
Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock
of Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock.
Each share of Company Common Stock that is owned by the Company or by
any subsidiary of the Company and each share of Company Common Stock
that is owned by Parent, Sub or any other subsidiary of Parent
immediately prior to the Effective Time shall automatically be canceled
and retired without any conversion thereof and no consideration shall be
delivered with respect thereto.
(c) Conversion of Common Stock. Each share of Company
Common Stock issued and outstanding as of the Effective Time, other than
Dissenting Shares (as hereinafter defined) and shares to be canceled in
accordance with Section 2.2(b), shall be converted, subject to Section
2.2 (e), into the right to receive 0.45239 (the "Exchange Ratio") of a
share of Parent Common Stock. If, prior to the Effective Time, Parent
should split or combine the Parent Common Stock, or pay a stock dividend
or other stock distribution in Parent Common Stock, then the Exchange
Ratio will be appropriately adjusted to reflect such split, combination,
dividend or other distribution. (Without limiting the foregoing, in the
event the previously announced two-for-one stock split proposed by
Parent is approved by the shareholders of Parent and effected prior to
the Effective Time, the Exchange Ratio shall be equal to 0.90478.)
As of the Effective Time, all such shares of Company Common
Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each certificate previously
representing any such shares shall thereafter represent the right to
receive a certificate representing the shares of Parent Common Stock
into which such Company Common Stock was converted in the Merger. The
holders of such certificates previously evidencing such shares of
Company Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of Company
Common Stock as of the Effective Time except as otherwise provided
herein or by law. Such certificates previously representing shares of
Company Common Stock shall be exchanged for certificates representing
whole shares of Parent Common Stock issued in consideration therefor
upon the surrender of such certificates in accordance with the
provisions of Section 2.2, without interest. No fractional share of
Parent Common Stock shall be issued, and, in lieu thereof, a cash
payment shall be made pursuant to Section 2.2(e).
SECTION 2.2. Exchange of Certificates. (a) Exchange
Agent. Prior to the Effective Time, Parent shall enter into an
agreement with such bank or trust company as may be designated by Parent
and as shall be reasonably satisfactory to the Company (the "Exchange
Agent"), and as contemplated by such agreement, Parent shall deposit, or
shall cause to be deposited, with the Exchange Agent as of the Effective
Time (or otherwise when requested by the Exchange Agent from time to
time in order to effect any exchange pursuant to this Section 2.2), for
the benefit of the holders of shares of Company Common Stock, for
exchange in accordance with this Article II through the Exchange Agent,
certificates representing the shares of Parent Common Stock issuable
pursuant to Section 2.1 in exchange for outstanding shares of Company
Common Stock (such certificates representing shares of Parent Common
Stock, together with any dividends or distributions with respect
thereto, being collectively referred to as the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions, deliver the
Parent Common Stock contemplated to be issued pursuant to Section 2.1
out of the Exchange Fund. Except as contemplated by Section 2.2(e), the
Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, Parent shall instruct the Exchange Agent to
mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares
of Company Common Stock (the "Certificates") (other than Dissenting
Shares), (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange
Agent and which shall be in a customary form) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for
certificates representing shares of Parent Common Stock. Upon surrender
of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, and such other documents as
may reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor a
certificate evidencing that number of whole shares of Parent Common
Stock which such holder has the right to receive in respect of the
shares of Company Common Stock formerly evidenced by such Certificate
(after taking into account all shares of Company Common Stock then held
of record by such holder), cash in lieu of fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 2.2(e)
and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.2(c), and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of
Company Common Stock which is not registered in the transfer records of
the Company, a certificate representing the proper number of shares of
Parent Common Stock may be issued to a person other than the person in
whose name the Certificate so surrendered is registered, if such
Certificate, accompanied by all documents required to evidence and
effect such transfer, shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall
pay any transfer or other taxes required by reason of the issuance of
shares of Parent Common Stock to a person other than the registered
holder of such Certificate or establish to the satisfaction of Parent
that such tax has been paid or is not applicable. 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
upon such surrender the Certificate evidencing whole shares of Parent
Common Stock, cash in lieu of any fractional shares of Parent Common
Stock to which such holder is entitled pursuant to Section 2.2(e) and
any dividends or other distributions to which such holder is entitled
pursuant to Section 2.2(c). No interest will be paid or will accrue on
any cash payable pursuant to Section 2.2(c) or 2.2(e).
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective
Time with respect to Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock
represented thereby, and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section 2.2(e), in each
case until the surrender of such Certificate in accordance with this
Article II. Subject to the effect of applicable escheat laws, following
surrender of such Certificate, there shall be paid to the holder of the
Certificate representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender,
the amount of any cash payable in lieu of a fractional share of Parent
Common Stock to which such holder is entitled pursuant to Section 2.2(e)
and the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole
shares of Parent Common Stock, and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after
the Effective Time but prior to such surrender and with a payment date
subsequent to such surrender payable with respect to such whole shares
of Parent Common Stock.
(d) No Further Ownership Rights in Company Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Article II (including
any cash paid pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to
have been issued (and paid) in full satisfaction of all rights
pertaining to the shares of Company Common Stock theretofore represented
by such Certificates, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a
record date prior to the Effective Time which may have been declared or
made by the Company on such shares of Company Common Stock in accordance
with the terms of this Agreement or prior to the date of this Agreement
and which remain unpaid at the Effective Time and have not been paid
prior to surrender. At the Effective Time, the stock transfer books of
the Company shall be closed, and there shall be no further registrations
of transfers of shares of Company Common Stock thereafter on the records
of the Company. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, Parent or the Exchange Agent for
any reason, they shall be cancelled and exchanged as provided in this
Article II.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued
upon the surrender for exchange of Certificates, and such fractional
share interests will not entitle the owner thereof to vote or to any
rights of a stockholder of Parent.
(ii) As promptly as practicable following the Effective
Time, Parent shall instruct the Exchange Agent to determine the
excess of (x) the number of full shares of Parent Common Stock
delivered to the Exchange Agent by Parent pursuant to Section
2.2(a) over (y) the aggregate number of full shares of Parent
Common Stock to be distributed to holders of Certificates pursuant
to Section 2.2(b) (such excess being herein called the "Excess
Shares"). As soon after the Effective Time as practicable, the
Exchange Agent, as agent for such holders of Certificates, shall
sell the Excess Shares at the then prevailing prices on The New
York State Exchange ("NYSE"), all in the manner provided in
paragraph (iii) of this Section 2.2(e).
(iii) The sale of the Excess Shares by the Exchange Agent
shall be executed on the NYSE and shall be executed in round lots
to the extent practicable. Until the net proceeds of such sale or
sales have been distributed to such holders of Certificates, the
Exchange Agent will hold such proceeds in trust for such holders
of Certificates (the "Trust"). Parent shall pay all commissions,
transfer taxes and other out-of-pocket transaction costs of the
Exchange Agent incurred in connection with such sale or sales of
Excess Shares. In addition, Parent shall pay the Exchange Agent's
compensation and expenses in connection with such sales. The
Exchange Agent shall determine the portion of the Trust to which
each holder of one or more Certificates shall be entitled, if any,
by multiplying the amount of the aggregate net proceeds comprising
the Trust by a fraction the numerator of which is the amount of
the fractional share interest to which such holder of Certificates
is entitled (after taking into account all shares of Company
Common Stock held of record immediately prior to the Effective
Time by such holder) and the denominator of which is the aggregate
amount of fractional share interests to which all holders of
Certificates are entitled.
(iv) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Certificates with
respect to any fractional share interests, the Exchange Agent
shall promptly pay such amounts to such holders of Certificates
subject to and in accordance with the terms of Section 2.2(c).
(f) Termination of Exchange Fund and Trust. Any portion of
the Exchange Fund and Trust that remains undistributed to the holders of
Certificates for six months after the Effective Time shall be delivered
to Parent, upon demand, and any holders of Certificates who have not
theretofore complied with this Article II shall thereafter look only to
Parent for the shares of Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock to which they are
entitled.
(g) No Liability. None of Parent, Sub, the Company or the
Exchange Agent shall be liable to any holder of shares of Company Common
Stock for any shares of Parent Common Stock (or dividends or
distributions with respect thereto) or cash from the Exchange Fund or
the Trust delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) Withholding Rights. Parent or the Exchange Agent shall
be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Certificates such
amounts as Parent or the Exchange Agent, as the case may be, is required
to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by Parent or the Exchange Agent,
such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Certificates in
respect of which such deduction and withholding shall have been made by
Parent or the Exchange Agent.
(i) Investment of Exchange Fund and Trust. The Exchange
Agent shall invest any cash included in the Exchange Fund and the Trust,
as directed by Parent, on a daily basis. Any interest and other income
resulting from such investments shall be paid to Parent.
(j) Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, shares of Company Common Stock which are
issued and outstanding immediately prior to the Effective Time and which
are held by stockholders who did not vote in favor of the adoption of
this Agreement, who are entitled to demand the fair value of such shares
of Company Common Stock under Sections 13.020 through 13.260 of the BCA,
and who comply with all of the relevant provisions of such Sections (the
"Dissenting Shares") shall not be converted into or be exchangeable for
the right to receive Parent Common Stock (unless and until such holders
shall have failed to perfect or shall have effectively withdrawn or lost
their dissenters' rights under the BCA), but shall instead be entitled
to all applicable dissenters' rights as are prescribed by the BCA. If
any such holder shall have failed to perfect or shall have effectively
withdrawn or lost such dissenters' rights, such holder's shares of
Company Common Stock shall thereupon be converted into and become
exchangeable for the right to receive, as of the Effective Time, Parent
Common Stock, without any interest thereon. The Company shall give
Parent (i) prompt notice of any written demands for payment for any
Company Common Stock under Section 13.210 of the BCA, attempted
withdrawals of such demands, and any other instruments served pursuant
to the BCA and received by the Company relating to dissenters' rights,
and (ii) the opportunity to participate in and direct all negotiations
and proceedings with respect to the exercise of dissenters' rights under
the BCA. The Company shall not, except with the prior written consent
of the Parent, voluntarily make any payment with respect to any demands
for payment for Company Common Stock under the BCA, offer to settle or
settle any such demands or approve any withdrawal of any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company.
Except as disclosed by specific reference to the Disclosure Schedule
delivered by the Company to Parent prior to the execution of this
Agreement (the "Company Disclosure Schedule"), the Company represents
and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The
Company and each of its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction
in which it is organized and has the requisite corporate power and
authority to carry on its business as now being conducted. The Company
and each of its subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties
makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material adverse
effect on the Company. The Company has made available to Parent
complete and correct copies of its certificate of incorporation and by-
laws and the certificates of incorporation and by-laws or other
organizational documents of its Material Subsidiaries, in each case as
amended to the date of this Agreement. For purposes of this Agreement,
"Material Subsidiary" means each subsidiary of the Company designated as
a Material Subsidiary in Schedule 3.1(b)(i) of the Company Disclosure
Schedule.
(b) Subsidiaries. Schedule 3.1(b)(i) of the Company
Disclosure Schedule lists each subsidiary of the Company and its
jurisdiction of incorporation or organization. All the outstanding
shares of capital stock of each such subsidiary have been validly issued
and are fully paid and nonassessable and are owned by the Company, by
another subsidiary of the Company or by the Company and another such
subsidiary, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"). Except for the capital stock of its
subsidiaries, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation,
partnership, joint venture or other entity.
(c) Capital Structure. The authorized capital stock of the
Company consists of 40,000,000 shares of Common Stock, $.25 par value
(the "Company Common Stock") and 2,000,000 shares of preferred stock,
$.25 par value. At the close of business on April 22, 1998, (i)
18,275,747 shares of Company Common Stock and no shares of preferred
stock were issued and outstanding, (ii) there were no shares of Company
Common Stock held by the Company in its treasury and (iii) 2,907,019
shares of Company Common Stock were reserved for issuance upon exercise
of outstanding Stock Options (as defined in Section 5.4). Each share of
Company Common Stock carries with it a common share purchase right (a
"Right") issued pursuant to the Rights Agreement, dated as of July 11,
1988, and amended and restated on April 25, 1997, between the Company
and Continental Stock Transfer and Trust Company, as Rights Agent (the
"Rights Agreement"), which entitles the holder thereof to purchase, on
the occurrence of certain events, Company Common Stock. Except as set
forth above, at the close of business on April 22, 1998, no shares of
capital stock or other voting securities of the Company were issued,
reserved for issuance or outstanding. Since April 22, 1998, (x) no
shares of Common Stock have been issued except pursuant to Stock Options
outstanding on April 22, 1998, and (y) no new Stock Options have been
issued. There are no outstanding stock appreciation rights of the
Company which were not granted in tandem with a related Stock Option and
no outstanding limited stock appreciation rights or other rights to
redeem for cash options or warrants of the Company. All outstanding
shares of capital stock of the Company are, and all shares which may be
issued upon the exercise of Stock Options will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject
to preemptive rights. There are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any
matters on which stockholders of the Company may vote. Except for the
Stock Options described above, as of the date of this Agreement, there
are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which the Company or any of its subsidiaries is a party or by which any
of them is bound obligating the Company or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of the
Company or of any of its subsidiaries or obligating the Company or any
of its subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. There are no outstanding contractual
obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock (or options to
acquire any such shares) of the Company or any of its subsidiaries.
There are no agreements, arrangements or commitments of any character
(contingent or otherwise) pursuant to which any person is or may be
entitled to receive any payment based on the revenues, earnings or
financial performance of the Company or any of its subsidiaries or
assets or calculated in accordance therewith (other than ordinary course
commissions to sales representatives of the Company based upon revenues
generated by them without augmentation as a result of the transactions
contemplated hereby) or to cause the Company or any of its subsidiaries
to file a registration statement under the Securities Act of 1933 or
which otherwise relate to the registration of any securities of the
Company.
(d) Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this Agreement and
the Stock Option Agreement and, subject to the Company Stockholder
Approval, to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Stock
Option Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the Company,
subject to the Company Stockholder Approval of this Agreement. The
Company Stockholder Approval is the only vote of the holders of any
class or series of the Company's securities necessary to approve this
Agreement and the transactions contemplated hereby. This Agreement and
the Stock Option Agreement have been duly executed and delivered by the
Company and constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms. The
execution and delivery of this Agreement and the Stock Option Agreement
do not, and the consummation of the transactions contemplated hereby and
thereby and compliance with the provisions hereof and thereof will not,
conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or require the consent of (or
the giving of notice to) a third party with respect to, or give rise to
a right of termination, cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the creation of any
Lien upon any of the properties or assets of the Company or any of its
subsidiaries under, (i) the certificate of incorporation or by-laws of
the Company or the comparable charter or organizational documents of any
of its subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or any of its
subsidiaries or their respective properties or assets, or (iii) subject
to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, laws,
ordinance, rule or regulation applicable to the Company or any of its
subsidiaries or their respective properties or assets, other than, in
the case of clauses (ii) or (iii), any such conflicts, violations,
defaults, rights or Liens that individually or in the aggregate would
not (x) have a material adverse effect on the Company, (y) impair in any
material respect the ability of the Company to perform its obligations
under this Agreement or the Stock Option Agreement, or (z) prevent or
materially delay the consummation of any of the transactions
contemplated hereby or thereby. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Federal, state or local government or any court, administrative or
regulatory agency or commission or other governmental authority or
agency, domestic or foreign (a "Governmental Entity"), is required by
the Company or any of its subsidiaries in connection with the execution
and delivery of this Agreement or the Stock Option Agreement by the
Company or the consummation by the Company of the transactions
contemplated hereby or thereby, except for (i) the filing with the
Federal Trade Commission and the Antitrust Division of the Department of
Justice (the "Specified Agencies") of a premerger notification and
report form by the Company under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), (ii) the filing with the
Securities and Exchange Commission (the "SEC") of (x) the Proxy
Statement (as defined in Section 5.1) and (y) such reports under Section
13(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as may be required in connection with this Agreement and the
Stock Option Agreement and the transactions contemplated hereby and
thereby, (iii) the filing of the Articles of Merger with the Washington
Secretary of State and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do
business, and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings, including under
the laws of any foreign country in which the Company or any of its
subsidiaries conducts any business or owns any property or assets, the
failure of which to be obtained or made would not, individually or in
the aggregate, have a material adverse effect on the Company or prevent
or materially delay the consummation of any of the transactions
contemplated by this Agreement or the Stock Option Agreement.
(e) SEC Documents; Financial Statements. Since January 1,
1995, the Company has filed with the SEC all required reports and forms
and other documents (the "SEC Documents"). As of their respective
dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents contained any untrue statement
of a material fact or omitted 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.
Except to the extent that information contained in any SEC Document has
been revised or superseded by a later-filed SEC Document filed and
publicly available prior to the date of this Agreement, none of the SEC
Documents contains any untrue statement of a material fact or omits 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. The financial statements of
the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the SEC Documents filed prior to
the date of this Agreement (or, with respect to any future repetition of
this representation, prior to the time of such repetition), and except
for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the most recent
consolidated balance sheet included in the SEC Documents, neither the
Company nor any of its subsidiaries has any liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise)
required by generally accepted accounting principles to be set forth on
a consolidated balance sheet of the Company and its consolidated
subsidiaries or in the notes thereto.
(f) Information Supplied. None of the information supplied
or to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the Form S-4 (as defined in Section
5.1(a)) will, at the time the Form S-4 is filed with the SEC, at any
time it is amended or supplemented or at the time it becomes effective
under the Securities Act, 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 not misleading or (ii) the
Proxy Statement will, at the date it is first mailed to the Company's
stockholders or at the time of the Company Stockholders' Meeting (as
defined in Section 5.1(b)), 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 (provided that
the Company shall not be liable in damages for breach of this
representation except to the extent the information which is the subject
of such liability was provided in writing). The Proxy Statement will
comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on
information supplied by Parent or Sub specifically for inclusion or
incorporation by reference in the Proxy Statement.
(g) Absence of Certain Changes or Events. Except as
disclosed in the SEC Documents filed prior to the date of this
Agreement, since April 26, 1997 the Company has conducted its business
only in the ordinary course consistent with prior practice, and there
has not been (i) any material adverse change in the Company and its
subsidiaries on a consolidated basis, (ii) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any of the Company's capital stock,
(iii) any split, combination or reclassification of any of its capital
stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock, (iv) (x) any granting by the Company or any of its
subsidiaries to any officer or general manager of the Company or any of
its subsidiaries of any increase in compensation, except in the ordinary
course of business consistent with prior practice or as was required
under employment agreements in effect as of the date of the most recent
audited financial statements included in the SEC Documents filed prior
to the date of this Agreement (a list of all such employment agreements
being set forth in Section 3.1(g) of the Company Disclosure Schedule),
(y) any granting by the Company or any of its subsidiaries to any such
officer or general manager of any increase in severance or termination
pay, except as was required under employment, severance or termination
agreements in effect as of the date of the most recent audited financial
statements included in the SEC Documents filed prior to the date of this
Agreement, or (z) any entry into, or renewal or modification of, any
employment, consulting, severance or termination agreement with any such
officer or general manager by the Company or any of its subsidiaries,
(v) any damage, destruction or loss, whether or not covered by
insurance, that has or would reasonably be expected to have a material
adverse effect on the Company, (vi) any change in accounting methods,
principles or practices by the Company, except insofar as may have been
required by a change in generally accepted accounting principles or
(vii) any agreement to do any of the things described in the preceding
clauses (i) through (vi).
(h) Litigation. Except as disclosed in the SEC Documents
filed prior to the date of this Agreement, there is no suit, action,
investigation, audit or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries that,
individually or in the aggregate, would reasonably be expected to (i)
have a material adverse effect on the Company, (ii) impair in any
material respect the ability of the Company to perform its obligations
under this Agreement, or (iii) prevent the consummation of any of the
transactions contemplated by this Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any of its subsidiaries
having, or which is reasonably likely to have, any effect referred to in
the foregoing clauses (i) through (iii).
(i) Benefit Plans; ERISA Compliance. (i) For purposes of
this Section 3.1(i), the following terms have the meanings set forth
below:
"Controlled Group Liability" means any and all liabilities
(i) under Title IV of ERISA, (ii) under section 302 of ERISA, (iii)
under sections 412 and 4971 of the Code, (iv) as a result of a failure
to comply with the continuation coverage requirements of section 601 et
seq. of ERISA and section 4980B of the Code, and (v) under corresponding
or similar provisions of foreign laws or regulations, other than such
liabilities that arise solely out of, or relate solely to, the Employee
Benefit Plans.
"ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a
group described in Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA that includes the first entity, trade or
business, or that is a member of the same "controlled group" as the
first entity, trade or business pursuant to Section 4001(a)(14) of
ERISA.
An "Employee Benefit Plan" means any employee benefit plan,
program, policy, practices, or other arrangement providing benefits to
any current or former employee, officer or director of the Company or
any of its subsidiaries or any beneficiary or dependent thereof that is
sponsored or maintained by the Company or any of its subsidiaries or to
which the Company or any of its subsidiaries contributes or is obligated
to contribute, whether or not written, including without limitation any
employee welfare benefit plan within the meaning of Section 3(1) of
ERISA, any employee pension benefit plan within the meaning of Section
3(2) of ERISA (whether or not such plan is subject to ERISA) and any
bonus, incentive, deferred compensation, vacation, stock purchase, stock
option, severance, employment, change of control or fringe benefit plan,
program or agreement.
A "Plan" means any Employee Benefit Plan other than a
Multiemployer Plan.
A "Multiemployer Plan" means any "multiemployer plan" within
the meaning of Section 4001(a)(3) of ERISA.
"Withdrawal Liability" means liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as those terms are defined in Part I of Subtitle E
of Title IV of ERISA.
(ii) Schedule 3.1(i)(ii) of the Company Disclosure Schedule
sets forth a true, complete and correct complete list of all material
Employee Benefit Plans (the "Plan List").
(iii) With respect to each Plan, the Company has delivered
to Parent a true, correct and complete copy of: (A) each writing
constituting a part of such Plan, including without limitation all plan
documents, employee communications, benefit schedules, trust agreements,
and insurance contracts and other funding vehicles; (B) the most recent
Annual Report (Form 5500 Series) and accompanying schedule, if any; (C)
the current summary plan description and any material modifications
thereto, if any (in each case, whether or not required to be furnished
under ERISA); (D) the most recent annual financial report, if any; (E)
the most recent actuarial report, if any; and (F) the most recent
determination letter from the IRS, if any. Except as specifically
provided in the foregoing documents delivered to Parent, there are no
amendments to any Plan that have been adopted or approved nor has the
Company or any of its subsidiaries undertaken to make any such
amendments or to adopt or approve any new Plan.
(iv) The Plan List identifies each Plan that is intended to
be a "qualified plan" within the meaning of Section 401(a) of the Code
("Qualified Plans"). The Internal Revenue Service has issued a
favorable determination letter with respect to each Qualified Plan and
the related trust that has not been revoked, and there are no existing
circumstances nor any events that have occurred that could adversely
affect the qualified status of any Qualified Plan or the related trust
unless such circumstances or events could be cured without any material
liability to the Company and its subsidiaries. The Plan List identifies
each Plan which is intended to meet the requirements of Code Section
501(c)(9), and each such plan meets such requirements in all material
respects and provides no disqualified benefits (as such term is defined
in Code Section 4976(b).
(v) All contributions required to be made to any Plan by
applicable law or regulation or by any plan document or other
contractual undertaking, and all premiums due or payable with respect to
insurance policies funding any Plan, for any period through the date
hereof have been timely made or paid in full or, to the extent not
required to be made or paid on or before the date hereof, have been
fully reflected on the Company's most recent balance sheet included in
the SEC Documents filed prior to the date hereof. Each Employee Benefit
Plan that is an employee welfare benefit plan under Section 3(1) of
ERISA is either (A) funded through an insurance company contract and is
not a "welfare benefit fund" with the meaning of Section 419 of the Code
or (B) unfunded.
(vi) With respect to each Employee Benefit Plan, the
Company and its subsidiaries have complied, and are now in compliance,
in all material respects with all provisions of ERISA, the Code and all
laws and regulations applicable to such Employee Benefit Plans and each
Employee Benefit Plan has been administered in all material respects in
accordance with its terms. There is not now, nor do any circumstances
exist that could give rise to, any requirement for the posting of
security with respect to a Plan or the imposition of any material lien
on the assets of the Company or any of its subsidiaries under ERISA or
the Code.
(vii) With respect to each Plan that is subject to Title IV
or Section 302 of ERISA or Section 412 or 4971 of the Code: (A) there
does not exist any accumulated funding deficiency within the meaning of
Section 412 of the Code or Section 302 of ERISA, whether or not waived;
(B) the fair market value of the assets of such Plan equals or exceeds
the actuarial present value of all accrued benefits under such Plan
(whether or not vested), based upon the actuarial assumptions used to
prepare the most recent actuarial report for such Plan; (C) no
reportable event within the meaning of Section 4043(c) of ERISA for
which the 30-day notice requirement has not been waived has occurred,
and the consummation of the transactions contemplated by this agreement
will not result in the occurrence of any such reportable event; (D) all
premiums to the Pension Benefit Guaranty Corporation have been timely
paid in full; (E) no material liability (other than for premiums to the
PBGC) under Title IV of ERISA has been or is expected to be incurred by
the Company; and (F) the PBGC has not instituted proceedings to
terminate any such Plan and, to the Company's knowledge, no condition
exists that presents a material risk that such proceedings will be
instituted or which would constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer,
any such Plan.
(viii) No Employee Benefit Plan is a Multiemployer Plan or
a plan that has two or more contributing sponsors at least two of whom
are not under common control, within the meaning of Section 4063 of
ERISA (a "Multiple Employer Plan"). None of the Company and its
subsidiaries nor any of their respective ERISA Affiliates has, at any
time during the last six years, contributed to or been obligated to
contribute to any Multiemployer Plan or Multiple Employer Plan. None of
the Company and its subsidiaries nor any ERISA Affiliates has incurred
any Withdrawal Liability that has not been satisfied in full.
(ix) There does not now exist, nor do any circumstances
exist that could result in, any Controlled Group Liability that would be
a liability of the Company following the Closing. Without limiting the
generality of the foregoing, neither the Company nor any ERISA Affiliate
of the Company has engaged in any transaction described in Section 4069
or Section 4204 or 4212 of ERISA.
(x) Except as disclosed in the SEC Reports, the Company has
no material liability for life, health, medical or other welfare
benefits to former employees or beneficiaries or dependents thereof,
except for health continuation coverage as required by Section 4980B of
the Code or Part 6 of Title I of ERISA and at no expense to the Company.
(xi) Except as set forth on Schedule 3.1(i)(xi) of the
Company Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will (either alone or in conjunction with any other event) result in,
cause the accelerated vesting or delivery of, or increase the amount or
value of, any payment or benefit to any employee, officer or director of
the Company or any of its subsidiaries.
(xii) None of the Company and its subsidiaries nor any
other person, including any fiduciary, has engaged in any "prohibited
transaction" (as defined in Section 4975 of the Code or Section 406 of
ERISA), which could subject any of the Employee Benefit Plans or their
related trusts, the Company, any of its subsidiaries or any person that
the Company or any of its subsidiaries has an obligation to indemnify,
to any tax or penalty imposed under Section 4975 of the Code or Section
502 of ERISA.
(xiii) There are no pending or threatened claims (other
than claims for benefits in the ordinary course), lawsuits or
arbitrations which have been asserted or instituted, or to Company's
knowledge, no set of circumstances exists which may reasonably give rise
to a claim or lawsuit, against the Plans, any fiduciaries thereof with
respect to their duties to the Plans or the assets of any of the trusts
under any of the Plans which could reasonably be expected to result in
any material liability of the Company or any of its subsidiaries to the
Pension Benefit Guaranty Corporation, the Department of Treasury, the
Department of Labor, any Multiemployer Plan, any Plan or any participant
in a Plan.
(xiv) For purposes of this Section 3.1(i), the term
"employee" shall be considered to include individuals rendering personal
services to the Company as independent contractors.
(j) Taxes. (i) Each of the Company and its subsidiaries
has timely filed all Federal, state, local and foreign tax returns and
reports required to be filed by it through the date hereof and shall
timely file all such returns and reports required to be filed on or
before the Effective Time. All such returns and reports are and will be
true, complete and correct in all material respects. The Company and
each of its subsidiaries has paid and discharged (or the Company has
paid and discharged on its behalf) all taxes due from them, other than
such taxes as are being contested in good faith by appropriate
proceedings and are adequately reserved for on the most recent financial
statements contained in the SEC Documents filed prior to the date of the
Agreement. The most recent financial statements contained in the SEC
Documents filed prior to the date of this Agreement properly reflect in
accordance with generally accepted accounting principles all taxes
payable by the Company and its subsidiaries for all taxable periods and
portions thereof through the date of such financial statements.
(ii) No claim or deficiency for any taxes has been
proposed, threatened, asserted or assessed by the IRS or any other
taxing authority or agency against the Company, or any of its
subsidiaries which, if resolved against the Company or any of its
subsidiaries, would, individually or in the aggregate, have a material
adverse effect upon the Company, and no requests for waivers of the time
to assess any taxes are pending. The Federal income tax returns of the
Company and each of its subsidiaries consolidated in such returns have
been examined by and settled with the Internal Revenue Service for all
years through fiscal year 1993. The fiscal year 1994 was closed after
review and approval of the amended federal tax return. The Company has
made available to Parent true and correct copies of all federal, state,
local and foreign income tax returns, and state and local property and
sales tax returns and any other tax returns filed by the Company or any
of its subsidiaries for any of the taxable periods that remains open, as
of the date hereof, for examination or assessment of tax.
(iii) Neither the Company nor any of its subsidiaries has
taken or agreed to take any action or has any knowledge of any fact or
circumstance that might prevent or impede the Merger from qualifying as
a reorganization within the meaning of Sections 368(a)(1)(A) and
(a)(2)(E) of the Code.
(iv) As used in this Agreement, "taxes" shall include all
Federal, state, local and foreign income, property, sales, excise and
other taxes, of any nature whatsoever (whether payable directly or by
withholding), together with any interest and penalties, additions to tax
or additional amounts imposed with respect thereto. Notwithstanding the
definition of "subsidiary" set forth in Section 8.3 of this Agreement,
for the purposes of this Section 3.1(k), references to the Company and
each of its subsidiaries shall also include former subsidiaries of the
Company for the periods during which any such corporations were included
in the consolidated federal income tax return of the Company.
(k) No Excess Parachute Payments. Any amount that could be
received (whether in cash or property or the vesting of property) as a
result of any of the transactions contemplated by this Agreement by any
employee, officer or director of the Company or any of its affiliates
who is a "disqualified individual" (as such term is defined in proposed
Treasury Regulation Section 1.280G-1) under any employment, severance or
termination agreement, other compensation arrangement or Benefit Plan
currently in effect would not be characterized as an "excess parachute
payment" (as such term is defined in Section 280G(b)(l) of the Code).
(l) Labor Agreements. Neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement or other
labor agreement with any union or labor organization and the Company
does not know of any activity or proceeding of any labor organization
(or representative thereof) to organize any such employees. The Company
and its subsidiaries are not subject to any pending, or to the knowledge
of the Company, threatened (i) material unfair labor practice,
employment discrimination or other complaint, (ii) strike or lockout or
material dispute, slowdown or work stoppage or (iii) material claim,
suit, action or governmental investigation, in respect of which any
director, officer, employee or agent of the Company or any of its
subsidiaries is or may be entitled to claim indemnification from the
Company or and subsidiary.
(m) Compliance with Applicable Laws. (i) Each of the
Company and its subsidiaries has in effect all Federal, state, local and
foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("Permits") necessary
for it to own, lease or operate its properties and assets and to carry
on its business as now conducted, and there has occurred no default
under any such Permit, except for the lack of Permits and for defaults
under Permits which lack or default individually or in the aggregate
would not reasonably be expected to have a material adverse effect on
the Company. Except as disclosed in the SEC Documents filed prior to
the date of this Agreement, the Company and its subsidiaries are in
compliance with all applicable statutes, laws, ordinances, rules, orders
and regulations of any Governmental Entity, except for noncompliance
which individually or in the aggregate would not have a material adverse
effect on the Company.
(ii) To the knowledge of the Company, the Company and each
of its subsidiaries is, and has been, and each of the Company's former
subsidiaries, while subsidiaries of the Company, was, in compliance in
all material respects with all applicable Environmental Laws, except for
noncompliance which individually or in the aggregate would not have a
material adverse effect on the Company. The term "Environmental Laws"
means any Federal, state, local or foreign statute, code, ordinance,
rule, regulation, policy, guideline, permit, consent, approval, license,
judgment, order, writ, decree, injunction or other authorization,
including the requirement to register underground storage tanks,
relating to: (A) emissions, discharges, releases or threatened releases
of Hazardous Material (as hereinafter defined) into the environment,
including, without limitation, into ambient air, soil, sediments, land
surface or subsurface, buildings or facilities, surface water,
groundwater, publicly owned treatment works, septic systems or land; or
(B) the generation, treatment, storage, disposal, use, handling,
manufacturing, transportation or shipment of Hazardous Material.
(iii) During the period of ownership or operation by the
Company and its subsidiaries of any of their respective current or
previously owned or leased properties, there have been no releases of
Hazardous Material in, on, under or affecting such properties or, to the
knowledge of the Company, any surrounding site, except in each case for
those which individually or in the aggregate are not reasonably likely
to have a material adverse effect on the Company. Prior to the period
of ownership or operation by the Company and its subsidiaries of any of
their respective current or previously owned or leased properties, to
the knowledge of the Company, no Hazardous Material was generated,
treated, stored, disposed of, used, handled or manufactured at, or
transported, shipped or disposed of from, such currently or previously
owned or leased properties, and there were no releases of Hazardous
Material in, on, under or affecting any such property or any surrounding
site, except in each case for those which individually or in the
aggregate are not reasonably likely to have a material adverse effect on
the Company. The term "Hazardous Material" means (A) hazardous
materials, contaminants, constituents, medical wastes, hazardous or
infectious wastes and hazardous substances as those terms are defined in
the following statutes and their implementing regulations: the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., the Comprehensive Environmental Response, Compensation and
Liability Act, as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Section 9601 et seq., the Clean Water
Act, 33 U.S.C. Section 1251 et seq. and the Clean Air Act, 42 U.S.C.
Section 7401 et seq., (B) petroleum, including crude oil and any
fractions thereof, (C) natural gas, synthetic gas and any mixtures
thereof, (D) asbestos and/or asbestos-containing material, and (E) PCBs,
or materials or fluids containing PCBs in excess of 50 ppm.
(n) Contracts; Debt Instruments. Except as disclosed in
Schedule 3.1(n) of the Company Disclosure Schedule, there is no contract
or agreement that is material to the business, financial condition or
results of operations of the Company and its subsidiaries taken as a
whole ("Material Contract"). Each Material Contract of the Company is
valid and binding and in full force and effect, and neither the Company
nor any of its subsidiaries is in violation of or in default under (nor
does there exist any condition which upon the passage of time or the
giving of notice, or both, would cause such a violation of or default
under) any loan or credit agreement, note, bond, mortgage, indenture or
lease, or any other Material Contract to which it is a party or by which
it or any of its properties or assets is bound, except for such failures
to be valid and binding and for violations or defaults that would not,
individually or in the aggregate, reasonably be expected to result in a
material adverse effect on the Company. Set forth in Section 3.1(n) of
the Company Disclosure Schedule is a description of any material changes
to the amount and terms of the indebtedness of the Company and its
subsidiaries as described in the Company's Form 10-Q for the quarter
ended January 23, 1998. The Company and its subsidiaries are not, and
after the Effective Time neither the Surviving Corporation nor Parent
will be (by reason of any agreement to which the Company is a party),
subject to any noncompetition or similar restriction on their respective
businesses
(o) Title to Properties. (i) The Company and its
subsidiaries have good and marketable title to, or valid leasehold
interests in, all their material properties and assets except for such
as are no longer used or useful in the conduct of their businesses or as
have been disposed of in the ordinary course of business and except for
defects in title, easements, restrictive covenants and similar
encumbrances or impediments that, individually or in the aggregate,
would not have a material adverse effect on the Company.
(ii) Each of the Company and its subsidiaries has complied
with the terms of all material leases to which it is a party and under
which it is in occupancy, and all such leases are in full force and
effect, except for such failures to comply or to be in full force and
effect which would not, individually or in the aggregate, have a
material adverse effect on the Company. Each of the Company and its
subsidiaries enjoys peaceful and undisturbed possession under all such
material leases, except for the failures to do so which would not,
individually or in the aggregate, have a material adverse effect on the
Company.
(p) Intellectual Property. Except as would not,
individually and in the aggregate, reasonably be expected to have a
material adverse effect on the Company, (i) the Company and each of its
subsidiaries owns, has the right to acquire or is licensed or otherwise
has the right to use (in each case, free and clear of any liens or
encumbrances of any kind), all Intellectual Property (as defined below)
used in or necessary for the conduct of its business as currently
conducted or as currently proposed to be conducted, (ii) no claims are
pending or, to the knowledge of the Company, threatened, that the
Company or any of its subsidiaries is infringing on or otherwise
violating the rights of any person with regard to any Intellectual
Property, and (iii) to the knowledge of the Company, no person is
infringing on or otherwise violating any right of the Company or any of
its subsidiaries with respect to any Intellectual Property owned by
and/or licensed to the Company or its subsidiaries. For purposes of
this Agreement, "Intellectual Property" shall mean patents, copyrights,
trademarks (registered or unregistered), service marks, brand names,
trade dress, trade names, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing; and trade secrets and rights in
any jurisdiction to limit the use or disclosure thereof by any person.
(q) Accounting Matters. Neither the Company nor, to its
best knowledge, any of its affiliates has taken or agreed to take any
action or has knowledge of any fact or circumstance relating to the
Company that would prevent Parent from accounting for the business
combination to be effected by the Merger as a pooling-of-interests.
(r) Opinion of Financial Advisor. The Company has received
the opinion of Salomon Smith Barney, dated the date of this Agreement,
to the effect that, as of such date, the consideration to be received in
the Merger by the Company's stockholders is fair to the Company's
stockholders from a financial point of view, and a signed copy of such
opinion has been delivered to Parent.
(s) Brokers. No broker, investment banker, financial
advisor or other person, other than Salomon Smith Barney, the fees and
expenses of which have been disclosed to Parent and will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on
behalf of the Company.
(t) State Takeover Statutes. The Company has taken all
requisite action to render inapplicable to this Agreement, the Stock
Option Agreement and the Stockholder Support Agreements and the
transactions contemplated hereby and thereby the provisions of Sections
19.010 through 19.050 of the BCA and such action is effective at the
date of this Agreement. To the best of the Company's knowledge, no
other state takeover statute or similar statute or regulation applies or
purports to apply to the Merger, this Agreement or the Stock Option
Agreement or any of the transactions contemplated by this Agreement, the
Stock Option Agreement or the Stockholder Support Agreements.
(u) Rights Agreement. The Company and the Company Board
have authorized and taken all necessary action to enter into an
amendment to the Rights Agreement (without redeeming the Rights)
providing that (i) neither the execution or delivery of this Agreement,
the Stock Option Agreement or the Stockholder Support Agreements nor the
consummation of the transactions contemplated hereby or thereby,
including the Merger, will (x) cause any Rights issued pursuant to the
Rights Agreement to become exercisable or to separate from the stock
certificates to which they are attached, (y) cause Parent, Sub or any of
their Affiliates to be an Acquiring Person (as each such term is defined
in the Rights Agreement), or (z) trigger other provisions of the Rights
Agreement, including giving rise to a Distribution Date (as such term is
defined in the Rights Agreement), and (ii) as of immediately prior to
the Effective Time, neither the Company nor Parent will have any
obligations under the Rights or the Rights Agreement and the holders of
the Rights will have no rights under the Rights or the Rights Agreement,
and such amendment shall be in full force and effect from and after the
date hereof.
SECTION 3.2. Representations and Warranties of Parent and
Sub Except as disclosed by specific reference to the Disclosure Schedule
delivered by Parent to the Company prior to the execution of this
Agreement (the "Parent Disclosure Schedule"), Parent and Sub represent
and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of
Parent and each of its subsidiaries (including Sub) is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being
conducted. Each of Parent and each of its subsidiaries (including Sub)
is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) would not have
a material adverse effect on Parent. Parent has delivered to the
Company complete and correct copies of its certificate of incorporation
and by-laws and the certificate of incorporation and by-laws of Sub, in
each case as amended to the date of this Agreement.
(b) Capital Structure. The authorized capital stock of
Parent as of the date of this Agreement consists of 125,000,000 shares
of Parent Common Stock and 15,000,000 shares of preferred stock, par
value $.01 per share. At the close of business on April 22, 1998, (i)
58,560,370 shares of Parent Common Stock and no shares of preferred
stock were issued and outstanding, (ii) 5,797,606 shares of Parent
Common Stock were held by Parent in its treasury, and (iii) 1,367,176
shares of Parent Common Stock were reserved for issuance upon exercise
of outstanding employee stock options to purchase shares of Parent
Common Stock. Except as set forth above, at the close of business on
April 22, 1998 no shares of capital stock or other voting securities of
the Parent were issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of Parent are, and all shares which
may be issued pursuant to this Agreement will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject
to preemptive rights. As of the date of this Agreement, there are no
bonds, debentures, notes or other indebtedness of Parent having the
right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of Parent
may vote. Except as set forth above, as of the date of this Agreement,
there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which Parent or any of its Significant Subsidiaries is a party or by
which any of them is bound obligating Parent or any of its Significant
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other voting securities
of Parent or of any of its Significant Subsidiaries or obligating Parent
or any of its Significant Subsidiaries to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. As of the date of this
Agreement, there are no outstanding contractual obligations of Parent or
any of its Significant Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of Parent or its Significant
Subsidiaries. As of the date of this Agreement, the authorized capital
stock of Sub consists of 1,000 shares of common stock, par value $.01
per share, all of which have been validly issued, are fully paid and
nonassessable and are owned by Parent free and clear of any Liens. For
purposes of this Agreement, "Significant Subsidiary" means any
subsidiary that constitutes a significant subsidiary within the meaning
of Rule 1-02 of Regulation S-X of the SEC.
(c) Authority; Noncontravention. Parent and Sub have the
requisite corporate power and authority to enter into this Agreement and
the Stock Option Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of Parent and Sub. This
Agreement and the Stock Option Agreement have been duly executed and
delivered by Parent (and, in the case of this Agreement, Sub) and
constitutes a valid and binding obligation of each such party,
enforceable against each such party in accordance with their terms. The
execution and delivery of this Agreement and the Stock Option Agreement
do not, and the consummation of the transactions contemplated hereby and
thereby and compliance with the provisions hereof and thereof will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or require the consent
of (or the giving notice to) a third party with respect to, or give rise
to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Parent or
any of its subsidiaries under, (i) the certificate of incorporation or
by-laws of Parent or Sub or the comparable charter or organizational
documents of any other subsidiary of Parent, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to
Parent or any of its subsidiaries or their respective properties or
assets as of the date hereof, or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Parent or any of its subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) or (iii),
any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a material adverse
effect on Parent, (y) impair in any material respect the ability of
Parent and Sub to perform their respective obligations under this
Agreement or the Stock Option Agreement, or (z) prevent or materially
delay the consummation of any of the transactions contemplated hereby or
thereby. No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is
required by Parent or any of its subsidiaries in connection with the
execution and delivery of this Agreement or the Stock Option Agreement
or the consummation by Parent or Sub, as the case may be, of any of the
transactions contemplated hereby or thereby, except for (i) the filing
with the Specified Agencies of a premerger notification and report form
under the HSR Act, (ii) the filing with the SEC of (x) the Form S-4 and
(y) such reports under Sections 13(a), 13(d) and 16(a) of the Exchange
Act as may be required in connection with this Agreement and the Stock
Option Agreement and the transactions contemplated hereby and thereby,
(iii) the filing of the Articles of Merger with the Washington Secretary
of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, and (iv)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings, including under (x) the laws of any foreign
country in which the Company or any of its subsidiaries conducts any
business or owns any property or assets or (y) the "takeover" or "blue
sky" laws of various states, the failure of which to be obtained or made
would not, individually, or in the aggregate, have a material adverse
effect on Parent or prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement or the stock Option
Agreement.
(d) SEC Documents; Financial Statements. Since January 1,
1995, Parent has filed with the SEC all required reports and forms and
other documents (the "Parent SEC Documents"). As of their respective
dates, the Parent SEC Documents complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents, and none of the Parent SEC
Documents contained any untrue statement of a material fact or omitted
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. Except to the extent that
information contained in any Parent SEC Document has been revised or
superseded by a later-filed Parent SEC Document filed and publicly
available prior to the date of this Agreement, none of the Parent SEC
Documents contains any untrue statement of a material fact or omits 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. The financial statements of
Parent included in the Parent SEC Documents comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of Parent and its
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end
adjustments). Except as set forth in the Parent SEC Documents, and
except for liabilities and obligations incurred in the ordinary course
of business consistent with past practice since the date of the most
recent consolidated balance sheet included in the Parent SEC Documents,
neither Parent nor any of its subsidiaries has any material liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by generally accepted accounting principles to be
recognized or disclosed on a consolidated balance sheet of Parent and
its consolidated subsidiaries or in the notes thereto.
(e) Information Supplied. None of the information supplied
or to be supplied by Parent or Sub for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the Form S-4 is filed
with the SEC, at any time it is amended or supplemented or at the time
it becomes effective under the Securities Act, 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 not
misleading or (ii) the Proxy Statement will, at the date the Proxy
Statement is first mailed to the Company's stockholders or at the time
of the Stockholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading (provided that
Parent shall not be liable in damages for breach of this representation
except to the extent the information which is the subject of such
liability was provided in writing). The Form S-4 will comply as to form
in all material respects with the requirements of the Securities Act and
the rules and regulations promulgated thereunder, except that no
representation or warranty is made by Parent or Sub with respect to
statements made or incorporated by reference in either the Form S-4 or
the Proxy Statement based on information supplied by the Company
specifically for inclusion or incorporation by reference therein.
(f) Absence of Certain Changes or Events. Except as
disclosed in the Parent SEC Documents filed prior to the date of this
Agreement, since January 1, 1998, Parent has conducted its business only
in the ordinary course consistent with prior practice and there has not
been (i) any material adverse change in Parent, (ii) except for regular
quarterly cash dividends (in an amount determined in a manner consistent
with Parent's past practice) with customary record and payment dates,
any declaration, setting aside or payment of any dividend or
distribution (whether in cash, stock or property) with respect to any of
Parent's capital stock, (iii) any split, combination or reclassification
of any of its capital stock (other than the previously announced stock
split proposed by Parent) or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, (iv) any damage,
destruction or loss, whether or not covered by insurance, that has or
would reasonably be expected to have a material adverse effect on
Parent, (v) any change in accounting methods, principles or practices by
Parent materially affecting its assets, liabilities or business except
insofar as may have been required by a change in generally accepted
accounting principles, or (vi) any agreement to do any of the things
described in the preceding clauses (i) through (v).
(g) Litigation. Except as disclosed in the Parent SEC
Documents filed prior to the date of this Agreement, as of the date of
this Agreement there is no suit, action or proceeding pending or, to the
knowledge of Parent, threatened against Parent or any of its
subsidiaries that, individually or in the aggregate, would reasonably be
expected to (i) have a material adverse effect on Parent, (ii) impair in
any material respect the ability of Parent to perform its obligations
under this Agreement, or (iii) prevent the consummation of any of the
transactions contemplated by this Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Parent or any of its subsidiaries having,
or which is reasonably likely to have, any effect referred to in the
foregoing clauses (i) through (iii).
(h) Compliance with Applicable Laws. (i) Each of Parent
and its subsidiaries has in effect all Permits necessary for it to own,
lease or operate its properties and assets and to carry on its business
as now conducted, and there has occurred no default under any such
Permit, except for the lack of Permits and for defaults under Permits
which lack or default individually or in the aggregate would not
reasonably be expected to have a material adverse effect on Parent.
Except as disclosed in the Parent SEC Documents filed prior to the date
of this Agreement, Parent and its subsidiaries are in compliance with
all applicable statutes, laws, ordinances, rules, orders and regulations
of any Governmental Entity, except for possible noncompliance which
individually or in the aggregate would not have a material adverse
effect on Parent.
(ii) To the knowledge of Parent, Parent and each of its
subsidiaries is, and has been, and each of Parent's former subsidiaries,
while subsidiaries of Parent, was, in compliance in all material
respects with all applicable Environmental Laws, except for possible
noncompliance which individually or in the aggregate would not have a
material adverse effect on Parent.
(i) Accounting Matters; Tax Treatment. Neither Parent nor,
to its best knowledge, any of its affiliates has taken or agreed to take
any action or has knowledge of any fact or circumstance relating to
Parent that would prevent Parent from accounting for the business
combination to be effected by the Merger as a pooling-of-interests.
Neither Parent nor any of its subsidiaries has taken or agreed to take
any action or has any knowledge of any fact or circumstance that might
prevent or impede the Merger from qualifying as a reorganization within
the meaning of Sections 368(a)(1)(A) and (a)(2)(E) of the Code.
(j) Brokers. No broker, investment banker, financial
advisor or other person, other than Merrill Lynch & Co., the fees and
expenses of which will be paid by Parent, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Parent or Sub.
(k) Interim Operations of Sub. Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations
only as contemplated hereby.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1. Conduct of Business. (a) Conduct of Business
by the Company. Between the date of this Agreement and the Effective
Time, the Company shall, and shall cause its subsidiaries to, carry on
their respective businesses in the ordinary course and use all
reasonable efforts to preserve intact their current business
organizations, keep available the services of their current officers and
employees and preserve their relationships with customers, suppliers and
others having business dealings with them. Without limiting the
generality of the foregoing, between the date of this Agreement and the
Effective Time, except (a) as contemplated by this Agreement or (b) as
set forth in Section 4.1(a) of the Company Disclosure Schedule, the
Company shall not, and shall not permit any of its subsidiaries, without
the prior written approval of Parent, to:
(i) (A) declare, set aside or pay (whether in cash, stock,
property, or otherwise) any dividends on, or make any other
distributions in respect of, any of its capital stock, other than (x)
the regular quarterly dividend declared by the Company with a record
date of April 24, 1998 and (y) dividends and distributions by any
direct or indirect wholly owned subsidiary of the Company to its parent,
(B) split, combine or reclassify any of its capital stock, or issue or
authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, or (C) purchase,
redeem or otherwise acquire any shares of capital stock of the Company
or any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other
securities;
(ii) other than the issuance of Company Common Stock upon
the exercise of Stock Options outstanding on the date of this Agreement
in accordance with their present terms or in accordance with the present
terms of any employment agreements existing on the date of this
Agreement and described in Section 4.1(a) of the Company Disclosure
Schedule, (A) issue, deliver, sell, award, pledge, dispose of or
otherwise encumber or authorize or propose the issuance, delivery,
grant, sale, award, pledge or other encumbrance (including limitations
in voting rights) or authorization of, any shares of its capital stock,
any other voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting
securities or convertible securities, (B) amend or otherwise modify the
terms of any such rights, warrants or options, or (C) accelerate the
vesting of any of the Stock Options;
(iii) amend its certificate of incorporation, by-laws or
other comparable charter or organizational documents, or amend or take
any other action with respect to the Rights Agreement or the Rights that
is adverse to Parent;
(iv) acquire or agree to acquire (for cash or shares of
stock or otherwise) (A) by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or (B)
any assets except purchases of inventory in the ordinary course of
business consistent with past practice;
(v) mortgage or otherwise encumber or subject to any Lien,
or sell, lease, exchange or otherwise dispose of any of, its properties
or assets, except for sales of its properties or assets in the ordinary
course of business consistent with past practice;
(vi) (A) incur any indebtedness for borrowed money
(including under existing credit facilities) or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company
or any of its subsidiaries, guarantee any debt securities of another
person, enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except
for the incurrence of indebtedness to finance the Company's working
capital needs which, in the aggregate, do not exceed $1,000,000 provided
that the terms of any such indebtedness (including any prepayment
penalty) shall be subject to the approval of Parent, or (B) make any
loans, advances or capital contributions to, or investments in, any
other person, other than to the Company or any direct or indirect wholly
owned subsidiary of the Company;
(vii) make or agree to make any new capital expenditures
which, individually, exceed $250,000 or which, in the aggregate, exceed
$2,000,000;
(viii) make or rescind any express or deemed election
relating to taxes, settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to taxes, or change any of its methods of reporting income or
deductions for Federal income tax purposes, except as may be required by
applicable law;
(ix) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company included in the SEC
Documents or incurred in the ordinary course of business consistent with
past practice;
(x) (A) increase the rate or terms of compensation payable
or to become payable generally to any of the Company's directors,
officers or employees, (B) pay or agree to pay any pension, retirement
allowance or other employee benefit not provided for by any existing
Pension Plan, Benefit Plan or employment agreement described in the SEC
Documents filed prior to the date of this Agreement, (C) commit itself
to any additional pension, profit sharing, bonus, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right,
group insurance, severance pay, continuation pay, termination pay,
retirement or other employee benefit plan, agreement or arrangement, or
increase the rate or terms of any employee plan or benefit arrangement,
(D) enter into any employment agreement with or for the benefit of any
person, or (E) increase the rate of compensation under or otherwise
change the terms of any existing employment agreement; provided,
however, that nothing in this clause (x) shall preclude payments under
the terms of the existing incentive compensation plans of the Company in
accordance with past practice;
(xi) except in the ordinary course of business consistent
with past practice, modify, amend, terminate, renew or fail to use
reasonable business efforts to renew any material contract or agreement
to which the Company or any subsidiary is a party or waive, release or
assign any material rights or claims; or
(xii) authorize any of, or commit or agree to take any of,
the foregoing actions.
(b) Conduct of Business by Parent. During the period from
the date of this Agreement to the Effective Time, Parent shall, and
shall cause its subsidiaries to, carry on their respective businesses in
the ordinary course and use all reasonable efforts to preserve their
relationships with customers, suppliers and others having business
dealings with them; provided that the foregoing shall not prevent Parent
or any of its subsidiaries from discontinuing or disposing of any part
of its assets or business or from acquiring any assets or businesses or
from entering into any financing transactions if such action is, in the
judgment of Parent, desirable in the conduct of the business of Parent
and its subsidiaries. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the Effective Time,
except as (i) contemplated by this Agreement or (ii) as set forth in a
writing delivered to the Company prior to the execution hereof, Parent
shall not, and shall not permit any of its subsidiaries to:
(i) (A) declare, set aside or pay (whether in cash or
property) any dividends on, or make any other distributions in respect
of, any capital stock other than dividends and distributions by any
direct or indirect wholly owned subsidiary of Parent to its parent and
except for regular quarterly cash dividends (in an amount determined in
a manner consistent with Parent's past practice) declared by the Board
of Directors of Parent with customary record and payment dates, (B)
split, combine or reclassify any of its capital stock (other than the
previously announced stock split proposed by Parent) or issue or
authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of Parent's capital stock or (C) purchase,
redeem or otherwise acquire any shares of Parent Common Stock;
(ii) amend its certificate of incorporation (except for the
purpose of increasing its authorized capitalization), by-laws or other
comparable charter or organizational documents in a manner which would
reasonably be expected to be materially adverse to the stockholders of
the Company; or
(iii) authorize, or commit or agree to take any of, the
foregoing actions.
(c) Other Actions. The Company and Parent shall not, and
shall not permit any of their respective subsidiaries to, take any
action that would result in (i) any of the representations and
warranties of such party set forth in this Agreement that are qualified
as to materiality, becoming untrue or (ii) any of such representations
and warranties that are not so qualified becoming untrue in any material
respect.
SECTION 4.2. No Solicitation. (a) The Company shall not,
nor shall it permit any of its subsidiaries to, nor shall it authorize
or permit any officer, director or employee of, or any investment
banker, attorney or other advisor or representative of, the Company or
any of its subsidiaries to, (i) solicit or initiate, or encourage the
submission of, any, Takeover Proposal (as such term is defined below),
(ii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, 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 Takeover
Proposal; provided, however, that prior to the Effective Time, to the
extent required by the fiduciary obligations of the Board of Directors
of the Company, as determined in good faith by the Board of Directors
after receipt of the advice of outside counsel, the Company may, (A) in
response to an unsolicited request therefor, furnish information with
respect to the Company to any person pursuant to a confidentiality
agreement no less favorable to the Company than the Confidentiality
Agreement (as defined in Section 5.2) and discuss such information and
the terms of this Section 4.2 (but not the terms of any possible
Takeover Proposal) with such person and (B) upon receipt by the Company
of a Takeover Proposal, following delivery to Parent of the notice
required pursuant to Section 4.2(c), participate in negotiations
regarding such Takeover Proposal. For purposes of this Agreement,
"Takeover Proposal") means any proposal or offer (whether or not in
writing and whether or not delivered to the Company's shareholders gen-
erally) for an Alternative Transaction. An "Alternative Transaction
means a merger or other business combination involving the Company or
any of its Material Subsidiaries or any acquisition in any manner,
directly or indirectly, of any voting securities of, or in excess of 10%
of the book value of the assets of, the Company or any of its Material
Subsidiaries, or any other transaction that would involve the transfer
or potential transfer of an interest in or control of the Company or any
of its Material Subsidiaries, other than the transactions contemplated
by this Agreement.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify (other than a nonpublic proposal by a committee to the full
Board), in a manner adverse to Parent or Sub, the approval or
recommendation by such Board of Directors or any such committee of this
Agreement or the Merger, (ii) approve or recommend, or propose to
approve or recommend (other than a nonpublic proposal by a committee to
the full Board), any Takeover Proposal or (iii) enter into any agreement
with respect to any Takeover Proposal. Notwithstanding the foregoing,
in the event the Board of Directors of the Company receives a Takeover
Proposal that, in the exercise of its fiduciary obligations (as
determined in good faith by the Board of Directors after receipt of the
written advice of outside counsel), it determines to be a Superior
Proposal (as defined below), the Board of Directors may (subject to the
following sentences) withdraw or modify its approval or recommendation
of this Agreement or the Merger, approve or recommend any such Superior
Proposal, enter into an agreement with respect to such Superior Proposal
or terminate this Agreement, in each case at any time after the second
business day following Parent's receipt of written notice (a "Notice of
Superior Proposal") advising Parent that the Board of Directors has
received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making
such Superior Proposal. In addition, if the Company enters into an
agreement with respect to any Takeover Proposal, it shall concurrently
with entering into such agreement pay, or cause to be paid, to Parent
the Termination Fee (as defined in Section 5.8(b)) and the Expense Fee
(as defined in Section 5.8(b)) in accordance with Section 5.8(b). For
purposes of this Agreement, a "Superior Proposal" means any bona fide
Takeover Proposal to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, more than 50% of the shares of
Company Common Stock then outstanding or all or substantially all the
assets of the Company, and otherwise on terms which the Board of
Directors of the Company determines in its good faith reasonable
judgment (after receipt of the written advice of a financial advisor of
nationally recognized reputation) to be more favorable from a financial
point of view to the Company's stockholders than the Merger. Nothing
contained herein shall prohibit the Company from taking and disclosing
to its stockholders a position contemplated by Rule 14e-2(a) under the
Exchange Act or otherwise making any disclosures required by the
fiduciary obligations of the Board of Directors of the Company that
would not violate or be inconsistent with the Company's obligations
under this Agreement.
(c) In addition to the obligations of the Company set forth
in paragraph (b), the Company shall promptly advise Parent orally and in
writing of any request for information or of any Takeover Proposal, or
any inquiry with respect to or which could reasonably be expected to
lead to any Takeover Proposal, the material terms and conditions of such
request, Takeover Proposal or inquiry, and the identity of the person
making any such Takeover Proposal or inquiry. The Company shall keep
Parent informed on a current basis of the status and details of any such
request, Takeover Proposal or inquiry.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Preparation of Form S-4 and the Proxy
Statement; Stockholders' Meeting. (a) As promptly as practicable after
the execution of this Agreement, (i) the Company shall prepare and file
with the SEC a proxy statement relating to the meeting of the Company's
stockholders to be held to obtain the Company Stockholder Approval,
respectively (together with any amendments and supplements thereof or
supplements thereto, the "Proxy Statement"), and (ii) Parent shall
prepare and file with the SEC a registration statement on Form S-4
(together with all amendments thereto, the "Form S-4") in which the
Proxy Statement shall be included as a prospectus, in connection with
the registration under the Securities Act of the shares of Parent Common
Stock to be issued to the stockholders of the Company pursuant to the
Merger. Each of Parent and the Company shall use all reasonable efforts
to cause the Form S-4 to become effective as promptly as practicable,
and shall take all or any action required under any applicable Federal
or state securities laws in connection with the issuance of shares of
Parent Common Stock pursuant to the Merger. Each of Parent and the
Company shall furnish all information concerning itself to the other as
the other may reasonably request in connection with such actions and the
preparation of the Form S-4 and Proxy Statement. As promptly as
practicable after the Form S-4 shall have become effective, the Company
shall mail the Proxy Statement to its stockholders.
(b) Stockholders' Meeting. As soon as practicable
following the date of this Agreement, the Company shall call and hold a
meeting of its stockholders (the "Company Stockholders' Meeting"), for
the purpose of obtaining the Company Stockholder Approval. The Company
shall use its reasonable efforts to solicit from its stockholders
proxies, and shall take all other action necessary or advisable to
secure the vote or consent of stockholders required by applicable law to
obtain the Company Stockholder Approval and, through its Board of
Directors, shall recommend to its stockholders the obtaining of the
Company Stockholder Approval, except to the extent that the Board of
Directors of the Company shall have withdrawn or modified its approval
or recommendation of this Agreement or the Merger in accordance with the
provisions of Section 4.2(b).
SECTION 5.2. Access to Information; Confidentiality. Each
of the Company and Parent shall, and shall cause each of its respective
subsidiaries to, afford to the other party, and to the officers,
employees, accountants, counsel, financial advisers and other
representatives of such other party, reasonable access during normal
business hours during the period prior to the Effective Time to all
their respective properties, books, contracts, commitments, personnel
and records and, during such period, each of the Company and Parent
shall, and shall cause each of its respective subsidiaries to, furnish
promptly to the other party, (a) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of Federal or state securities laws and (b)
all other information concerning its business, properties and personnel
as such other party may reasonably request. Except as required by law,
each of the Company and Parent will hold, and will cause its respective
officers, employees, accountants, counsel, financial advisers and other
representatives and affiliates to hold, any confidential information in
accordance with the Confidentiality Agreement dated April 2, 1998,
between Parent and the Company (the "Confidentiality Agreement").
SECTION 5.3. Reasonable Efforts; Notification. (a) Upon
the terms and subject to the conditions set forth in this Agreement,
each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including (i) the making of
all necessary registrations and filings (including filings with
Governmental Entities, if any), (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, and (iii) the
execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement. Each party shall promptly notify the other
parties of any communication to that party from any Governmental Entity
and permit the other parties to review in advance any proposed
communications to any Governmental Entity. Parent and the Company shall
not (and shall cause their respective affiliates and representatives not
to) participate in any meeting with any Governmental Entity in respect
of any filings, investigation or other inquiry unless it consults with
the other party in advance and, to the extent permitted by such
Governmental Entity, gives the other party the opportunity to attend and
participate thereat. Subject to the Confidentiality Agreement, each of
the parties hereto will coordinate and cooperate fully with the other
parties hereto in exchanging such information and providing such
assistance as such other parties may reasonably request in connection
with the foregoing and in seeking early termination of any applicable
waiting periods under the HSR Act or in connection with other required
consents. Each of the Company and Parent agrees to respond promptly to
and comply fully with any request for additional information or
documents under the HSR Act. Subject to the Confidentiality Agreement,
each party will provide the others with copies of all correspondence,
filings or communications (or memoranda setting forth the substance
thereof) between such party or any of its representatives, on the one
hand, and any Governmental Entity or members of its staff, on the other
hand, and any Governmental Entity or members of its staff, on the other
hand, with respect to this Agreement and the transactions contemplated
hereby. Notwithstanding the foregoing, the Board of Directors of the
Company shall not be prohibited from taking any action permitted by
Section 4.2(b).
(b) The Company shall give prompt notice to Parent, and
Parent shall give prompt notice to the Company, of (i) any
representation or warranty made by it contained in this Agreement that
is qualified as to materiality becoming untrue or inaccurate in any
respect or any such representation or warranty that is not so qualified
becoming untrue or inaccurate in any material respect or (ii) the
failure by it to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it
under this Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants, or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
SECTION 5.4. Stock Option Plans. The Company and Parent
shall take all necessary action to provide that, at the Effective Time,
all outstanding stock options to purchase shares of Company Common Stock
("Stock Options") heretofore granted under any stock option or stock
appreciation rights plan, program or arrangement of the Company
(collectively, the "Stock Option Plans") will be canceled and retired
and shall cease to exist, and that each holder of a Stock Option,
whether or not then exercisable, shall receive with respect to such
Stock Option, without any action on the part of such holder, the number
of whole shares of Parent Common Stock equal to (i) the Fair Value of
such Stock Option (as defined below) divided by (ii) the Closing Parent
Stock Price (as defined below), where: the "Fair Value of such Stock
Option" is equal to the product of (x) the number of shares of Company
Common Stock subject to such Stock Option and (y) the excess, if any, of
(A) the product of the Exchange Ratio and the Closing Parent Stock Price
over (B) the exercise price of such Stock Option; and the "Closing
Parent Stock Price" means the average of the daily last sale prices of
Parent Common Stock as reported on the NYSE Composite Transactions
reporting system (as reported in The Wall Street Journal or, if not
reported therein, in another mutually agreed upon authoritative source)
for the ten consecutive full trading days ending at the close of trading
on the trading day immediately preceding the Closing Date. The Company
shall use its reasonable best efforts to receive any consents necessary
to effectuate the foregoing. The Company represents and warrants that,
under the terms of the Stock Option Plans and the Stock Options,
following the Effective Time, no holder of a Stock Option or participant
in any Stock Option Plan shall have any right thereunder to acquire any
capital stock of the Company, Parent or the Surviving Corporation.
SECTION 5.5. Benefit Plans and Employee Matters. (a) Parent
agrees that the Company will honor, and, from and after the Effective
Time, Parent will cause the Surviving Corporation to honor, in
accordance with their respective terms as in effect on the date hereof,
the employment, severance and bonus agreements and arrangements to which
the Company is a party which are set forth on Sections 3.1(i) and 5.5
of the Company Disclosure Schedule. Parent intends to continue the
Fluke Corporation Supplemental Retirement Plan, the Fluke Corporation
Executive Deferred Compensation Plan and the Fluke Corporation Pre-
Retirement Death Benefit Plan following the Effective Time, subject to
their terms.
(b) Parent agrees that (i) for the period ending December
31, 1998, the Surviving Corporation shall continue the compensation and
employee benefit and welfare plans and programs of the Company to the
extent practicable as in effect on the date hereof, and (ii) thereafter
the Surviving Corporation shall provide employees of the Company and its
subsidiaries as a whole (A) compensation (including bonus and incentive
awards) programs and plans and (B) employee benefit and welfare plans,
programs, contracts, agreements and policies (including insurance and
pension plans), fringe benefits and vacation policies which are
substantially the same as or not materially less favorable in the
aggregate to such employees than those generally in effect with respect
to similarly situated employees of Parent.
SECTION 5.6. Indemnification, Exculpation and Insurance.
(a) The certificate of incorporation and the by-laws of the Surviving
Corporation shall contain the provisions with respect to indemnification
and exculpation from liability set forth in the Company's certificate of
incorporation and by-laws on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who on or prior to
the Effective Time were directors, officers, employees or agents of the
Company, unless such modification is required by law. Parent shall
guarantee the obligations of the Surviving Corporation with respect to
the indemnification provisions contained in the Surviving Corporation's
certificate of incorporation and by-laws.
(b) For three years from the Effective Time, Parent shall
maintain in effect directors' and officers' liability insurance covering
those persons who are currently covered by the Company's directors' and
officers' liability insurance policy (a copy of which has been
heretofore delivered to Parent) (the "Indemnified Parties") on terms no
less favorable than the terms of such current insurance coverage;
provided, however, that in no event shall Parent be required to expend
in any one year an amount in excess of 200% 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, Parent shall be obligated to obtain a policy with the greatest
coverage available for a cost not exceeding such amount.
(c) In the event Parent, the Surviving Corporation or any
of their successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then and
in each such case, proper provisions shall be made so that the
successors and assigns of Parent or the Surviving Corporation, as the
case may be, shall assume the obligations set forth in this Section 5.6.
(d) This Section 5.6 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company,
Parent, the Surviving Corporation and the Indemnified Parties, and shall
be binding on all successors and assigns of Parent and the Surviving
Corporation.
SECTION 5.7. Letters of Accountants. (a) The Company
shall use its reasonable efforts to cause to be delivered to Parent
"comfort" letters of Ernst & Young LLP, the Company's independent public
accountants, dated and delivered a date within two business days before
the date on which the Form S-4 shall become effective and within two
business days before the Closing Date, each addressed to Parent, in form
and substance reasonably satisfactory to Parent and reasonably customary
in scope and substance for letters delivered by independent public
accountants in connection with transactions such as those contemplated
by this Agreement.
(b) Parent shall use its reasonable efforts to cause to be
delivered to the Company "comfort" letters of Arthur Andersen LLP,
Parent's independent public accountants, dated a date within two
business days before the date on which the Form S-4 shall become
effective and within two business days before the Closing Date, each
addressed to the Company, in form and substance reasonably satisfactory
to the Company and reasonably customary in scope and substance for
letters delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
SECTION 5.8. Fees and Expenses. (a) Except as provided in
this Section 5.8, all fees and expenses incurred in connection with the
Merger, this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such fees or expenses, whether or not the
Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day
funds to Parent upon demand an amount equal to (A) $ 17,000,000 (the
"Termination Fee") plus (B) Parent's aggregate Expenses (as hereinafter
defined) not exceeding $3,000,000 (the "Expense Fee"):
(i) if the Agreement is terminated pursuant to (A) Section
7.1(b) as a result of a material breach by the Company of its agreements
set forth in Section 4.2(b) or 5.1(b), (B) Section 7.1(g)(i) or
7.1(g)(ii); or (C) Section 7.1(h); or
(ii) if the Company enters into any agreement with respect
to any Superior Proposal in accordance with Section 4.2(b); or
(iii) if (A) the Agreement is terminated pursuant to
Section 7.1(g)(iii) and (B) prior to such termination, any person or
"group" acquiring beneficial ownership of more than 10% (excluding Fluke
Capital and Management Company ("FCM") and ICM Asset Management, Inc.
("ICM")) of the outstanding shares of capital stock of the Company shall
have refused or failed to deliver to Parent upon request a binding
commitment reasonably satisfactory in form and substance to Parent to
the effect that such acquisition is purely for investment purposes and
that such person or the members of such "group" shall not take any
action that may frustrate the transactions contemplated by this
Agreement and (C) within one year after the date of such termination of
the Agreement, the Company consummates an Alternative Transaction;
provided, that the Company shall make a nonrefundable payment of
$5,000,000 (which amount shall be credited to Termination Fee or the
Expense Fee) upon the termination of the Agreement pursuant to Section
7.1(g)(iii); or
(iv) if (A) the Agreement is terminated pursuant to Section
7.1(f) following a failure to obtain the Company Stockholder Approval
and (B) at the time of the Company Stockholders' Meeting there existed a
Takeover Proposal or a third party shall have indicated its intention to
make a Takeover Proposal or shall have solicited proxies or consents in
opposition to the Merger and (C) within one year after the date of such
termination of the Agreement, the Company consummates an Alternative
Transaction.
(c) Limitation of Termination Fees. Notwithstanding
anything herein or in the Stock Option Agreement to the contrary, the
sum of (x) the amounts payable to Parent pursuant to Section 5.8(b) and
(y) the value of the Stock Option Agreement to the holder or holders
thereof (which for purposes of this Section 5.8(c) shall be the Option
Repurchase Price (as defined in the Stock Option Agreement)) shall not
exceed $20,000,000. If the sum of the amounts to which Parent would be
entitled under Section 5.8(b) and the value of the Stock Option
Agreement is greater than $20,000,000 in the aggregate on the date
Parent would be entitled to demand payment of the Termination Fee, then
the amount which the Company shall be obligated to pay Parent under
Section 5.8(b) and the holder or holders (on a pro rata basis) of the
Stock Option Agreement shall be limited to $20,000,000 and Parent shall
indicate to the Company how such amount shall be allocated between the
Termination Fee, the Expense Fee and the Option Repurchase Price.
(d) The prevailing party in any legal action undertaken to
enforce this Agreement or any provision hereof shall be entitled to
recover from the other party the costs and expenses (including
attorneys' and expert witness fees) incurred in connection with such
action.
SECTION 5.9. Public Announcements. Parent and Sub, on the
one hand, and the Company, on the other hand, will consult with each
other before issuing, and provide each other the opportunity to review
and comment upon, any press release or other public statements with
respect to the transactions contemplated by this Agreement, including
the Merger, and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required
by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange. The parties
agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the form
heretofore agreed to by the parties.
SECTION 5.10. Affiliates; Accounting and Tax Treatment.
(a) The Company shall (x) within 30 days after the date of this
Agreement, deliver to Parent a letter identifying all persons who may be
deemed affiliates of the Company under Rule 145 of the Securities Act or
otherwise under applicable SEC accounting releases with respect to
pooling-of-interests accounting treatment and (y) use its reasonable
efforts to obtain from each such affiliate, by the thirtieth day prior
to the Effective Time, a written agreement substantially in the form of
Exhibit 5.10 hereto. The Company shall use its reasonable efforts to
obtain such a written agreement as soon as practicable from any person
who may be deemed to have become an affiliate of the Company, after the
Company's delivery of the letter referred to above and prior to the
Effective Time.
(b) Each party hereto shall (i) use its reasonable efforts
to cause the Merger to qualify, and shall not take any actions which
such party knows or has reason to know could prevent the Merger from
qualifying, for pooling-of-interests accounting treatment and as a
reorganization under the provisions of Section 368(a) of the Code and
(ii) use its reasonable efforts to obtain the letters from the
accountants referred to in Sections 6.2(e) and 6.3(d) and the opinions
of counsel referred to in Section 6.3(c).
(c) The Company shall (i) use its reasonable best efforts
to secure the waiver of any limited stock appreciation rights or other
rights to redeem for cash options or warrants of the Company by each
holder thereof and (ii) subject to the prior consent of Parent, which
shall not be unreasonably withheld, take such other actions as are
necessary to cure any facts or circumstances that could prevent the
Merger from qualifying for pooling-of-interests accounting treatment.
(d) Parent shall publish results covering at least 30 days
of combined operations of the Company and Parent within 45 calendar days
of the end of Parent's fiscal quarter ending immediately following the
Effective Time that includes such 30 days of combined operations.
SECTION 5.11. State Takeover Laws. The Company shall, upon
the request of Parent, take all reasonable steps to assist in any
challenge by Parent to the validity or applicability to the
transactions contemplated by this Agreement, the Stock Option Agreement
or the Stockholder Support Agreements, including the Merger, of any
state takeover law.
SECTION 5.12. Coordination of Dividends. Parent and the
Company shall coordinate with one another regarding the declaration or
payment of dividends in respect of Parent Common Stock and Company
Common Stock (including any partial quarterly dividends) and the record
dates and payment dates relating thereto, it being the intention of
Parent and the Company that any holder of Company Common Stock shall not
receive two dividends, or fail to receive one dividend, for any single
calendar quarter with respect to its shares of Company Common Stock
and/or any shares of Parent Common Stock any such holder receives in
exchange therefor pursuant to the Merger.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Each Party's Obligations to
Effect the Merger. The respective obligation of each party to effect
the Merger is subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) Stockholder Approvals. The Company Stockholder
Approval shall have been obtained.
(b) NYSE Listing. The shares of Parent Common Stock
issuable to the Company's stockholders pursuant to this Agreement and
under the Stock Option Plans shall have been approved for listing on
the NYSE, subject to official notice of issuance.
(c) No Injunctions; Litigation. No litigation brought by a
Governmental Entity shall be pending, and no litigation shall be
threatened by any Governmental Entity, which seeks to enjoin or prohibit
the consummation of the Merger, and no temporary restraining order,
preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect.
(d) Form S-4. The Form S-4 shall have been declared
effective by the SEC under the Securities Act. No stop order suspending
the effectiveness of the Form S-4 shall have been issued by the SEC, and
no proceedings for that purpose shall have been initiated or, to the
knowledge of Parent or the Company, threatened by the SEC.
(e) HSR Act. The applicable waiting period (and any
extension thereof) under the HSR Act shall have expired or been
terminated.
(f) Approvals. Other than the filing of merger documents
in accordance with the BCA, all authorizations, consents, waivers,
orders or approvals required to be obtained, and all filings, notices or
declarations required to be made, by Parent, Sub and the Company prior
to the consummation of the Merger and the transactions contemplated
hereunder shall have been obtained from, and made with, all required
Governmental Entities except for such authorizations, consents, waivers,
orders, approvals, filings, notices or declarations the failure to
obtain or make which would not have a material adverse effect, at or
after the Effective Time, on the Company or Parent.
SECTION 6.2. Additional Conditions to Obligations of Parent
and Sub. The obligations of Parent and Sub to effect the Merger are
also subject to the following conditions:
(a) Representations and Warranties. Each of the
representations and warranties of the Company contained in this
Agreement shall, as of the Closing Date as though made on and as of the
Closing Date, be true and correct except for such failures to be true
and correct as could not, individually or in the aggregate, reasonably
be expected to result in a material adverse effect on the Company or
Parent (except that where any statement in a representation or warranty
is expressly qualified by a material adverse effect, such statement
shall be true and correct in all respects); provided that those
representations and warranties which address matters only as of a
particular date shall remain true and correct in all material respects
(except that where any statement in a representation or warranty
expressly includes a standard of materiality, such statement shall be
true and correct in all respects giving effect to such standard) as of
such date. Parent shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of the Company to such
effect.
(b) Agreements and Covenants. The Company shall have
performed or complied in all material respects with the agreements and
covenants required by this Agreement to be performed or complied with by
it on or prior to the Closing Date. Parent shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer
of the Company to that effect.
(c) Consents Under Agreements. The Company shall have
obtained the consent or approval of each person whose consent or
approval shall be required in connection with the Merger under all loan
or credit agreements, notes, mortgages, indentures, leases or other
agreements or instruments to which it or any of its Material
Subsidiaries is a party, except those for which failure to obtain such
consents and approvals would not have a material adverse effect on the
Company prior to or after the Effective Time or a material adverse
effect on Parent after the Effective Time.
(d) Tax Opinion. Parent shall have received the opinion of
Wachtell, Lipton, Rosen & Katz, counsel to Parent, dated the date of the
Proxy Statement, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, the Merger
will be treated for Federal income tax purposes as a reorganization
qualifying under the provisions of Section 368(a) of the Code, which
opinion shall not have been withdrawn or modified in any material
respect. The issuance of such opinion shall be conditioned on the
receipt of customary representation letters.
(e) Pooling Letter. Parent shall have received from Arthur
Andersen LLP, as independent auditors of Parent, on the date of the
Proxy Statement and on the Closing Date, letters, in each case dated as
of such respective dates, addressed to Parent, in form and substance
reasonably acceptable to Parent and to the effect that the business
combination to be effected by the Merger is required to be accounted for
as a pooling-of-interests by Parent for purposes of its consolidated
financial statements under generally accepted accounting principles and
applicable SEC rules and regulations. No action shall have been taken
by any Governmental Entity or any statute, rule, regulation or order
enacted, promulgated or issued by any Governmental Entity, or any
proposal made for any such action by any Governmental Entity which is
reasonably likely to be put into effect, that would prevent Parent from
accounting for the business combination to be effected by the Merger as
a pooling-of-interests. The conditions set forth in this Section 6.2(e)
may not be waived by Parent without the Company's consent; provided that
such consent shall not be withheld for any reason other than that such
waiver would result in a material diminution in the value of the
consideration to be received by holders of Company Common Stock in the
Merger; and provided, further, that such consent shall not be required
if the failure to satisfy the conditions set forth in this Section
6.2(e) resulted from any act or omission of the Company.
(f) Affiliate Agreements. Parent shall have received from
each person who may be deemed to be an affiliate of the Company (under
Rule 145 of the Securities Act or otherwise under applicable SEC
accounting releases with respect to pooling-of-interests accounting
treatment) on or prior to the Closing Date a signed agreement
substantially in the form of Exhibit 5.10 hereto.
(g) Dissenting Shares. The number of Dissenting Shares
shall not constitute more than 5% of the number of issued and
outstanding shares of Company Common Stock.
SECTION 6.3. Additional Conditions to Obligations of the
Company. The obligations of the Company to effect the Merger are also
subject to the following conditions:
(a) Representations and Warranties. Each of the
representations and warranties of Parent contained in this Agreement
shall, as of the Closing Date as though made on and as of the Closing
Date, be true and correct, except for such failures to be true and
correct as could not, individually or in the aggregate, reasonably be
expected to result in a material adverse effect on Parent (except that
where any statement in a representation or warranty is expressly
qualified by a material adverse effect, such statement shall be true and
correct in all respects); provided that those representations and
warranties which address matters only as of a particular date shall
remain true and correct in all material respects (except that where any
statement in a representation or warranty expressly includes a standard
of materiality, such statement shall be true and correct in all respects
giving effect to such standard) as of such date. The Company shall have
received a certificate of the Chief Executive Officer and Chief
Financial Officer of Parent to such effect.
(b) Agreements and Covenants. Parent shall have performed
or complied in all material respects with the agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Closing Date. The Company shall have received a
certificate the Chief Executive Officer and Chief Financial Officer of
Parent to that effect.
(c) Tax Opinion. The Company shall have received the
opinion of Davis Wright Tremaine, counsel to the Company, dated the date
of the Proxy Statement, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, the Merger
will be treated for Federal income tax purposes as a reorganization
qualifying under the provisions of Section 368(a) of the Code, which
opinion shall not have been withdrawn or modified in any material
respect. The issuance of such opinion shall be conditioned on the
receipt of customary representation letters.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after
approval of matters presented in connection with the Merger by the
stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by Parent, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in
this Agreement, or if any representation or warranty of the Company
shall have become untrue, in either case such that the conditions set
forth in Section 6.2(a) or Section 6.2(b), as the case may be, would be
incapable of being satisfied by October 31, 1998; provided that, in any
case, a willful material breach which, to the extent it may be cured, is
not cured within a reasonable time after notice thereof, shall be deemed
to cause such conditions to be incapable of being satisfied for purposes
of this Section 7.1(b);
(c) by the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, or if any representation or warranty of Parent shall have
become untrue, in either case such that the conditions set forth in
Section 6.3(a) or Section 6.3(b), as the case may be, would be incapable
of being satisfied by October 31, 1998; provided that, in any case, a
willful material breach which, to the extent it may be cured, is not
cured within a reasonable time after notice thereof, shall be deemed to
cause such conditions to be incapable of being satisfied for purposes of
this Section 7.1(c);
(d) by either Parent or the Company, if any Governmental
Entity shall have issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise prohibiting the
consummation of the Merger and such order, decree or ruling or other
action shall have become final and nonappealable;
(e) by either Parent or the Company, if the Merger shall
not have occurred by October 31, 1998 unless the failure to consummate
the Merger is the result of a breach of a covenant set forth in this
Agreement or a material breach of any representation, or warranty,
covenant or agreement set forth in this Agreement by the party seeking
to terminate this Agreement;
(f) by either Parent or the Company, if upon a vote at a
duly held Company Stockholders' Meeting or any adjournment thereof the
Company Stockholder Approval shall not have been obtained;
(g) by Parent, if (i) the Board of Directors of the Company
shall withdraw, modify or change its recommendation of this Agreement or
the Merger in any manner adverse to Parent, or the Company or any of its
Material Subsidiaries shall have entered into an agreement with respect
to any Alternative Transaction, or the Board of Directors of the Company
shall have resolved or announced its intention to do any of the forego-
ing; (ii) the Board of Directors of the Company shall have recommended
to the shareholders of the Company a Takeover Proposal, or shall have
resolved or announced its intention to do so; or (iii) any person (other
than Parent and its subsidiaries) shall have acquired beneficial
ownership of, or any "group" (as such term is defined under Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder) shall have been formed which beneficially owns, or has the
right to acquire beneficial ownership of, more than 10% of the then
outstanding shares of capital stock of the Company; provided that
existing interests of FCM and ICM shall not give rise to any termination
right hereunder;
(h) by the Company, in accordance with the provisions of
Section 4.2(b); and
(i) by the Company, if its Board of Directors so determines
by a vote of a majority of the members of its entire Board, at any time
during the two-day period commencing at the close of business on the
fifth calendar day (the "Determination Date") prior to the date
scheduled for the Company Stockholders' Meeting, if the average of the
daily last sale prices of Parent Common Stock as reported on the NYSE
Composite Transactions reporting system (as reported in The Wall Street
Journal or, if not reported therein, in another mutually agreed upon
authoritative source) for the fifteen consecutive full trading days
ending at the close of trading on the Determination Date (the "Average
Closing Price") shall be less than $63.88; subject, however, to the
following four sentences. If the Company elects to exercise its termi-
nation right pursuant to this Section 7.1(i), it shall give prompt
written notice to Parent; provided that such notice of election to
terminate may be withdrawn at any time within the aforementioned two-day
period or during the two-day period specified below. During the two-day
period commencing with its receipt of such notice, Parent may elect to
increase the Exchange Ratio to equal a number equal to a quotient
(rounded to five decimal points), the numerator of which is the product
of $63.88 and the Exchange Ratio (as then in effect) and the denominator
of which is the Average Closing Price. If Parent makes an election
contemplated by the preceding sentence within such two-day period, it
shall give prompt written notice to the Company of such election and the
revised Exchange Ratio, whereupon no termination shall have occurred
pursuant to this Section 7.1(i) and this Agreement shall remain in
effect in accordance with its terms, except that any references in this
Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this Section 7.1(i). If Parent
declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares or similar
transaction between the date hereof and the Determination Date, the
prices for the Parent Common Stock shall be appropriately adjusted for
the purposes of applying this Section 7.1(i).
SECTION 7.2. Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as
provided in Section 7.1, this Agreement shall forthwith become void and
have no effect, without any liability or obligation on the part of
Parent, Sub or the Company, other than the provisions of Section 3.1(s),
3.2(j), the last sentence of Section 5.2, Section 5.8, this Section 7.2
and Article VIII and except to the extent that such termination results
from the willful and material breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION 7.3. Amendment. This Agreement may be amended by
the parties at any time before or after the Company Stockholder
Approval; provided, however, that after the Company Stockholder Approval
there shall not be made any amendment that by law requires further
approval by the stockholders of the Company without the further approval
of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
SECTION 7.4. Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance
of any of the obligations or other acts of the other parties, (b) waive
any inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 7.3, waive compliance with any of the
agreements or conditions contained in this Agreement. Any agreement on
the part of a 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. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver
of those rights.
SECTION 7.5. Procedure for Termination, Amendment,
Extension or Waiver. A termination of this Agreement pursuant to
Section 7.1, an amendment of this Agreement pursuant to Section 7.3 or
an extension or waiver pursuant to Section 7.4 shall, in order to be
effective, require in the case of Parent, Sub or the Company, action by
its Board of Directors or the duly authorized designee of its Board of
Directors.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the
Effective Time. This Section 8.1 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance
after the Effective Time of the Merger.
SECTION 8.2. Notices. All notices, requests, claims,
demands and other communications under this Agreement shall be in
writing and shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) or telecopy (with
receipt acknowledged) 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 Sub, to
Danaher Corporation
1250 24th Street, N.W.
Washington, D.C. 20037
Facsimile: (202) 828-0860
Attention: Patrick W. Allender
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Facsimile: (212) 403-2000
Attention: Martin Lipton, Esq.
and a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, DC 20037
Facsimile: (202) 663-6363
Attention: George P. Stamas, Esq.
(b) if to the Company, to
Fluke Corporation
6920 Seaway Boulevard
Everett, WA 98203
Facsimile: (425) 356-5256
Attention: Douglas McKnight
with a copy to:
Davis Wright Tremaine
2600 Century Square
1501 4th Avenue
Seattle, WA 98101
Facsimile: (206) 628-7699
Attention: Francis Kareken, Esq.
SECTION 8.3. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "material adverse change" or "material adverse effect"
means, when used in connection with the Company or Parent, any changes
or effects that is or would, individually or in the aggregate,
reasonably be expected to be materially adverse to the business, assets,
liabilities, condition (financial or otherwise) or results of operations
of such party and its subsidiaries taken as a whole;
(c) "person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other
entity; and
(d) a "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there
are no such voting interests, more than 50% of the equity interests of
which) is owned directly or indirectly by such first person.
(e) Parent's "Expenses" shall mean all documented out-of-
pocket fees and expenses incurred or paid by or on behalf of Parent in
connection with or in contemplation of the Merger or the consummation of
any of the transactions contemplated by this Agreement, including all
fees and expenses of counsel, investment banking firms, accountants,
experts and consultants to Parent.
SECTION 8.4. Interpretation. When a reference is made in
this Agreement to a Section, Exhibit or Schedule, such reference shall
be to a Section of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever the
words "include," "includes" and "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation."
SECTION 8.5. Counterparts. This Agreement may be executed
in one or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to
the other parties.
SECTION 8.6. Entire Agreement; No Third-Party
Beneficiaries. This Agreement and the Confidentiality Agreement
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter of this Agreement and except for the provisions of
Article II and Section 5.6, are not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
SECTION 8.7. Governing Law. Except for Article I which
shall be governed and construed in accordance with the laws of the State
of Washington, this Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the
laws that might otherwise govern under applicable principles of conflict
of laws thereof.
SECTION 8.8. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by any
of the parties without the prior written consent of the other parties.
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.
SECTION 8.9. Enforcement. The parties agree that
irreparable damage would occur in the event that any of the provisions
of this Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States located
in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any Federal court located in the
State of Delaware or any Delaware state court in the event any dispute
arises out of this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any
such court, and (c) agrees that it will not bring any action relating to
this Agreement or any of the transactions contemplated by this Agreement
in any court other than a Federal or state court sitting in the State of
Delaware.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
Attest: DANAHER CORPORATION
By: /S/ PATRICK W. ALLENDER
Name: Patrick W. Allender
Title: Senior Vice President and
Chief Financial Officer
FALCON ACQUISITION CORP.
By:/S/ PATRICK W. ALLENDER
Name: Patrick W. Allender
Title: President
FLUKE CORPORATION
By:/S/ WILLIAM G. PARZYBOK, JR.
Name: William G. Parzybok, Jr.
Title: Chairman of the Board and
Chief Executive Officer
EXHIBIT 5.10
FORM OF AFFILIATE LETTER
Danaher Corporation
1250 24th Street, N.W.
Washington, D.C. 20037
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of FLUKE CORPORATION, a Washington
corporation (the "Company"), as the term "affiliate" is (i) defined
within the meaning of Rule 145 of the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"),
and/or (ii) used in and for purposes of Accounting Series Releases 130
and 135, as amended, of the Commission. Pursuant to the terms of the
Agreement and Plan of Merger dated as of April 2, 1998 (the
"Agreement"), among Danaher Corporation, a Delaware corporation
("Parent"), Falcon Acquisition Corp., a Washington corporation ("Sub"),
and the Company, Sub will be merged with and into the Company (the
"Merger").
In connection with the Merger, I am entitled to receive
shares of common stock, par value $.01 per share, of Parent (the "Parent
Shares") in exchange for shares (or options for shares) owned by me of
common stock of the Company (the "Company Shares").
I represent, warrant and covenant to Parent that in the event
I receive any Parent Shares as a result of the Merger:
(a) I shall not make any sale, transfer or other
disposition of the Parent Shares in violation of the Act or the Rules
and Regulations.
(b) I have carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of
Parent Shares, to the extent I felt necessary, with my counsel or
counsel for the Company.
(c) I have been advised that the issuance of Parent Shares
to me pursuant to the Merger has been registered with the Commission
under the Act on a Registration Statement on Form S-4. However, because
I have been advised that, at the time the Merger is submitted for a vote
of the stockholders of the Company, (a) I may be deemed to be an
affiliate of the Company, and (b) other than as set forth in the
Agreement, the distribution by me of the Parent Shares has not been
registered under the Act, I will not sell, transfer, hedge, encumber or
otherwise dispose of Parent Shares issued to me in the Merger unless (i)
such sale, transfer or other disposition is made in conformity with the
volume and other limitations of Rule 145 promulgated by the Commission
under the Act, (ii) such sale, transfer or other disposition has been
made pursuant to an effective registration statement under the Act, or
(iii) in the opinion of counsel reasonably acceptable to Parent or as
described in a "no-action" or interpretive letter from the Staff of the
Commission, such sale, transfer or other disposition is otherwise exempt
from registration under the Act.
(d) I understand that Parent is under no obligation, other
than as set forth in the Agreement, to register the sale, transfer or
other disposition of the Parent Shares by me or on my behalf under the
Act or to take any other action necessary in order to make compliance
with an exemption from such registration available solely as a result of
the Merger.
(e) I also understand that there will be placed on the
Certificates for the Parent Shares issued to me, or any substitutions
therefor, a legend stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION
TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE REGISTERED HOLDER
HEREOF AND DANAHER CORPORATION, A COPY OF WHICH AGREEMENT IS ON FILE AT
THE PRINCIPAL OFFICES OF DANAHER CORPORATION.
(f) I also understand that unless a sale or transfer is
made in conformity with the provisions of Rule 145, or pursuant to a
registration statement, Parent reserves the right to put the following
legend on the certificates issued to my transferee:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED
BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933.
It is understood and agreed that the legends set forth in
paragraphs (e) and (f) above shall be removed by delivery of substitute
certificates without such legend if the undersigned shall have delivered
to Parent a copy of a letter from the staff of the Commission, or an
opinion of counsel reasonably satisfactory to Parent in form and
substance reasonably satisfactory to Parent, to the effect that such
legend is not required for purposes of the Act.
I further represent to, and covenant with, Parent that I will
not, during the 30 days prior to the Effective Time (as defined in the
Agreement), sell, transfer, hedge, encumber or otherwise dispose or
reduce my rights with respect to of the Company Shares or shares of the
capital stock of Parent that I may hold and, furthermore, that I will
not sell, transfer, hedge, encumber or otherwise dispose of or reduce my
rights with respect to Parent Shares received by me in the Merger or any
other shares of the capital stock of Parent until after such time as
results covering at least 30 days of combined operations of the Company
and Parent have been published by Parent, in the form of a quarterly
earnings report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or
any other public filing or announcement which includes such combined
results of operations.
Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of the Company as
described in the first paragraph of this letter, or as a waiver of any
rights I may have to object to any claim that I am such an affiliate on
or after the date of this letter.
Very truly yours,
Name:
Accepted this day of
, 1998, by
DANAHER CORPORATION
By
Name:
Title:
STOCK OPTION AGREEMENT, dated April 24, 1998, between FLUKE
CORPORATION, a Washington corporation ("Issuer"), and DANAHER
CORPORATION, a Delaware corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement
and Plan of Merger of even date herewith (the "Merger Agreement"), which
agreement has been executed by the parties hereto immediately prior to
this Stock Option Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant
Grantee the Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Merger
Agreement, the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms
hereof, up to 3,636,874 fully paid and nonassessable shares of Issuer's
Common Stock, par value $.25 per share ("Common Stock"), at a price of
$34.00 per share (the "Option Price"); provided, however, that in no
event shall the number of shares of Common Stock for which this Option
is exercisable exceed 19.9% of the Issuer's issued and outstanding
shares of Common Stock without giving effect to any shares subject to or
issued pursuant to the Option. The number of shares of Common Stock
that may be received upon the exercise of the Option and the Option
Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are either (i) issued or otherwise become outstanding after the date of
this Agreement (other than pursuant to this Agreement) or (ii) redeemed,
repurchased, retired or otherwise cease to be outstanding after the date
of the Agreement, the number of shares of Common Stock subject to the
Option shall be increased or decreased, as appropriate, so that, after
such issuance, such number equals 19.9% of the number of shares of
Common Stock then issued and outstanding without giving effect to any
shares subject or issued pursuant to the Option. Nothing contained in
this Section 1(b) or elsewhere in this Agreement shall be deemed to
authorize Issuer or Grantee to breach any provision of the Merger
Agreement.
2. (a) The holder or holders of the Option (the "Holder")
may exercise the Option, in whole or part, and from time to time, if,
but only if, a Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the
written notice of such exercise (as provided in subsection (e) of this
Section 2) within 180 days following such Triggering Event.
(b) Each of the following shall be an "Exercise Termination
Event": (i) the Effective Time of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof unless (A)
such termination follows the occurrence of a Triggering Event, (B) such
termination is by Grantee pursuant to Section 7.1(b) of the Merger
Agreement (if the breach by Issuer giving rise to such right of
termination is willful) or (C) such termination is by Issuer pursuant to
Section 7.1(h) of the Merger Agreement; or (iii) the passage of 12
months after termination of the Merger Agreement if (A) such termination
follows the occurrence of a Triggering Event, (B) such termination is by
Grantee pursuant to Section 7.1(b) of the Merger Agreement (if the
breach by Issuer giving rise to such right of termination is willful) or
(C) such termination is by Issuer pursuant to Section 7.1(h) of the
Merger Agreement.
(c) The term "Triggering Event" shall mean any event or
transaction entitling the Grantee to terminate the Merger Agreement
pursuant to (i) Section 7.1(g)(i) or 7.1(g)(ii) thereof or (ii) Section
7.1(g)(iii) thereof; provided that such event or transaction shall only
be a Triggering Event if any person or "group" acquiring beneficial
ownership of more than 10% of the outstanding shares of capital stock of
the Company shall have refused or failed to deliver to Grantee upon
request a binding commitment reasonably satisfactory in form and
substance to Grantee to the effect that such acquisition is purely for
investment purposes and that such person or the members of such "group"
shall not take any action that may frustrate the transactions
contemplated by the Merger Agreement.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Triggering Event which it has notice, it being
understood that the giving of such notice by Issuer shall not be a
condition to the right of the Holder to exercise the Option.
(e) (e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the date
of which being herein referred to as the "Notice Date") specifying (i)
the total number of shares it will purchase pursuant to such exercise
and (ii) a place and date not earlier than three business days nor later
than 60 business days from the Notice Date for the closing of such
purchase (the "Closing Date"); provided that if prior approval of the
Federal Trade Commission under, or the passage of the waiting period
under, the HSR Act, or prior approval from any other regulatory agency
is required in connection with such purchase, the Holder shall promptly
file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on
which any required notification periods have expired or been terminated
or such approvals have been obtained and any requisite waiting period or
periods shall have passed. Any exercise of the Option shall be deemed
to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase price
for the shares of Common Stock purchased pursuant to the exercise of the
Option in immediately available funds by wire transfer to a bank account
designated by Issuer, provided that failure or refusal of Issuer to
designate such a bank account shall not preclude the Holder from
exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this
Section 2, Issuer shall deliver to the Holder a certificate or
certificates representing the number of shares of Common Stock purchased
by the Holder and, if the Option should be exercised in part only, a new
Option evidencing the rights of the Holder thereof to purchase the
balance of the shares purchasable hereunder, and the Holder shall
deliver to Issuer a copy of this Agreement and a letter agreeing that
the Holder will not offer to sell or otherwise dispose of such shares in
violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate
is subject to certain provisions of an agreement between the
registered holder hereof and Issuer and to resale
restrictions arising under the Securities Act of 1933, as
amended. A copy of such agreement is on file at the
principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933 Act"),
in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the Holder shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of
counsel, in form and substance reasonably satisfactory to Issuer, to the
effect that such legend is not required for purposes of the 1933 Act;
(ii) the reference to the provisions of this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without
such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do
not require the retention of such reference; and (iii) the legend shall
be removed in its entirety if the conditions in the preceding clauses
(i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection (e) of
this Section 2 and the tender of the applicable purchase price in
immediately available funds, the Holder shall be deemed to be the holder
of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be
closed or that certificates representing such shares of Common Stock
shall not then be actually delivered to the Holder. Issuer shall pay
all expenses, and any and all United States federal, state and local
taxes and other charges that may be payable in connection with the
preparation, issue and delivery of stock certificates under this Section
2 in the name of the Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it will not, by charter amendment
or through reorganization, consolidation, merger, dissolution or sale of
assets, or by any other voluntary act, avoid or seek to avoid the
observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by Issuer; (ii)
promptly to take all action as may from time to time be required
(including complying with all premerger notification, reporting and
waiting period requirements under the HSR Act) in order to permit the
Holder to exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant hereto; (iii) that if a Triggering Event
shall have occurred prior to the occurrence of an Exercise Termination
Event, the Issuer shall use its best efforts to obtain additional
authorized but unissued shares which are free of preemptive rights so
that the Option may be exercised without additional authorization of
Common Stock after giving effect to all other options, warrants,
convertible securities and other rights to purchase Common Stock and
(iv) promptly to take all action provided herein to protect the rights
of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal office of
Issuer, for other Agreements providing for Options of different
denominations entitling the holder thereof to purchase, on the same
terms and subject to the same conditions as are set forth herein, in the
aggregate the same number of shares of Common Stock purchasable
hereunder. The terms "Agreement" and "Option" as used herein include
any Stock Option Agreements and related Options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer
will execute and deliver a new Agreement of like tenor and date. Any
such new Agreement executed and delivered shall constitute an additional
contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of
Common Stock that are purchasable upon exercise of the Option pursuant
to Section 1 of this Agreement, the number of shares of Common Stock
purchasable upon the exercise of the Option and the Option Price shall
be subject to adjustment from time to time as provided in this Section
5. In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividends, splitups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares, distributions on or in respect of the Common Stock that would be
prohibited under the terms of the Merger Agreement, or the like, the
type and number of shares of Common Stock purchasable upon exercise
hereof and the Option Price shall be appropriately adjusted in such man-
ner as shall fully preserve the economic benefits provided hereunder and
proper provision shall be made in any agreement governing any such
transaction to provide for such proper adjustment and the full
satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within 90 days of such Triggering Event (whether on
its own behalf or on behalf of any subsequent holder of this Option (or
part thereof) or any of the shares of Common Stock issued pursuant
hereto), promptly prepare, file and keep current a shelf registration
statement under the 1933 Act covering this Option and any shares issued
and issuable pursuant to this Option and shall use its reasonable best
efforts to cause such registration statement to become effective and
remain current in order to permit the sale or other disposition of this
Option and any shares of Common Stock issued upon total or partial
exercise of this Option ("Option Shares") in accordance with any plan of
disposition requested by Grantee. Issuer will use its reasonable best
efforts to cause such registration statement first to become effective
and then to remain effective for such period not in excess of 180 days
from the day such registration statement first becomes effective or such
shorter time as may be reasonably necessary to effect such sales or
other dispositions. Grantee shall have the right to demand two such
registrations. The foregoing notwithstanding, if, at the time of any
request by Grantee for registration of the Option or Option Shares as
provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering the inclusion of the Holder's Option or Option Shares would
interfere with the successful marketing of the shares of Common Stock
offered by Issuer, the number of Option Shares otherwise to be covered
in the registration statement contemplated hereby may be reduced; and
provided, however, that after any such required reduction the number of
Option Shares to be included in such offering for the account of the
Holder shall constitute at least 25% of the total number of shares to be
sold by the Holder and Issuer in the aggregate; and provided further,
however, that if such reduction occurs, then the Issuer shall file a
registration statement for the balance as promptly as practical and no
reduction shall thereafter occur. In addition, the Board of Directors
of the Issuer may delay the filing of any such registration statement
for up to 30 days by giving notice to the Grantee if, in the good faith
determination of the Board, at the time of a request for registration
hereunder, the Issuer has pending any material financing, acquisition,
reorganization or other corporate transaction which would be required
to be disclosed prematurely to the material detriment of the Issuer.
Each such Holder shall provide all information reasonably requested by
Issuer for inclusion in any registration statement to be filed
hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement
relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities
and other agreements customarily included in secondary offering
underwriting agreements for the Issuer. Upon receiving any request
under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to
registration rights under this Section 6, in each case by promptly
mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies. Notwithstanding anything to
the contrary contained herein, in no event shall Issuer be obligated to
effect more than two registrations pursuant to this Section 6 by reason
of the fact that there shall be more than one Grantee as a result of any
assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase
Event (as defined below), (i) following a request of the Holder,
delivered prior to an Exercise Termination Event, Issuer (or any
successor thereto) shall repurchase the Option from the Holder at a
price (the "Option Repurchase Price") equal to the amount by which (A)
the Market/Offer Price (as defined below) exceeds (B) the Option Price,
multiplied by the number of shares for which this Option may then be
exercised (provided that, notwithstanding anything to the contrary, if
the Issuer shall not have sufficient additional authorized but unissued
shares or treasury shares of Common Stock so that the Option may be
exercised in full, the Option Repurchase Price shall be calculated as if
there were sufficient shares which were authorized but unissued so that
the Option could be exercised in full) and (ii) at the request of the
owner of Option Shares from time to time (the "Owner"), delivered within
90 days of such occurrence (or such later period as provided in Section
10), Issuer shall repurchase such number of the Option Shares from the
Owner as the Owner shall designate at a price (the "Option Share
Repurchase Price") equal to the Market/Offer Price multiplied by the
number of Option Shares so designated. The term "Market/Offer Price"
shall mean the highest of (i) the price per share of Common Stock at
which a tender offer or exchange offer therefor has been made, (ii) the
price per share of Common Stock to be paid by any third party pursuant
to an agreement with Issuer, (iii) the highest closing price for shares
of Common Stock within the six-month period immediately preceding the
date the Holder gives notice of the required repurchase of this Option
or the Owner gives notice of the required repurchase of Option Shares,
as the case may be, or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in
such sale for such assets and the current market value of the remaining
assets of Issuer as determined by a nationally recognized investment
banking firm selected by the Holder or the Owner, as the case may be,
and reasonably acceptable to the Issuer, divided by the number of shares
of Common Stock of Issuer outstanding at the time of such sale;
provided, however, that if and to the extent the operation of this
Section 7 would require a shareholder vote pursuant to Article V of the
Restated Articles of Incorporation of the Issuer (the "Articles"), the
Market/Offer Price shall be no higher than the Market Price (as defined
in the Articles). In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally
recognized investment banking firm selected by the Holder or Owner, as
the case may be, and reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may
exercise its right to require Issuer to repurchase the Option and any
Option Shares pursuant to this Section 7 by surrendering for such
purpose to Issuer, at its principal office, a copy of this Agreement or
certificates for Option Shares, as applicable, accompanied by a written
notice or notices stating that the Holder or the Owner, as the case may
be, elects to require Issuer to repurchase this Option and/or the Option
Shares in accordance with the provisions of this Section 7. No later
than the later to occur of (x) five business days after the surrender of
the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto and (y) the time that
is immediately prior to the occurrence of a Repurchase Event, Issuer
shall deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase Price
therefor or the portion thereof, if any, that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation from repurchasing the Option and/or the Option Shares
in full, Issuer shall immediately so notify the Holder and/or the Owner
and thereafter deliver or cause to be delivered, from time to time, to
the Holder and/or the Owner, as appropriate, the portion of the Option
Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business
days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice
of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation from delivering to the Holder and/or
the Owner, as appropriate, the Option Repurchase Price and the Option
Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its best efforts to obtain all required regulatory and
legal approvals and to file any required notices, in each case as
promptly as practicable in order to accomplish such repurchase), the
Holder or Owner may revoke its notice of repurchase of the Option or the
Option Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, Issuer shall promptly (i) deliver to the
Holder and/or the Owner, as appropriate, that portion of the Option
Repurchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either
(A) to the Holder, a new Stock Option Agreement evidencing the right of
the Holder to purchase that number of shares of Common Stock obtained by
multiplying the number of shares of Common Stock for which the
surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of
which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the
Option Repurchase Price, or (B) to the Owner, a certificate for the
Option Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a "Repurchase Event"
shall be deemed to have occurred (i) upon the consummation of any
merger, consolidation or similar transaction involving Issuer or any
purchase, lease or other acquisition of all or a substantial portion of
the assets of Issuer, or (ii) upon the acquisition by any person of
beneficial ownership of 50% or more of the then outstanding shares of
Common Stock, provided that no such event shall constitute a Repurchase
Event unless a Triggering Event shall have occurred prior to an Exercise
Termination Event.
(e) Notwithstanding anything herein or in the Merger
Agreement to the contrary, the sum of (x) the amounts payable to Grantee
pursuant to Section 5.8(b) of the Merger Agreement and (y) the value of
this Option to the Holder or Holders hereof (which for purposes of this
Section shall be the Option Repurchase Price) shall not exceed
$20,000,000. If the sum of the amounts to which Grantee would be
entitled under Section 5.8(b) of the Merger Agreement and the value of
this Option is greater than $20,000,000 in the aggregate on the date
Grantee would be entitled to demand payment of the Termination Fee and
the Expense Fee (each as defined in the Merger Agreement), then the
amount which the Company shall be obligated to pay Grantee under Section
5.8(b) of the Merger Agreement and the holder or holders (on a pro rata
basis) of this Option or the Option Shares shall be limited to
$20,000,000 and Grantee shall indicate to the Company how such amount
shall be allocated between the Termination Fee, the Expense Fee and the
Option Repurchase Price
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate with or
merge into any person, other than Grantee or one of its Subsidiaries,
and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee
or one of its Subsidiaries, to merge into Issuer and Issuer shall be the
continuing or surviving corporation, but, in connection with such
merger, the then outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of Common
Stock shall after such merger represent less than 50% of the outstanding
voting shares and voting share equivalents of the merged company, or
(iii) to sell or otherwise transfer all or substantially all of its
assets to any person, other than Grantee or one of its Subsidiaries,
then, and in each such case, the agreement governing such transaction
shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions
set forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person that
controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or merger
with Issuer (if other than Issuer), (ii) Issuer in a merger in
which Issuer is the continuing or surviving person, and (iii) the
transferee of all or substantially all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon exercise
of the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.
(4) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of the
shares of Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided that if Issuer is the
issuer of the Substitute Option, the Average Price shall be com-
puted with respect to a share of common stock issued by the person
merging into Issuer or by any company which controls or is
controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar
as possible and in no event less advantageous to the Holder. The issuer
of the Substitute Option shall also enter into an agreement with the
then Holder or Holders of the Substitute Option in substantially the
same form as this Agreement, which shall be applicable to the Substitute
Option.
(d) The Substitute Option shall be exercisable for such
number of shares of Substitute Common Stock as is equal to the Assigned
Value multiplied by the number of shares of Common Stock for which the
Option is then exercisable, divided by the Average Price. The exercise
price of the Substitute Option per share of Substitute Common Stock
shall then be equal to the Option Price multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock for
which the Option is then exercisable and the denominator of which shall
be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more than
19.9% of the shares of Substitute Common Stock outstanding prior to
exercise of the Substitute Option. In the event that the Substitute
Option would be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of
(i) the value of the Substitute Option without giving effect to the
limitation in this clause (e) over (ii) the value of the Substitute Op-
tion after giving effect to the limitation in this clause (e). This
difference in value shall be determined by a nationally recognized
investment banking firm selected by the Holder or the Owner, as the case
may be, and reasonably acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and
any person that controls the Acquiring Corporation assume in writing all
the obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute
Option (the "Substitute Option Holder"), the Substitute Option Issuer
shall repurchase the Substitute Option from the Substitute Option Holder
at a price (the "Substitute Option Repurchase Price") equal to (x) the
amount by which (i) the Highest Closing Price (as hereinafter defined)
exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute
Option may then be exercised plus (y) Grantee's reasonable out-of-pocket
expenses (to the extent not previously reimbursed), and at the request
of the owner (the "Substitute Share Owner") of shares of Substitute
Common Stock (the "Substitute Shares"), the Substitute Option Issuer
shall repurchase the Substitute Shares at a price (the "Substitute Share
Repurchase Price") equal to (x) the Highest Closing Price multiplied by
the number of Substitute Shares so designated plus (y) Grantee's
reasonable Out-of-Pocket Expenses (to the extent not previously
reimbursed). The term "Highest Closing Price" shall mean the highest
closing price for shares of Substitute Common Stock within the six-month
period immediately preceding the date the Substitute Option Holder gives
notice of the required repurchase of the Substitute Option or the
Substitute Share Owner gives notice of the required repurchase of the
Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise their respective rights to
require the Substitute Option Issuer to repurchase the Substitute Option
and the Substitute Shares pursuant to this Section 9 by surrendering for
such purpose to the Substitute Option Issuer, at its principal office,
the agreement for such Substitute Option (or, in the absence of such an
agreement, a copy of this Agreement) and certificates for Substitute
Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may
be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable, and in any
event within five business days after the surrender of the Substitute
Option and/or certificates representing Substitute Shares and the
receipt of such notice or notices relating thereto, the Substitute
Option Issuer shall deliver or cause to be delivered to the Substitute
Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor
or, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from
so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation from repurchasing the
Substitute Option and/or the Substitute Shares in part or in full, the
Substitute Option Issuer following a request for repurchase pursuant to
this Section 9 shall immediately so notify the Substitute Option Holder
and/or the Substitute Share Owner and thereafter deliver or cause to be
delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute
Share Repurchase Price, respectively, which it is no longer prohibited
from delivering, within five business days after the date on which the
Substitute Option Issuer is no longer so prohibited; provided, however,
that if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation from delivering to the
Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the Substitute Option Repurchase Price and the Substitute
Share Repurchase Price, respectively, in full (and the Substitute Option
Issuer shall use its best efforts to obtain all required regulatory and
legal approvals, in each case as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option
or the Substitute Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, the Substitute Option Issuer
shall promptly (i) deliver to the Substitute Option Holder or Substitute
Share Owner, as appropriate, that portion of the Substitute Option
Repurchase Price or the Substitute Share Repurchase Price that the
Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Substitute Option Holder, a
new Substitute Option evidencing the right of the Substitute Option
Holder to purchase that number of shares of the Substitute Common Stock
obtained by multiplying the number of shares of the Substitute Common
Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the
numerator of which is the Substitute Option Repurchase Price less the
portion thereof theretofore delivered to the Substitute Option Holder
and the denominator of which is the Substitute Option Repurchase Price,
or (B) to the Substitute Share Owner, a certificate for the Substitute
Common Shares it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain rights under
Sections 2, 6, 7 and 13 shall be extended: (i) to the extent necessary
to obtain all regulatory approvals for the exercise of such rights, and
for the expiration of all statutory waiting periods; and (ii) to the
extent necessary to avoid liability under Section 16(b) of the 1934 Act
by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of Issuer and no other
corporate proceedings on the part of Issuer are necessary to authorize
this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Issuer.
(b) Subject to Section 3, Issuer has taken all necessary
corporate action to authorize and reserve and to permit it to issue, and
at all times from the date hereof through the termination of this
Agreement in accordance with its terms will have reserved for issuance
upon the exercise of the Option, that number of shares of Common Stock
equal to the maximum number of shares of Common Stock at any time and
from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims,
liens, encumbrance and security interests and not subject to any
preemptive rights.
(c) Issuer has entered into an amendment to the Rights
Agreement providing that the entering into of this Option Agreement, the
acquisition of shares of Common Stock hereunder and the other
transactions contemplated hereby do not and will not result in the grant
of any rights to any person under the Rights Agreement or enable or
require the Rights to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority
to enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Grantee. This Agreement has
been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock
or other securities acquired by Grantee upon exercise of the Option will
not be, acquired with a view to the public distribution thereof and will
not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act.
13. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option created
hereunder to any other person, without the express written consent of
the other party, except that in the event a Triggering Event shall have
occurred prior to an Exercise Termination Event, Grantee, subject to the
express provisions hereof, may assign in whole or in part its rights and
obligations hereunder within 90 days following such Triggering Event (or
such later period as provided in Section 10).
14. Each of Grantee and Issuer will use its best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement, including without
limitation making all required filings under the HSR Act and making
application to list the shares of Common Stock issuable hereunder on the
New York Stock Exchange upon official notice of issuance.
15. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto
and that the obligations of the parties hereto shall be enforceable by
either party hereto through injunctive or other equitable relief.
16. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and
effect, and shall in no way be affected, impaired or invalidated. If
for any reason such court or regulatory agency determines that the
Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common
Stock provided in Section 1(a) hereof (as adjusted pursuant to Section
1(b) or 5 hereof), it is the express intention of Issuer to allow the
Holder to acquire or to require Issuer to repurchase such lesser number
of shares as may be permissible, without any amendment or modification
hereof.
17. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when
delivered in person, by cable, telegram, telecopy or telex, or by
registered or certified mail (postage prepaid, return receipt requested)
at the respective addresses of the parties set forth in the Merger
Agreement.
18. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington, regardless of the
laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
19. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
20. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
21. Except as otherwise expressly provided herein or in the
Merger Agreement, this Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect
thereof, written or oral. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto and
their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party,
other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned thereto in the Merger Agreement.
23. Any provision of this instrument applicable to or for
the benefit of the Holder hereof or the Owner of Option Shares shall, if
there be more than one Holder or Owner, apply to the Holders or the
Owners on a pro rata basis in accordance with their economic interests
in the Option or the Option Shares.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
FLUKE CORPORATION DANAHER CORPORATION
as Issuer as Grantee
By: /S/ WILLIAM G. PARZYBOK, JR. By: /S/ PATRICK W. ALLENDER
Name: William G. Parzybok, Jr. Name: Patrick W. Allender
Title: Chairman of the Board and Title: Senior Vice President and
Chief Executive Officer Chief Financial Officer
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCKHOLDERS SUPPORT AGREEMENT
STOCKHOLDERS SUPPORT AGREEMENT, dated as of April 24, 1998,
by and among DANAHER CORPORATION, a Delaware corporation ("Parent"), on
the one hand, and each of David L Fluke, John M. Fluke, Jr. and Fluke
Capital and Management Services Company, a Washington limited
partnership ("FCMS") (each a "Stockholder" and, collectively, the
"Stockholders"), on the other hand. Each Stockholder is executing this
Agreement in its capacity as a stockholder of FLUKE CORPORATION, a
Washington corporation (the "Company").
WHEREAS, Parent, FALCON ACQUISITION CORP., a Washington
corporation and a wholly owned subsidiary of Parent ("Sub"), and the
Company, are entering into an Agreement and Plan of Merger (the "Merger
Agreement"; capitalized terms used without definition herein having the
meanings ascribed thereto in the Merger Agreement) under which the
stockholders will receive substantial value for their interest in the
Company;
WHEREAS, a significant portion of the goodwill and value of
the Company resides in the "Fluke" tradename;
WHEREAS, each individual Stockholder is a director of the
Company, who possesses significant knowledge and information about and
expertise in the Company Business (as defined below) which is extremely
valuable to competitors of the Company, and accordingly, in order to
induce Parent to enter into the Merger Agreement and to provide Parent
with the full value of its investment in the Company through the Merger,
Parent has requested that each Stockholder make, and each Stockholder
has agreed to make, the commitments herein set forth;
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein, the parties hereto
agree as follows:
Section 1. Agreement to Support Transaction. Until the
earlier of the Effective Time and the termination of this Agreement in
accordance with its terms: (a) Each Stockholder hereby agrees that it
shall vote, or shall cause to be voted, in person or by proxy, at the
Company Stockholders' Meeting, any other meeting of stockholders of the
Company held prior to the earlier of the Effective Time and the
termination of this Agreement or, in each case, any adjournment or
postponement thereof, all Shares, and any other voting securities of the
Company (whether acquired heretofore or hereafter) that are beneficially
owned by such Stockholder or its affiliates or as to which such
Stockholder or any of its affiliates has, directly or indirectly, the
right to vote or control, (i) in favor of approval and adoption of the
Merger Agreement, the Merger, the other transactions contemplated by the
Merger Agreement and any action required in furtherance thereof, (ii)
against any action or agreement that would result in a breach of any
representation, warranty, covenant or obligation of the Company
contained in the Merger Agreement, and (iii) against any Alternative
Transaction or any other proposal that is inconsistent with or would
interfere with the Merger or the other transactions contemplated by the
Merger Agreement.
(b) Each Stockholder agrees that it will not, and will not
permit any company, trust or other entity controlled by such Stockholder
to, and will not permit any of its affiliates to, contract to sell,
sell, pledge, encumber or otherwise transfer or dispose of any of the
Shares beneficially owned by it or any interest therein or securities
convertible thereinto or any voting rights with respect thereto, other
than (i) pursuant to the Merger or (ii) with Parent's prior written
consent.
(c) Each Stockholder hereby revokes any and all previous
proxies with respect to such Stockholder's Shares or any other voting
securities of the Company.
(d) Each Stockholder hereby agrees to, will cause any
company, trust or other entity controlled by such Stockholder to, and
will cause its affiliates to, cooperate fully with Parent in connection
with the Merger Agreement and the transactions contemplated thereby.
Each Stockholder agrees that neither it nor any of its officers,
employees, representatives, agents or Affiliates will, directly or
indirectly, encourage, solicit or engage in discussions or negotiations
with any third party (other than Parent) concerning any Takeover
Proposal, other than the transactions contemplated hereby and by the
Merger Agreement. Each such Stockholder shall immediately request that
any Person that has received directly or indirectly from such
Stockholder any confidential information involving the Company or any of
its Subsidiaries return all copies thereof to the Company and shall, and
shall cause its Subsidiaries, officers, employees, representatives,
agents and Affiliates to, terminate all discussions or negotiations with
any Person with respect to any Takeover Proposal. Each such Stockholder
will notify Parent immediately of any inquiries or proposals with
respect to any such transaction that are received by, or any such
negotiations or discussions of which it is aware that are sought to be
initiated with, such Stockholder or any of its Affiliates or the Company
or any of its Subsidiaries, will advise Parent of the identity of any
Person making any such Takeover Proposal and of the terms thereof and
shall keep Parent apprised with respect to all matters relating thereto.
(e) Each individual Stockholder is signing this Agreement
solely in his capacity as a record holder and beneficial owner of Shares
and nothing herein shall limit or affect any actions taken by a
Stockholder in his capacity as an officer or director of the Company,
subject to the provisions of the Merger Agreement.
Section 2. Rule 145; Pooling Letter. Each Stockholder is
on the date hereof executing, and shall cause each of its controlled
Affiliates identified as Affiliates of the Company on the Company's
letter referred to in Section 5.10 of the Merger Agreement to execute by
the thirtieth day prior to the Effective Time, a written agreement in
the form attached as Exhibit 5.10 to the Merger Agreement (relating to
compliance with Rule 145 and pooling rules).
Section 3. Tax Representations. Each Stockholder shall
deliver to Parent's counsel and the Company's counsel, if so requested
by such counsel, respectively, a certificate setting forth such
representations as are customary to be given by shareholders in
transactions such as the Merger in connection with the opinions
contemplated by Sections 6.2(d) and 6.3(c) of the Merger Agreement.
Section 4. Covenant Not to Compete. (a) Each Stockholder
agrees that, commencing at the Effective Time and continuing until the
third anniversary of the Effective Time, he shall not carry on or
participate in the design, manufacture or marketing of electronic test
tools (any such activities being referred to herein as "Company
Business") or in any business in competition with the Company Business,
as conducted by the Company on the date hereof in any country in which
the Company operates. Each Stockholder shall not, whether or not for
compensation, engage in any Company Business, or assist or advise any
other Person in such Person's conduct of any Company Business, whether
as a director, officer, employee, consultant, adviser, independent
contractor or otherwise; provided, however, that the Stockholders shall
not be prohibited from owning up to five percent (5%) of the outstanding
securities in any Person that is engaged in any Company Business as a
passive investor.
(b) Each Stockholder agrees that, commencing at the
Effective Time and continuing until the fifth anniversary of the
Effective Time, he shall not (i) lend or allow his name or reputation to
be used in or to promote any Company Business, other than for the
benefit Parent and its Affiliates (including the Company); or (ii)
solicit, divert or attempt to divert from Parent and its Affiliates any
business constituting, or any customer of, or any supplier of, any part
of the Company Business then conducted by the Company, Parent or any of
their Affiliates.
Section 5. Covenant Not to Solicit. In addition to the
foregoing, each Stockholder further agrees that he shall not, commencing
at the Effective Time and continuing until the fifth anniversary of the
Effective Time, induce or attempt to induce any Person (i) engaged or
employed currently or within the prior 12 months (whether part-time or
full-time) by the Company or any of its Affiliates to leave the employ
of or engagement with the Company, or its Affiliates, as the case may
be, or to cease providing the services to or on behalf of the Company or
its Affiliates, as the case may be, then provided by such Person, or in
any other manner seek to engage, employ or contract for the services of,
any such Person (whether or not for compensation) in any capacity, or
(ii) that is then or has been within the prior 12 months a customer or
supplier with respect to any Company Business to interfere, in any way,
directly or indirectly, with the business relationship between the
Company or any of its Affiliates and any such customer.
Section 6. Representations as to Stock Ownership. Each
Stockholder, as to such Stockholder, represents and warrants to Parent
that Schedule I hereto sets forth, opposite such Stockholder's name, the
number and type of Shares or other securities of the Company of which
such Stockholder is the record or beneficial owner (including, in the
case of the individual Stockholders, through FCMS in which the
Stockholders are general partners). Such Stockholder is the lawful
owner of such Shares, free and clear of all liens, charges,
encumbrances, voting agreements and commitments of every kind, except as
may be disclosed on Schedule I. FCMS is, and shall remain through the
Effective Time, under the common control of the Stockholders for
purposes of the Stockholders' obligations herein set forth, and no other
person has or shares voting or investment power (determined in
accordance with Rule 13d-3 under the Exchange Act) with respect to the
Partnership or the Shares owned by it.
Section 7. Effectiveness and Termination. In the event the
Merger Agreement is terminated in accordance with its terms, this
Agreement shall automatically terminate and be of no further force or
effect; provided, however, that if this Merger Agreement is terminated
under circumstances in which a Termination Fee shall be payable under
Section 5.8 of the Merger Agreement, then this Agreement shall only
terminate upon the payment in full by the Company of all amounts payable
pursuant to said Section 5.8. Upon such termination, except for any
rights any party may have in respect of any breach by any other party of
its obligations hereunder, none of the parties hereto shall have any
further obligation or liability hereunder.
Section 8. Miscellaneous.
(a) Notices, Etc. All notices, requests, demands or other
communications required by or otherwise with respect to this Agreement
shall be in writing and shall be deemed to have been duly given when
delivered personally (by courier service or otherwise) or when delivered
by telecopy (with receipt acknowledged), to Parent at Danaher
Corporation, 1250 24th Street, N.W., Washington, D.C. 20037, or to any
Stockholder at his address set forth in the records of the Company, with
a copy to C. Kent Carlson, Esq., Preston, Gates & Ellis, LLP, 5000
Columbia Seafirst Center, 701 Fifth Avenue, Seattle, Washington 98104-
7011, Telecopy (206) 623-7022, or to such other address as any such
party shall have designated by notice so given to each other party.
(b) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or
terminated except by an instrument in writing signed by each party
hereto. The failure of any party hereto to exercise any right, power or
remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice
of the parties at variance with the terms hereof, shall not constitute a
waiver by such party of its right to exercise any such or other right,
power or remedy or to demand such compliance.
(c) Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of and be enforceable by the
parties and their respective successors and assigns. Any transfer of
Shares notwithstanding, the transferor shall remain liable for the
performance of all obligations under this Agreement of transferor.
(d) Entire Agreement. This Agreement (together with the
Merger Agreement and the other agreements and documents expressly
contemplated hereby and thereby) embodies the entire agreement and
understanding among the parties relating to the subject matter hereof
and supersedes all prior agreements and understandings relating to such
subject matter. There are no representations, warranties or covenants
by the parties hereto relating to such subject matter other than those
expressly set forth in this Agreement and the Merger Agreement.
(e) Severability. If any term of this Agreement or the
application thereof to any party or circumstance shall be held invalid
or unenforceable to any extent, the remainder of this Agreement and the
application of such term to the other parties or circumstances shall not
be affected thereby and shall be enforced to the greatest extent
permitted by applicable law, provided that, in such event, the parties
shall negotiate in good faith in an attempt to agree to another
provision (in lieu of the term or application held to be invalid or
unenforceable) that will be valid and enforceable and will carry out the
parties' intentions hereunder.
(f) Specific Performance. The parties acknowledge that
money damages are not an adequate remedy for violations of this
Agreement and that any party may, in its sole discretion, apply to a
court of competent jurisdiction for specific performance or injunctive
or such other relief as such court may deem just and proper in order to
enforce this Agreement or prevent any violation hereof and, to the
extent permitted by applicable law, each party waives any objection to
the imposition of such relief or any requirement for a bond. All
rights, powers and remedies provided under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and
not alternative, and the exercise or beginning of the exercise of any
thereof by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
(g) Governing Law; Jurisdiction. This Agreement and all
disputes hereunder shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware, without
regard to principles of conflicts of law. Each party hereby irrevocably
submits to the exclusive jurisdiction of the Court of Chancery in the
State of Delaware or the United States District Court of Delaware in any
action, suit or proceeding arising in connection with this Agreement,
and agrees that any such action, suit or proceeding shall be brought
only in such court (and waives any objection based on forum non
conveniens or any other objection to venue therein); provided, however,
that such consent to jurisdiction is solely for the purpose referred to
in this paragraph (g) and shall not be deemed to be a general submission
to the jurisdiction of said Courts or in the State of Delaware other
than for such purposes. Each party hereto hereby waives any right to a
trial by jury in connection with any such action, suit or proceeding.
(h) Name, Captions, Gender. The name assigned this
Agreement and the section captions used herein are for convenience of
reference only and shall not affect the interpretation or construction
hereof. Whenever the context may require, any pronoun used herein shall
include the corresponding masculine, feminine or neuter forms.
(i) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one instrument. Each
counterpart may consist of a number of copies each signed by less than
all, but together signed by all, the parties hereto.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
DANAHER CORPORATION
By: /S/ PATRICK W. ALLENDER
FLUKE CAPITAL AND MANAGEMENT SERVICES
COMPANY
By: Fluke Management Corporation, G.P.
By: /S/ MARGARET HOFMAN, PRESIDENT
General Partner
/S/ DAVID L. FLUKE
David L. Fluke
/S/ JOHN M. FLUKE, JR.
John M. Fluke, Jr.
Schedule I
SHARE OWNERSHIP
Name of Shareholder Shares Owned Beneficially
Shares Options
David L. Fluke 1,989,508 9,800
John M. Fluke, Jr. 1,957,146 1,800
Fluke Capital Management
Services Company 1,862,792 0
Total
Name of Shareholder Shares Owned Of Record
Shares Options
David L. Fluke 70,000 9,800
John M. Fluke, Jr. 37,638 1,800
Fluke Capital Management
Services Company 1,862,792 0
Total
Various shares held by FCMS have been pledged in connection to loans to
FCMS. At closing all Fluke shares will be free and clear.
STOCKHOLDERS SUPPORT AGREEMENT
STOCKHOLDERS SUPPORT AGREEMENT, dated as of April 24, 1998, by
and among DANAHER CORPORATION, a Delaware corporation ("Parent"), on the
one hand, and each of the stockholders listed below (each a
"Stockholder" and, collectively, the "Stockholders"), on the other hand.
Each Stockholder is executing this Agreement in its capacity as a
stockholder of FLUKE CORPORATION, a Washington corporation (the
"Company").
WHEREAS, Parent, FALCON ACQUISITION CORP., a Washington
corporation and a wholly owned subsidiary of Parent ("Sub"), and the
Company, are entering into an Agreement and Plan of Merger (the "Merger
Agreement"; capitalized terms used without definition herein having the
meanings ascribed thereto in the Merger Agreement);
WHEREAS, each Stockholder is recognized as a leading executive
in the electronic test tool industry, who possesses significant
knowledge and information about and expertise in the Company Business
(as defined below) which is extremely valuable to competitors of the
Company, and accordingly, in order to induce Parent to enter into the
Merger Agreement and to provide Parent with the full value of its
investment in the Company through the Merger, Parent has requested that
each Stockholder make, and each Stockholder has agreed to make, the
commitments herein set forth;
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein, the parties hereto
agree as follows:
Section 1. Agreement to Support Transaction. (a) Each
Stockholder hereby agrees that it shall vote, or shall cause to be
voted, in person or by proxy, at the Company Stockholders' Meeting, any
other meeting of stockholders of the Company held prior to the earlier
of the Effective Time and the termination of this Agreement or, in each
case, any adjournment or postponement thereof, all Shares, and any other
voting securities of the Company (whether acquired heretofore or
hereafter) that are beneficially owned by such Stockholder or its
affiliates or as to which such Stockholder or any of its affiliates has,
directly or indirectly, the right to vote or control, (i) in favor of
approval and adoption of the Merger Agreement, the Merger, the other
transactions contemplated by the Merger Agreement and any action
required in furtherance thereof, (ii) against any action or agreement
that would result in a breach of any representation, warranty, covenant
or obligation of the Company contained in the Merger Agreement, and
(iii) against any Alternative Transaction or any other proposal that is
inconsistent with or would interfere with the Merger or the other
transactions contemplated by the Merger Agreement.
(b) Each Stockholder agrees that it will not, and will not
permit any company, trust or other entity controlled by such Stockholder
to, and will not permit any of its affiliates to, contract to sell,
sell, pledge, encumber or otherwise transfer or dispose of any of the
Shares beneficially owned by it or any interest therein or securities
convertible thereinto or any voting rights with respect thereto, other
than (i) pursuant to the Merger or (ii) with Parent's prior written
consent.
(c) Each Stockholder hereby revokes any and all previous
proxies with respect to such Stockholder's Shares or any other voting
securities of the Company.
(d) Each Stockholder hereby agrees to, will cause any
company, trust or other entity controlled by such Stockholder to, and
will cause its affiliates to, cooperate fully with Parent in connection
with the Merger Agreement and the transactions contemplated thereby.
Each Stockholder agrees that neither it nor any of its officers,
employees, representatives, agents or Affiliates will, directly or
indirectly, encourage, solicit or engage in discussions or negotiations
with any third party (other than Parent) concerning any Takeover
Proposal, other than the transactions contemplated hereby and by the
Merger Agreement. Each such Stockholder shall immediately request that
any Person that has received directly or indirectly from such
Stockholder any confidential information involving the Company or any of
its Subsidiaries return all copies thereof to the Company and shall, and
shall cause its Subsidiaries, officers, employees, representatives,
agents and Affiliates to, terminate all discussions or negotiations with
any Person with respect to any Takeover Proposal. Each such Stockholder
will notify Parent immediately of any inquiries or proposals with
respect to any such transaction that are received by, or any such
negotiations or discussions of which it is aware that are sought to be
initiated with, such Stockholder or any of its Affiliates or the Company
or any of its Subsidiaries, will advise Parent of the identity of any
Person making any such Takeover Proposal and of the terms thereof and
shall keep Parent apprised with respect to all matters relating thereto.
Section 2. Rule 145; Pooling Letter. Each Stockholder is on
the date hereof executing, and shall cause each of its controlled
Affiliates identified as Affiliates of the Company on the Company's
letter referred to in Section 5.10 of the Merger Agreement to execute by
the thirtieth day prior to the Effective Time, a written agreement in
the form attached as Exhibit 5.10 to the Merger Agreement (relating to
compliance with Rule 145 and pooling rules).
Section 3. Tax Representations. Each Stockholder shall
deliver to Parent's counsel and the Company's counsel, if so requested
by such counsel, respectively, a certificate setting forth such
representations as are customary in transactions such as the Merger in
connection with the opinions contemplated by Sections 6.2(d) and 6.3(c)
of the Merger Agreement.
Section 4. Covenant Not to Compete. Each Stockholder agrees
that, commencing at the Effective Time and continuing until the third
anniversary of the Effective Time (the "Covenant Period"), he shall not
directly or indirectly carry on or participate in the design,
manufacture or marketing of electronic test tools (any such activities
being referred to herein as "Company Business") or in any business
similar to or in competition with the Company Business, as conducted by
the Company on the date hereof in any country in which the Company
operates. Without limiting the forgoing, each Stockholder shall not:
(i) whether or not for compensation, directly or indirectly engage in
any Company Business, or assist or advise any other Person in such
Person's conduct of any Company Business, whether as a director,
officer, employee, consultant, adviser, independent contractor or
otherwise; (ii) own any interest in any Person that is engaged in any
Company Business, whether as an owner, investor, partner, creditor,
joint venturer or otherwise (except for passive investments of up to two
percent (2%) of the outstanding securities of any publicly traded
reporting corporation); (iii) lend or allow his name or reputation to be
used in or to promote any Company Business, other than for the benefit
Parent and its Affiliates (including the Company); or (iv) solicit,
divert or attempt to divert from Parent and its Affiliates any business
constituting, or any customer of, or any supplier of, any part of the
Company Business then conducted by the Company, Parent or any of their
Affiliates.
Section 5. Covenant Not to Solicit. In addition to the
foregoing, each Stockholder further agrees that he shall not, during the
Covenant Period, induce or attempt to induce any Person (i) engaged or
employed currently or within the prior 12 months (whether part-time or
full-time) by the Company or any of its Affiliates to leave the employ
of or engagement with the Company, or its Affiliates, as the case may
be, or to cease providing the services to or on behalf of the Company or
its Affiliates, as the case may be, then provided by such Person, or in
any other manner seek to engage, employ or contract for the services of,
any such Person (whether or not for compensation) in any capacity, or
(ii) that is then or has been within the prior 12 months a customer or
supplier with respect to any Company Business to do business with any
other Person or to interfere, in any way, directly or indirectly, with
the business relationship between the Company or any of its Affiliates
and any such customer.
Section 6. Representations as to Stock Ownership. Each
Stockholder, as to such Stockholder, represents and warrants to Parent
that Schedule I hereto sets forth, opposite such Stockholder's name, the
number and type of Shares or other securities of the Company of which
such Stockholder is the record or beneficial owner. Such Stockholder is
the lawful owner of such Shares, free and clear of all liens, charges,
encumbrances, voting agreements and commitments of every kind, except as
may be disclosed on Schedule I. The Partnership is, and shall remain
through the Effective Time, under the common control of the Stockholders
for purposes of the Stockholders' obligations herein set forth, and no
other person has or shares voting or investment power (determined in
accordance with Rule 13d-3 under the Exchange Act) with respect to the
Partnership or the Shares owned by it.
Section 7. Effectiveness and Termination. In the event the
Merger Agreement is terminated in accordance with its terms, this
Agreement shall automatically terminate and be of no further force or
effect; provided, however, that if this Merger Agreement is terminated
under circumstances in which a Termination Fee shall be payable under
Section 5.8 of the Merger Agreement, then this Agreement shall only
terminate upon the payment in full by the Company of all amounts payable
pursuant to said Section 5.8. Upon such termination, except for any
rights any party may have in respect of any breach by any other party of
its obligations hereunder, none of the parties hereto shall have any
further obligation or liability hereunder.
Section 8. Miscellaneous.
(a) Notices, Etc. All notices, requests, demands or other
communications required by or otherwise with respect to this Agreement
shall be in writing and shall be deemed to have been duly given when
delivered personally (by courier service or otherwise) or when delivered
by telecopy (with receipt acknowledged), to Parent at Danaher
Corporation, 1250 24th Street, N.W., Suite 800, Washington, D.C. 20037 ,
or to any Stockholder at his address set forth in the records of the
Company, or to such other address as any such party shall have
designated by notice so given to each other party.
(b) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or
terminated except by an instrument in writing signed by each party
hereto. The failure of any party hereto to exercise any right, power or
remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice
of the parties at variance with the terms hereof, shall not constitute a
waiver by such party of its right to exercise any such or other right,
power or remedy or to demand such compliance.
(c) Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Any transfer of Shares
notwithstanding, the transferor shall remain liable for the performance
of all obligations under this Agreement of transferor.
(d) Entire Agreement. This Agreement (together with the
Merger Agreement and the other agreements and documents expressly
contemplated hereby and thereby) embodies the entire agreement and
understanding among the parties relating to the subject matter hereof
and supersedes all prior agreements and understandings relating to such
subject matter. There are no representations, warranties or covenants
by the parties hereto relating to such subject matter other than those
expressly set forth in this Agreement and the Merger Agreement.
(e) Severability. If any term of this Agreement or the
application thereof to any party or circumstance shall be held invalid
or unenforceable to any extent, the remainder of this Agreement and the
application of such term to the other parties or circumstances shall not
be affected thereby and shall be enforced to the greatest extent
permitted by applicable law, provided that, in such event, the parties
shall negotiate in good faith in an attempt to agree to another
provision (in lieu of the term or application held to be invalid or
unenforceable) that will be valid and enforceable and will carry out the
parties' intentions hereunder.
(f) Specific Performance. The parties acknowledge that
money damages are not an adequate remedy for violations of this
Agreement and that any party may, in its sole discretion, apply to a
court of competent jurisdiction for specific performance or injunctive
or such other relief as such court may deem just and proper in order to
enforce this Agreement or prevent any violation hereof and, to the
extent permitted by applicable law, each party waives any objection to
the imposition of such relief or any requirement for a bond. All
rights, powers and remedies provided under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and
not alternative, and the exercise or beginning of the exercise of any
thereof by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
(g) Governing Law; Jurisdiction. This Agreement and all
disputes hereunder shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware, without
regard to principles of conflicts of law. Each party hereby irrevocably
submits to the exclusive jurisdiction of the Court of Chancery in the
State of Delaware or the United States District Court of Delaware in any
action, suit or proceeding arising in connection with this Agreement,
and agrees that any such action, suit or proceeding shall be brought
only in such court (and waives any objection based on forum non
conveniens or any other objection to venue therein); provided, however,
that such consent to jurisdiction is solely for the purpose referred to
in this paragraph (g) and shall not be deemed to be a general submission
to the jurisdiction of said Courts or in the State of Delaware other
than for such purposes. Each party hereto hereby waives any right to a
trial by jury in connection with any such action, suit or proceeding.
(h) Name, Captions, Gender. The name assigned this
Agreement and the section captions used herein are for convenience of
reference only and shall not affect the interpretation or construction
hereof. Whenever the context may require, any pronoun used herein shall
include the corresponding masculine, feminine or neuter forms.
(i) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one instrument. Each
counterpart may consist of a number of copies each signed by less than
all, but together signed by all, the parties hereto.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
DANAHER CORPORATION
By:/S/ PATRICK W. ALLENDER
/S/ WILLIAM G. PARZYBOK, JR.
Bill Parzybok
/S/ DAVID E. KATRI
David E. Katri
/S/ ELIZABETH J. HUEBNER
Liz Huebner
/S/ DOUGLAS G. MCKNIGHT
Doug McKnight
/S/ GEORGE WINN
George Winn
Schedule I
SHARE OWNERSHIP
Name of Shareholder Shares Owned Beneficially
Shares Options
Bill Parzybok 22,173 537,000
David E. Katri 14,846 178,200
Liz Huebner 4,135 102,000
Doug McKnight 10,540 118,600
George Winn 5,696 182,350
Total 57,390 1,118,150
FOR IMMEDIATE RELEASE Contact: Patrick W. Allender
Chief Financial Officer
Danaher Corporation
(202) 828-0850
Elizabeth J. Huebner
Chief Financial Officer
Fluke Corporation
(425) 356-5664
or
Gary Ball
Manager, Investor Relations
and Public Affairs
(425) 356-5262
DANAHER CORPORATION SIGNS DEFINITIVE MERGER AGREEMENT
WITH FLUKE CORPORATION
Washington, D.C., and Everett, Washington, April 27, 1998 -- Danaher
Corporation (NYSE: DHR) and Fluke Corporation (NYSE: FLK) announced
today that they have entered into a definitive merger agreement pursuant
to which the companies will merge. According to the agreement, Fluke
shareholders will receive .4524 shares of Danaher stock for each share
of Fluke. The transaction is valued at approximately $33.39 per share to
Fluke shareholders or approximately $625 million, based on Danaher's
April 24, 1998 closing price. The transaction is also expected to be
tax-free to Fluke shareholders.
The transaction, which will be accounted for as a pooling of interests,
is subject to customary regulatory review and approval by Fluke
shareholders. The Boards of Directors of both corporations have
approved the agreement and Fluke has received a fairness opinion from
Salomon Smith Barney, its financial advisor.
In connection with the execution of the merger agreement, Danaher has
entered into an agreement with certain shareholders of Fluke, who
collectively hold approximately 11% of the outstanding shares of Fluke
common stock. The agreement also provides for each of these
shareholders' to vote for and otherwise support the transaction.
Additionally, Fluke and Danaher have entered into a stock option
agreement whereby Fluke has granted Danaher an irrevocable option to
purchase up to 19.9% of Fluke's issued and outstanding shares of common
stock at $34 per share.
George M. Sherman, Danaher's President and Chief Executive Officer,
stated, "We are very excited about the combination of our two companies.
With its premier brand, experienced management team, reputation for
superior quality and innovation, and global presence, Fluke represents a
very attractive strategic fit with Danaher. We expect the transaction
to be accretive to earnings per share."
William G. Parzybok, Jr., Fluke's Chairman and Chief Executive Officer,
stated, "We believe this transaction is very positive for Fluke
shareholders, employees and customers. We are excited to be part of
Danaher and see many strategic advantages as a result of this
transaction."
Fluke Corporation, with annual revenues of approximately $430 million,
is a leading worldwide manufacturer of compact, professional electronic
test tools. Its products are used by technicians and engineers in
installation, maintenance, service, manufacturing test and quality
functions in a variety of industries throughout the world. Fluke,
founded in 1948, has approximately 2,500 employees worldwide and
distributes its products in over 100 countries. The company's worldwide
headquarters are in Everett, Washington, USA, with European sales and
service headquarters located in Eindhoven, The Netherlands.
(http://www.fluke.com)
Danaher Corporation is a leading manufacturer of Process/Environmental
Controls and Tools and Components. (http://www.danaher.com)
