<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY
(AS PERMITTED BY RULE 14A-
6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-
12
FLUKE CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
Common Stock, par value $.25 per share, of Fluke Corporation ("Fluke
Shares")
2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
18,275,747 Fluke Shares plus options to acquire up to 2,907,019 Fluke
Shares ("Fluke Options"), which are to be converted in the Merger into
Common Stock, par value $.01, of Danaher Corporation ("Danaher Shares")
3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE AMOUNT ON WHICH THE
FILING FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):
The underlying value of the transaction of $635,066,092 has been
calculated pursuant to Exchange Act Rule 0-11 by multiplying (i)
$71.5625 (the average of the high and low prices of the Danaher Shares
on the New York Stock Exchange ("NYSE") on May 6, 1998) and (ii)
8,874,286, the number of Danaher Shares proposed to be issued in the
transaction, which is equal to the sum of (a) 8,267,765, the aggregate
number of Danaher Shares to be issued in exchange for the 18,275,747
outstanding Fluke Shares at the exchange ratio of 0.45239 and (b)
606,521, the estimated number of Danaher Shares to be issued in respect
of the 2,907,019 outstanding Fluke Options. Each Fluke Option is to be
paid out in Danaher Shares based on its fair value (minus its exercise
price). For purposes of estimating the proposed maximum aggregate value
of the transaction, the closing price of Danaher Shares on the NYSE on
May 6, 1998 (of $72.00) and the most recently calculated weighted
average exercise price per Fluke Option (of $17.55 giving effect to the
two-for-one stock split effected in September 1997) have been used to
estimate the fair value of the Fluke Options).
4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
$635,066,092
5) TOTAL FEE PAID:
$127,014
[X] Fee paid previously with preliminary materials filed on May 12, 1998.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) AMOUNT PREVIOUSLY PAID:
2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
3)FILING PARTY:
4) DATE FILED:
Notes:
<PAGE>
FLUKE(R)
6920 SEAWAY BOULEVARD
EVERETT, WA 98203
June 8, 1998
Dear Stockholder:
As you may be aware, Fluke Corporation ("Fluke") has entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Danaher Corporation
("Danaher"), providing for the acquisition of Fluke by Danaher. Pursuant to
the Merger Agreement, a special meeting of stockholders of Fluke (the "Fluke
Special Meeting") will be held at Fluke Park, 6920 Seaway Boulevard, Everett,
WA 98203 on July 7, 1998 at 1:00 p.m.
At the Fluke Special Meeting you will be asked to consider and vote upon a
proposal to approve the Merger Agreement which provides for the merger of a
wholly-owned subsidiary of Danaher with and into Fluke (the "Merger"). Upon
consummation of the Merger, Fluke will become a wholly-owned subsidiary of
Danaher. As a result of the Merger, each outstanding share of common stock of
Fluke, par value $.25 per share, will be converted into 0.90478 of a share of
common stock of Danaher, par value $.01 per share. The Merger Agreement is
described more fully in the accompanying Proxy Statement/Prospectus.
AFTER CAREFUL CONSIDERATION, THE FLUKE BOARD OF DIRECTORS HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, AND
HAS CONCLUDED THEY ARE FAIR TO, AND IN THE BEST INTERESTS OF, FLUKE AND ITS
STOCKHOLDERS. YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR
OF THE MERGER AGREEMENT.
In the materials accompanying this letter you will find a Notice of Special
Meeting of Stockholders, a Proxy Statement/Prospectus relating to the proposal
to be voted upon at the Fluke Special Meeting and a Proxy Card. The Proxy
Statement/Prospectus more fully describes the proposed transactions.
Stockholders are urged to review carefully the information contained in the
accompanying Proxy Statement/Prospectus, in particular the information under
the captions "The Merger--Background of the Merger" and "--Reasons for the
Merger; Recommendation of the Parties' Boards of Directors," prior to voting
on the proposal.
All stockholders are cordially invited to attend the Fluke Special Meeting
in person. If you attend the meeting, you may vote in person even though you
may have previously returned your completed proxy. Whether or not you plan to
attend the Fluke Special Meeting, it is important that your shares be
represented and voted, regardless of the number of shares you hold. Approval
of the Merger Agreement requires the affirmative vote of the holders of 66
2/3% of the outstanding shares of Fluke Common Stock. Therefore, please
complete, sign, date and return your proxy in the enclosed envelope. Please do
not send in the stock certificate(s) representing your Fluke Common Stock at
this time.
On behalf of the Board, I thank you for your support and ask you to vote in
favor of the Merger Agreement.
Sincerely,
/s/ William G. Parzybok, Jr.
William G. Parzybok, Jr.
Chairman of the Board and
Chief Executive Officer
YOUR VOTE IS IMPORTANT--PLEASE RETURN YOUR PROXY PROMPTLY
<PAGE>
FLUKE CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To the Stockholders:
A Special Meeting of Stockholders of Fluke Corporation will be held in the
Auditorium at the corporate headquarters of Fluke Corporation, 6920 Seaway
Boulevard, Everett, Washington, on Tuesday, July 7, 1998, at 1:00 p.m. for the
following purpose:
A. APPROVAL OF THE AGREEMENT AND PLAN OF MERGER. To approve the Agreement
and Plan of Merger (the "Merger Agreement"), dated as of April 24, 1998, among
Fluke Corporation ("Fluke"), Danaher Corporation, a Delaware corporation
("Danaher"), and Falcon Acquisition Corp., a Washington corporation and
wholly-owned subsidiary of Danaher ("Sub"), and to approve the merger of Sub
with and into Fluke pursuant to which Fluke will become a wholly-owned
subsidiary of Danaher and all outstanding shares of Fluke Common Stock will be
converted into shares of Danaher Common Stock. The Merger Agreement is
attached to the accompanying Proxy Statement/Prospectus as Annex A.
B. OTHER BUSINESS. To transact such other business as may properly come
before the meeting, and all adjournments or postponements thereof.
The Board of Directors has fixed the close of business on June 5, 1998 as
the record date for the determination of stockholders entitled to notice of,
and to vote at, said Special Meeting. Fluke stockholders are entitled to
dissenters' appraisal rights under Section 13.200 of the Washington Business
Corporation Act ("WBCA") in connection with the Merger. Section 13 of the WBCA
is attached to the accompanying Proxy Statement/Prospectus as Annex C.
Information relating to the above proposal is set forth in the attached
Proxy Statement/Prospectus. Approval of the Merger Agreement and approval of
the merger described above will require the affirmative vote of the holders of
two-thirds of the shares of Fluke common stock outstanding on the record date.
All stockholders are cordially invited to attend the Fluke Special Meeting in
person.
By order of the Board of Directors
Douglas G. McKnight
Vice President, General Counsel and
Corporate Secretary
Everett, Washington
June 8, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE FLUKE SPECIAL MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES.
<PAGE>
FLUKE CORPORATION
PROXY STATEMENT
----------------
DANAHER CORPORATION
PROSPECTUS
----------------
This Proxy Statement/Prospectus is being furnished to holders of common
stock, $0.25 par value per share ("Fluke Common Stock"), of Fluke Corporation,
a Washington corporation ("Fluke"), in connection with the solicitation of
proxies by the Board of Directors of Fluke (the "Fluke Board") for use at the
Special Meeting of Fluke stockholders to be held on July 7, 1998, at Fluke
Park, 6920 Seaway Boulevard, Everett, WA 98203, commencing at 1:00 p.m.,
Pacific Time, and at any adjournment or postponement thereof (the "Fluke
Special Meeting"). At the Fluke Special Meeting, holders of Fluke Common Stock
("Fluke Stockholders") as of the close of business on the Record Date (as
hereinafter defined) will be asked to consider and vote on a proposal to
approve the Agreement and Plan of Merger, dated as of April 24, 1998 (the
"Merger Agreement"), providing for the merger (the "Merger") of Falcon
Acquisition Corp. ("Sub"), a Washington corporation and a wholly owned
subsidiary of Danaher Corporation, a Delaware corporation ("Danaher"), with
and into Fluke. The Merger will be consummated on the terms and subject to the
conditions set forth in the Merger Agreement, as a result of which (i) Fluke
will become a wholly owned subsidiary of Danaher and (ii) Fluke Stockholders
will be entitled to receive 0.90478 shares (the "Exchange Ratio") of Danaher
common stock, par value $.01 per share ("Danaher Common Shares"), for each
outstanding share of Fluke Common Stock held by them, with cash in lieu of
fractional shares. See "The Merger Agreement--Terms of the Merger."
This Proxy Statement/Prospectus also constitutes the Prospectus of Danaher
with respect to up to 17,697,928 Danaher Common Shares to be issued by Danaher
in the Merger described herein in exchange for the outstanding shares of Fluke
Common Stock and options to purchase Fluke Common Stock. Danaher Common Shares
are quoted on the New York Stock Exchange (the "NYSE") under the symbol "DHR".
On June 5, 1998, the closing price of Danaher Common Shares on the NYSE
Composite Tape was $35 15/16. Fluke Common Stock is also quoted on the NYSE
under the symbol "FLK". On June 5, 1998, the closing price of Fluke Common
Stock on the NYSE was $32 1/16. Because the market price of Danaher Common
Stock is subject to fluctuation, the value of the shares of Danaher Common
Stock that holders of Fluke Common Stock will receive in the Merger may
increase or decrease prior to and after the Merger. Stockholders should obtain
current quotes for the Danaher Common Shares and Fluke Common Stock.
THE SECURITIES TO BE ISSUED PURSUANT TO THIS PROXY STATEMENT/PROSPECTUS HAVE
NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
All information contained or incorporated by reference in this Proxy
Statement/Prospectus with respect to Danaher has been supplied by Danaher. All
information contained or incorporated by reference in this Proxy
Statement/Prospectus with respect to Fluke has been supplied by Fluke.
This Proxy Statement/Prospectus, the Letter to Fluke Stockholders, the
Notice of the Fluke Special Meeting and the form of proxy for use at the Fluke
Special Meeting are first being mailed to Fluke Stockholders on or about June
8, 1998. Any stockholder who has given his proxy may revoke it at any time
prior to its use. See "The Fluke Special Meeting--Voting of Proxies."
----------------
The date of this Proxy Statement/Prospectus is June 8, 1998.
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED HEREIN OR IN THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY SECURITIES, OR THE SOLICITATION OF A PROXY, IN ANY
JURISDICTION IN WHICH OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF DANAHER COMMON SHARES MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF DANAHER OR FLUKE SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS CORRECT
AS OF ANY TIME AFTER THE DATE HEREOF.
----------------
AVAILABLE INFORMATION
Each of Danaher and Fluke is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements, and other information filed by either Danaher or Fluke with
the Commission can be inspected and copied at the public reference facilities
maintained by the Commission at its principal office at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the following Regional Offices
of the Commission: New York Regional Office, 7 World Trade Center, 13th Floor,
New York, New York 10048, and Chicago Regional Office, Citicorp Center, 500
West Madison, Suite 1400, Chicago, Illinois 60661. Copies of such material can
also be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
maintains an Internet worldwide web site that contains reports, proxy and
information statements and other information regarding issuers, like Danaher
and Fluke, who file electronically with the Commission. The address of that
site is http://www.sec.gov. The Danaher Common Shares and Fluke Common Stock
are both listed on the NYSE, and such reports, proxy statements and other
information concerning Danaher or Fluke are also available for inspection and
copying at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
Danaher has filed with the Commission a Registration Statement on Form S-4
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to Danaher Common Shares to be issued in the Merger (the "Registration
Statement"). This Proxy Statement/Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
Reference is hereby made to the Registration Statement and related exhibits
for further information with respect to Danaher and the securities offered
hereby. Statements contained herein concerning the provisions of any document
are necessarily summaries of such documents and not complete, and in each
instance, reference is made to the copy of such document attached hereto or
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such
reference.
ii
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Danaher with the Commission pursuant to the
Exchange Act (Commission File No. 001-08089) are hereby incorporated by
reference in this Proxy Statement/Prospectus:
1. The description of Danaher Common Shares contained in Danaher's
Registration Statement on Form 8-B dated November 3, 1986, including all
amendments and reports filed for the purpose of updating such description;
2. Danaher's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, filed with the Commission on March 17, 1998, including
the portions of the Danaher Annual Report to Shareholders incorporated
therein (the "1997 Danaher Form 10-K");
3. The information contained in Danaher's Proxy Statement dated March 30,
1998 for its Annual Meeting of Shareholders to be held on May 5, 1998 that
has been incorporated by reference in the 1997 Danaher Form 10-K and was
filed with the Commission on Schedule 14A on March 17, 1998; and
4. Danaher's Quarterly Report on Form 10-Q for the quarter ended March
27, 1998.
The following documents filed by Fluke with the Commission pursuant to the
Exchange Act (Commission File No. 001-05590) are hereby incorporated by
reference in this Proxy Statement/Prospectus:
1. The description of Fluke Common Stock contained in Fluke's
Registration Statement on Form 8-A dated March 10, 1995, including any
amendment or report filed for the purpose of updating such description;
2. Fluke's Annual Report on Form 10-K for the fiscal year ended April 25,
1997, filed with the Commission on July 23, 1997, including the portions of
the Fluke Annual Report to Stockholders incorporated therein (the "1997
Fluke Form 10-K");
3. The information contained in Fluke's Proxy Statement dated July 17,
1997 for its Annual Meeting of Stockholders held on September 10, 1997 that
has been incorporated by reference in the 1997 Fluke Form 10-K and was
filed with the Commission on Schedule 14A on July 21, 1997;
4. Fluke's Quarterly Reports on Form 10-Q for the quarters ended July 25,
1997, October 24, 1997 and January 23, 1998; and
5. Fluke's Current Report on Form 8-K dated April 24, 1998.
All reports and other documents filed with the Commission by Danaher or
Fluke pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this Proxy Statement/Prospectus and prior to the Fluke Special
Meeting shall be deemed to be incorporated by reference herein and to be a
part hereof from the respective dates of the filing of such reports and other
documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for all purposes to the extent that a statement contained herein
or in any other subsequently filed document that is also incorporated or
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Proxy
Statement/Prospectus.
iii
<PAGE>
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WITH
RESPECT TO DANAHER AND FLUKE THAT ARE NOT PRESENTED HEREIN OR DELIVERED
HEREWITH. COPIES OF THESE DOCUMENTS (NOT INCLUDING EXHIBITS TO SUCH DOCUMENTS
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH
DOCUMENTS OR HEREIN) ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS
PROXY STATEMENT/PROSPECTUS IS DELIVERED UPON WRITTEN OR ORAL REQUEST TO THE
FOLLOWING:
<TABLE>
<CAPTION>
DANAHER DOCUMENTS FLUKE DOCUMENTS
- ----------------- ---------------------------
<S> <C>
Danaher Corporation Fluke Corporation
1250 24th Street, N.W. 6920 Seaway Boulevard
Washington, D.C. 20037 Everett, WA 98203
Attention: C. Scott Brannan Attention: Douglas McKnight
</TABLE>
IN ORDER TO ENSURE TIMELY DELIVERY, ANY REQUEST FOR DOCUMENTS SHOULD BE MADE
BY JUNE 30, 1998.
THIS PROXY STATEMENT/PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS,
INCLUDING STATEMENTS CONCERNING POSSIBLE OR ASSUMED FUTURE RESULTS OF
OPERATIONS OF DANAHER AND FLUKE SET FORTH UNDER "THE MERGER--REASONS FOR THE
MERGER; RECOMMENDATION OF THE PARTIES' BOARDS OF DIRECTORS" AND "--OPINION OF
FLUKE'S FINANCIAL ADVISOR" AND THOSE PRECEDED BY, FOLLOWED BY OR THAT INCLUDE
THE WORDS "BELIEVES," "EXPECTS," "ANTICIPATES" OR SIMILAR EXPRESSIONS. FOR
THOSE STATEMENTS, THE COMPANIES CLAIM THE PROTECTION OF THE SAFE HARBOR FOR
FORWARD-LOOKING STATEMENTS CONTAINED IN THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. YOU SHOULD UNDERSTAND THAT THE FOLLOWING IMPORTANT
FACTORS, IN ADDITION TO THOSE DISCUSSED ELSEWHERE IN THIS DOCUMENT AND IN THE
DOCUMENTS WHICH THE COMPANIES INCORPORATE BY REFERENCE, COULD AFFECT THE
FUTURE RESULTS OF DANAHER AND FLUKE, AND COULD CAUSE THOSE RESULTS TO DIFFER
MATERIALLY FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS: CHANGES IN
DANAHER'S LONGSTANDING RELATIONSHIP WITH MAJOR CUSTOMERS; THE EXTENT TO WHICH
ACQUIRED BUSINESSES ARE ABLE TO MEET DANAHER'S EXPECTATIONS AND OPERATE
PROFITABLY; CHANGES IN REGULATIONS WHICH COULD AFFECT DEMAND FOR PRODUCTS AND
UNANTICIPATED DEVELOPMENTS THAT COULD OCCUR WITH RESPECT TO CONTINGENCIES SUCH
AS ENVIRONMENTAL MATTERS AND LITIGATION; MATERIALLY ADVERSE CHANGES IN
ECONOMIC CONDITIONS IN THE MARKETS SERVED BY THE COMPANIES OR IN THE ECONOMY
IN GENERAL; A SIGNIFICANT DELAY IN THE EXPECTED CLOSING OF THE MERGER; GREATER
THAN EXPECTED COSTS OR DIFFICULTIES RELATED TO THE INTEGRATION OF THE
BUSINESSES OF DANAHER AND FLUKE; AND OTHER RISKS AND UNCERTAINTIES AS MAY BE
DETAILED FROM TIME TO TIME IN DANAHER'S AND/OR FLUKE'S PUBLIC ANNOUNCEMENTS
AND COMMISSION FILINGS.
iv
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION..................................................... ii
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... iii
SUMMARY................................................................... 1
The Companies........................................................... 1
The Fluke Special Meeting............................................... 1
The Merger.............................................................. 2
Certain Federal Income Tax Consequences................................. 8
Comparison of Stockholder Rights........................................ 8
Amendment to Fluke Rights Plan.......................................... 8
Certain Significant Considerations...................................... 8
Summary Historical and Unaudited Pro Forma Financial Information........ 9
Unaudited Pro Forma Combined Summary Financial Information.............. 11
COMPARATIVE PER SHARE DATA................................................ 12
MARKET PRICE AND DIVIDEND DATA............................................ 13
THE FLUKE SPECIAL MEETING................................................. 14
General................................................................. 14
Matters to be Considered at the Fluke Special Meeting................... 14
Record Date; Vote Required; Voting at the Meeting....................... 14
Voting of Proxies....................................................... 14
Solicitation of Proxies................................................. 15
Appraisal Rights........................................................ 15
THE MERGER................................................................ 16
Background of the Merger................................................ 16
Reasons for the Merger; Recommendation of the Parties' Boards of Direc-
tors................................................................... 17
Opinion of Fluke's Financial Advisor.................................... 19
Interests of Certain Persons in the Merger.............................. 23
Accounting Treatment.................................................... 24
Regulatory Approvals.................................................... 25
Federal Securities Law Consequences..................................... 25
Stock Option Agreement.................................................. 26
Stockholders Support Agreements......................................... 27
Amendments to Retention Agreements...................................... 29
Management and Operations After the Merger.............................. 30
THE MERGER AGREEMENT...................................................... 31
Terms of the Merger..................................................... 31
Effect on Capital Stock................................................. 31
Representations and Warranties.......................................... 33
Certain Covenants....................................................... 34
Closing Conditions...................................................... 37
Amendment; Termination; Expenses........................................ 39
CERTAIN FEDERAL INCOME TAX CONSEQUENCES................................... 42
THE COMPANIES............................................................. 43
Business of Danaher..................................................... 43
Business of Fluke....................................................... 43
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION......................... 44
Unaudited Pro Forma Combined Balance Sheet............................... 44
Unaudited Pro Forma Combined Statements of Earnings...................... 45
COMPARISON OF STOCKHOLDER RIGHTS........................................... 47
Size and Classification of the Board of Directors........................ 47
Removal of Directors..................................................... 47
Special Meetings of Stockholders......................................... 48
Amendment to Certificate/Articles of Incorporation....................... 48
Provisions Relating to Acquisitions and Business Combinations............ 48
Mergers, Acquisitions and Other Transactions............................. 50
Action Without a Meeting................................................. 50
Appraisal or Dissenters' Rights.......................................... 50
Indemnification of Directors and Officers................................ 51
Dividends................................................................ 51
DESCRIPTION OF DANAHER CAPITAL STOCK....................................... 52
APPRAISAL RIGHTS........................................................... 52
LEGAL MATTERS.............................................................. 54
EXPERTS.................................................................... 55
</TABLE>
ANNEXES:
A--Agreement and Plan of Merger, dated April 24, 1998, among Danaher
Corporation, Falcon Acquisition Corp. and Fluke Corporation
B--Opinion of Salomon Smith Barney, dated April 24, 1998
C--Section 23B.13 of the Washington Business Corporation Act
ii
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere in this
Proxy Statement/Prospectus and the Annexes hereto (the "Proxy
Statement/Prospectus"). This summary is not intended to be complete and is
qualified in its entirety by the more detailed information and financial
statements appearing elsewhere or incorporated by reference in this Proxy
Statement/Prospectus. Fluke Stockholders are urged to read and consider
carefully all of the information contained or incorporated by reference in this
Proxy Statement/Prospectus, including the Annexes.
THE COMPANIES
FLUKE
Fluke was founded in 1948 and incorporated under the laws of the State of
Washington on October 7, 1953. Fluke is engaged in the design, manufacture and
marketing of compact, professional electronic test tools. Fluke's principal
products are portable instruments that measure voltage, current, power quality,
frequency, temperature, pressure and other key functional parameters of
electronic equipment. The principal executive offices of Fluke are located at
6920 Seaway Boulevard, Everett, Washington 98203, and its telephone number is
(425) 347-6100.
DANAHER
Danaher, a Delaware corporation, conducts its operations through two business
segments, Tools and Components (including general purpose mechanics' hand
tools, automotive specialty tools, hardware and components for the power
generation and transmission industries and high quality miniature precision
parts) and Process/Environmental Controls (including underground storage tank
leak detection systems and temperature, level and position sensing devices,
power switches and controls, communication line products, power protection
products, liquid flow measuring devices, telecommunications products, quality
assurance products and systems, and electronic and mechanical counting and
controlling devices). The principal executive offices of Danaher are located at
1250 24th Street, N.W., Washington, D.C. 20037, and its telephone number is
(202) 828-0850.
THE FLUKE SPECIAL MEETING
DATE, TIME AND PLACE OF FLUKE SPECIAL MEETING
The Fluke Special Meeting will be held at Fluke Park, 6920 Seaway Boulevard,
Everett, WA 98203, on July 7, 1998, at 1:00 p.m., Pacific Time, for the
following purposes:
1. To consider and vote on a proposal (the "Fluke Merger Proposal") to
approve the Merger Agreement pursuant to which, among other things, (i) Sub
will be merged with and into Fluke with the result that Fluke becomes a
wholly owned subsidiary of Danaher, and (ii) each outstanding share (other
than shares held in the treasury of Fluke, if any, which will be canceled)
of Fluke Common Stock will be converted into a number of Danaher Common
Shares equal to the Exchange Ratio as set forth in the Merger Agreement.
The Merger Agreement is attached to this Proxy Statement/Prospectus as
Annex A.
2. Such other matters as may properly come before the Fluke Special
Meeting.
RECORD DATE
Only Fluke Stockholders of record at the close of business on June 5, 1998
(the "Record Date"), will be entitled to notice of and to vote at the Fluke
Special Meeting. On the Record Date, there were 18,389,535 shares of Fluke
Common Stock outstanding. See "The Fluke Special Meeting."
1
<PAGE>
REQUIRED VOTE
The Fluke Merger Proposal requires the affirmative vote of the holders of 66
2/3% of the shares of Fluke Common Stock outstanding and entitled to vote
thereon. As of the Record Date, the directors and executive officers of Fluke
and certain of their affiliates may be deemed to be beneficial owners of
approximately 11.7% of the outstanding Fluke Common Stock and each such person
has advised Fluke that he, she or it intends to vote in favor of the Fluke
Merger Proposal. In addition, certain stockholders of Fluke (including certain
directors of Fluke and certain of their affiliates), who as of the Record Date
beneficially owned in the aggregate approximately 11.3% of the outstanding
Fluke Common Stock, have each agreed to vote or direct the vote of all Fluke
Common Stock over which such person has voting control in favor of the Fluke
Merger Proposal. See "The Fluke Special Meeting--Record Date; Vote Required;
Voting at the Meeting" and "The Merger--Stockholders Support Agreements."
REVOCABILITY OF PROXIES
Any Fluke Stockholder returning a proxy has the power to revoke it at any
time before shares of Fluke Common Stock represented by the proxy are voted at
the meeting. A Fluke Stockholder may also revoke his proxy by attending the
meeting and voting at the meeting. Any shares of Fluke Common Stock represented
by an unrevoked proxy will be voted unless the stockholder attends the meeting
and votes in person. A Fluke Stockholder's right to revoke his proxy is not
limited by or subject to compliance with a specified formal procedure, but
written notice should be given to the Corporate Secretary of Fluke at or before
the meeting so that the number of shares represented by proxy can be
appropriately adjusted.
APPRAISAL RIGHTS
Fluke Stockholders will be entitled to dissenters' appraisal rights in
connection with the Merger if they follow the procedures specified for
perfecting such rights. It is a condition to Danaher's obligation to consummate
the Merger that holders of no more than 5% of the outstanding shares of Fluke
Common Stock assert dissenters' appraisal rights. See "Appraisal Rights" and
"Comparison of Stockholder Rights--Appraisal or Dissenters' Rights."
THE MERGER
GENERAL; EXCHANGE RATIO
Pursuant to the Merger Agreement, each share of Fluke Common Stock issued and
outstanding immediately prior to the Effective Time, other than shares held in
the treasury of Fluke, if any, which will be canceled, or any Dissenting Shares
(as hereinafter defined) will be converted into and represent that number of
Danaher Common Shares equal to the Exchange Ratio.
The Exchange Ratio is 0.90478. If, prior to the Effective Time, Danaher
should split or combine the Danaher Common Shares, or pay a stock dividend or
other stock distribution in Danaher Common Shares, then the Exchange Ratio will
be appropriately adjusted to reflect such split, combination, dividend or other
distribution. If the average price of the Danaher Common Shares over a two-day
period commencing on the Determination Date (as hereinafter defined) is less
than $31.94 (equivalent to a value of approximately $28.90 per share of Fluke
Common Stock), then the Fluke Board will have the right to terminate the Merger
Agreement, subject to Danaher's right to increase the Exchange Ratio to provide
a value of $28.90 per share of Fluke Common Stock. See "The Merger Agreement--
Amendment; Termination; Expenses."
2
<PAGE>
FLUKE OPTIONS
At the Effective Time, Fluke and Danaher shall take all necessary action to
provide that all outstanding stock options to purchase shares of Fluke Common
Stock ("Stock Options") heretofore granted under any stock option or stock
appreciation rights plan, program or arrangement of Fluke (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 Danaher Common Shares equal to (i) the Fair Value of
such Stock Option (as hereinafter defined) divided by (ii) the Closing Danaher
Stock Price (as hereinafter defined). As of the Record Date, 2,792,263 shares
of Fluke Common Stock were issuable upon the exercise of outstanding Fluke
Options, which options, based upon the Exchange Ratio of 0.90478 (and assuming
a Closing Danaher Stock Price of $35 15/16, the closing price of Danaher Common
Stock on the NYSE on June 5, 1998), will be converted to become approximately
1,162,788 Danaher Common Shares in the aggregate. See "The Merger--Interests of
Certain Persons in the Merger--Fluke Options."
EFFECTIVE TIME OF THE MERGER; CLOSING DATE
The Merger will become effective (the "Effective Time") when Articles of
Merger are filed with the Washington Secretary of State or at such later time
as is specified in the Articles of Merger. This filing will be made on a date
(the "Closing Date") set by Danaher, which date will be within two business
days following the date upon which all conditions set forth in the Merger
Agreement have been satisfied or waived, as the case may be. See "The Merger
Agreement--Closing Conditions."
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to, among other things, (i) approval by
the Fluke Stockholders of the Merger and the transactions contemplated thereby,
(ii) no temporary restraining order, preliminary or permanent injunction or
other order or decree being in effect which prevents the consummation of the
Merger, (iii) expiration or termination of the applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") (and any extension thereof), (iv) the Commission having declared the
Registration Statement effective, and at the Effective Time, no stop order or
similar restraining order prohibiting the Merger having been threatened or
entered by the Commission, (v) receipt by Danaher and Fluke of legal opinions
to the effect that the Merger will qualify as a tax-free reorganization for
federal income tax purposes, (vi) receipt by Danaher of a letter, in form and
substance reasonably satisfactory to Danaher, from Arthur Andersen LLP with
respect to qualification of the Merger as a pooling-of-interests for accounting
and financial reporting purposes, (vii) the listing of the Danaher Common Stock
to be issued in the Merger on the NYSE having been approved (subject to
official notification of issuance), (viii) all necessary consents and
authorizations having been obtained, (ix) no action being pending or threatened
by any Governmental Entity (as defined in the Merger Agreement) which seeks to
prevent consummation of the Merger, and (x) receipt by Danaher of signed
affiliate agreements from each person who may be deemed to be an affiliate of
Fluke.
In addition, consummation of the Merger by each of Danaher and Fluke is
conditioned upon the other party's representations and warranties being true
and correct on and as of the Closing Date (except for those made as of a
specified time) except as could not reasonably be expected to result in a
material adverse effect (as hereinafter defined) on the other party and
performance in all material respects of each of the covenants to be performed
or complied with by the other party. It is also a condition to Danaher's
obligation to consummate the Merger that the number of Dissenting Shares (as
hereinafter defined) do not constitute more than 5% of the outstanding shares
of Fluke Common Stock. See "The Merger--Accounting Treatment," "--Interests of
Certain Persons in the Merger," "--Regulatory Approvals," "The Merger
Agreement--Representations and Warranties," "--Certain Covenants" and "--
Closing Conditions."
3
<PAGE>
ACCOUNTING TREATMENT
The Merger is intended to qualify as a pooling-of-interests for accounting
and financial reporting purposes. Consummation of the Merger is conditioned on,
among other matters, Danaher's receipt of a letter, in form and substance
reasonably satisfactory to Danaher, from Arthur Andersen LLP to the effect that
the Merger will qualify as a pooling-of-interests. See "The Merger--Accounting
Treatment."
NO SOLICITATION
Fluke has agreed that, prior to the Effective Time or earlier termination of
the Merger Agreement, neither Fluke nor any of its officers, employees,
representatives, agents or affiliates will, directly or indirectly, encourage,
solicit or participate in discussions or negotiations with any person (other
than Danaher) concerning any merger, consolidation, share exchange or similar
transaction, or any transaction that would involve the transfer or potential
transfer of control of Fluke, other than the transactions contemplated by the
Merger Agreement, except that Fluke may take certain actions, including
withdrawing or modifying its approval of the Merger Agreement, to the extent
required by the fiduciary obligations of the Fluke Board and in accordance with
the provisions of the Merger Agreement upon the receipt by the Fluke Board of a
Superior Proposal (as hereinafter defined). See "The Merger Agreement--No
Solicitation."
TERMINATION; EXPENSES
The Merger 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 Fluke Stockholders (i) by mutual written consent of Danaher
and Fluke; (ii) by Danaher, upon certain material breaches of Fluke's
representations, warranties, covenants or agreements; (iii) by Fluke, upon
certain material breaches of Danaher's representations, warranties, covenants
or agreements; (iv) by either Danaher or Fluke, 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; (v) by either Danaher or Fluke, 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 the Merger Agreement by the party seeking
to terminate the Merger Agreement; (vi) by either Danaher or Fluke, if the
requisite approval of the Fluke Stockholders shall not have been obtained;
(vii) by Danaher, if the Fluke Board shall withdraw, modify or change its
recommendation of the Merger Agreement or the Merger in any manner adverse to
Danaher, or if Fluke or any of its material subsidiaries shall have entered
into (or resolved or announced its intention to enter into) an agreement with
respect to any Alternative Transaction (as hereinafter defined), or if the
Fluke Board shall have recommended to the Fluke Stockholders a Takeover
Proposal (as hereinafter defined) or shall have so resolved; or if any person
(other than Danaher and its subsidiaries) shall have acquired beneficial
ownership of more than 10% of the then outstanding shares of capital stock of
Fluke (except that certain existing interests shall not give rise to any
termination right thereunder); (viii) by Fluke, if it shall enter into an
agreement with respect to a Superior Proposal in accordance with the provision
of the Merger Agreement, including payment of the Termination Fee and the
Expense Fee (each as hereinafter defined); and (ix) by Fluke, if, at any time
during a set period close to the Effective Time, the average of the daily last
sale prices of Danaher Common Shares as reported on the NYSE Composite
Transactions reporting system shall be less than $31.94 (subject to Danaher's
right to increase the Exchange Ratio to provide at least $28.90 in value in
Danaher Common Shares per share of Fluke Common Stock (based on the same
measuring period)). The Fluke Board may, after taking certain facts and
circumstances into consideration, elect not to terminate the Merger Agreement
pursuant to clause (ix) above. By approving the Merger Agreement, Fluke
Stockholders would be permitting the Fluke Board to determine, in the exercise
of its fiduciary duties, to proceed with the Merger even though the value
received per share of Fluke Common Stock was less than $28.90 because the
average daily last sales prices of Danaher Common Shares, as determined by the
method described above, was below $31.94.
As set forth in the Merger Agreement, Fluke shall pay, or cause to be paid,
in same day funds to Danaher upon demand an amount equal to $17 million (the
"Termination Fee") plus Danaher's aggregate expenses
4
<PAGE>
incurred in connection with the Merger Agreement up to $3 million (the "Expense
Fee") (i) if the Merger Agreement is terminated as a result of a material
breach by Fluke of its agreements to hold the Fluke Stockholders Meeting and
recommend the Merger to Fluke Stockholders; (ii) if Fluke terminates the Merger
Agreement in order to enter into any agreement with respect to any Superior
Proposal; (iii) if the Merger Agreement is terminated by Danaher, because any
person or group (other than Danaher or its subsidiaries) acquires or has the
right to acquire more than 10% of the outstanding shares of Fluke Common Stock
(with certain exceptions) and prior to such termination, any such person or
group shall have refused or failed to deliver to Danaher upon request a binding
commitment not to take any action that may frustrate the transactions
contemplated by the Merger Agreement and within one year after the date of such
termination of the Merger Agreement, Fluke consummates an Alternative
Transaction; provided, that Fluke shall make a nonrefundable payment of $5
million (which amount shall be credited to Termination Fee or the Expense Fee)
upon the termination of the Merger Agreement for this reason; (iv) if the
Merger Agreement is terminated by Danaher as a result of the Fluke Board
withdrawing, modifying or changing its recommendation in any manner adverse to
Danaher or recommending a competing Takeover Proposal, or as a result of Fluke
or any of Fluke's material subsidiaries having entered into an agreement with
respect to an Alternative Transaction (or the Fluke Board having resolved to do
any of these things); or (v) if the Merger Agreement is terminated following a
failure to obtain the requisite approval of Fluke Stockholders and at the time
of the Fluke Special 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 within one year
after the date of such termination of the Merger Agreement, Fluke consummates
an Alternative Transaction. Notwithstanding the foregoing, the total amount
payable as to Danaher in the form of a Termination Fee and Expense Fee and the
Option Repurchase Price (as hereinafter defined) shall not exceed $20 million.
See "The Merger Agreement--Stock Option Agreement" and "--Amendment;
Termination; Expenses."
REASONS FOR THE MERGER; RECOMMENDATION OF THE PARTIES' BOARDS OF DIRECTORS
Fluke. The Fluke Board identified a number of potential advantages of the
Merger to the Fluke Stockholders. See "The Merger--Reasons for the Merger;
Recommendation of the Parties' Boards of Directors." These advantages include,
among others:
-- The Merger is expected to provide Fluke Stockholders with Danaher Common
Shares at a significant premium over the market price for shares of
Fluke Common Stock prevailing prior to the public announcement of the
Merger in a tax-free exchange.
-- Such premium is especially significant considering Fluke's expected
decline in earnings for the fourth quarter of fiscal year 1998, ended on
April 24, 1998.
-- The fixed Exchange Ratio will allow Fluke Stockholders to share fully in
any potential increases in the price of Danaher Common Shares.
-- The Fluke Board reserved the right to terminate the Merger Agreement in
the event that the price of Danaher Common Shares falls below a certain
level thus ensuring that if the Merger goes forward, Fluke Stockholders
will receive a guaranteed minimum value for their shares of Fluke Common
Stock.
-- The Merger should provide Fluke with greater resources to support its
marketing, distribution, product development and potential acquisition
efforts.
AT A SPECIAL MEETING OF THE FLUKE BOARD HELD ON APRIL 24, 1998, THE DIRECTORS
UNANIMOUSLY DETERMINED THAT THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF
FLUKE AND FLUKE STOCKHOLDERS, UNANIMOUSLY APPROVED THE MERGER, AND UNANIMOUSLY
RECOMMENDED APPROVAL OF THE MERGER AGREEMENT BY FLUKE STOCKHOLDERS.
5
<PAGE>
Danaher. The Danaher Board of Directors (the "Danaher Board"), in the course
of reaching its decision to approve the Merger Agreement and the transactions
contemplated thereby, considered a number of factors, including the fact that
Fluke has a leading brand in its business segment and broad geographic
coverage, as well as distribution channels and products that complement a
number of Danaher businesses in the tools, environmental and telecommunication
testing industries. In addition, there exist opportunities to leverage
manufacturing and purchasing between the companies. For additional information,
see "The Merger--Reasons for the Merger; Recommendation of the Parties' Boards
of Directors--Danaher."
OPINION OF FLUKE'S FINANCIAL ADVISOR
Salomon Smith Barney ("Salomon Smith Barney"), Fluke's financial advisor, has
delivered its written opinion, dated April 24, 1998, to the Fluke Board to the
effect that, based upon the facts and circumstances as they existed as of the
date thereof, and subject to certain assumptions and other considerations set
forth in such opinion, as of the date thereof, the consideration to be received
by Fluke Stockholders in the Merger was fair, from a financial point of view,
to the Fluke Stockholders. The full text of the written opinion of Salomon
Smith Barney, setting forth the assumptions made, matters considered and
limitations on the review undertaken by Salomon Smith Barney, is attached as
Annex B to this Proxy Statement/Prospectus and holders of Fluke Common Stock
are urged to read carefully the opinion in its entirety. See "The Merger--
Opinion of Fluke's Financial Advisor" for additional information.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Fluke Board with respect to the
Merger Agreement, Fluke Stockholders should be aware that certain officers and
directors of Fluke (or their affiliates) have interests in the Merger that are
different from and in addition to the interests of Fluke Stockholders
generally. These interests include, but are not limited to, the fact that (i)
all of the executive officers and all of the current non-employee directors of
Fluke currently hold Stock Options, which, whether or not currently vested or
exercisable, will be converted into Danaher Common Shares in the Merger based
on the Exchange Ratio, (ii) the Merger will result in a change in control under
the employment agreements and change in control agreements of certain executive
officers of Fluke, including William Parzybok, some of whom will be receiving
significant cash payments as a result of the Merger, (iii) Danaher has agreed,
from and after the Effective Time, to cause Fluke, as the surviving corporation
(the "Surviving Corporation"), to indemnify present and former officers and
directors of Fluke and has agreed to cause the Surviving Corporation to
maintain in effect after the Effective Time, policies of directors' and
officers' liability insurance, in each case in respect of acts, omissions or
matters occurring prior to the Effective Time and subject to certain
limitations, and (iv) Danaher has agreed, from and after the Effective Time, to
cause the Surviving Corporation to honor various current Fluke employment
arrangements and benefit plans. The Fluke Board was aware of these interests
and took these interests into account in approving the Merger Agreement and the
transactions contemplated thereby. See "The Merger--Interests of Certain
Persons in the Merger" and "--Stockholders Support Agreements."
EXCHANGE PROCEDURES
If the Fluke Merger Proposal is approved and the Merger is consummated, as
soon as practicable after the Effective Time, a letter of transmittal will be
mailed or delivered to each Fluke Stockholder to be used in forwarding
certificates evidencing such holder's shares of Fluke Common Stock for
surrender and exchange for certificates evidencing Danaher Common Shares to
which such holder has become entitled and, if applicable, cash in lieu of
fractional Danaher Common Shares. After receipt of such letter of transmittal,
each holder of certificates formerly representing shares of Fluke Common Stock
should surrender such certificates to SunTrust Bank, Atlanta, the exchange
agent for the Merger, pursuant to and in accordance with the instructions
accompanying such letter of transmittal, and each holder will receive in
exchange therefor certificates evidencing the whole number of Danaher Common
Shares to which he is entitled and any cash which may be payable in lieu of
fractional Danaher Common Shares. See "The Merger Agreement--Terms of the
Merger." Such letter
6
<PAGE>
of transmittal will be accompanied by instructions specifying other details of
the exchange. FLUKE STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL
THEY RECEIVE A LETTER OF TRANSMITTAL.
STOCK OPTION AGREEMENT
In connection with the execution of the Merger Agreement, Danaher and Fluke
entered into the Stock Option Agreement, dated April 24, 1998 (the "Stock
Option Agreement"), filed as an exhibit to the Registration Statement of which
this Proxy Statement/Prospectus forms a part, pursuant to which Fluke has
granted to Danaher an option (the "Option") to purchase up to 3,636,874 shares
of Fluke Common Stock (or 19.9% of the outstanding shares of Fluke Common Stock
as of the Record Date, without including any shares subject to or issued
pursuant to the Option) at an exercise price of $34.00 per share. The Option is
exercisable upon the occurrence of certain events and provides Danaher with the
right, under certain circumstances, to require Fluke to repurchase the Option
for its in-the-money value, provided that the sum of the Termination Fee, the
Expense Fee and the Option repurchase price shall not exceed $20 million. The
Option, which Danaher required that Fluke grant as a condition to Danaher's
entering into the Merger Agreement, may increase the likelihood of consummation
of the Merger. See "The Merger--Stock Option Agreement" and "The Merger
Agreement--Amendment; Termination; Expenses."
STOCKHOLDERS SUPPORT AGREEMENTS
Concurrently with the execution of the Merger Agreement, certain stockholders
of Fluke (including certain executive officers and directors of Fluke and
certain of their affiliates), who as of the Record Date beneficially owned in
the aggregate 11.3% of the outstanding Fluke Common Stock (each, a "Supporting
Stockholder" and together, the "Supporting Stockholders"), executed
Stockholders Support Agreements with Danaher, which are filed as exhibits to
the Registration Statement of which this Proxy Statement/Prospectus forms a
part (the "Stockholders Support Agreements"), pursuant to which each Supporting
Stockholder agreed, among other things, to vote or direct the vote of all
shares of Fluke Common Stock beneficially owned by the Supporting Stockholder,
to approve the Merger and the Merger Agreement. Each Supporting Stockholder
also agreed, among other things, to not sell or otherwise transfer any shares
of Fluke Common Stock, other than pursuant to the Merger, without Danaher's
prior written consent or solicit, initiate, encourage or facilitate, or furnish
or disclose nonpublic information in furtherance of, any inquiries or the
making of any proposal with respect to any recapitalization, merger,
consolidation or other business combination involving Fluke, or acquisition of
any capital stock or any material portion of the assets of Fluke, or any
combination of the foregoing (a "Competing Transaction"), or negotiate, explore
or otherwise engage in discussions with any person (other than as specified
therein) with respect to any Competing Transaction or enter into any agreement,
arrangement, or understanding with respect to any Competing Transaction or
agree to or otherwise assist in the effectuation of any Competing Transaction;
provided, however, that nothing in any Stockholders Support Agreement prevents
any Supporting Stockholder from taking any action or omitting to take any
action as a member of the Fluke Board to the extent permitted under certain
provisions of the Merger Agreement. The Stockholders Support Agreements also
contain certain agreements on the part of the Supporting Stockholders not to
compete with Fluke. Each Stockholders Support Agreement will terminate
automatically upon the termination of the Merger Agreement. See "The Merger--
Stockholders Support Agreements."
AMENDMENTS TO RETENTION AGREEMENTS
In connection with the Merger Agreement, employment agreements between Fluke
and certain of its executive officers were amended to prevent the triggering of
change of control provisions in those agreements. Certain employment
agreements, which included noncompete agreements which terminate upon a change
of control (which would include the Merger), were also amended to provide that
certain employees would not compete with Fluke following its acquisition by
Danaher. See "The Merger--Amendments to Retention Agreements."
7
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Fluke has received an opinion from Davis Wright Tremaine and Danaher has
received an opinion from Wachtell, Lipton, Rosen & Katz to the effect that if
the Merger is consummated in accordance with the terms of the Merger Agreement,
no gain or loss will be recognized by Fluke or the Fluke Stockholders who do
not exercise dissenter's rights (except, in the case of such holders, for gain
or loss recognized on account of cash received in lieu of fractional Danaher
Common Shares) for federal income tax purposes. These opinions are based upon
and are subject to, among other things, customary representations to be made to
Davis Wright Tremaine and Wachtell, Lipton, Rosen & Katz. See "Certain Federal
Income Tax Consequences."
COMPARISON OF STOCKHOLDER RIGHTS
As a result of the Merger, shares of Fluke Common Stock, which are issued by
a Washington corporation, will be converted into the right to receive Danaher
Common Shares, which are issued by a Delaware corporation. There are
differences between the rights of Fluke Stockholders and the rights of holders
of Danaher Common Shares ("Danaher Stockholders"). These differences result
from (i) differences between Washington and Delaware law, and (ii) differences
between the governing instruments of Fluke and Danaher. For a discussion of the
various differences between the rights of Fluke Stockholders and Danaher
Stockholders, see "Comparison of Stockholder Rights."
AMENDMENT TO FLUKE RIGHTS PLAN
In connection with the execution of the Merger Agreement, Fluke amended the
Rights Agreement, dated July 11, 1988, between Fluke and Continental Stock
Transfer & Trust Company (the "Fluke Rights Agreement") so that the entering
into of the Merger Agreement, the Stockholders Support Agreements and the Stock
Option Agreement and the consummation of the Merger and the other transactions
contemplated thereby do not and will not result in the ability of any person to
exercise any Rights (as defined therein) under the Fluke Rights Agreement or
enable or require the Rights to be separated from the shares of Fluke Common
Stock to which they are attached or to be triggered or become exercisable, and
so that the Fluke Rights Agreement and the Rights will terminate upon
consummation of the Merger.
CERTAIN SIGNIFICANT CONSIDERATIONS
In considering whether to vote in favor of approval of the Merger Agreement,
Fluke Stockholders should consider the following: (i) the value to be received
in exchange for each share of Fluke Common Stock in the Merger will be
determined by the value of Danaher Common Shares at the Effective Time; (ii)
the price of Danaher Common Shares at the Effective Time can be expected to
vary from its price as of the date of this Proxy Statement/Prospectus and the
date on which the Fluke Stockholders vote on the Merger Agreement due to
changes in the business, operations or prospects of Danaher, market assessments
of the likelihood that the Merger will be consummated and the timing thereof,
general market and economic conditions, and other factors; and (iii) if the
Average Closing Price (as hereinafter defined) of Danaher Common Shares shall
be less than $31.94 (and, as a result, the value of each share of Fluke Common
Stock exchanged in the Merger shall be less than $28.90), Fluke may (subject to
Danaher's right to increase the Exchange Ratio), but is not obligated to,
terminate the Merger Agreement. Fluke Stockholders should also consider that by
approving the Merger Agreement, Fluke Stockholders would be permitting the
Fluke Board to determine, in the exercise of its fiduciary duties, to proceed
with the Merger even though the value received per share of Fluke Common Stock
is less than $28.90 because the Average Closing Price is below $31.94.
8
<PAGE>
SUMMARY HISTORICAL AND UNAUDITED PRO
FORMA FINANCIAL INFORMATION
FLUKE SUMMARY HISTORICAL FINANCIAL INFORMATION
The summary historical financial information of Fluke set forth below for
each of the years in the four-year period ended April 25, 1997, the seven
months ended April 30, 1993, and the year ended September 25, 1992, has been
derived from the historical financial statements of Fluke. The summary
historical financial information for Fluke for the three quarters ended January
23, 1998 and January 24, 1997 has been obtained from the unaudited financial
statements of Fluke which, in the opinion of management of Fluke, include all
adjustments of a normal and recurring nature which are necessary to present
fairly the information for such periods. Such financial information should be
read in conjunction with the financial statements of Fluke and other financial
information incorporated by reference in this Proxy Statement/Prospectus. See
"Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
FISCAL YEAR SEVEN MONTHS FISCAL YEAR ENDED NINE MONTHS ENDED
ENDED ENDED ----------------------------------- -----------------
SEPTEMBER APRIL APRIL APRIL APRIL APRIL JANUARY JANUARY
25, 1992 30, 1993(1) 29, 1994 28, 1995 26, 1996 25, 1997 24, 1997 23, 1998
----------- ------------ -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EARNINGS STATEMENT DATA
Net Revenues............ $271,819 $132,139 $357,904 $382,066 $413,525 $430,166 $315,077 $325,945
Net Earnings before
cumulative effect of
change in accounting
principles............. 14,655 2,953 8,628 16,787 23,703 19,606 19,385 21,579
Earnings per share
before cumulative
effect of change in
accounting principles:
Diluted................ 0.96 0.19 0.50 0.98 1.34 1.08 1.09 1.14
Basic.................. 1.06 0.21 0.51 1.00 1.38 1.12 1.12 1.18
Cash Dividends declared
per share.............. 0.24 0.13 0.26 0.28 0.30 0.32 0.24 0.26
BALANCE SHEET DATA
Total Assets............ 175,889 172,129 244,648 274,907 275,672 292,360 281,657 304,158
Total Debt.............. 391 34 14,712 21,613 7,098 563 3,600 772
Stockholders' Equity.... 128,826 134,207 156,048 174,678 192,077 202,939 205,472 222,338
</TABLE>
Notes:
(1) 1993 was a seven-month stub period created by the change of the fiscal
year from the last Friday in September. 1993 included two changes in accounting
principles:
a. Change in the method of applying overhead costs to inventory
b. Adoption of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes"
(2) Earnings per share data has been retroactively restated to reflect a two-
for-one stock split on October 15, 1997 and the adoption of Statement of
Financial Accounting Standards No. 128, "Earnings per Share". The adoption of
the standard did not change previously reported earnings per share as compared
to diluted earnings per share determined based on FAS No. 128.
9
<PAGE>
DANAHER SUMMARY HISTORICAL FINANCIAL INFORMATION
The summary historical financial information of Danaher set forth below has
been derived from and should be read in conjunction with the audited financial
statements and other financial information incorporated by reference in this
Proxy Statement/Prospectus. See "Incorporation of Certain Documents by
Reference."
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
---------------------------------------------------- ---------------------
MARCH 28, MARCH 27,
1993 1994 1995 1996 1997 1997 1998
-------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS STATEMENT DATA:
Net Revenues $937,633 $1,113,973 $1,486,769 $1,811,878 $2,050,968 $ 466,441 $ 534,418
Net Earnings before
cumulative effect of
change in accounting
principles
--Continuing
Operations............ 48,030 72,319 105,766 127,959 154,806 31,535 38,044
--Discontinued
Operations............ 5,719 9,331 2,550 79,811 -- -- --
--Total................ 53,749 81,650 108,316 207,770 154,806 31,535 38,044
Earnings per share
before cumulative
effect of change in
accounting principles
--Continuing Operations
Diluted................ $ 0.42 $ 0.62 $ 0.88 $ 1.07 $ 1.28 $ 0.26 $ 0.31
Basic.................. $ 0.42 $ 0.63 0.90 $ 1.09 $ 1.32 $ 0.27 $ 0.32
--Discontinued
Operations
Diluted................ $ 0.05 $ 0.08 $ 0.02 $ 0.67 -- -- --
Basic.................. $ 0.05 $ 0.08 $ 0.02 $ 0.68 -- -- --
--Total
Diluted................ $ 0.47 $ 0.70 $ 0.90 $ 1.73 $ 1.28 $ 0.26 $ 0.31
Basic.................. $ 0.47 $ 0.71 $ 0.92 $ 1.77 $ 1.32 $ 0.27 $ 0.32
Cash Dividends declared
per share.............. $ 0.03 $ 0.03 $ 0.04 $ 0.05 $ 0.05 $ 0.01 $ 0.01
BALANCE SHEET DATA:
Total Assets............ 872,472 1,105,645 1,485,991 1,765,074 1,879,717 1,794,658 2,370,725
Total Debt.............. 133,585 185,286 283,587 236,327 198,247 209,364 527,605
Shareholders' Equity.... 363,666 476,100 586,311 800,261 916,881 817,463 957,983
</TABLE>
10
<PAGE>
UNAUDITED PRO FORMA COMBINED SUMMARY FINANCIAL INFORMATION
The unaudited pro forma combined summary financial information of Danaher and
Fluke set forth below gives effect to the Merger under the pooling-of-interests
accounting method, and assumes that the Merger had occurred at the beginning of
the periods presented for the earnings statement data. The pro forma
information is presented in accordance with Danaher's fiscal year which ends
December 31, and Fluke's balances for twelve month periods ending approximately
one month later than the Danaher periods. The pro forma information is
presented for illustrative purposes only and is not necessarily indicative of
the operating results or financial position that would have occurred if the
Merger had been consummated at such time, nor is it necessarily indicative of
future operating results or financial position. The unaudited pro forma
combined summary financial information should be read in conjunction with the
"Unaudited Pro Forma Combined Financial Information" included elsewhere in this
Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
DECEMBER 31,
--------------------------------
1995 1996 1997
---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
EARNINGS STATEMENT DATA:
Net Revenues.................................. $1,899,463 $2,233,193 $2,492,002
Net Earnings
--Continuing Operations..................... $ 128,289 $ 154,357 $ 176,606
--Discontinued Operations................... 2,550 79,811 --
---------- ---------- ----------
--Total..................................... $ 130,839 $ 234,168 $ 176,606
========== ========== ==========
Earnings per share
--Continuing Operations
Diluted................................... $ 0.95 $ 1.13 $ 1.28
Basic..................................... $ 0.97 $ 1.16 $ 1.32
--Discontinued Operations
Diluted................................... $ 0.02 $ 0.59 --
Basic..................................... $ 0.02 $ 0.60 --
--Total
Diluted................................... $ 0.96 $ 1.72 $ 1.28
Basic..................................... $ 0.99 $ 1.76 $ 1.32
Cash Dividends declared per share............. $ 0.07 $ 0.08 $ 0.09
BALANCE SHEET DATA:
Total Assets.................................. $1,755,978 $2,046,731 $2,183,875
Total Debt.................................... 294,547 239,927 199,019
Shareholders' Equity.......................... 772,874 1,005,733 1,114,219
Average Shares--Diluted....................... 135,685 136,124 137,731
Average Shares--Basic......................... 132,772 132,951 134,000
</TABLE>
11
<PAGE>
COMPARATIVE PER SHARE DATA
Set forth below are earnings, cash dividends declared and book value per
share data for Danaher and Fluke on both historical and pro forma combined
bases and on a per share equivalent pro forma basis for Fluke. Pro forma
combined earnings per share are derived from the Unaudited Pro Forma Combined
Financial Information presented elsewhere in this Proxy Statement/Prospectus,
which gives effect to the Merger under the pooling-of-interests accounting
method. Book value per share for the pro forma combined presentation is based
upon outstanding Danaher Common Shares, adjusted to include Danaher Common
Shares to be issued in the Merger for outstanding shares of Fluke Common Stock
and outstanding Fluke Options at the Effective Time. The per share equivalent
pro forma combined data for shares of Fluke Common Stock is based on the
assumed conversion of each share of Fluke Common Stock into 0.90478 Danaher
Common Shares. See "The Merger Agreement--Terms of the Merger." The information
set forth below should be read in conjunction with the respective audited and
unaudited financial statements of Danaher and Fluke incorporated by reference
in this Proxy Statement/Prospectus and the "Unaudited Pro Forma Combined
Financial Information" and the notes thereto presented elsewhere herein. See
"Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
AT OR FOR THE YEAR
ENDED DECEMBER 31, THREE MONTHS ENDED
-------------------- -------------------
MARCH 28, MARCH 27,
1995 1996 1997 1997 1998
------ ------ ------ --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
FLUKE--HISTORICAL:
Earnings per share before cumulative
effect of change in accounting
principles
--Continuing Operations
Diluted............................ $ 1.28 $ 1.47 $ 1.15
Basic.............................. $ 1.32 $ 1.52 $ 1.20
--Total
Diluted............................ $ 1.28 $ 1.47 $ 1.15
Basic.............................. $ 1.32 $ 1.52 $ 1.20
Cash Dividends declared per share..... $ 0.30 $ 0.32 $ 0.35
Book Value per share.................. $10.55 $11.47 $11.68
DANAHER--HISTORICAL:
Earnings per share before cumulative
effect of change in accounting
principles
--Continuing Operations
Diluted............................ $ 0.88 $ 1.07 $ 1.28 $0.26 $0.31
Basic.............................. $ 0.90 $ 1.09 $ 1.32 $0.27 $0.32
--Discontinued Operations
Diluted............................ $ 0.02 $ 0.67 -- -- --
Basic.............................. $ 0.02 $ 0.68 -- -- --
--Total
Diluted............................ $ 0.90 $ 1.73 $ 1.28 $0.26 $0.31
Basic.............................. $ 0.92 $ 1.77 $ 1.32 $0.27 $0.32
Cash Dividends declared per share..... $ 0.04 $ 0.05 $ 0.05 $0.01 $0.01
Book Value per share.................. $ 4.90 $ 6.67 $ 7.61 $6.77 $7.90
DANAHER & FLUKE--PRO FORMA COMBINED:
Earnings per share before cumulative
effect of change in accounting
principles
--Continuing Operations
Diluted............................ $ 0.95 $ 1.13 $ 1.28
Basic.............................. $ 0.97 $ 1.16 $ 1.32
--Discontinued Operations
Diluted............................ $ 0.02 $ 0.59 --
Basic.............................. $ 0.02 $ 0.60 --
--Total
Diluted............................ $ 0.96 $ 1.72 $ 1.28
Basic.............................. $ 0.99 $ 1.76 $ 1.32
Cash Dividends declared per share..... $ 0.07 $ 0.08 $ 0.09
Book Value per share.................. $ 5.69 $ 7.39 $ 8.27
EQUIVALENT PRO FORMA COMBINED PER
FLUKE SHARE:
--Continuing Operations
Diluted............................ $ 0.86 $ 1.03 $ 1.16
Basic.............................. $ 0.87 $ 1.05 $ 1.19
--Discontinued Operations
Diluted............................ $ 0.02 $ 0.53 --
Basic.............................. $ 0.02 $ 0.54 --
--Total
Diluted............................ $ 0.87 $ 1.56 $ 1.16
Basic.............................. $ 0.89 $ 1.59 $ 1.19
Cash Dividends declared per share..... $ 0.07 $ 0.07 $ 0.08
Book Value per share.................. $ 5.15 $ 6.68 $ 7.48
</TABLE>
12
<PAGE>
MARKET PRICE AND DIVIDEND DATA
The following table reflects (i) the range of the reported high and low last
sale prices of Danaher Common Shares on the NYSE Composite Tape and the per
share dividends paid thereon and (ii) the range of the reported high and low
last sale prices of Fluke Common Stock on the NYSE Composite Tape and the per
share dividends paid thereon, in each case for the calendar quarters indicated.
The information in the table has been adjusted to reflect retroactively all
applicable stock splits.
<TABLE>
<CAPTION>
DANAHER FLUKE
COMMON SHARES COMMON STOCK
------------------- -------------------
HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
------- ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
1996:
First quarter.......... 18 5/8 14 3/4 .01 19 1/16 17 1/4 .075
Second quarter......... 21 3/4 18 1/16 .01 20 3/16 18 3/4 .075
Third quarter.......... 21 9/16 18 1/16 .0125 20 1/16 17 1/8 .08
Fourth quarter......... 23 5/16 20 1/4 .0125 22 7/8 18 9/16 .08
1997:
First quarter.......... 25 20 13/16 .0125 24 5/16 22 3/16 .08
Second quarter......... 25 15/16 19 13/16 .0125 29 3/4 21 1/4 .08
Third quarter.......... 29 7/32 24 29/32 .0125 29 1/8 24 1/8 .0875
Fourth quarter......... 31 7/8 26 23/32 .0125 27 13/32 22 9/16 .0875
1998:
First quarter.......... 38 3/32 29 1/2 .0125 25 1/2 22 9/16 .0875
Second quarter (through
June 5, 1998)......... 39 3/16 33 3/4 -- 33 3/4 22 3/8 .0875
</TABLE>
On April 24, 1998, the last full trading day prior to the execution, delivery
and public announcement of the Merger Agreement, the closing price of the
Danaher Common Shares 36 29/32 per share and the closing price of the Fluke
Common Stock was $23 3/16 per share, as reported on the NYSE Composite Tape.
The value of Fluke Common Stock at April 24, 1998, on an equivalent per share
basis, was $33.39 (assuming an Exchange Ratio of 0.90478). On June 5, 1998, the
most recent practicable date prior to the mailing of this Proxy
Statement/Prospectus, the last sale prices of Danaher Common Shares and Fluke
Common Stock were $35 15/16 per share and $32 1/16 per share, respectively, as
reported on the NYSE Composite Tape. Fluke Stockholders are encouraged to
obtain current market quotations for Danaher Common Shares and Fluke Common
Stock.
Danaher has applied for the listing on the NYSE of the Danaher Common Shares
to be issued in the Merger.
Fluke has agreed in the Merger Agreement that it shall not declare or pay any
dividends other than the $0.0875 regular quarterly dividend payable to Fluke
Stockholders of record as of April 24, 1998. In addition, Danaher and Fluke
have agreed in the Merger Agreement to coordinate with one another regarding
the declaration or payment of dividends in respect of Danaher Common Shares and
Fluke Common Stock.
13
<PAGE>
THE FLUKE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to Fluke Stockholders in
connection with the solicitation of proxies by the Fluke Board for use at the
Fluke Special Meeting to be held on July 7, 1998, at Fluke Park, 6920 Seaway
Boulevard, Everett, WA 98203, commencing at 1:00 p.m., Pacific Time, and at
any adjournment or postponement thereof.
This Proxy Statement/Prospectus, the Letter to Fluke Stockholders, the
Notice of the Fluke Special Meeting and the form of proxy for use at the Fluke
Special Meeting are first being mailed to Fluke Stockholders on or about June
8, 1998.
MATTERS TO BE CONSIDERED AT THE FLUKE SPECIAL MEETING
At the Fluke Special Meeting, Fluke Stockholders will consider and vote on:
1. The Fluke Merger Proposal, which is a proposal to approve the Merger
Agreement pursuant to which, among other things, (i) Sub will be merged
with and into Fluke with the result that Fluke becomes a wholly owned
subsidiary of Danaher, and (ii) each outstanding share (other than shares
held in the treasury of Fluke, if any, which will be canceled, or any
Dissenting Shares) of Fluke Common Stock will be converted into a number of
Danaher Common Shares equal to the Exchange Ratio as set forth in the
Merger Agreement. A copy of the Merger Agreement is attached as Annex A to
this Proxy Statement/Prospectus.
2. Such other business as may properly come before the Fluke Special
Meeting.
RECORD DATE; VOTE REQUIRED; VOTING AT THE MEETING
The Fluke Board has fixed June 5, 1998, as the Record Date for determination
of Fluke Stockholders entitled to notice of and to vote at the Fluke Special
Meeting. Accordingly, only holders of Fluke Common Stock of record at the
close of business on June 5, 1998, will be entitled to notice of and to vote
at the Fluke Special Meeting. Each holder of record of Fluke Common Stock at
the close of business on the Record Date is entitled to cast one vote per
share, exercisable in person or by a properly executed proxy, at the Fluke
Special Meeting. As of the Record Date, there were 18,389,535 shares of Fluke
Common Stock outstanding and entitled to vote which were held by approximately
1,574 holders of record.
Pursuant to Fluke's Articles of Incorporation, as amended (the "Fluke
Articles"), its Bylaws (the "Fluke Bylaws") and applicable law, the
affirmative vote of the holders of 66 2/3% of the shares of Fluke Common Stock
outstanding and entitled to vote thereon is required to approve the Fluke
Merger Proposal. As of the Record Date, the directors and executive officers
of Fluke and certain of their affiliates may be deemed to be beneficial owners
of 11.7% of the outstanding shares of Fluke Common Stock and each such person
has advised Fluke that such person intends to vote in favor of the Fluke
Merger Proposal. In addition, certain stockholders of Fluke (including certain
directors and executive officers of Fluke and certain of their affiliates),
who as of the Record Date beneficially owned in the aggregate approximately
11.3% of the outstanding Fluke Common Stock, have each agreed in the
Stockholders Support Agreements to vote or direct the vote of all Fluke Common
Stock over which such person has voting control in favor of the Fluke Merger
Proposal.
VOTING OF PROXIES
All Fluke Stockholders who are entitled to vote and are represented at the
Fluke Special Meeting by properly executed proxies received prior to or at
such meeting and not revoked will be voted at such meeting in accordance with
the instructions indicated in such proxies. If no instructions are indicated,
such proxies will be voted FOR approval of the Fluke Merger Proposal.
If any other matters are properly presented at the Fluke Special Meeting for
consideration, including, among other things, consideration of a motion to
adjourn such meeting to another time or place (including, without
14
<PAGE>
limitation, for the purpose of soliciting additional proxies), the persons
named in the enclosed form of proxy, and acting thereunder, will have
discretion to vote on such matters in accordance with their best judgment
(unless authorization to use such discretion is withheld). Fluke is not aware
of any matters expected to be presented at the meeting other than as described
in its Notice of Special Meeting.
Any Fluke Stockholder returning a proxy has the power to revoke it at any
time before shares of Fluke Common Stock represented by the proxy are voted at
the meeting. A Fluke Stockholder may also revoke his proxy by attending the
meeting and voting at the meeting. Any shares of Fluke Common Stock
represented by an unrevoked proxy will be voted unless the stockholder attends
the meeting and votes in person. A Fluke Stockholder's right to revoke his
proxy is not limited by or subject to compliance with a specified formal
procedure, but written notice should be given to the Corporate Secretary of
Fluke at or before the meeting so that the number of shares represented by
proxy can be appropriately adjusted.
Pursuant to applicable law, abstaining votes will not be counted in favor of
the Fluke Merger Proposal. Shares of Fluke Common Stock represented by proxies
returned by a broker holding such shares in nominee or "street" name will be
counted for purposes of determining whether a quorum exists, even if such
shares are not voted in matters where discretionary voting by the broker is
not allowed ("broker non-votes"). Since the Fluke Merger Proposal requires the
affirmative vote of 66 2/3% of the outstanding Fluke Common Stock, abstentions
and broker non-votes will have the same effect as votes against such proposal.
SOLICITATION OF PROXIES
The expenses of the solicitations for the Fluke Special Meeting, including
the cost of printing and distributing this Proxy Statement/Prospectus and the
form of proxy, will be borne by Fluke, subject to each party's obligation to
reimburse the other for its expenses under certain circumstances. See "The
Merger Agreement--Amendment; Termination; Expenses." In addition to
solicitation by mail, proxies may be solicited by directors, officers and
employees of Fluke in person or by telephone, telegram or other means of
communication. These persons will receive no additional compensation for
solicitation of proxies, but may be reimbursed for reasonable out-of-pocket
expenses in connection with such solicitation. Fluke has retained D.F. King &
Co., Inc. at an estimated cost of $5,000, plus reimbursement of expenses, to
assist in its solicitation of proxies from brokers, nominees, institutions and
individuals. Arrangements will also be made by Fluke with custodians, nominees
and fiduciaries for forwarding of proxy solicitation materials to beneficial
owners of shares held of record by such custodians, nominees and fiduciaries,
and Fluke will reimburse such custodians, nominees and fiduciaries for
reasonable expenses incurred in connection therewith.
APPRAISAL RIGHTS
Holders of Fluke Common Stock will be entitled to dissenters' appraisal
rights under Washington law. See "Appraisal Rights" and "Comparison of
Stockholder Rights--Appraisal or Dissenters' Rights."
15
<PAGE>
THE MERGER
BACKGROUND OF THE MERGER
On March 9, 1998, William Parzybok, Chairman of the Board and Chief
Executive Officer of Fluke was phoned by George Sherman, Chief Executive
Officer and President of Danaher to explore a possible acquisition of Fluke by
Danaher. A meeting was set up on March 19, 1998 between Mr. Parzybok and Mr.
Sherman to discuss the potential advantages of such a proposal. Mr. Parzybok
informed the members of the Executive Committee of the Fluke Board of these
discussions. Salomon Smith Barney, which was engaged by Fluke on January 8,
1998, was then informed of these discussions and was requested to begin
preparing an analysis of Danaher.
A second meeting was then held on March 27, 1998 which included Mr.
Parzybok, David Katri, President and Chief Operating Officer, Elizabeth
Huebner, Vice President and Chief Financial Officer and Douglas McKnight, Vice
President, General Counsel and Corporate Secretary of Fluke and Mr. Sherman
and Patrick Allender, Senior Vice President and Chief Financial Officer of
Danaher. The participants at this meeting discussed the Danaher operating and
financial strategy in more detail and how Fluke might fit into this strategy.
On March 30, 1998, the Fluke Board met and were informed of the discussions
with Danaher. Fluke management updated the Board about the current operating
situation and the projected operating results for the next few years. Salomon
Smith Barney reviewed public information related to Danaher and discussed a
preliminary review of the valuation of Fluke Common Stock. The Fluke Board
authorized management to continue discussions with Danaher after the signing
of a non-disclosure agreement.
On April 2, 1998, a non-disclosure agreement (the "Non-Disclosure
Agreement") with a standstill provision was executed and the parties began the
process of due diligence. During the week of April 6, 1998, representatives of
Fluke presented Fluke's business and financial plans to representatives of
Danaher. Likewise representatives of Danaher presented Danaher's business and
financial plans to representatives of Fluke and Salomon Smith Barney.
On April 13 and 14, 1998, representatives of Fluke, including Messrs.
Parzybok, Katri, McKnight and Ms. Huebner, and Mr. Adams, Vice President,
Manufacturing, Mr. Rowan, Senior Vice President, General Manager, Fluke
Networks, and Mr. Van Saun, Senior Vice President, General Manager, Industrial
Group, met with representatives of Danaher, including Messrs. Sherman and
Allender, to summarize the discussions between the parties during the prior
week, to review the longer term strategic plans of Fluke and to develop a
valuation of Fluke's business.
On April 14 and 15, 1998, the Executive Committee of the Danaher Board
reviewed the status of discussions between the parties and discussed the
general terms of a possible proposal for a business combination with Fluke.
On April 16, 1998, the Fluke Board held a special meeting and were informed
of the general terms of the Danaher proposal. The Fluke Board reviewed the
general terms proposed by Danaher and authorized management to negotiate the
terms of a business combination within specified parameters and to proceed
with the negotiation of a merger document.
Representatives of Danaher and Fluke and their advisors continued to meet
during this period to discuss due diligence, scheduling and retention issues.
During this period the financial advisors of the parties also discussed
valuation issues, including whether the transaction would be structured with a
fixed exchange ratio with or without a collar range, whether there would be a
walkaway right if the market price of Danaher stock falls below certain
levels, whether a stock option right would be granted to Danaher and the
appropriate level of break-up fees which would be payable by Fluke to Danaher
under certain circumstances if the acquisition transaction were not to close.
They also discussed the retention plans for certain Fluke officers and the
proposed communications to employees and the investment community following
the possible announcement of the acquisition.
16
<PAGE>
On April 20, 1998, the Danaher Board held a special meeting to discuss the
status of discussions between Fluke and Danaher and approved the general terms
of a proposal for a business combination with Fluke. The Danaher Board also
authorized the Executive Committee and management to negotiate the final terms
of the offer and proceed with the negotiation of a merger document.
On April 20 through April 23, 1998, representatives from Danaher and Fluke,
as well as their respective counsels, negotiated and finalized the terms of
the Merger Agreement and the Stock Option Agreement. Representatives of
Danaher also negotiated the terms of the Stockholders Support Agreements
during this time with certain members of Fluke's management and other Fluke
Stockholders.
On April 24, 1998, the Fluke Board reviewed the final terms and conditions
of the proposed transaction with Danaher. At the meeting, legal counsel for
Fluke advised the Fluke Board on the final terms of the definitive agreements,
the results of the legal diligence of Danaher, and the responsibilities of the
Fluke Board. Salomon Smith Barney then made a financial presentation in
respect of the proposed Merger and rendered to the Fluke Board its oral
opinion (which opinion was subsequently confirmed by delivery of a written
opinion dated April 24, 1998) to the effect that, as of such date and based
upon and subject to certain matters stated in such opinion, the consideration
to be received by the holders of Fluke Common Stock in the Merger was fair,
from a financial point of view, to such stockholders. See "--Opinion of
Fluke's Financial Advisor." After discussion, the Fluke Board unanimously
approved the terms of the Merger Agreement and directed the officers of Fluke
to finalize and execute the Merger Agreement.
On April 24, 1998, the Executive Committee of the Danaher Board reviewed and
approved the final terms and conditions of the transaction. The Executive
Committee of the Danaher Board authorized certain officers of Danaher to
finalize and to execute the Merger Agreement.
The definitive Merger Agreement was executed on behalf of Danaher, Fluke and
Sub after the close of the stock market on April 24, 1998, along with the
Stock Option Agreements and the two Stockholders Support Agreements and was
publicly announced before the commencement of the business day on April 27,
1998.
REASONS FOR THE MERGER; RECOMMENDATION OF THE PARTIES' BOARDS OF DIRECTORS
Fluke. The Fluke Board believes that the Merger is fair to and in the best
interests of Fluke and Fluke Stockholders, and the Fluke Board has unanimously
approved the Merger Agreement. The following are among the reasons the Fluke
Board believes the Merger will be beneficial to Fluke and Fluke Stockholders:
-- The Merger is expected to provide Fluke Stockholders with Danaher
Common Shares at a significant premium over the market price for shares of
Fluke Common Stock prevailing prior to the public announcement of the
Merger in a tax-free exchange.
-- Such premium is especially significant considering Fluke's expected
decline in earnings for the fourth quarter of fiscal year 1998, ended on
April 24, 1998.
-- The fixed Exchange Ratio will allow Fluke Stockholders to share fully
in any potential increases in the price of Danaher Common Shares.
-- The Fluke Board reserved the right to terminate the Merger Agreement
in the event that the price of Danaher Common Shares falls below a certain
level thus ensuring that if the Merger goes forward, Fluke Stockholders
will receive a guaranteed minimum value for their shares of Fluke Common
Stock.
-- The Merger should provide Fluke with greater resources to support its
marketing, distribution, product development and potential acquisition
efforts.
In addition to the factors set forth above, in the course of its
deliberations concerning the Merger, the Fluke Board consulted with Fluke's
legal and financial advisors as well as Fluke's management, and reviewed a
number of other factors relevant to the Merger, including (i) reports from
management and legal and financial advisors on specific terms of the Merger
Agreement and ancillary transaction agreements referred to in the Agreement;
17
<PAGE>
(ii) information concerning the financial performance, business operations and
prospects of Danaher presented at meetings of the Fluke Board, including among
other things, Danaher's recent and historical stock and earnings performance,
and the ability of Danaher to implement successfully its growth strategy;
(iii) Fluke's understanding that Fluke would operate as a wholly-owned
subsidiary of Danaher after the Merger, with sufficient independence to
continue to implement its business strategy; (iv) Fluke's belief that the
corporate cultures of the two companies would be complementary; (v) the
expected tax and accounting treatment of the Merger; (vi) financial
presentations by Salomon Smith Barney and Salomon Smith Barney's opinion to
the effect that, as of April 24, 1998 and based upon and subject to certain
matters stated in such opinion, the consideration to be received by Fluke
Stockholders in the Merger was fair, from a financial point of view, to the
Fluke Stockholders; and (vii) the fact that the Merger Agreement would permit
the Fluke Board to terminate the agreement under certain circumstances.
The Fluke Board also considered a number of potentially negative factors in
its deliberations concerning the Merger, including (i) the possibility of
management disruption associated with the Merger and the risk that key
technical and management personnel of Fluke might not continue with Fluke;
(ii) the risks associated with obtaining necessary approvals of the Merger and
the possibility that the Merger may not be consummated even if approved by
Fluke Stockholders; (iii) the possibility that the Merger might adversely
affect Fluke's relationship with certain of its customers; (iv) the
possibility of a decline in the value of Danaher Common Shares; and (v) the
risk that the potential benefits of the Merger might not be realized. The
Fluke Board concluded, however, that the benefits of the transaction to Fluke
and Fluke Stockholders outweighed the risks associated with the foregoing
factors.
The foregoing discussion of the information and factors considered by the
Fluke Board in connection with its evaluation of the Merger is not intended to
be exhaustive but is intended to include all of the material factors
considered by the directors. In view of the wide variety of factors considered
by the Fluke Board, the directors did not find it practical to, and did not,
quantify or otherwise assign relative weights to the specific factors
considered.
AT A SPECIAL MEETING OF THE FLUKE BOARD HELD ON APRIL 24, 1998, THE FLUKE
BOARD UNANIMOUSLY DETERMINED THAT THE MERGER IS FAIR TO AND IN THE BEST
INTERESTS OF FLUKE AND FLUKE STOCKHOLDERS, UNANIMOUSLY APPROVED THE MERGER,
AND UNANIMOUSLY RECOMMENDED APPROVAL OF THE MERGER AGREEMENT BY FLUKE
STOCKHOLDERS.
Danaher. The Danaher Board, in the course of reaching its decision to
approve the Merger Agreement and the transactions contemplated thereby,
considered a number of factors. Danaher's strategy has been to develop its
businesses both internally and through selective acquisitions. Key attributes
looked for in acquisition candidates include leading brands and market
positions, strong international presence, above average growth prospects, and
design, marketing and sales strengths that can be complemented by Danaher's
manufacturing capabilities.
Utilizing these characteristics, Fluke had been identified by Danaher as an
attractive company and potential acquisition candidate. Fluke has a leading
brand in its business segment and broad geographic coverage, as well as
distribution channels and products that complement a number of Danaher
businesses in the tools, environmental and telecommunication testing
industries. In addition, there exist opportunities to leverage manufacturing
and purchasing between the companies.
In addition to the factors set forth above, in the course of its
deliberations concerning the Merger, the Danaher Board consulted with
Danaher's legal and financial advisors as well as Danaher's management, and
reviewed a number of other factors relevant to the Merger, including (i)
reports from management and legal and financial advisors on specific terms of
the Merger Agreement and ancillary transaction agreements referred to in the
Merger Agreement; (ii) information concerning the financial performance,
business operations and prospects of Fluke, including among other things,
Fluke's recent and historical stock and earnings performance; (iii)
18
<PAGE>
Danaher's belief that the corporate cultures of the two companies would be
complementary; (iv) the expected tax and accounting treatment of the Merger;
(v) the fact that a fixed Exchange Ratio provided certainty as to the maximum
number of Danaher Common Shares which would be issued in the Merger, and the
maximum degree of dilution; and (vi) the fact that Danaher had received
commitments from certain key Fluke personnel to remain in the employ of the
Surviving Company.
The foregoing discussion of the factors considered by the Danaher Board is
not intended to be exhaustive. In view of the wide variety of factors
considered in connection with its evaluation of the Merger, the Danaher Board
did not find it practicable to, and did not, quantify or otherwise attempt to
assign relative weights to the specific factors considered in reaching its
determinations.
OPINION OF FLUKE'S FINANCIAL ADVISOR
Salomon Smith Barney was retained by Fluke to act as its financial advisor
in connection with the proposed Merger. In connection with such engagement,
Fluke requested that Salomon Smith Barney evaluate the fairness, from a
financial point of view, to holders of Fluke Common Stock of the consideration
to be received by such holders pursuant to the terms of the Merger Agreement.
On April 24, 1998, at a meeting of the Fluke Board held to evaluate the
Merger, Salomon Smith Barney delivered an oral opinion (subsequently confirmed
by delivery of a written opinion dated April 24, 1998) to the Fluke Board to
the effect that, as of the date of such opinion and based upon and subject to
certain matters stated therein, the consideration to be received by Fluke
Stockholders in the Merger was fair, from a financial point of view, to the
holders of Fluke Common Stock.
In arriving at its opinion, Salomon Smith Barney reviewed a draft of the
Merger Agreement and held discussions with certain senior officers, directors
and other representatives and advisors of Fluke and certain senior officers
and other representatives and advisors of Danaher concerning the businesses,
operations and prospects of Fluke and Danaher. Salomon Smith Barney examined
certain publicly available business and financial information relating to
Fluke and Danaher as well as certain financial forecasts for Fluke and other
information and data for Fluke and Danaher which were provided to or otherwise
discussed with Salomon Smith Barney by the respective managements of Fluke and
Danaher, including information relating to certain strategic implications and
operational benefits, if any, anticipated to result from the Merger. Salomon
Smith Barney reviewed the financial terms of the Merger as set forth in the
Merger Agreement in relation to, among other things: (i) current and
historical market prices and trading volumes of the Fluke Common Stock and
Danaher Common Stock; (ii) the historical and projected earnings and other
operating data of Fluke and Danaher; and (iii) the capitalization and
financial condition of Fluke and Danaher. Salomon Smith Barney also
considered, to the extent publicly available, the financial terms of certain
other similar transactions recently effected which Salomon Smith Barney
considered relevant in evaluating the Merger and analyzed certain financial,
stock market and other publicly available information relating to the
businesses of other companies whose operations Salomon Smith Barney considered
relevant in evaluating those of Fluke and Danaher. Salomon Smith Barney also
evaluated the potential pro forma financial impact of the Merger on Danaher.
In addition to the foregoing, Salomon Smith Barney conducted such other
analyses and examinations and considered such other financial, economic and
market criteria as Salomon Smith Barney deemed appropriate in arriving at its
opinion. Salomon Smith Barney noted that its opinion was necessarily based
upon information available, and financial, stock market and other conditions
and circumstances existing and disclosed to Salomon Smith Barney, as of the
date of its opinion.
In rendering its opinion, Salomon Smith Barney assumed and relied, without
independent verification, upon the accuracy and completeness of all financial
and other information and data publicly available or furnished to or otherwise
reviewed by or discussed with Salomon Smith Barney. Salomon Smith Barney also
assumed, with the consent of the Fluke Board, that the final terms of the
Merger Agreement reviewed by Salomon Smith Barney in draft form would not vary
materially from the draft reviewed by Salomon Smith Barney. With respect to
financial forecasts and other information and data furnished to or otherwise
reviewed by or discussed with Salomon Smith Barney, the management of Fluke
advised Salomon Smith Barney that such forecasts and other information and
data were reasonably prepared on bases reflecting the best currently available
estimates and
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judgment of the management of Fluke as to the future financial performance of
Fluke and Danaher and the strategic implications and operational benefits
(including the amount, timing and achievability thereof), if any, anticipated
to result from the Merger.
Salomon Smith Barney's opinion, as set forth therein, relates to the
relative values of Fluke and Danaher. Salomon Smith Barney did not express any
opinion as to what the value of the Danaher Common Stock actually will be when
issued pursuant to the Merger or the price at which the Danaher Common Stock
will trade subsequent to the consummation of the Merger. Salomon Smith Barney
did not make and was not provided with an independent evaluation or appraisal
of the assets or liabilities (contingent or otherwise) of Fluke or Danaher nor
did Salomon Smith Barney make any physical inspection of the properties or
assets of Fluke or Danaher. Salomon Smith Barney was not requested to and did
not approach third parties or hold discussions with third parties to solicit
indications of interest in the possible acquisition of Fluke. Salomon Smith
Barney was not requested to consider, and Salomon Smith Barney's opinion does
not address, the relative merits of the Merger as compared to any alternative
business strategies that might exist for Fluke or the effect of any other
transaction in which Fluke might engage. Although Salomon Smith Barney
evaluated the consideration to be received by Fluke Stockholders in the Merger
from a financial point of view, Salomon Smith Barney was not asked to and did
not recommend the specific consideration payable in the Merger, which was
determined through negotiation between Fluke and Danaher. No other limitations
were imposed by Fluke on Salomon Smith Barney with respect to the
investigations made or procedures followed by Salomon Smith Barney in
rendering its opinion.
THE FULL TEXT OF THE WRITTEN OPINION OF SALOMON SMITH BARNEY DATED APRIL 24,
1998, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED HERETO AS ANNEX B AND SHOULD
BE READ CAREFULLY IN ITS ENTIRETY. THE OPINION OF SALOMON SMITH BARNEY IS
DIRECTED TO THE BOARD OF DIRECTORS OF FLUKE AND RELATES ONLY TO THE FAIRNESS
OF THE CONSIDERATION TO BE RECEIVED BY FLUKE STOCKHOLDERS IN THE MERGER FROM A
FINANCIAL POINT OF VIEW, DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER OR
RELATED TRANSACTIONS AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY FLUKE
STOCKHOLDER AS TO HOW SUCH FLUKE STOCKHOLDER SHOULD VOTE AT THE FLUKE SPECIAL
MEETING. THE SUMMARY OF THE OPINION OF SALOMON SMITH BARNEY SET FORTH IN THIS
PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT OF SUCH OPINION.
In preparing its opinion to the Fluke Board, Salomon Smith Barney performed
a variety of financial and comparative analyses, including those described
below. The summary of such analyses does not purport to be a complete
description of the analyses underlying Salomon Smith Barney's opinion. The
preparation of a financial opinion is a complex analytic process involving
various determinations as to the most appropriate and relevant methods of
financial analyses and the application of those methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
summary description. Accordingly, Salomon Smith Barney believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and factors, without considering all analyses and factors, could
create a misleading or incomplete view of the processes underlying such
analyses and opinion. In its analyses, Salomon Smith Barney made numerous
assumptions with respect to Fluke, Danaher, industry performance, general
business, economic, market and financial conditions and other matters, many of
which are beyond the control of Fluke and Danaher. The estimates contained in
such analyses and the valuation ranges resulting from any particular analysis
are not necessarily indicative of actual values or predictive of future
results or values, which may be significantly more or less favorable than
those suggested by such analyses. In addition, analyses relating to the value
of businesses or securities do not purport to be appraisals or to reflect the
prices at which businesses or securities actually may be sold. Accordingly,
such analyses and estimates are inherently subject to substantial uncertainty.
Salomon Smith Barney's opinion and financial analyses were only one of many
factors considered by the Fluke Board in its evaluation of the Merger and
should not be viewed as determinative of the views of the Fluke Board or
management with respect to the consideration to be received by Fluke
Stockholders in the Merger or the proposed Merger.
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The following is a summary of the material financial analyses performed by
Salomon Smith Barney in connection with its opinion dated April 24, 1998:
Selected Company Analysis. Using publicly available information, Salomon
Smith Barney analyzed, among other things, the market values and trading
multiples of Fluke and the following selected publicly traded companies in the
electronic test tools industry, consisting of: (i) directly comparable
companies in the electronic test tool industry, consisting of: Teradyne, Inc.,
Tektronix, Inc., LeCroy Corp, IFR Systems, Inc., and Tollgrade Communications,
Inc. (collectively, the "Direct Companies"); (ii) micro capitalization
electronic test tool companies: Wireless Telecom Group, Inc., Keithley
Instruments, Wandel & Goltermann Technologies, Microtest and Giga-Tronics Inc.
(collectively, the "MicroCap Companies"); and (iii) indirectly comparable
companies that are primarily focused in other industries: Genrad, Inc.,
Hewlett Packard Co., Integrated Measurement Systems Inc. and National
Instruments Corp. (collectively, the "Indirect Companies", and together with
the Direct Companies and the MicroCap Companies, the "Selected Companies").
With respect to the Selected Companies, Salomon Smith Barney focused primarily
on the Direct Companies, which companies Salomon Smith Barney considered to be
most similar to Fluke. Salomon Smith Barney compared market values as a
multiple of, among other things, actual calendar year 1997 and estimated
calendar years 1998 and 1999 earnings per share ("EPS"), and adjusted market
values (market value, plus total debt, less cash, plus operating leases
capitalized at 12.5%) as multiples of among other things, latest 12 months
earnings before interest and taxes ("EBIT") and earnings before interest,
taxes, depreciation and amortization ("EBITDA"). Salomon Smith Barney also
compared the implied trading multiples for the combined company based on the
trading multiples of the Direct Companies. All multiples were based on closing
stock prices as of April 22, 1998. EPS estimates for the Selected Companies
were obtained from reports published by the First Call Corporation, and EPS
estimates for Fluke and Danaher were based on internal estimates of the
managements of Fluke and Danaher. Applying a range of multiples for the Direct
Companies of latest 12 months EBIT and EBITDA of 11.3x to 14.9x and 9.1x to
11.8x, respectively, to corresponding financial data of Fluke resulted in an
equity valuation range of $28.88 to $37.68 per share and $32.07 to $41.20 per
share of Fluke Common Stock, on a fully diluted basis, as compared to an
implied equity valuation of the consideration to be received by Fluke
Stockholders in the Merger of $34.58 based on the closing price of Danaher
Common Shares on April 22, 1998. Applying a range of multiples for the Direct
Companies of actual calendar year 1997 EPS of 16.7x to 24.2x to corresponding
financial data of Fluke resulted in an equity valuation range of $26.22 to
$37.99 per share of Fluke Common Stock, on a fully diluted basis, as compared
to an implied equity valuation of the consideration to be received by Fluke
Stockholders in the Merger of $34.58 based on the closing price of Danaher
Common Shares on April 22, 1998. Applying a range of multiples for the Direct
Companies of estimated calendar years 1998 and 1999 EPS of 14.5x to 18.4x and
11.9x to 14.8x, respectively, to corresponding financial data of Fluke
resulted in an average equity valuation range of $21.97 to $27.60 per share of
Fluke Common Stock, on a fully diluted basis, as compared to the implied
equity valuation of the consideration to be received by Fluke Stockholders in
the Merger of $34.58 based on the closing price of Danaher Common Shares on
April 22, 1998.
Selected Merger and Acquisition Transactions Analysis. Using publicly
available information, Salomon Smith Barney analyzed the purchase price and
implied transaction value multiples paid in the following selected
transactions in the electronic test tools industry, consisting of
(acquiror/target): WG Technologies, Inc./Wavetek Corp.; Aetrium Inc./WEB
Technology Inc.; Clayton, Dubilier & Rice et. al./Dynatech Corporation;
AMETEK/Chatillon and Lloyd (Technitrol); Fluke Corp./DeskNet Systems; KLA
Instruments Corporation/Tencor Instruments; Dynatech Corp./Itronix (Texlon)
Corp.; Fluke Corp ./Forte Networks; Teradyne Corp./Megatest Corporation;
Dynatech Corp/Tele-Path Industries; Tektronix Inc./Microwave Logic; GN Great
Nordic Ltd./Laser Precision Corp.; Snap-on Tools Corporation/Sun Electronic
Corporation; and Torrey Investments Inc./Wavetek Corp. (collectively, the
"Selected Transactions"). Salomon Smith Barney compared purchase prices in the
Selected Transactions as a multiple of, among other things, latest 12 months
net income, and transaction values as multiples of, among other things, latest
12 months EBIT and EBITDA. All multiples for the Selected Transactions were
based on information available at the time of announcement of the transaction.
Applying the range of multiples for the Selected Transactions of latest 12
months net income, EBIT and EBITDA of 20.1x to 22.5x, 11.4x to 17.4x and 9.8x
to 11.9x, respectively, to corresponding financial data for Fluke resulted in
an average valuation range of $31.71 to $40.22 per share of Fluke Common
Stock, on a fully diluted
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basis, as compared to the implied equity valuation of the consideration to be
received by Fluke Stockholders in the Merger of $34.58 based on the closing
price of Danaher Common Shares on April 22, 1998.
No company, transaction or business used in the "Selected Company Analysis"
or "Selected Merger and Acquisition Transactions Analysis" as a comparison is
identical to Fluke, Danaher or the Merger. Accordingly, an analysis of the
results of the foregoing is not entirely mathematical; rather, it involves
complex considerations and judgments concerning differences in financial and
operating characteristics and other factors that could affect the acquisition,
public trading or other values of the Selected Companies, Selected
Transactions or the business segment, company or transaction to which they are
being compared.
Contribution Analysis. Salomon Smith Barney analyzed the respective
contributions of Fluke and Danaher to, among other things, the revenues, EBIT,
EBITDA and net income of the combined company for the latest 12 months ended
December 31, 1997 for Danaher and January 23, 1998 for Fluke and the estimated
revenues, EBIT, EBITDA and net income of the combined company for calendar
year 1998, based on internal estimates of the managements of Fluke and
Danaher. This analysis indicated that (i) for the latest 12 months ended
December 31, 1997 for Danaher and January 23, 1998 for Fluke, Fluke would have
contributed approximately 17.2% of revenues, 15.4% of EBITDA, 14.4% of EBIT
and 15.7% of net income, and Danaher would have contributed approximately
82.8% of revenues, 84.6% of EBITDA, 85.6% of EBIT and 84.3% of net income; and
(ii) in the estimated calendar year 1998, Fluke would have contributed
approximately 15.9% of revenues, 14.7% of EBITDA, 12.6% of EBIT and 14.4% of
net income, and Danaher would have contributed approximately 84.1% of
revenues, 85.3% of EBITDA, 87.4% of EBIT and 85.6% of net income, of the
combined company. Based on the consideration to be received by Fluke
Stockholders in the Merger, current stockholders of Fluke and Danaher would
own approximately 12.7% and 87.3%, respectively, of the equity value of the
combined company upon consummation of the Merger, on a fully diluted basis,
and Fluke and Danaher would constitute approximately 11.1% and 88.9%,
respectively, of the enterprise value of the combined company, on a fully
diluted basis.
Discounted Cash Flow Analysis. Salomon Smith Barney performed a discounted
cash flow analysis of the projected free cash flows of Fluke for fiscal years
ended April 30, 1999 through 2003, based on internal estimates of the
management of Fluke. The stand-alone discounted cash flow analyses of Fluke
were determined by (i) adding (x) the present value of the projected free cash
flows of Fluke over the five-year period from 1999 to 2003 and (y) the present
value of the estimated terminal value of Fluke in year 2003 and (ii)
subtracting the current net debt of Fluke. The range of estimated terminal
value for Fluke at the end of the five-year period was calculated by applying
terminal value multiples of 7.0x to 9.0x to the projected 2003 EBITDA of
Fluke. The cash flows and terminal value of Fluke were discounted to present
value using discount rates ranging from 13.0% to 15.0%. Utilizing such
terminal multiples and discount rates, this analysis resulted in an equity
reference range for Fluke of approximately $23.43 to $30.88 per share of Fluke
Common Stock, as compared to the implied equity valuation of the consideration
to be received by Fluke Stockholders in the Merger of $34.58 based on the
closing price of Danaher Common Shares on April 22, 1998.
Pro Forma Merger Analysis. Salomon Smith Barney analyzed certain pro forma
effects resulting from the Merger, including, among other things, the impact
of the Merger on the projected EPS of Fluke for the calendar year 1998, based
on internal estimates of the managements of Fluke. The results of the pro
forma merger analysis suggested that the Merger would be accretive to the
fully diluted EPS of Fluke and Danaher in calendar year 1998, both before and
after giving effect to cost savings and other potential synergies, if any,
anticipated by the management of Fluke to result from the Merger. The actual
results achieved by the combined company may vary from projected results and
the variations may be material.
Other Factors and Comparative Analyses. In rendering its opinion, Salomon
Smith Barney considered certain other factors and conducted certain other
comparative analyses, including, among other things, a review of (i)
historical and projected financial results of Fluke and Danaher; (ii) the
history of trading prices and volume for Fluke Common Stock and the
relationship between movements in Fluke Common Stock and movements in the
NASDAQ Composite Index; (iii) selected published analysts' reports on Fluke,
including analysts' estimates as to the earnings growth potential of Fluke;
and (iv) premiums paid in selected stock-for-stock transactions in the
electronic test tool industry.
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Pursuant to the terms of Salomon Smith Barney's engagement, Fluke has agreed
to pay Salomon Smith Barney for its services in connection with the Merger an
aggregate financial advisory fee based on a percentage of the aggregate
transaction value of the Merger. The fee payable to Salomon Smith Barney is
currently estimated to be approximately $4,500,000. Fluke has also agreed to
reimburse Salomon Smith Barney for travel and other out-of-pocket expenses
incurred by Salomon Smith Barney in performing its services, including the
fees and expenses of its legal counsel, and to indemnify Salomon Smith Barney
and related persons against certain liabilities, including liabilities under
the federal securities laws, arising out of Salomon Smith Barney's engagement.
Salomon Smith Barney will receive greater compensation in the event that the
Merger is completed than if it is not. Salomon Smith Barney has advised Fluke
that, in the ordinary course of business, Salomon Smith Barney and its
affiliates may actively trade or hold the securities of Fluke for their own
account or for the account of customers and, accordingly, may at any time hold
a long or short position in such securities.
Salomon Smith Barney has in the past provided investment banking services to
Fluke and Danaher unrelated to the Merger, for which services Salomon Smith
Barney has received compensation. In addition, Salomon Smith Barney and its
affiliates (including Travelers Group Inc. and its affiliates) may maintain
relationships with Fluke and Danaher. Salomon Smith Barney as an
internationally recognized investment banking firm and was selected by Fluke
based on its experience, expertise and familiarity with Fluke and its
business. Salomon Smith Barney regularly engages in the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, competitive bids, secondary distributions of listed
and unlisted securities, private placements and valuations for estate,
corporate and other purposes.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Fluke Board with respect to the
Merger Agreement, Fluke Stockholders should be aware that certain officers and
directors of Fluke (or their affiliates) have interests in the Merger that are
different from and in addition to the interests of Fluke Stockholders
generally. The Fluke Board was aware of these interests and took these
interests into account in approving the Merger Agreement and the transactions
contemplated thereby.
Fluke Options. Fluke and Danaher shall take all necessary action to provide
that, at the Effective Time, all Stock Options under any 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 Danaher Common Shares equal to (i) the Fair Value of such Stock Option
divided by (ii) the Closing Danaher Stock Price, where: the "Fair Value of
such Stock Option" is equal to the product of (x) the number of shares of
Fluke Common Stock subject to such Stock Option and (y) the excess, if any, of
(A) the product of the Exchange Ratio and the Closing Danaher Stock Price over
(B) the exercise price of such Stock Option; and the "Closing Danaher Stock
Price" means the average of the daily last sale prices of Danaher Common
Shares 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.
As of the Record Date, 2,792,263 shares of Fluke Common Stock were issuable
upon the exercise of outstanding Fluke Options, which options, assuming an
Exchange Ratio of 0.90478 (and assuming a Closing Danaher Stock Price of $35
15/16, the closing price of Danaher Common Stock on the NYSE on June 5, 1998),
will be converted to become approximately 1,162,788 Danaher Common Shares in
the aggregate. All of the executive officers and all of the current non-
employee directors of Fluke currently hold Fluke Options which will become
Danaher Common Shares.
Benefit Plans and Employee Matters. In the Merger Agreement, Danaher agreed
that it will cause the Surviving Corporation to honor, in accordance with
their respective terms as in effect on the date hereof, certain employment,
severance and bonus agreements and arrangements to which Fluke is a party.
Danaher 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.
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Danaher also agreed 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 Fluke to the extent practicable as in effect on
the date hereof, and (ii) thereafter the Surviving Corporation shall provide
employees of Fluke 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 Danaher.
Amendments to Retention Agreements. In connection with the Merger Agreement,
employment agreements and change of control agreements between Fluke and
certain of its employees were amended. See "Amendments to Retention
Agreements."
Indemnification; Insurance. In the Merger Agreement, Danaher has agreed
that, from and after the Effective Time, it will cause the Surviving
Corporation in the Merger to indemnify and hold harmless (including providing
adequate funding), pursuant to the procedures set forth in the Merger
Agreement, the present and former officers and directors of Fluke in respect
of acts or omissions occurring prior to the Effective Time to the fullest
extent provided under the Fluke Articles and Fluke Bylaws in effect on the
date of the Merger Agreement. Danaher has also agreed to use its reasonable
efforts to cause the Surviving Corporation in the Merger to maintain in effect
for not less than three years after the Effective Time the current policies of
directors' and officers' liability insurance maintained by Fluke with respect
to matters occurring prior to the Effective Time; provided, however, that (i)
the Surviving Corporation may substitute therefor policies of at least the
same coverage containing terms and conditions which are no less advantageous
to the covered officers and directors and (ii) the Surviving Corporation will
not be required to pay an annual premium for such insurance in excess of two
times the last annual premium paid prior to the date hereof, but in such case
will purchase as much coverage as possible for such amount.
ACCOUNTING TREATMENT
The Merger is intended to qualify as a pooling-of-interests for accounting
and financial reporting purposes. Consummation of the Merger is conditioned on
Danaher's receipt of a letter, in form and substance reasonably satisfactory
to Danaher, from Arthur Andersen LLP, independent auditors of Danaher,
confirming its letter dated the date of this Proxy Statement/Prospectus to the
effect that the Merger will qualify as a pooling-of-interests for accounting
and financial reporting purposes. The Merger Agreement provides that this
condition may not be waived by Danaher without Fluke'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 the holders of Fluke Common Stock in the Merger; and provided,
further, that such consent shall not be required if the failure to satisfy the
condition set forth in the preceding sentence resulted from any act or
omission of Fluke. Under the pooling-of-interests method of accounting, the
recorded assets and liabilities of Danaher and Fluke will be carried forward
to the combined company at their historical recorded amounts, income of the
combined company will include income of Fluke and Danaher for the entire
fiscal year in which the combination occurs, and the reported income of the
separate companies for previous periods will be combined and restated as
income of the combined company. See "The Merger Agreement--Closing Conditions"
and "Unaudited Pro Forma Combined Financial Information."
It is a condition to the Merger that Fluke obtain written undertakings by
the thirtieth day prior to the Effective Time from each person who may be an
"affiliate" of Fluke for purposes of Rule 145 under the Securities Act to the
effect that, among other things, such person will not sell, transfer or
otherwise dispose of, or direct or cause the sale, transfer or other
disposition of, any shares of Fluke Common Stock or Danaher Common Shares or
Stock Options during the 30 days prior to the Effective Time and will not
sell, transfer or otherwise dispose of, or direct or cause the sale, transfer
or other disposition of, any Danaher Common Shares received in or as a result
of the Merger or otherwise until after such time as Danaher shall have
publicly released a report in the form of a quarterly earnings report,
registration statement filed with the Commission, a report
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filed with the Commission or any other public filing, statement or
announcement which includes the combined financial results of Danaher and
Fluke for a period of at least 30 days of combined operations of Danaher and
Fluke following the Effective Time. See "The Merger Agreement--Closing
Conditions."
REGULATORY APPROVALS
Under the HSR Act and the rules that have been promulgated thereunder by the
Federal Trade Commission (the "FTC"), the Merger may not be consummated unless
certain information has been furnished to the Antitrust Division of the United
States Department of Justice (the "Antitrust Division") and the FTC and
certain waiting period requirements have been satisfied. On May 12, 1998,
Danaher and Fluke furnished to the FTC and the Antitrust Division certain
required information and documentary material with respect to the Merger. On
June 3, 1998, Danaher and Fluke were notified that the waiting period
requirements under the HSR Act had been satisfied.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Merger. At any time before or
after the consummation of the Merger, the Antitrust Division or the FTC could
take such action under the antitrust laws as it deems necessary or desirable
in the public interest, including seeking to enjoin the consummation of the
Merger or seeking the divestiture of substantial assets of Fluke or Danaher.
Fluke and Danaher believe that the consummation of the Merger will not violate
the antitrust laws. There can be no assurance, however, that a challenge to
the Merger on antitrust grounds will not be made, or, if such a challenge is
made, what the result will be.
Because of the international scope of Fluke's business, regulatory filings
may also be required in certain European and other jurisdictions. Danaher and
Fluke are in the process of determining what, if any, such filings will be
required, but do not expect any such filings to affect the expected timing of
the transaction.
Other than as described herein, the Merger does not require the approval of
any Federal or state or other agency.
FEDERAL SECURITIES LAW CONSEQUENCES
All Danaher Common Shares issued in connection with the Merger will be
freely transferable, except that any Danaher Common Shares received by persons
who are deemed to be "affiliates" (as such term is defined under the
Securities Act) of Danaher or Fluke prior to the Merger may be sold by them
only in transactions permitted by the resale provisions of Rule 145 under the
Securities Act with respect to affiliates of Danaher or Fluke, or Rule 144
under the Securities Act with respect to persons who are or become affiliates
of Danaher, or as otherwise permitted under the Securities Act. Persons who
may be deemed to be affiliates of Danaher or Fluke generally include
individuals or entities that control, are controlled by or are under common
control with, such person and generally include the executive officers and
directors of such person as well as principal stockholders of such person.
Affiliates may not sell their Danaher Common Shares acquired in connection
with the Merger, except pursuant to an effective registration under the
Securities Act covering such shares or in compliance with Rule 145 under the
Securities Act (or Rule 144 under the Securities Act in the case of persons
who become affiliates of Danaher) or another applicable exemption from the
registration requirements of the Securities Act. In general, Rule 145 under
the Securities Act provides that for one year following the Effective Time an
affiliate (together with certain related persons) would be entitled to sell
Danaher Common Shares acquired in connection with the Merger only through
unsolicited "broker transactions" or in transactions directly with a "market
maker," as such terms are defined in Rule 144. Additionally, the number of
shares to be sold by an affiliate (together with certain related persons and
certain persons acting in concert) within any three-month period for purposes
of Rule 145 under the Securities Act may not exceed the greater of 1% of the
outstanding Danaher Common Shares or the average weekly trading volume of such
shares during the four calendar weeks preceding such sale. Rule 145 under the
Securities Act will remain available to affiliates if Danaher remains current
with its informational
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filings with the Commission under the Exchange Act. One year after the
Effective Time, an affiliate of Fluke will be able to sell such Danaher Common
Shares without being subject to such manner of sale or volume limitations
provided that Danaher is current with its Exchange Act informational filings
and such affiliate is not then an affiliate of Danaher. Two years after the
Effective Time, an affiliate will be able to sell such Danaher Common Shares
without any restrictions so long as such affiliate had not been an affiliate
of Danaher for at least three months prior to the date.
Commission guidelines regarding qualifying for the "pooling-of-interests"
method of accounting also limit sales of shares of the acquiring and acquired
company by affiliates of either company in a business combination. Commission
guidelines also indicate that the "pooling-of-interests" method of accounting
generally will not be challenged on the basis of sales by affiliates of the
acquiring or acquired company if such affiliates do not dispose of any of the
shares of the corporation they own, or shares of a corporation they receive in
connection with a merger, during the period beginning 30 days before the
merger is consummated and ending when financial results covering at least 30
days of post-merger operations of the combined companies have been published.
See "The Merger--Accounting Treatment."
STOCK OPTION AGREEMENT
In connection with the execution of the Merger Agreement, Danaher and Fluke
entered into the Stock Option Agreement pursuant to which Fluke has issued
Danaher an Option to purchase up to 3,636,874 shares of Fluke Common Stock (or
19.9% of the outstanding shares of Fluke Common Stock as of the Record Date,
without including any shares subject to or issued pursuant to the Option) at
an exercise price of $34.00 per share. Danaher may exercise the Option, in
whole or in part, at any time or from time to time within 180 days following
the occurrence of certain "Triggering Events" which are described below. To
the knowledge of Fluke and Danaher, no Triggering Event has occurred as of the
date of this Proxy Statement/Prospectus.
The Option terminates upon the earliest to occur of (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 Danaher upon any breach by Fluke
of any representation, warranty, covenant or agreement set forth in the Merger
Agreement (if the breach by Fluke giving rise to such right of termination is
willful) or (C) such termination is by Fluke upon receipt of a Superior
Proposal (as hereinafter defined); 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 Danaher under
circumstances described in clause (ii)(B) above or (C) such termination is by
Fluke under circumstances described in clause (ii)(C) above.
Under the Stock Option Agreement, a "Triggering Event" is defined as any
event or transaction entitling Danaher to terminate the Merger Agreement if
(i) the Fluke Board shall withdraw, modify or change its recommendation of the
Merger or shall recommend a Takeover Proposal (as hereinafter defined) to
Fluke Stockholders or (ii) any person or group shall have acquired 10% or more
of the outstanding Fluke Common Stock; 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
Fluke shall have refused or failed to deliver to Danaher upon request a
binding commitment reasonably satisfactory in form and substance to Danaher 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.
Immediately prior to the occurrence of a Repurchase Event (as defined in the
Stock Option Agreement), (i) following a request of Danaher, delivered prior
to an Exercise Termination Event (as defined in the Stock Option Agreement),
Fluke (or any successor thereto) shall repurchase the Option from Danaher 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 and (ii)
at the request of the owner of Option Shares from time to time (the "Owner"),
delivered within 90 days of such
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occurrence (or such later period as provided in the Stock Option Agreement),
Fluke 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 (as hereinafter defined) 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 Fluke Common Stock at which a tender
offer or exchange offer therefor has been made, (ii) the price per share of
Fluke Common Stock to be paid by any third party pursuant to an agreement with
Fluke, (iii) the highest closing price for shares of Fluke Common Stock within
the six-month period immediately preceding the date Danaher 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 Fluke's assets, the sum of the
price paid in such sale for such assets and the current market value of the
remaining assets of Fluke as determined by a nationally recognized investment
banking firm selected by Danaher or the Owner, as the case may be, and
reasonably acceptable to Fluke, divided by the number of shares of Fluke
Common Stock outstanding at the time of such sale; provided, however, that if
and to the extent the operation of this provision would require a shareholder
vote pursuant to the "anti-greenmail" provisions set forth in Article V of the
Fluke Articles, the Market/Offer Price shall be no higher than the Market
Price (as defined in the Fluke Articles).
Notwithstanding the foregoing, Danaher has agreed in the Merger Agreement
and in the Stock Option Agreement that the sum of the Termination Fee, the
Expense Fee and the value of the Option (measured by the Option Repurchase
Price) shall not exceed $20 million, and if such amounts would be payable,
Danaher shall determine the allocation among the Termination Fee, Expense Fee
and the Option.
Pursuant to the Stock Option Agreement, at any time after a Purchase Event
(as defined therein), Fluke will be obligated, under certain circumstances, to
file a registration statement under the Securities Act if necessary in order
to permit the sale or other disposition of the shares of Fluke Common Stock
that have been acquired upon exercise of the Option. Fluke is not required to
file more than two such registration statements under the Stock Option
Agreement.
The foregoing is a summary of the material provisions of the Stock Option
Agreement, a copy of which is included as an exhibit to the Registration
Statement of which this Proxy Statement/Prospectus forms a part. See
"Available Information." This summary is qualified in its entirety by
reference to the Stock Option Agreement which is incorporated herein by this
reference.
STOCKHOLDERS SUPPORT AGREEMENTS
Concurrently with the execution of the Merger Agreement, Danaher and each
Supporting Stockholder executed Stockholders Support Agreements pursuant to
which each Supporting Stockholder agreed that, among other things, such
Supporting Stockholder (i) will not, and will not permit any company, trust or
other entity controlled by such Supporting Stockholder to, contract to sell,
sell or otherwise transfer or dispose of any of the shares of the capital
stock of Fluke of which such Supporting Stockholder is the record or
beneficial owner ("Supporting Stockholder Shares") or any interest therein or
securities convertible thereinto or any voting rights with respect thereto,
other than (x) pursuant to the Merger or (y) with Danaher's prior written
consent, (ii) will not, and will not permit any such company, trust or other
entity to, directly or indirectly (including through its officers, directors,
employees, or other representatives), solicit, initiate, encourage or
facilitate, or furnish or disclose non-public information in furtherance of,
any inquiries or the making of any proposal with respect to any Competing
Transaction, or negotiate, explore or otherwise engage in discussions with any
person (other than Danaher, Sub or their respective directors, officers,
employees, agents and representatives) with respect to any Competing
Transaction or enter into any agreement, arrangement, or understanding with
respect to any Competing Transaction or agree to or otherwise assist in the
effectuation of any Competing Transaction; provided, however, that nothing in
any Stockholders Support Agreement prevents any Supporting Stockholder from
taking any action or omitting to take any action as a member of the Fluke
Board to the extent permitted by the Merger Agreement (as described below
under the caption "The Merger Agreement--Amendment; Termination; Expenses"),
and (iii) will vote all of such Supporting Stockholder Shares beneficially
owned by such Supporting Stockholder, or over which such Supporting
Stockholder has voting power or control, directly
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or indirectly (including any Fluke Common Stock acquired after the date of the
Stockholders Support Agreement), at the record date for any meeting of
stockholders of Fluke called to consider and vote to approve the Merger and
the Merger Agreement and/or the transactions contemplated thereby in favor
thereof and such Supporting Stockholder will not vote such Supporting
Stockholder Shares in favor of any Competing Transaction. In the event the
Merger Agreement is terminated in accordance with its terms, the Stockholders
Support Agreements shall automatically terminate and be of no further force or
effect; provided, however, that if the Merger Agreement is terminated under
circumstances in which the Termination Fee shall be payable under the Merger
Agreement, then the Stockholders Support Agreements shall only terminate upon
the payment in full by Fluke of all amounts payable pursuant to the Merger
Agreement. 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 under such
agreements.
Each Supporting Stockholder and the number of shares of Fluke Common Stock
beneficially owned (excluding shares which may be acquired upon the exercise
of options) by such Supporting Stockholder or over which such Supporting
Stockholder has voting control are as follows: Fluke Capital and Management
Services Company ("FCMS") (1,862,792 shares); David Fluke (1,989,508 shares
(including shares held through FCMS)); John Fluke, Jr. (1,957,146 shares
(including shares held through FCMS)); William Parzybok (22,173 shares); David
Katri (14,846 shares); Elizabeth Huebner (4,135 shares); Douglas McKnight (10,
540 shares); and George Winn (5,696 shares).
FCMS, David Fluke and John Fluke, Jr., in their Stockholders Support
Agreement with Danaher agreed, among other things and subject to certain
limited exceptions that they each will not, for three years from the Effective
Time, carry on or participate in the design, manufacture or marketing of
electronic test tools (the "Company Business") in competition with the
Surviving Company in any country in which the Surviving Company operates. Each
of the aforementioned Supporting Stockholders also agrees, for a period of
five years from the Effective Time, not to lend or allow his name or
reputation to be used in or to promote any Company Business, other than for
the benefit of Danaher and its affiliates (including the Surviving Company),
or solicit, divert or attempt to divert from Danaher and its affiliates any
business constituting, or any customer of, or any supplier of, any part of the
Surviving Company Business then conducted by the Surviving Company, Danaher or
any of their affiliates.
The Stockholders Support Agreement by and among Danaher and William
Parzybok, David Katri, Elizabeth Huebner, Douglas McKnight and George Winn
includes restrictions similar in scope to those described in the preceding
paragraph, which survive for three years after the Effective Time.
The foregoing is a summary of the material provisions of the Stockholders
Support Agreements, which are filed as exhibits to the Registration Statement
of which this Proxy Statement/Prospectus forms a part. See "Available
Information." This summary is qualified in its entirety by reference to the
full texts of the Stockholders Support Agreements.
AMENDMENTS TO RETENTION AGREEMENTS
In connection with the Merger Agreement, the Employment Agreement dated
December 12, 1995 between Fluke and William Parzybok (the "Parzybok Employment
Agreement") and the Employment Agreement dated December 12, 1995 between Fluke
and Richard Van Saun (the "Van Saun Employment Agreement") were amended and
restated. The Parzybok and Van Saun Employment Agreements provide for the
payment of certain severance benefits upon a change of control of Fluke and
although these Agreements contained non-competition provisions, such
provisions did not apply following a change of control.
As a condition of Danaher entering into the Merger Agreement, Fluke and
Messrs. Parzybok and Van Saun amended and restated the Parzybok Employment
Agreement and the Van Saun Employment Agreement, respectively, to (i)
eliminate their option to elect to receive a lump sum cash payment for certain
Fluke stock
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options held by them upon a change of control and (ii) provide that the non-
competition provisions in the Employment Agreements will continue following
the acquisition of Fluke by Danaher.
Under the terms of the Parzybok Employment Agreement, if Mr. Parzybok leaves
after a change of control, Fluke must pay, for the remaining term of the
contract (minimum of one year), severance equal to the average annual cash
compensation for the three complete fiscal years prior to the date of
termination, and certain other compensation unreduced by any compensation from
other employment. If, as is expected, Mr. Parzybok leaves Fluke on or around
July 10, 1998, the following maximum severance benefits would be payable: cash
compensation, $2,044,000; estimated variable compensation, $57,000;
contribution to the supplemental retirement program, $95,000; payments in lieu
of continued accruals and contributions to the defined benefit and defined
contribution plans, $38,000; immediate exercisability of all stock options for
the term of the agreement, and the continuation of medical and life insurance
benefits for the term of the agreement. If the total amounts payable to Mr.
Parzybok under his employment agreement, together with all other payments to
which he is entitled, would constitute an excess parachute payment as defined
in Section 280G of the Code, he will receive the larger of (i) the sum of such
payments reduced to the largest amount that may be paid without any portion of
such amount being subject to the excise tax imposed by Section 4999 of the
Code and (ii) the sum of such payments net of the excise tax (in both cases
after adjustment for normal income taxes).
In addition, the Van Saun Employment Agreement was further amended to
provide that the term of Mr. Van Saun's employment by Fluke would continue for
a period of at least one year following the Effective Time of the Merger and
that he would provide Fluke a minimum of six months' prior written notice of
his intention to terminate his employment with Fluke. If Mr. Van Saun
terminates his employment with Fluke prior to one year following the Closing
Date or without providing six months notice, Fluke shall not be liable to him
for any severance payments otherwise due Mr. Van Saun under the Van Saun
Employment Agreement.
Fluke and David Katri amended the Change of Control Agreement dated December
11, 1996 between Fluke and David Katri (the "Katri Change of Control
Agreement") to provide that Fluke's becoming a subsidiary of Danaher would not
constitute a material reduction in the level or nature of his status, title,
position, authority or responsibility as an officer of Fluke. Mr. Katri waived
any right to terminate his employment with Fluke because of the change of
control of Fluke contemplated by the Merger Agreement. Mr. Katri also agreed
not to compete with Fluke for a three year period following termination of his
employment with Fluke.
The Katri Change of Control Agreement will remain in effect until the second
anniversary of the Closing Date and at that time, a Separation Agreement
entered into among Danaher, Fluke and Mr. Katri (the "Separation Agreement")
will become effective. Under the Separation Agreement, if Mr. Katri is
terminated by Fluke without cause or if he terminates his employment for good
reason, he has the right to payment of two years' severance compensation by
Fluke.
Fluke is a party to change of control agreements with certain executive
officers, including, among others Elizabeth Huebner, Vice President, Chief
Financial Officer and Douglas McKnight, Vice President, General Counsel and
Corporate Secretary. Under the terms of these agreements, if an officer
terminates his or her employment for good reason based upon a material
reduction in the level or nature of the employee's status, title, position,
authority or responsibility as an officer of Fluke, as in effect immediately
prior to the change of control, then certain compensation and other benefits
will be paid. If, as is expected, Ms. Huebner and Mr. McKnight leave Fluke on
or around July 10, 1998, severance benefits would consist of full base salary
for the minimum 90 day period between the notice of termination and the
termination date, two years of annual cash compensation, an annual
contribution to the supplemental retirement program, and immediate
exercisability of all stock options. The maximum severance benefits payable to
Ms. Huebner and Mr. McKnight would be $562,000 and $513,000, respectively. No
other Fluke employee that is party to a change of control agreement with Fluke
is expected to terminate employment in connection with this transaction. These
change of control agreements provide that for a three year period following
the Closing Date, Ms. Huebner and Mr. McKnight will not compete with Fluke.
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MANAGEMENT AND OPERATIONS AFTER THE MERGER
After the Merger, the Surviving Company will be a wholly owned subsidiary of
Danaher. Danaher currently intends to retain all of Fluke's facilities and they
will continue to operate as they have in the past. Danaher also intends to
continue certain Fluke benefits plans. See "--Interests of Certain Persons in
the Merger--Fluke Options" and "--Interests of Certain Persons in the Merger--
Benefit Plans and Employee Matters."
It is currently contemplated that, while certain Fluke executives and
employees will retire following the Merger, most of Fluke's chief operating
personnel are expected to remain with the Surviving Company.
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THE MERGER AGREEMENT
The description of the Merger Agreement set forth below does not purport to
be complete and is qualified in its entirety by reference to the Merger
Agreement, a copy of which is attached as Annex A to this Proxy
Statement/Prospectus and incorporated by reference herein.
TERMS OF THE MERGER
The Merger. Subject to the terms and conditions of the Merger Agreement, Sub
will merge with and into Fluke at the Effective Time. Fluke will continue as
the Surviving Corporation. The separate corporate existence of Sub will then
cease, and the internal corporate affairs of the Surviving Corporation will
continue to be governed by the laws of the State of Washington.
Effective Time. Subject to the provisions of the Merger Agreement, as soon
as practicable after the satisfaction or waiver, if applicable, of the
conditions to the Merger, 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 Washington Business Corporation
Act ("WBCA") and shall make all other filings or recordings required under the
WBCA. 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 Fluke 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").
Certificate of Incorporation and By-Laws. The Merger Agreement provides that
the certificate of incorporation of Sub as in effect immediately prior to the
Effective Time will become 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"). The by-laws of Sub in effect at the Effective Time
will become the by-laws of the Surviving Corporation.
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.
Officers. The officers of Fluke 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.
EFFECT ON CAPITAL STOCK
Conversion of Fluke Common Stock in the Merger. At the Effective Time, by
virtue of the Merger and without any action on the part of Danaher, Sub,
Fluke, or the holders of any shares of Fluke Common Stock or any shares of
capital stock of Sub: (i) 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; and (ii) each share of Fluke Common Stock that is
owned by Fluke or by any subsidiary of Fluke and each share of Fluke Common
Stock that is owned by Danaher, Sub or any other subsidiary of Danaher
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.
Each share of Fluke Common Stock issued and outstanding as of the Effective
Time, other than Dissenting Shares, shall be converted into the right to
receive 0.90478 of a Danaher Common Share (subject to increase under certain
circumstances, as described under "--Amendment; Termination; Expenses"). If,
prior to the Effective Time, Danaher should split or combine Danaher Common
Shares, or pay a stock dividend or other stock distribution in Danaher Common
Shares, then the Exchange Ratio will be appropriately adjusted to reflect such
split, combination, dividend or other distribution.
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As of the Effective Time, all such shares of Fluke 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 Danaher Common Shares into which such Fluke Common Stock was
converted in the Merger. The holders of such certificates previously
evidencing such shares of Fluke Common Stock and outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to such
shares of Fluke Common Stock as of the Effective Time except as otherwise
provided in the Merger Agreement or by law. Such certificates previously
representing shares of Fluke Common Stock shall be exchanged for certificates
representing whole Danaher Common Shares issued in consideration therefor upon
the surrender of such certificates in accordance with the provisions of
"Exchange of Certificates," without interest. No fractional Danaher Common
Share shall be issued, and in lieu thereof a cash payment shall be made. See
"No Fractional Shares."
Exchange of Certificates. Prior to the Effective Time, Danaher shall enter
into an agreement with SunTrust Bank, Atlanta as Exchange Agent, and as
contemplated by such agreement, Danaher shall deposit, or shall cause to be
deposited, with the Exchange Agent as of the Effective Time for the benefit of
the holders of shares of Fluke Common Stock, for exchange through the Exchange
Agent, certificates representing the Danaher Common Shares issuable pursuant
to the terms of the Merger Agreement described in "Effect on Capital Stock" in
exchange for outstanding shares of Fluke Common Stock (such certificates
representing Danaher Common Shares, 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 Danaher Common Shares contemplated to be issued
pursuant to the terms of the Merger Agreement described in "Effect on Capital
Stock" out of the Exchange Fund. Except as contemplated by the terms of the
Merger Agreement described in "No Fractional Shares," the Exchange Fund shall
not be used for any other purpose.
As soon as reasonably practicable after the Effective Time, Danaher 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 Fluke Common Stock (the "Certificates"), (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 Danaher Common Shares. Until
surrendered as contemplated by the terms of the Merger Agreement, 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
Danaher Common Shares, cash in lieu of any fractional Danaher Common Shares to
which such holder is entitled and any dividends or other distributions to
which such holder is entitled pursuant to the terms of the Merger Agreement.
No interest will be paid or will accrue on any cash payable pursuant to the
provisions of the Merger Agreement concerning unexchanged shares and
fractional shares.
No dividends or other distributions declared or made after the Effective
Time with respect to Danaher Common Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the Danaher Common Shares represented thereby, and no cash
payment in lieu of fractional shares shall be paid to any such holder, in each
case until the surrender of such Certificate in accordance with the terms of
the Merger Agreement.
All Danaher Common Shares issued upon the surrender for exchange of
Certificates in accordance with the terms of the Merger Agreement shall be
deemed to have been issued (and paid) in full satisfaction of all rights
pertaining to the shares of Fluke 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 Fluke on such
shares of Fluke Common Stock in accordance with the terms of the Merger
Agreement or prior to the date of the Merger 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 Fluke shall be closed, and there
shall be no further registration of transfers of shares of Fluke Common Stock
thereafter on the records of Fluke.
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No Fractional Shares. No certificates or scrip representing fractional
Danaher Common Shares 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 Danaher Stockholder. Following the
Effective Time, Danaher shall instruct the Exchange Agent to determine the
excess of (x) the number of full Danaher Common Shares delivered to the
Exchange Agent by Danaher over (y) the aggregate number of Danaher Common
Shares to be distributed to holders of Certificates (such excess being 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 NYSE. 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 Exchange Agent shall determine the portion of
such amount to which each holder of one or more Certificates shall be
entitled, if any, and shall promptly pay such amounts to such holders of
Certificates subject to and in accordance with the terms of the Merger
Agreement.
Dissenting Stockholders. Notwithstanding anything in the Merger Agreement to
the contrary, shares of Fluke 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 the Merger Agreement, who are
entitled to demand the fair value of such shares of Fluke Common Stock under
Sections 13.010 through 13.310 of the WBCA, 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 Danaher Common
Shares (unless and until such holders shall have failed to perfect or shall
have effectively withdrawn or lost their dissenters' rights under the WBCA),
but shall instead be entitled to all applicable dissenters' rights as are
prescribed by the WBCA. If any such holder shall have failed to perfect or
shall have effectively withdrawn or lost such dissenters' rights, such
holder's shares of Fluke Common Stock shall thereupon be converted into and
become exchangeable for the right to receive, as of the Effective Time,
Danaher Common Shares, without any interest thereon. Fluke shall give Danaher
(i) prompt notice of any written demands for payment for any Fluke Common
Stock under Section 13.210 of the WBCA, attempted withdrawals of such demands,
and any other instruments served pursuant to the WBCA and received by Fluke
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 WBCA. Fluke shall not, except with the prior
written consent of Danaher, voluntarily make any payment with respect to any
demands for payment for Fluke Common Stock under the WBCA, offer to settle or
settle any such demands or approve any withdrawal of any such demands. The
relevant provisions of the WBCA are attached to this Proxy
Statement/Prospectus as Annex C.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of the
parties thereto. The Merger Agreement includes representations and warranties
by Fluke as to (i) the corporate organization, standing and power of Fluke and
its subsidiaries, (ii) approvals by the Fluke Board and fairness opinions
received by Fluke, (iii) its capitalization, (iv) the authorization of the
Merger Agreement, (v) pending or threatened litigation, (vi) the Merger
Agreement's noncontravention of any agreement, law or charter or by-law
provision and the absence of the need (except as specified) for governmental
or third-party consents to the Merger, (vii) the terms, existence, operations,
liabilities and compliance with applicable laws of Fluke employee plans, and
certain other matters relating to the Employee Retirement Income Security Act
of 1974, as amended, (viii) payment of taxes, (ix) ownership of and rights to
use certain intellectual property, (x) the accuracy of Fluke's financial
statements and filings with the Commission, (xi) the conduct of Fluke's
business in the ordinary and usual course and the absence of any material
adverse change (as hereinafter defined), (xii) certain contracts and leases of
Fluke and its subsidiaries, (xiii) parachute payments, (xiv) brokers and
finders employed by Fluke, (xv) the accuracy of information to be supplied by
Fluke for inclusion in this Proxy Statement/Prospectus and in the Registration
Statement, (xvi) labor agreements involving Fluke or its subsidiaries, (xvii)
material contracts and debt instruments, (xviii) title to properties, (xix)
the amendment of the Fluke Rights Agreement, (xx) state statutes, and (xxi)
the accounting for the Merger as a pooling-of-interests.
The Merger Agreement also includes representations and warranties by Danaher
and Sub as to: (i) the corporate organization, standing and power of Danaher
and its subsidiaries; (ii) the authorization of the Merger
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Agreement and the Stock Option Agreement, (iii) Danaher's capitalization, (iv)
the authorization of the Danaher Common Shares to be issued pursuant to the
Merger Agreement, (v) pending or threatened litigation, (vi) the Merger
Agreement's noncontravention of any agreement, law or charter or by-law
provision and the absence of the need (except as specified) for governmental
or third-party consents to the Merger, (vii) the accuracy of Danaher's
financial statements and filings with the Commission, (viii) the absence of
any material adverse change, (ix) the ownership, activities and assets of Sub,
(x) brokers and finders employed by Danaher, (xi) the accuracy of information
to be supplied by Danaher for inclusion in this Proxy Statement/Prospectus and
in the Registration Statement, and (xii) the accounting for the Merger as a
pooling-of-interests.
CERTAIN COVENANTS
Conduct of Business by Fluke. The Merger Agreement provides that between the
date of the Merger Agreement and the Effective Time, Fluke 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. The Merger Agreement
further provides, without limiting the generality of the foregoing, that
between the date of the Merger Agreement and the Effective Time, except as
contemplated by the Merger Agreement (or as disclosed by Fluke to Danaher at
the time of entering into the Merger Agreement), Fluke shall not, and shall
not permit any of its subsidiaries, without the prior written approval of
Danaher, 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 Fluke with a record date of April 24, 1998 and (y)
dividends and distributions by any direct or indirect wholly owned subsidiary
of Fluke 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 Fluke 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 Fluke Common Stock upon the exercise of Stock Options
outstanding on the date of the Merger Agreement in accordance with their
present terms or in accordance with the present terms of any employment
agreements existing on the date of the Merger Agreement, (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 Danaher; (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 Fluke 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
Fluke'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 Danaher, or (B) make
any loans, advances or capital contributions to, or investments in, any other
person, other than to Fluke or any direct or indirect wholly owned subsidiary
of Fluke; (vii) make or agree to make any new capital expenditures which,
individually, exceed $250,000 or which, in the aggregate, exceed
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$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 Fluke included in the documents filed
with the Commission 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 Fluke'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 documents filed by Fluke with the
Commission prior to the date of the Merger 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; (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 Fluke 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.
Conduct of Business by Danaher. During the period from the date of the
Merger Agreement to the Effective Time, Danaher has agreed that it 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 Danaher 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 Danaher,
desirable in the conduct of the business of Danaher and its subsidiaries.
Without limiting the generality of the foregoing, during the period from the
date of the Merger Agreement to the Effective Time, except as contemplated by
the Merger Agreement (or as disclosed to Fluke at the time of entering into
the Merger Agreement), Danaher has agreed that it 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 Danaher to its parent and except
for regular quarterly cash dividends (in an amount determined in a manner
consistent with Danaher's past practice) declared by the Danaher Board 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
Danaher) or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of Danaher's capital stock or (C)
purchase, redeem or otherwise acquire any Danaher Common Shares; (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 Fluke; or (iii) authorize, or commit
or agree to take any of, the foregoing actions.
No Solicitation. Fluke has agreed in the Merger Agreement that it 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, Fluke or any of its
subsidiaries to, (i) solicit or initiate, or encourage the submission of, any
Takeover Proposal, (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 Fluke Board, as determined in
good faith by the Fluke Board after receipt of the advice of outside counsel,
Fluke
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may, (A) in response to an unsolicited request therefor, furnish information
with respect to Fluke to any person pursuant to a confidentiality agreement no
less favorable to Fluke than the Non-Disclosure Agreement and discuss such
information (but not the terms of any possible Takeover Proposal) with such
person and (B) upon receipt by Fluke of a Takeover Proposal, following
delivery to Danaher of the notice required pursuant to the Merger Agreement,
participate in negotiations regarding such Takeover Proposal. For purposes of
the Merger Agreement, "Takeover Proposal" means any proposal or offer (whether
or not in writing and whether or not delivered to Fluke's shareholders
generally) for an Alternative Transaction. An "Alternative Transaction" means
a merger or other business combination involving Fluke or any of its Material
Subsidiaries (as defined in the Merger Agreement) 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, Fluke 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 Fluke or any of its
Material Subsidiaries, other than the transactions contemplated by the Merger
Agreement.
Neither the Fluke Board 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 Fluke Board), in a manner adverse to Danaher or Sub, the
approval or recommendation by such Fluke Board or any such committee of the
Merger 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 Fluke Board), any Takeover Proposal or (iii) enter into any agreement
with respect to any Takeover Proposal. Notwithstanding the foregoing, in the
event the Fluke Board receives a Takeover Proposal that, in the exercise of
its fiduciary obligations (as determined in good faith by the Fluke Board
after receipt of the written advice of outside counsel), it determines to be a
Superior Proposal, the Fluke Board may (subject to compliance with its
notification and payment obligations as described in the following sentences)
withdraw or modify its approval or recommendation of the Merger Agreement or
the Merger, approve or recommend any such Superior Proposal, enter into an
agreement with respect to such Superior Proposal or terminate the Merger
Agreement, in each case at any time after the second business day following
Danaher's receipt of written notice (a "Notice of Superior Proposal") advising
Danaher that the Fluke Board 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 any of (i), (ii) or
(iii) listed above shall occur, Fluke shall pay, or cause to be paid, to
Danaher the Termination Fee and the Expense Fee (as described below under "--
Amendment; Termination; Expenses"). For purposes of the Merger 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 Fluke Common Stock then outstanding or all or
substantially all the assets of Fluke, and otherwise on terms which the Fluke
Board 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 Fluke Stockholders than
the Merger. Nothing in the Merger Agreement shall prohibit Fluke from taking
and disclosing to Fluke 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 Fluke Board that would not violate or be
inconsistent with Fluke's obligations under the Merger Agreement.
In addition to the obligations of Fluke described above, Fluke shall
promptly advise Danaher 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. Fluke shall keep
Danaher informed on a current basis of the status and details of any such
request, Takeover Proposal or inquiry.
Benefit Plans and Employee Matters. In the Merger Agreement, Danaher has
agreed that Fluke will honor, and, from and after the Effective Time, Danaher
will cause the Surviving Corporation to honor, in accordance with their
respective terms as in effect on the date hereof, certain employment,
severance and bonus agreements and arrangements to which Fluke is a party.
Danaher 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.
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Danaher has further agreed in the Merger Agreement 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 Fluke to
the extent practicable as in effect on the date hereof, and (ii) thereafter
the Surviving Corporation shall provide employees of Fluke 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
Danaher.
CLOSING CONDITIONS
Conditions to Each Party's Obligations to Effect the Merger. The Merger
Agreement makes the respective obligation of each party to effect the Merger
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(i) the Fluke Stockholders shall have adopted the Merger Agreement;
(ii) the Danaher Common Shares issuable to the Fluke Stockholders
pursuant to the Merger Agreement and under the Stock Option Plans shall
have been approved for listing on the NYSE, subject to official notice of
issuance;
(iii) 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;
(iv) the Registration Statement shall have been declared effective by the
Commission under the Securities Act, and no stop order suspending the
effectiveness of the Registration Statement shall have been issued by the
Commission, and no proceedings for that purpose shall have been initiated
or, to the knowledge of Danaher or Fluke, threatened by the Commission;
(v) the applicable waiting period (and any extension thereof) under the
HSR Act shall have expired or been terminated; and
(vi) other than the filing of merger documents in accordance with the
WBCA, all authorizations, consents, waivers, orders or approvals required
to be obtained, and all filings, notices or declarations required to be
made, by Danaher, Sub and Fluke 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 Surviving
Corporation or Danaher.
Additional Conditions to Obligations of Danaher and Sub. The Merger
Agreement also makes the obligations of Danaher and Sub to effect the Merger
subject to the following conditions:
(i) each of the representations and warranties of Fluke contained in the
Merger 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 Fluke or Danaher (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;
(ii) Fluke shall have performed or complied in all material respects with
the agreements and covenants required by the Merger Agreement to be
performed or complied with by it on or prior to the Closing Date;
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(iii) Fluke 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 Fluke
prior to or after the Effective Time or a material adverse effect on
Danaher after the Effective Time;
(iv) Danaher shall have received the opinion of Wachtell, Lipton, Rosen &
Katz, counsel to Danaher, 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 Internal Revenue Code of 1986, as amended (the "Code"), which
opinion shall not have been withdrawn or modified in any material respect
(provided that the issuance of such opinion shall be conditioned on the
receipt of customary representation letters);
(v) Danaher shall have received from Arthur Andersen LLP, as independent
auditors of Danaher, on the date of the Proxy Statement and on the Closing
Date, letters, in each case dated as of such respective dates, addressed to
Danaher, in form and substance reasonably acceptable to Danaher 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 Danaher for
purposes of its consolidated financial statements under generally accepted
accounting principles and applicable Commission 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 Danaher from accounting for the business combination to be
effected by the Merger as a pooling-of-interests. The conditions described
in this clause (v) may not be waived by Danaher without Fluke'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 Fluke Common Stock in the
Merger; and provided, further, that such consent shall not be required if
the failure to satisfy the conditions described in this clause (v) shall
have resulted from any act or omission of Fluke;
(vi) Danaher shall have received from each person who may be deemed to be
an affiliate of Fluke (under Rule 145 of the Securities Act or otherwise
under applicable Commission accounting releases with respect to pooling-of-
interests accounting treatment) on or prior to the Closing Date a signed
affiliate agreement substantially in the form attached as an exhibit to the
Merger Agreement; and
(vii) The number of Dissenting Shares shall not constitute more than 5%
of the number of issued and outstanding shares of Fluke Common Stock.
Additional Conditions to Obligations of Fluke. The Merger Agreement also
makes the obligations of Fluke to effect the Merger subject to the following
conditions:
(i) each of the representations and warranties of Danaher contained in
the Merger 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 Danaher (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;
(ii) Danaher shall have performed or complied in all material respects
with the agreements and covenants required by the Merger Agreement to be
performed or complied with by it on or prior to the Closing Date; and
(iii) Fluke shall have received the opinion of Davis Wright Tremaine,
counsel to Fluke, dated the date of the Proxy Statement, to the effect
that, on the basis of facts, representations and assumptions set forth in
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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 (provided that the issuance of such opinion shall be
conditioned on the receipt of customary representation letters).
For purposes of the Merger Agreement "material adverse change" or "material
adverse effect" means, when used in connection with Fluke or Danaher, any
change or effect 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.
AMENDMENT; TERMINATION; EXPENSES
Termination. The Merger 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 Fluke Stockholders:
(i) by mutual written consent of Danaher and Fluke;
(ii) by Danaher, upon a breach of any representation, warranty, covenant
or agreement, on the part of Fluke set forth in the Merger Agreement, or if
any representation or warranty of Fluke shall have become untrue, in either
case such that the conditions set forth in the sections of the Merger
Agreement pertaining to the continued accuracy of Fluke's representations
and warranties and Fluke's continued performance or compliance with all its
covenants and agreements contained therein, 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
termination of the Merger Agreement by Danaher;
(iii) by Fluke, upon a breach of any representation, warranty, covenant
or agreement on the part of Danaher set forth in the Merger Agreement, or
if any representation or warranty of Danaher shall have become untrue, in
either case such that the conditions set forth in the sections of the
Merger Agreement pertaining to the continued accuracy of Danaher's
representations and warranties and Danaher's continued performance or
compliance with all its covenants and agreements contained therein, 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 termination of the Merger Agreement by Fluke;
(iv) by either Danaher or Fluke, 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;
(v) by either Danaher or Fluke, 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 the Merger Agreement or a material
breach of any representation or warranty, covenant or agreement set forth
in the Merger Agreement by the party seeking to terminate the Merger
Agreement;
(vi) by either Danaher or Fluke, if upon a vote at a duly held Fluke
Stockholders' meeting or any adjournment thereof the requisite approval of
the Fluke Stockholders shall not have been obtained;
(vii) by Danaher, if (A) the Fluke Board shall withdraw, modify or change
its recommendation of the Merger Agreement or the Merger in any manner
adverse to Danaher, or Fluke or any of its Material Subsidiaries shall have
entered into an agreement with respect to any Alternative Transaction, or
the Fluke Board shall have resolved or announced its intention to do any of
the foregoing; (B) the Fluke Board shall have recommended to the Fluke
Stockholders a Takeover Proposal, or shall have resolved or announced its
intention to do so; or (C) any person (other than Danaher 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 Fluke;
provided that certain existing interests shall not give rise to any
termination right hereunder;
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(viii) by Fluke, if it shall enter into an agreement with respect to a
Superior Proposal in accordance with the provision of the Merger Agreement
(including payment of the Termination Fee and the Expense Fee); and
(ix) by Fluke, if the Fluke Board 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 Fluke Special
Meeting, if the average of the daily last sale prices of Danaher Common
Shares 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 $31.94; subject, however, to
the following four sentences. If Fluke elects to exercise its termination
right described in this clause (ix), it shall give prompt written notice to
Danaher; 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, Danaher 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 $31.94 and the Exchange
Ratio (as then in effect) and the denominator of which is the Average
Closing Price. If Danaher makes an election contemplated by the preceding
sentence within such two-day period, it shall give prompt written notice to
Fluke of such election and the revised Exchange Ratio, whereupon no
termination shall have occurred and the Merger Agreement shall remain in
effect in accordance with its terms, except that any references in the
Merger Agreement to "Exchange Ratio" shall thereafter be deemed to refer to
the Exchange Ratio as adjusted pursuant to the procedure described above.
If Danaher 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 Danaher Common Shares shall be appropriately adjusted for the
purposes of applying the procedure described above. Fluke may elect not to
terminate the Merger Agreement even if the Average Closing Price falls
below $31.94 per share. In determining whether to elect to terminate the
Merger Agreement in these circumstances, the Fluke Board will take into
account, consistent with its fiduciary duties, all relevant facts and
circumstances existing at the time, including, without limitation, whether
Danaher is prepared to increase the Exchange Ratio, the market for
comparable stocks in Fluke's industry, the relative value of Danaher Common
Shares in the market, and the advice of its financial advisors and legal
counsel. By approving the Merger Agreement, Fluke Stockholders would be
permitting the Fluke Board to determine, in the exercise of its fiduciary
duties, to proceed with the Merger even though the value received per share
of Fluke Common Stock is less than $28.90 because the Average Closing Price
is below $31.94.
Effect of Termination. In the event of termination of the Merger Agreement
by either Fluke or Danaher as provided in the terms of the Merger Agreement
described above, the Merger Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Danaher, Sub or
Fluke, other than the provisions of the Merger Agreement relating to Fluke's
and Danaher's representations as to their engagement of brokers, their
obligations to comply with the Non-Disclosure Agreement, their agreement as to
fees and expenses (including the provisions relating to the Termination Fee
and the Expense Fee described below), and certain general provisions of the
Merger Agreement 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 the Merger Agreement.
Amendment. The Merger Agreement may be amended by the parties at any time
before or after Fluke Stockholder Approval; provided, however, that after
approval by the Fluke Stockholders there shall not be made any amendment that
by law requires further approval by the Fluke Stockholders without the further
approval of such stockholders. The Merger Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties.
Extension; Waiver. At any time prior to the Effective Time, the parties may
extend the time for the performance of any of the obligations or other acts of
the other parties, waive any inaccuracies in the representations and
warranties contained in the Merger Agreement or in any document delivered
pursuant to the
40
<PAGE>
Merger Agreement or, except as otherwise provided in the Merger Agreement,
waive compliance with any of the agreements or conditions contained in the
Merger 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 the Merger Agreement to
assert any of its rights under the Merger Agreement or otherwise shall not
constitute a waiver of those rights.
Procedure for Termination, Amendment, Extension or Waiver. A termination of
or amendment to the Merger Agreement or an extension or waiver pursuant to its
terms shall, in order to be effective, require in the case of Danaher, Sub and
Fluke, action by the relevant Board of Directors or the duly authorized
designee of such Board of Directors.
Termination Fee; Expenses. As set forth in the Merger Agreement, Fluke shall
pay, or cause to be paid, in same day funds to Danaher upon demand an amount
equal to $17 million (the Termination Fee) plus Danaher's aggregate expenses
incurred in connection with the Merger Agreement up to $3 million (the Expense
Fee) (i) if the Merger Agreement is terminated by Danaher as a result of a
material breach by Fluke of its agreements to hold the Fluke Stockholders
Meeting and recommend the Merger to Fluke Stockholders; (ii) if Fluke
terminates the Merger Agreement in order to enter into any agreement with
respect to any Superior Proposal in accordance with the Merger Agreement;
(iii) if the Merger Agreement is terminated as a result of any person or
"group" acquiring beneficial ownership of more than 10% (excluding FCMS and
ICM Asset Management, Inc. ("ICM")) of the outstanding shares of capital stock
of Fluke and having refused or failed to deliver to Danaher upon request a
binding commitment reasonably satisfactory in form and substance to Danaher 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 if, within one
year after the date of such termination of the Merger Agreement, Fluke
consummates an Alternative Transaction; provided, that Fluke shall make a
nonrefundable payment of $5 million (which amount shall be credited to
Termination Fee or the Expense Fee) upon the termination of the Merger
Agreement; (iv) if the Merger Agreement is terminated by Danaher as a result
of the Fluke Board withdrawing, modifying or changing its recommendation in
any manner adverse to Danaher or recommending a competing Takeover Proposal,
or as a result of Fluke or any of Fluke's material subsidiaries having entered
into an agreement with respect to an Alternative Transaction (or the Fluke
Board having resolved to do any of these things); or (v) if the Merger
Agreement is terminated following a failure to obtain the requisite approval
of Fluke Stockholders and at the time of the Fluke Special 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 within one year after the date of
such termination of the Merger Agreement, Fluke consummates an Alternative
Transaction.
Notwithstanding anything in the Merger Agreement or in the Stock Option
Agreement to the contrary, the sum of the amounts payable to Danaher pursuant
to the preceding paragraph and the Option Repurchase Price shall not exceed
$20 million. If the sum of the amounts to which Danaher would be entitled
under the preceding paragraph and the value of the Stock Option Agreement is
greater than $20 million in the aggregate on the date Danaher would be
entitled to demand payment of the Termination Fee, then the amount which Fluke
shall be obligated to pay Danaher under the preceding paragraph and the holder
or holders (on a pro rata basis) of the Stock Option Agreement shall be
limited to $20 million and Danaher shall indicate to Fluke how such amount
shall be allocated between the Termination Fee, the Expense Fee and the Option
Repurchase Price.
The prevailing party in any legal action undertaken to enforce the Merger
Agreement or any provision thereof 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.
41
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended only as a summary of certain of the
material Federal income tax consequences of the Merger and does not purport to
be a complete analysis or listing of all potential tax effects relative to a
decision whether to vote for the approval of the Merger. The discussion does
not address all aspects of Federal income taxation that may be applicable to
certain Fluke Stockholders subject to special Federal income tax treatment,
including, without limitation, foreign persons, insurance companies, tax-
exempt entities, retirement plans and persons who acquired their Fluke Common
Stock pursuant to the exercise of employee stock options or otherwise as
compensation. The discussion addresses neither the effect of applicable state,
local or foreign tax laws, nor the effect of any Federal tax laws other than
those pertaining to Federal income tax.
Fluke has received an opinion from Davis Wright Tremaine and Danaher has
received an opinion from Wachtell, Lipton, Rosen & Katz to the effect that, if
the Merger occurs in accordance with the Merger Agreement, the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code
for Federal income tax purposes. Such opinions are based on the Code,
regulations and rulings now in effect or proposed thereunder, current
administrative rulings and practice and judicial precedent, all of which are
subject to change. Any such change, which may or may not be retroactive, could
alter the tax consequences discussed herein. The opinions are also based on
certain assumptions regarding the factual circumstances that will exist at the
Effective Time, including, without limitation, certain representations made by
Danaher, Fluke and certain Fluke Stockholders. If any of these factual
assumptions is inaccurate, the tax consequences of the Merger could differ
from those described herein. The discussion below assumes that the Fluke
Stockholders hold their shares of Fluke Common Stock as capital assets within
the meaning of Section 1221 of the Code.
As a reorganization under Section 368(a) of the Code, no gain or loss will
be recognized by the Fluke Stockholders with respect to the Danaher Common
Shares received in the Merger. The tax basis of the Danaher Common Shares
received by a Fluke Stockholder in the Merger will be equal to the tax basis
of the shares of Fluke Common Stock exchanged therefor, reduced by any amount
of basis allocable to fractional share interests for which cash is received.
For purposes of determining whether or not gain or loss on the subsequent
disposition of Danaher Common Shares received in the Merger is long-term or
short-term, the holding period of such Danaher Common Shares received by the
Fluke Stockholders will include the holding period of the shares of Fluke
Common Stock exchanged therefor.
The receipt of cash in lieu of a fractional Danaher Common Share by a Fluke
Stockholder pursuant to the Merger will result in taxable gain or loss to such
stockholder for Federal income tax purposes based on the difference between
the amount of cash received by such stockholder and such stockholder's basis
in such fractional share as set forth above. Such gain or loss will be a
capital gain or loss.
The Merger Agreement provides that neither Danaher nor Fluke is obligated to
consummate the Merger unless Danaher and Fluke shall have received the
opinions from Wachtell, Lipton, Rosen & Katz, counsel to Danaher, and Davis
Wright Tremaine, counsel to Fluke, respectively, substantially to the effect
that under applicable law, for Federal income tax purposes, the Merger will
constitute a reorganization under Section 368(a) of the Code.
THE FOREGOING DISCUSSION OF MATERIAL FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. THE OPINIONS OF
WACHTELL, LIPTON, ROSEN & KATZ AND DAVIS WRIGHT TREMAINE ARE NOT BINDING ON
THE INTERNAL REVENUE SERVICE. BECAUSE OF THE COMPLEXITY OF THE TAX LAWS, AND
BECAUSE THE TAX CONSEQUENCES OF ANY PARTICULAR STOCKHOLDER MAY BE AFFECTED BY
MATTERS NOT DISCUSSED HEREIN, EACH FLUKE STOCKHOLDER IS URGED TO CONSULT HIS
OWN TAX ADVISER WITH RESPECT TO HIS OWN PARTICULAR CIRCUMSTANCES AND WITH
RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO HIM, INCLUDING THE
APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS, ESTATE TAX LAWS
AND PROPOSED CHANGES IN APPLICABLE TAX LAWS.
42
<PAGE>
THE COMPANIES
BUSINESS OF DANAHER
Danaher, a Delaware corporation, conducts its operations through two
business segments: Tools and Components and Process/Environmental Controls.
The Tools and Components segment is one of the largest domestic producers and
distributors of general purpose mechanics' hand tools and automotive specialty
tools. Other products manufactured by this segment include tool boxes and
storage devices, diesel engine retarders, wheel service equipment, drill
chucks, custom designed headed tools and components, hardware and components
for the power generation and transmission industries, high quality precision
socket screws, fasteners, and high quality miniature precision parts. The
Process/Environmental Controls segment produces and sells underground storage
tank leak detection systems and temperature, level and position sensing
devices, power switches and controls, communication line products, power
protection products, liquid flow measuring devices, telecommunications
products, quality assurance products and systems, and electronic and
mechanical counting and controlling devices. These products are distributed by
the Company's sales personnel and independent representatives to original
equipment manufacturers, distributors and other end users. The principal
executive offices of Danaher are located at 1250 24th Street, N.W.,
Washington, D.C. 20037, and its telephone number is (202) 828-0850.
BUSINESS OF FLUKE
Fluke was founded in 1948 and incorporated under the laws of the State of
Washington on October 7, 1953. Fluke is engaged in the design, manufacture and
marketing of compact, professional electronic test tools. Fluke's principal
products are portable instruments that measure voltage, current, power
quality, frequency, temperature, pressure and other key functional parameters
of electronic equipment. The principal executive offices of Fluke are located
at 6920 Seaway Boulevard, Everett, Washington 98203, and its telephone number
is (425) 347-6100.
43
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information should be
read in conjunction with the financial statements, including the notes
thereto, of Danaher and Fluke, which are incorporated by reference in this
Proxy Statement/Prospectus. The pro forma information is presented for
illustration purposes only and is not necessarily indicative of the operating
results or financial position that would have occurred if the Merger had been
consummated in accordance with the assumptions set forth below, nor is it
necessarily indicative of future operating results or financial position.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
The following unaudited pro forma combined balance sheet presents, under the
pooling-of-interests accounting method, the consolidated balance sheet of
Danaher as of December 31, 1997 combined with the balance sheet of Fluke as of
January 23, 1998.
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
DANAHER FLUKE ADJUSTMENT BALANCE
---------- -------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash & Equivalents........... $ 33,317 $ 37,504 $ 70,821
Accounts Receivable.......... 322,600 81,258 403,858
Inventories.................. 209,416 55,706 265,122
Prepaids & Other............. 53,006 39,246 92,252
---------- -------- ----------
Total Current Assets....... 618,339 213,714 832,053
Plant, Property & Equipment,
net......................... 335,223 68,265 403,488
Other Assets................. 72,739 12,243 84,982
Excess Cost over net assets,
net......................... 853,416 9,936 863,352
---------- -------- ----------
Total Assets............... $1,879,717 $304,158 $2,183,875
========== ======== ==========
LIABILITIES
CURRENT LIABILITIES:
Note Payables, current
portion..................... $ 35,527 $ 383 $ 35,910
Accounts Payable............. 135,190 16,876 152,066
Accrued Expenses............. 353,518 38,803 $ 25,000 (2) 417,321
---------- -------- -------- ----------
Total Current Liabilities.. 524,235 56,062 25,000 605,297
Other Long Term Liabilities.. 275,881 25,369 301,250
Long-Term Debt............... 162,720 389 163,109
Shareholders' Equity:
Common Stock................. 1,286 4,589 (4,500) 1,375
APIC......................... 335,466 74,407 4,500 414,373
Cumulative adjustment &
other....................... (6,122) (7,137) (13,259)
Retained Earnings............ 655,692 150,479 (25,000)(2) 781,171
Treasury Stock............... (69,441) 0 (69,441)
---------- -------- -------- ----------
Total Shareholders'
Equity.................... 916,881 222,338 (25,000) 1,114,219
---------- -------- -------- ----------
Total.................... $1,879,717 $304,158 $ 0 $2,183,875
========== ======== ======== ==========
</TABLE>
See accompanying notes to the unaudited pro forma combined financial
information.
44
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF EARNINGS
The following unaudited pro forma combined statements of earnings present,
under the pooling-of-interests accounting method, the consolidated statements
of earnings of Danaher for the fiscal years ended December 31, 1997, December
31, 1996 and December 31, 1995 combined with the statements of earnings of
Fluke for the twelve months ended December 31, 1997, December 31, 1996 and
December 31, 1995.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
------------------------------
DANAHER FLUKE(1) PRO FORMA RESULTS
--------------- -------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net Sales...................... $2,050,968 $441,034 $2,492,002
Cost of Sales.................. 1,382,475 215,956 1,598,431
SG & A......................... 401,608 190,907 592,515
Total Expenses................. 1,784,083 406,863 2,190,946
---------- -------- ----------
Operating Profit............... 266,885 34,171 301,056
Interest expense, net.......... 13,104 107 13,211
---------- -------- ----------
Earnings before Taxes.......... 253,781 34,064 287,845
Taxes.......................... 98,975 12,264 111,239
---------- -------- ----------
Net Earnings................... $ 154,806 $ 21,800 $ 176,606
========== ======== ==========
EPS--Diluted................... $ 1.28 $ 1.15 $ 1.28
EPS--Basic..................... $ 1.32 $ 1.20 $ 1.32
Average Shares--Diluted........ 120,512 19,031 137,731
Average Shares--Basic.......... 117,538 18,195 134,000
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------
DANAHER FLUKE(1) PRO FORMA RESULTS
--------------- -------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net Sales..................... $1,811,878 $421,315 $2,233,193
Cost of Sales................. 1,219,388 190,305 1,409,693
SG & A........................ 366,354 189,740 556,094
Total Expenses................ 1,585,742 380,045 1,965,787
---------- -------- ----------
Operating Profit.............. 226,136 41,270 267,406
Interest expense, net......... 16,376 437 16,813
---------- -------- ----------
Earnings from continuing
operations before Taxes...... 209,760 40,833 250,593
Taxes......................... 81,801 14,435 96,236
---------- -------- ----------
Earnings from continuing
operations................... 127,959 26,398 154,357
Discontinued Operations....... 79,811 0 79,811
---------- -------- ----------
Net Earnings.................. $ 207,770 $ 26,398 $ 234,168
========== ======== ==========
EPS from continuing
operations--Diluted.......... $ 1.07 $ 1.47 $ 1.13
EPS from continuing
operations--Basic............ $ 1.09 $ 1.52 $ 1.16
Discontinued Operations EPS--
Diluted...................... $ 0.67 $ 0.00 $ 0.59
Discontinued Operations EPS--
Basic........................ $ 0.68 $ 0.00 $ 0.60
EPS--Net Earnings:
Diluted..................... $ 1.73 $ 1.47 $ 1.72
Basic....................... $ 1.77 $ 1.52 $ 1.76
Average Shares--Diluted....... 119,910 17,920 136,124
Average Shares--Basic......... 117,246 17,358 132,951
</TABLE>
See accompanying notes to the unaudited pro forma combined financial
information.
45
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
------------------------------
DANAHER FLUKE(1) PRO FORMA RESULTS
--------------- -------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net Sales..................... $ 1,486,769 $ 412,694 $1,899,463
Cost of Sales................. 1,039,622 192,382 1,232,004
SG & A........................ 266,890 184,677 451,467
Total Expenses................ 1,306,512 376,959 1,683,471
--------------- ------------- ----------
Operating Profit.............. 180,257 35,735 215,992
Interest expense, net......... 7,198 1,531 8,729
--------------- ------------- ----------
Earnings from continuing
operations before Taxes...... 173,059 34,204 207,263
Taxes......................... 67,293 11,681 78,974
--------------- ------------- ----------
Earnings from continuing
operations................... 105,766 22,523 128,289
Discontinued Operations....... 2,550 0 2,550
--------------- ------------- ----------
Net Earnings.................. $ 108,316 $ 22,523 $ 130,839
=============== ============= ==========
EPS from continuing
operations--Diluted.......... $ 0.88 $ 1.28 $ 0.95
EPS from continuing
operations--Basic............ $ 0.90 $ 1.32 $ 0.97
Discontinued Operations EPS--
Diluted...................... $ 0.02 $ 0.00 $ 0.02
Discontinued Operations EPS--
Basic........................ $ 0.02 $ 0.00 $ 0.02
EPS--Net Earnings:
Diluted...................... $ 0.90 $ 1.28 $ 0.96
Basic........................ $ 0.92 $ 1.32 $ 0.99
Average Shares--Diluted....... 119,726 17,639 135,685
Average Shares--Basic......... 117,324 17,074 132,772
</TABLE>
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (UNAUDITED)
(1) Fluke's fiscal year has historically ended in April. The pro forma
information is presented in accordance with Danaher's fiscal year which
ends December 31. Fluke's balances for twelve month periods ending
approximately one month later than the Danaher periods have been included
in these combined statements. In the opinion of Danaher's management, this
difference is not material.
(2) Merger expenses of approximately $25 million are based on a preliminary
estimate and are made up of approximately equal amounts related to: (i)
transaction costs associated with the Merger; and (ii) integrating and
implementing efficiencies associated with information, operational and
administrative systems.
(3) Earnings per share includes all Fluke common shares (or common shares and
equivalents, as appropriate) based on the exchange ratio of 0.90478 shares
of Danaher for each Fluke share (or equivalent).
46
<PAGE>
COMPARISON OF STOCKHOLDER RIGHTS
Upon consummation of the Merger, Fluke Stockholders will become holders of
Danaher Common Shares, and their rights will thereafter be governed by the
Delaware General Corporation Law ("DGCL") instead of the WBCA, and by the
certificate of incorporation of Danaher (the "Danaher Certificate of
Incorporation") and the By-Laws of Danaher (the "Danaher By-Laws"), as opposed
to the Fluke Articles and the Fluke Bylaws.
The following is a summary of certain material differences between the
rights of Danaher Stockholders, on one hand, and Fluke Stockholders, on the
other hand. These differences arise from differences between the DGCL and the
WBCA, and between the Danaher Certificate of Incorporation and the Danaher By-
Laws and the Fluke Articles and the Fluke Bylaws.
The following does not purport to be a complete statement of the rights of
the Danaher stockholders under the DGCL, the Danaher Certificate of
Incorporation and the Danaher By-Laws as compared with the rights of Fluke
Stockholders under the WBCA, the Fluke Articles and the Fluke Bylaws. The
identification of certain specific differences is not meant to indicate that
other equally or more significant differences do not exist. The following
summary is qualified in its entirety by reference to the DGCL, the WBCA and
the full text of the charter and bylaw documents of each of Danaher and Fluke.
For information as to how such documents may be obtained, see "Available
Information."
SIZE AND CLASSIFICATION OF THE BOARD OF DIRECTORS
Danaher. The DGCL provides that the board of directors of a Delaware
corporation shall consist of one or more directors as fixed by the
corporation's certificate of incorporation or bylaws. The Danaher Certificate
of Incorporation provides for a board of directors comprised of not less than
three persons, which number may be determined by the Danaher Board. Danaher
currently has nine directors. As permitted under the DGCL, the Danaher Board
is classified into three classes which are as nearly equal in number as
reasonably possible. Directors in each class serve for a three-year term, and
elections are staggered such that one class is elected each year.
Fluke. The WBCA provides that the board of directors of a Washington
corporation shall consist of one or more directors as fixed by the
corporation's articles of incorporation or bylaws. The Fluke Bylaws provide
for a board of directors comprised of twelve directors. As permitted under the
WBCA, the Fluke Board is classified into three classes which are as equal in
number as possible. Directors in each class serve for a three-year term, and
elections are staggered such that one class is elected each year. The WBCA
provides for cumulative voting for directors, unless a corporation has opted
out of such provision. Fluke has not opted out of this provision.
REMOVAL OF DIRECTORS
Danaher. The DGCL provides that a director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors. However, in the case
of a corporation whose board is classified, the directors may be removed only
for cause unless the certificate of incorporation provides otherwise. The
Danaher Certificate of Incorporation does not provide that directors may be
removed without cause.
Fluke. The WBCA provides that a corporation's shareholders may remove one or
more directors with or without cause unless the articles of incorporation
provide that directors may be removed only for cause. The Fluke Articles
provide that any director may be removed only for cause and only by the
affirmative vote of the holders of 80% of the voting power of the outstanding
shares of Fluke Common Stock.
47
<PAGE>
SPECIAL MEETINGS OF STOCKHOLDERS
Danaher. Under the DGCL, a special meeting of stockholders may be called by
the board of directors or by any other person authorized to do so in the
certificate of incorporation or the bylaws. The Danaher Certificate of
Incorporation provides that a special meeting of stockholders may be called
only by a majority of the entire Danaher Board, a majority of the stockholders
or by Danaher's Chairman of the Board. Business transacted at any special
meeting is limited to the purposes stated in the notice of the special
stockholders meeting given to stockholders. The DGCL and the Danaher By-Laws
require notice of stockholders meetings to be sent to all stockholders of
record entitled to vote thereon not less than 10 nor more than 60 days prior
to the date of the meeting.
Fluke. Under the WBCA, a special meeting of shareholders may be called by a
corporation's board of directors or other persons authorized by the
corporation's articles of incorporation or bylaws, or, unless limited by the
articles of incorporation, on written demand of holders of at least 10% of all
votes entitled to be cast on any issue proposed to be considered at the
proposed special meeting. The Fluke Articles provide that special meetings of
shareholders may be called only by the Fluke Board. The Fluke Bylaws require
that notice of such special meetings be delivered to the Fluke Stockholders by
the Secretary within 30 days after the receipt by the Secretary of a request
from the Fluke Board. The WBCA provides that notice of a shareholders meeting
to act on an amendment to the articles of incorporation, a plan of merger or a
share exchange or certain other transactions must be given not less than 20
nor more than 60 days prior to the date of the meeting. The Fluke Bylaws
require that any proposal brought before an annual meeting and any director
nomination must be delivered to the corporation at least 70 days before the
annual meeting or the election of directors. In addition, Fluke Stockholders
must follow the procedure set forth for proposals and director nominations in
the Fluke Bylaws.
AMENDMENT TO CERTIFICATE/ARTICLES OF INCORPORATION
Danaher. Under the DGCL, amendments to a corporation's certificate of
incorporation require the approval of the board of directors and stockholders
holding a majority of the outstanding stock of such class entitled to vote on
such amendment as a class, unless a different proportion is specified in the
certificate of incorporation or by other provisions of the DGCL. The Danaher
Certificate of Incorporation provides that it may be amended in the manner
prescribed by statute.
Fluke. The WBCA authorizes a corporation's board of directors to make
various changes of an administrative nature to the corporation's articles of
incorporation without shareholder action. Such changes include a change to the
corporate name, changes to the number of outstanding shares in order to
effectuate a stock split or stock dividend in the corporation's shares and
changes to or elimination of provisions with respect to the par value of the
corporation's stock. The WBCA requires that other amendments to a
corporation's articles of incorporation must be recommended to the
shareholders by the board of directors, unless the board determines that,
because of a conflict of interest or other special circumstances, it should
make no recommendation and communicates the basis for its determination to the
shareholders. Under the WBCA, such amendments must be approved by each voting
group entitled to vote thereon by a majority of all the votes entitled to be
cast by that voting group, unless another proportion is specified in the
articles of incorporation, by the board of directors as a condition to its
recommendation, or by the provisions of the WBCA. The Fluke Articles do not
specify another proportion other than requiring that approval by 80% of the
voting stock must be obtained to amend or adopt any provision inconsistent
with specified Articles of the Fluke Articles, provided that the affirmative
vote of only 66 2/3% of the voting stock is required if such amendment or
adoption of a new provision is approved by a majority of the Fluke Board, with
the concurrence of a majority of the Continuing Directors (as hereinafter
defined).
PROVISIONS RELATING TO ACQUISITIONS AND BUSINESS COMBINATIONS
Danaher. Section 203 of the DGCL prohibits a Delaware corporation from
engaging in any "business combination" with any person who owns 15% or more of
a corporation's voting stock (i.e., an "interested stockholder") for a period
of three years following the date that such person became an interested
stockholder,
48
<PAGE>
unless: (i) the corporation's board of directors has approved, prior to the
date on which such stockholder became an interested stockholder, either the
business combination or the transaction that resulted in the person becoming
an interested stockholder; (ii) upon consummation of the transaction that
resulted in the stockholder becoming an interested stockholder, such
stockholder owned at least 85% of the corporation's voting stock outstanding
at such time (excluding shares owned by persons who are both directors and
officers and shares owned by employee stock plans in which participants do not
have the right to determine confidentially whether shares will be tendered in
a tender or exchange offer); or (iii) on or after the date on which such
stockholder became an interested stockholder, the business combination is
approved by the board of directors and authorized by the affirmative vote (at
an annual or special meeting and not by written consent) of at least 66 2/3%
of the outstanding voting stock not owned by the interested stockholder.
For purposes of determining whether a person is the "owner" of 15% or more
of a corporation's voting stock for purposes of Section 203 of the DGCL,
ownership is defined broadly to include the right, directly or indirectly, to
acquire the stock or to control the voting or disposition of the stock. A
"business combination" is also defined broadly to include: (i) mergers and
sales or other dispositions of 10% or more of the assets of a corporation with
or to an interested stockholder; (ii) certain transactions resulting in the
issuance or transfer to the interested stockholder of any stock of the
corporation or its subsidiaries; (iii) certain transactions that would result
in an increase in the proportionate share of a corporation's or its
subsidiaries' stock owned by the interested stockholder; and (iv) any receipt
by the interested stockholder of the benefit, directly or indirectly (except
proportionately as a stockholder), of any loans, advances, guarantees, pledges
or other financial benefits provided by or through the corporation or any of
its subsidiaries.
A Delaware corporation may elect not to be governed by Section 203 by a
provision contained in its original certificate of incorporation or an
amendment thereto or to the bylaws, which amendment must be approved by a
majority of the shares entitled to vote and may not be further amended by the
board of directors. Such an amendment is not effective until 12 months
following its adoption. Danaher has not expressly made such an election in its
original Certificate of Incorporation or amendment thereto or in the Danaher
By-Laws.
Fluke. Chapter 23B.19 of the WBCA, which applies to Washington corporations
which have a class of voting stock registered with the Commission under the
Exchange Act, prohibits a "target corporation," with certain exceptions, from
engaging in certain "significant business transactions" with a person or group
of persons which beneficially owns 10% or more of the voting securities of the
target corporation (i.e., an "Acquiror") for a period of five years after such
acquisition, unless the transaction or acquisition of shares is approved by a
majority of the members of the target corporation's board of directors prior
to the time of acquisition. Such prohibited transactions include, among other
things, a merger or consolidation with, disposition of assets to, or issuance
or redemption of stock to or from, the Acquiror, termination of 5% or more of
the employees of the target corporation as a result of the Acquiror's
acquisition of 10% or more of the shares, or allowing the Acquiror to receive
any disproportionate benefit as a shareholder. After the five-year period, a
"significant business transaction" may take place if it complies with certain
"fair price" provisions of the statute. A corporation may not "opt out" of
this statute and, as such, Fluke is subject to it. The Merger will not be
subject to the provisions of the statute because the Fluke Board has approved
the Merger Agreement and the transactions contemplated thereby.
The Fluke Articles contain a provision requiring the affirmative vote of 80%
of the votes entitled to be cast by the holders of all shares of Fluke
entitled to vote generally in the election of directors for certain business
transactions, if such transactions are out of the ordinary course of business
and inconsistent with past practice, with any person or group of persons which
is the beneficial owner, directly or indirectly, of shares of Fluke having 10%
or more of the votes entitled to be cast by the holders of all outstanding
shares of voting stock (or any person or group of persons which had such
status at any time in the preceding two years). Notwithstanding the foregoing,
such business transaction will only require the affirmative vote otherwise
required if the business transaction is approved by a majority of the
directors who were members of the Fluke Board on May 29, 1986, or who were
elected to the Fluke Board upon the recommendation of a majority of persons
who were on the
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Fluke Board on May 29, 1986, voting separately as a class ("Continuing
Directors"). A majority of the Continuing Directors have approved the Merger.
MERGERS, ACQUISITIONS AND OTHER TRANSACTIONS
Danaher. Under the DGCL, a merger, consolidation or sale of all or
substantially all of a corporation's assets must be approved by the board of
directors and by a majority of the outstanding stock of the corporation
entitled to vote thereon, provided that no vote of stockholders of a
constituent corporation surviving a merger is required (unless the corporation
provides otherwise in its certificate of incorporation) if (i) the merger
agreement does not amend the certificate of incorporation of the surviving
corporation, (ii) each share of stock of the surviving corporation outstanding
before the merger is an identical outstanding or treasury share after the
merger, and (iii) either no shares of common stock of the surviving
corporation are to be issued or delivered pursuant to the merger or, if such
common stock will be issued or delivered, it will not increase the number of
shares of common stock outstanding immediately prior to the merger by more
than 20%.
Fluke. Under the WBCA, a merger, consolidation or sale of substantially all
of a corporation's assets other than in the regular course of business must be
approved by the affirmative vote of a majority of directors and by two-thirds
of all votes entitled to be cast by each voting group entitled to vote as a
separate group, unless another proportion (but not less than a majority of all
votes entitled to be cast) is specified in the articles of incorporation. The
Fluke Articles provide that the Fluke Board may sell, lease or exchange all of
Fluke's property and assets upon authorization by the affirmative vote of the
holders of at least two-thirds of the voting stock.
In addition, Fluke amended the Fluke Rights Agreement so that the entering
into of the Merger Agreement, the Stockholders Support Agreements and the
Stock Option Agreement and the consummation of the Merger and the other
transactions contemplated thereby do not and will not result in the ability of
any person to exercise any Right under the Fluke Rights Agreement or enable or
require the Rights to be separated from the shares of Fluke Common Stock to
which they are attached or to be triggered or become exercisable, and so that
the Fluke Rights Agreement and the Rights will terminate upon consummation of
the Merger.
ACTION WITHOUT A MEETING
Danaher. The DGCL authorizes stockholder action without a meeting, unless
otherwise provided in a corporation's certificate of incorporation.
Fluke. Under the WBCA, shareholder action may be taken without a meeting
only if written consents setting forth such action are signed by all holders
of outstanding shares entitled to vote thereon.
APPRAISAL OR DISSENTERS' RIGHTS
Danaher. Under the DGCL, dissenters' rights of appraisal are available to a
stockholder of a corporation only in connection with certain mergers or
consolidations involving such corporation. Appraisal rights are not available
under the DGCL if the corporation's stock is either (i) listed on a national
securities exchange (as the Danaher Common Shares are) or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. (the "NASD") or (ii) held of
record by more than 2,000 stockholders; provided, however, that appraisal
rights will be available if the merger or consolidation requires stockholders
to exchange their stock for anything other than (a) shares of the surviving
corporation, (b) shares of another corporation that will be listed on a
national securities exchange, designated as a national market system security
on an interdealer quotation system by the NASD or held of record by more than
2,000 stockholders, (c) cash in lieu of fractional shares, or (d) a
combination of such shares and cash in lieu of fractional shares.
Additionally, no appraisal rights are available if the corporation is the
surviving corporation, and no vote of its stockholders is required for the
merger.
Fluke. Under the WBCA, a shareholder of a Washington corporation may
exercise dissenters' rights in connection with a plan of merger providing for
a shareholder vote, a plan of exchange involving the acquisition
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of the corporation's shares providing for a shareholder vote, a sale or
exchange of all, or substantially all, of the property of the corporation
other than in the usual and regular course of business, providing for a
shareholder vote, a reverse stock split that results in the shareholder
becoming a fractional holder, and any corporate action taken by shareholder
vote for which the articles of incorporation, bylaws or resolution of the
board of directors provide for dissenters' rights. Accordingly, Fluke
Stockholders have the right to dissent from the Merger and receive payment of
the fair value of their shares of Fluke Common Stock. See "Appraisal Rights."
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Danaher. Under the DGCL, a corporation is permitted to adopt a provision in
its certificate of incorporation reducing or eliminating the liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such liability does not
arise from certain proscribed conduct (e.g., intentional misconduct or breach
of the duty of loyalty). The Danaher Certificate of Incorporation provides for
certain specified limitations on a director's liability to the fullest extent
permitted under the DGCL. In addition, the DGCL grants each Delaware
corporation the power to indemnify any of its officers, directors, employees
or agents who are parties to any action, suit or proceeding by reason of the
fact that he or she is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another entity, provided that such
officer, director, employee or agent acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to a criminal proceeding, had no reasonable
cause to believe his or her conduct was unlawful. To the extent a director,
officer, employee or agent is successful in the defense of such an action,
suit or proceeding, the corporation is required by the DGCL to indemnify such
person for reasonable expenses incurred thereby. The Danaher By-Laws provide
for exculpation and indemnification of officers and directors to the extent
permitted by the DGCL.
Fluke. The WBCA provides that a corporation's articles of incorporation may
include a provision that eliminates or limits the personal liability of a
director to the corporation or its shareholders for monetary damages for
conduct as a director. However, the provision may not eliminate or limit the
liability of a director for acts or omissions that involve intentional
misconduct by the director or a knowing violation of law by the director, for
unlawful distributions, or for any transaction from which the director will
personally receive a benefit in money, property or services to which the
director is not legally entitled. The Fluke Articles provide for the
limitation of director liability to the full extent permitted by the WBCA. In
addition, under the WBCA, if authorized by the articles of incorporation or a
bylaw adopted or ratified by the shareholders or by a resolution adopted or
ratified by the shareholders, a corporation has the power to indemnify a
director or officer made a party to a proceeding, or advance or reimburse
expenses incurred in a proceeding, under any circumstances, except that no
such indemnification shall be allowed on account of (i) acts or omissions of a
director or officer finally adjudged to be intentional misconduct or a knowing
violation of the law, (ii) conduct of a director or officer finally adjudged
to be an unlawful distribution, or (iii) any transaction with respect to which
it was finally adjudged that such director or officer personally received a
benefit in money, property or services to which the director or officer was
not legally entitled. Unless limited by the corporation's articles of
incorporation, Washington law requires indemnification if the director or
officer is wholly successful on the merits of the action or otherwise. Any
indemnification of a director must be reported to the shareholders in writing.
The Fluke Bylaws provide for the indemnification of a director or officer to
the full extent permitted by applicable law.
DIVIDENDS
Danaher. A Delaware corporation may declare and pay dividends out of its
surplus or, if it has no surplus, out of any net profits for the fiscal year
in which the dividend was declared or for the preceding fiscal year in which
the dividend was declared (provided that such payment will not reduce capital
below the amount of capital represented by all classes of shares having a
preference upon the distribution of assets).
Fluke. Under the WBCA, a corporation may make a distribution in cash or in
property to its shareholders upon the authorization of its board of directors
unless, after giving effect to such distribution, (i) the corporation
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would be unable to pay its debts as they become due in the usual course of
business, or (ii) the corporation's total assets would be less than the sum of
its total liabilities plus the amount that would be needed, if the corporation
were to be dissolved at the time of the distribution, to satisfy the
preferential rights of shareholders whose preferential rights are superior to
those receiving the distribution.
For a comparison of dividends historically paid by each of Danaher and Fluke
see "Market Price and Dividend Data."
DESCRIPTION OF DANAHER CAPITAL STOCK
As of June 5, 1998, the authorized capital stock of Danaher consisted of:
(i) 300,000,000 Danaher Common Shares, of which 117,153,940 were issued and
outstanding, 11,595,212 were issued and held in treasury, and 8,645,744 were
reserved for issuance pursuant to options outstanding under stock incentive
plans (with 3,987,320 additional Danaher Common Shares available for issuance
under such plans), (ii) 15,000,000 Preferred Shares, without par value
("Preferred Shares"), none of which has been issued or reserved for issuance.
Danaher announced a two-for-one split of the Danaher Common Shares, which was
approved by the Danaher Stockholders on May 5, 1998 and was effective as of
June 1, 1998.
From time to time, Danaher may issue additional authorized but unissued
Danaher Common Shares for share dividends, stock splits, employee benefit
programs, financing and acquisition transactions and other general corporate
purposes. Such Danaher Common Shares will be available for issuance without
action by Danaher Stockholders, unless such action is required by applicable
law (see "Comparison of Stockholder Rights--Mergers, Acquisitions and Certain
Other Transactions") or the rules of the NYSE or any other stock exchange on
which Danaher Common Shares may be listed in the future.
Danaher Stockholders do not have preemptive rights and have no rights to
convert their shares into any other security. All Danaher Common Shares are
entitled to participate equally, and ratably in dividends on Danaher Common
Shares as may be declared by the Danaher Board. In the event of the
liquidation of Danaher, Danaher Stockholders are entitled to share ratably in
assets remaining after payment of all liabilities, subject to prior
distribution rights of any Preferred Shares then outstanding. Danaher
Stockholders are entitled to one vote per share for the election of directors
and upon all matters on which shareholders are entitled to vote.
Certain directors and executive officers of Danaher beneficially own
approximately 43.4% of the Danaher Common Shares. See "Available Information"
for a description of how further information regarding such shareholdings may
be obtained.
APPRAISAL RIGHTS
Holders of Fluke Common Stock are entitled to dissenters' rights under
Chapter 23B.13 of the WBCA with respect to the Merger Agreement.
THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW PERTAINING
TO DISSENTERS' RIGHTS UNDER THE WBCA AND IS QUALIFIED IN ITS ENTIRETY BY THE
FULL TEXT OF CHAPTER 23B.13 OF THE WBCA, WHICH IS REPRINTED IN ITS ENTIRETY AS
ANNEX C TO THIS PROXY STATEMENT/PROSPECTUS.
Fluke Stockholders will have the right to dissent with respect to the Merger
and, subject to certain conditions, will be entitled to receive a payment of
the fair value of such Fluke Stockholders' shares under the WBCA. Each
beneficial owner asserting dissenters' rights must assert such rights with
respect to all shares of which such shareholder is the beneficial owner or
over which such shareholder has power to direct the vote, and such shareholder
must submit to Fluke, with or prior to such shareholder's assertion of
dissenters' rights, the record shareholder's written consent to such dissent.
A record shareholder may assert dissenters' rights as to
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fewer than all the shares registered in such shareholder's name only if the
shareholder dissents with respect to all shares beneficially owned by any one
person and notifies Fluke in writing of the name and address of each person on
whose behalf such shareholder asserts dissenters' rights. A Fluke dissenting
holder (i) must deliver to Fluke before the vote on the Merger is taken,
written notice of such shareholder's intent to demand payment for such
shareholder's shares if the Merger is effectuated and (ii) must not vote such
shareholder's shares in favor of the Merger. Such notice should be delivered
to Fluke at its principal executive offices, 6920 Seaway Boulevard, Everett,
Washington 98203, Attention: Secretary. A shareholder who does not satisfy
both of these requirements will not be entitled to dissenters' rights.
If the Merger is approved by the Fluke Stockholders, Fluke shall send
written notice not later than ten days after the Effective Time to each Fluke
dissenting holder (i) stating where such shareholder must send his or her
written payment demand, (ii) stating where and when certificates representing
Fluke Common Stock must be deposited, (iii) containing a form for demanding
payment which requires that the dissenter certify whether or not he or she
acquired beneficial ownership before the first public announcement of the
Merger on April 27, 1998 and (iv) setting a date by which such written payment
demand must be received. Such notice must be accompanied by a copy of Chapter
23B.13 of the WBCA. A Fluke Stockholder who does not demand payment, certify
that such shareholder acquired the shares before April 27, 1998, and deposit
his or her shares within the time provided by such notice will not be entitled
to dissenters' rights.
Fluke shall pay to each Fluke dissenting shareholder who complies with the
procedures described above, within 30 days after the Effective Time, the
amount that Fluke estimates to be the fair value of such dissenter's shares,
plus accrued interest. Fluke will provide, along with such payment, certain
financial information, including Fluke's balance sheet, income statement and
statement of changes in shareholders' equity for its last fiscal year and
Fluke's latest available interim financial statements, if any, an explanation
of how Fluke estimated the fair value of the shares, an explanation of how the
accrued interest was calculated and certain other information; provided,
however, that Fluke may elect to withhold such payment from any dissenter who
was not the beneficial owner of the shares of Fluke Common Stock as to which
dissenters' rights are asserted before the date of first public announcement
of the Merger, April 27, 1998. Any dissenting shareholder who is dissatisfied
with such payment or such offer may, within 30 days of such payment or offer
for payment, notify Fluke in writing of such shareholder's estimate of fair
value of his or her shares and the amount of interest due, and demand payment
thereof.
If any Fluke dissenting shareholder's demand for payment is not settled
within 60 days after receipt by Fluke of such shareholder's payment demand (as
described above), the WBCA requires that Fluke commence a proceeding, and
petition the court to determine the fair value of the shares and accrued
interest, naming all Fluke dissenting shareholders whose demands remain
unsettled as parties to the proceeding. The Court may appoint one or more
persons as appraisers to receive evidence and recommend the fair value of the
shares. The dissenters will be entitled to the same discovery rights as
parties in other civil actions. Each dissenter made a party to the proceeding
will be entitled to judgment for the amount, if any, by which the court finds
the fair value of his or her shares, plus accrued interest, exceeds the amount
paid by Fluke.
Court costs and approval fees would be assessed against Fluke, except that
the court may assess such costs against some or all of the dissenters to the
extent that the court finds the dissenters acted arbitrarily, vexatiously or
not in good faith in demanding payment. The court may also assess the fees and
expenses of counsel and experts of the respective parties in amounts that the
court finds equitable: (i) against Fluke, if the court finds that it did not
substantially comply with certain provisions of the WBCA concerning
dissenters' rights and (ii) against either the dissenter or Fluke, if the
court finds that the party against whom the fees and expenses are assessed
acted arbitrarily, vexatiously or not in good faith. If the court finds that
services of counsel for any dissenter were of substantial benefit to other
dissenters similarly situated, and that the fees should not be assessed
against Fluke, the court may award to such counsel reasonable fees to be paid
out of the amounts awarded to dissenters who benefited from the proceedings.
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It is a condition to Danaher's obligation to consummate the Merger that
holders of no more than 5% of the outstanding Fluke Common Stock assert
dissenters' appraisal rights.
LEGAL MATTERS
The validity of the Danaher Common Shares to be issued in the Merger will be
passed upon for Danaher by Wilmer, Cutler & Pickering, counsel to Danaher.
Wachtell, Lipton, Rosen & Katz and Davis Wright Tremaine have rendered the
opinions referred to under the caption "Certain Federal Income Tax
Consequences."
EXPERTS
The consolidated financial statements and schedule of Danaher and its
consolidated subsidiaries as of December 31, 1995, 1996 and 1997, and for the
years then ended, incorporated by reference in this Proxy Statement/Prospectus
and elsewhere in the registration statement, of which this Proxy
Statement/Prospectus is a part, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm
as experts in giving said reports.
The consolidated financial statements of Fluke as of April 25, 1997 and
April 26, 1996, and for each of the three years in the period ended April 25,
1997, included in the 1997 Fluke Form 10-K which is incorporated by reference
in this Proxy Statement/Prospectus, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon incorporated by
reference therein. Such financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
Representatives of Ernst & Young LLP are expected to be present at the Fluke
Special Meeting with the opportunity to make statements if they so desire.
Such representatives are also expected to be available to respond to
appropriate questions.
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ANNEX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 24, 1998
AMONG
DANAHER CORPORATION,
FALCON ACQUISITION CORP.
AND
FLUKE CORPORATION
<PAGE>
TABLE OF CONTENTS
ARTICLE I
The Merger
<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
Section 1.1. The Merger............................................... 1
Section 1.2. Closing.................................................. 1
Section 1.3. Effective Time........................................... 2
Section 1.4. Effects of the Merger.................................... 2
Section 1.5. Certificate of Incorporation and By-laws................. 2
Section 1.6. Directors................................................ 2
Section 1.7. Officers................................................. 2
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
Section 2.1. Effect on Capital Stock.................................. 2
Section 2.2. Exchange of Certificates................................. 3
ARTICLE III
Representations and Warranties
Section 3.1. Representations and Warranties of the Company............ 6
Section 3.2. Representations and Warranties of Parent and Sub......... 15
ARTICLE IV
Covenants Relating to Conduct of Business
Section 4.1. Conduct of Business...................................... 18
Section 4.2. No Solicitation.......................................... 20
ARTICLE V
Additional Agreements
Section 5.1. Preparation of Form S-4 and the Proxy Statement;
Stockholders' Meeting.................................... 21
Section 5.2. Access to Information; Confidentiality................... 22
Section 5.3. Reasonable Efforts; Notification......................... 22
Section 5.4. Stock Option Plans....................................... 23
Section 5.5. Benefit Plans and Employee Matters....................... 23
Section 5.6. Indemnification, Exculpation and Insurance............... 23
Section 5.7. Letters of Accountants................................... 24
</TABLE>
A-ii
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<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
Section 5.8. Fees and Expenses....................................... 24
Section 5.9. Public Announcements.................................... 25
Section 5.10. Affiliates; Accounting and Tax Treatment................ 25
Section 5.11. State Takeover Laws..................................... 26
Section 5.12. Coordination of Dividends............................... 26
ARTICLE VI
Conditions Precedent
Section 6.1. Conditions to Each Party's Obligations to Effect the
Merger.................................................. 26
Section 6.2. Additional Conditions to Obligations of Parent and Sub.. 27
Section 6.3. Additional Conditions to Obligations of the Company..... 28
ARTICLE VII
Termination, Amendment and Waiver
Section 7.1. Termination............................................. 28
Section 7.2. Effect of Termination................................... 29
Section 7.3. Amendment............................................... 30
Section 7.4. Extension; Waiver....................................... 30
Procedure for Termination, Amendment, Extension or
Section 7.5. Waiver.................................................. 30
ARTICLE VIII
General Provisions
Section 8.1. Nonsurvival of Representations and Warranties........... 30
Section 8.2. Notices................................................. 30
Section 8.3. Definitions............................................. 31
Section 8.4. Interpretation.......................................... 31
Section 8.5. Counterparts............................................ 31
Section 8.6. Entire Agreement; No Third-Party Beneficiaries.......... 32
Section 8.7. Governing Law........................................... 32
Section 8.8. Assignment.............................................. 32
Section 8.9. Enforcement............................................. 32
Exhibit 5.10 FORM OF AFFILIATE LETTER
</TABLE>
A-iii
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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.
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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
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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
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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
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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.
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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
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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
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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.
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(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
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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
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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
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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
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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. (S) 1801 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq., the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act, 42 U.S.C. (S)
9601 et seq., the Clean Water Act, 33 U.S.C. (S) 1251 et seq. and the Clean
Air Act, 42 U.S.C. (S) 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
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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
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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
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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
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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
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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
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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;
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(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 generally) 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
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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
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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
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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
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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 ACM Asset Management, Inc. ("ICM")) of the
outstanding shares of capital stock of the Company shall have refused or
failed to deliver to Parent upon
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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).
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(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
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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
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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);
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(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 foregoing; (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 termination 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
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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.
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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 98023
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.
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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
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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
<PAGE>
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:
A-2
<PAGE>
ANNEX B
[LETTERHEAD OF SALOMON SMITH BARNEY]
April 24, 1998
Board of Directors
Fluke Corporation
6920 Seaway Boulevard
Everett, Washington 98023
Ladies and Gentlemen:
You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to the holders of shares (the "Shares") of
common stock, par value $.25 per share (the "Company Common Stock"), of Fluke
Corporation (the "Company") of the consideration to be received by such
holders in the proposed acquisition of the Company by Danaher Corporation
("Danaher"), pursuant to an Agreement and Plan of Merger dated April 24, 1998
(the "Agreement"), among the Company, Danaher, and Falcon Acquisition Corp.
("Merger Sub").
As more specifically set forth in the Agreement, and subject to the terms
and conditions thereof, Merger Sub will merge (the "Proposed Merger") with and
into the Company, and each issued and outstanding Share (other than Shares
owned by Danaher, Merger Sub or the Company and shareholders who properly
dissent from the Proposed Merger) will be converted in the Proposed Merger
into the right to receive .45239 of a share of common stock, par value $.01
per share (the "Danaher Common Stock"), of Danaher, subject to adjustment to
the right to receive .90478 of a share of Danaher Common Stock in the event
that the previously announced two-for-one stock split proposed by Danaher is
approved by the shareholders of Danaher.
As you are aware, Salomon Brothers Inc, doing business as Salomon Smith
Barney (collectively with all other entities doing business as Salomon Smith
Barney, "Salomon Smith Barney"), is acting as financial advisor to the Company
in connection with the Proposed Merger and will receive a fee for such
services, a substantial portion of which is contingent upon consummation of
the Proposed Merger. Additionally, Salomon Smith Barney or its affiliates have
previously rendered certain investment banking and financial advisory services
to the Company and Danaher, for which we received customary compensation. In
addition, in the ordinary course of business, Salomon Smith Barney may
actively trade the securities of the Company and Danaher for its own account
and for the accounts of customers and, accordingly, may at any time hold a
long or short position in such securities. Salomon Smith Barney and its
affiliates (including Travelers Group Inc.) may have other business
relationships with Danaher and the Company.
In connection with rendering our opinion, we have reviewed and analyzed,
among other things, the following: (i) the Agreement; (ii) certain publicly
available information concerning the Company, including the Annual Reports on
Form 10-K of the Company for each of the years in the three-year period ended
April 25, 1997; (iii) certain internal information, primarily financial in
nature, including projections, concerning the business and operations of the
Company, prepared by the Company's management and finished to us by the
Company for purposes of our analysis; (iv) certain publicly available
information concerning the trading of, and the trading market for, the Company
Common Stock; (v) certain publicly available information concerning Danaher,
including the Annual Reports on Form 10-K of Danaher for each of the years in
the three-year period
B-1
<PAGE>
ended December 31, 1997; (vi) certain other information, primarily financial
in nature, including projections, concerning the business and operations of
Danaher, prepared by Danaher's management and furnished to us by Danaher for
purposes of our analysis; (vii) certain publicly available information
concerning the trading of, and the trading market for, the Danaher Common
Stock; (viii) certain publicly available information with respect to certain
other companies that we believe to be comparable to the Company or Danaher and
the trading markets for certain of such other companies' securities; and (ix)
certain publicly available information concerning the nature and terms of
certain other transactions that we consider relevant to our inquiry. We also
have considered such other information, financial studies, analyses,
investigations and financial, economic and market criteria that we deemed
relevant. We also have met with certain officers and employees of the Company
and Danaher to discuss the foregoing as well as other matters we believe
relevant to our inquiry.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and
other information provided to us or publicly available and have neither
attempted independently to verify nor assumed any responsibility for verifying
any of such information. With respect to financial projections and forecasts,
we have been advised by the management of the Company and Danaher and have
assumed that they were reasonably prepared and reflect the best currently
available estimates and judgment of the Company's or Danaher's management, as
the case may be, as to the future financial performance of the Company or
Danaher, as the case may be, as we express no view with respect to such
projections or forecasts or the assumptions on which they were based. We also
have assumed the Proposed Merger will be consummated in a timely manner and in
accordance with the terms of the Agreement. We have not conducted a physical
inspection of any of the properties or facilities of the Company or Danaher,
nor have we made or obtained or assumed any responsibility for making or
obtaining any independent evaluations or appraisals of any of such properties
or facilities, nor have we been furnished with any such evaluations or
appraisals.
In conducting our analysis and arriving at our opinion as expressed herein,
we have considered such financial and other factors as we have deemed
appropriate under the circumstances including, among others, the following:
(i) the historical and current financial position and results of operations of
the Company and Danaher; (ii) the business prospects of the Company and
Danaher; (iii) the historical and current market for the Company Common Stock,
the Danaher Common Stock and for the equity securities of certain other
companies that we believe to be comparable to the Company or Danaher; and (iv)
the nature and terms of certain other acquisition transactions that we believe
to be relevant. We have also taken into account our assessment of general
economic, market and financial conditions as well as our experience in
connection with similar transactions and securities valuation generally. Our
opinion necessarily is based upon conditions as they exist and can be
evaluated on the date hereof and we assume no responsibility to update or
revise our opinion based upon circumstances or events occurring after the date
hereof. Our opinion is, in any event, limited to the fairness, from a
financial point of view, of the consideration to be received by the holders of
Shares in the Proposed Merger and does not address the Company's underlying
business decision to effect the Proposed Merger or constitute a recommendation
to any holder of Shares as to how such holder should vote with respect to the
Proposed Merger. Nor does our opinion constitute an opinion or imply any
conclusion as to the price at which Danaher Common Stock will trade upon the
public announcement or the consummation of the Proposed Merger.
This opinion is intended solely for the benefit and use of the Company
(including its management and directors) in considering the transaction to
which it relates and may not be used for any other purpose or reproduced,
disseminated, quoted or referred to at any time, in any manner or for any
purpose without the prior written consent of Salomon Smith Barney, except that
this opinion may be reproduced in full in, and references to the opinion and
to Salomon Smith Barney and its relationship with the Company (in each case in
such form as Salomon Smith Barney shall approve) may be included in, the proxy
statement the Company distributes to holders of Company Common Stock in
connection with the Proposed Merger.
B-2
<PAGE>
Based upon and subject to the foregoing, it is our opinion as investment
bankers that as of the date hereof, the consideration to be received by the
holders of Shares in the Proposed Merger is fair, from a financial point of
view, to such holders.
Very truly yours,
/s/ Salomon Smith Barney
Salomon Smith Barney
B-3
<PAGE>
ANNEX C
CHAPTER 23B.13
DISSENTERS' RIGHTS
23B.13.010 DEFINITIONS.--As used in this chapter:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under RCW 23B.13.020 and who exercises that right when and
in the manner required by RCW 23B.13.200 through 23B.13.280.
(3) "Fair value," with respect to a dissenter's shares, means the value
of the shares immediately before the effective date of the corporate action
to which the dissenter objects, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be
inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair
and equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
23B.13.020 RIGHT TO DISSENT.--(1) A shareholder is entitled to dissent from,
and obtain payment of the fair value of the shareholder's shares in the event
of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party
(i) if shareholder approval is required for the merger by RCW 23B.11.030,
23B.11.080, or the articles of incorporation and the shareholder is
entitled to vote on the merger, or (ii) if the corporation is a subsidiary
that is merged with its parent under RCW 23B.11.040;
(b) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(c) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to
the shareholders within one year after the date of sale;
(d) An amendment of the articles of incorporation that materially reduces
the number of shares owned by the shareholder to a fraction of a share if
the fractional share so created is to be acquired for cash under RCW
23B.06.040; or
(e) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(2) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this chapter may not challenge the corporate action
creating the shareholder's entitlement unless the action fails to comply with
the procedural requirements imposed by this title, RCW 25.10.900 through
25.10.955, the articles of incorporation, or the bylaws, or is fraudulent with
respect to the shareholder or the corporation.
C-1
<PAGE>
(3) The right of a dissenting shareholder to obtain payment of the fair
value of the shareholder's shares shall terminate upon the occurrence of any
one of the following events:
(a) The proposed corporate action is abandoned or rescinded;
(b) A court having jurisdiction permanently enjoins or sets aside the
corporate action; or
(c) The shareholder's demand for payment is withdrawn with the written
consent of the corporation.
23B.13.030 DISSENT OF NOMINEES AND BENEFICIAL OWNERS.--(1) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in the shareholder's name only if the shareholder dissents with
respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf
the shareholder asserts dissenters' rights. The rights of a partial dissenter
under this subsection are determined as if the shares as to which the
dissenter dissents and the dissenter's other shares were registered in the
names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares held
on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder submits to the corporation the record
shareholder's written consent to the dissent no later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder does so with respect to all shares of
which such shareholder is the beneficial shareholder or over which such
shareholder has power to direct the vote.
23B.13.200 NOTICE OF DISSENTERS' RIGHTS.--(1) If proposed corporate action
creating dissenters' rights under RCW 23B.13.020 is submitted to a vote at a
shareholders' meeting, the meeting notice must state that shareholders are or
may be entitled to assert dissenters' rights under this chapter and be
accompanied by a copy of this chapter.
(2) If corporate action creating dissenters' rights under RCW 23B.13.020 is
taken without a vote of shareholders, the corporation, within ten days after
the effective date of such corporate action, shall notify in writing all
shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in RCW 23B.13.220.
23B.13.210 NOTICE OF INTENT TO DEMAND PAYMENT.--(1) If proposed corporate
action creating dissenters' rights under RCW 23B.13.020 is submitted to a vote
at a shareholders' meeting, a shareholder who wishes to assert dissenters'
rights must (a) deliver to the corporation before the vote is taken written
notice of the shareholder's intent to demand payment for the shareholder's
shares if the proposed action is effected, and (b) not vote such shares in
favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection (1) of
this section is not entitled to payment for the shareholder's shares under
this chapter.
23B.13.220 DISSENTERS' NOTICE.--(1) If proposed corporate action creating
dissenters' rights under RCW 23B.13.020 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters' notice to all
shareholders who satisfied the requirements of RCW 23B.13.210.
(2) The dissenters' notice must be sent within ten days after the effective
date of the corporate action, and must:
(a) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(b) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
C-2
<PAGE>
(c) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not the person acquired beneficial
ownership of the shares before that date;
(d) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than thirty nor more than sixty days after the
date the notice in subsection (1) of this section is delivered; and
(e) Be accompanied by a copy of this chapter.
23B.13.230 DUTY TO DEMAND PAYMENT.--(1) A shareholder sent a dissenters'
notice described in RCW 23B.13.220 must demand payment, certify whether the
shareholder acquired beneficial ownership of the shares before the date
required to be set forth in the dissenters' notice pursuant to RCW
23B.13.220(2)(c), and deposit the shareholder's certificates in accordance
with the terms of the notice.
(2) The shareholder who demands payment and deposits the shareholder's share
certificates under subsection (1) of this section retains all other rights of
a shareholder until the proposed corporate action is effected.
(3) A shareholder who does not demand payment or deposit the shareholder's
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for the shareholder's shares under this
chapter.
23B.13.240 SHARE RESTRICTIONS.--(1) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment
is received until the proposed corporate action is effected or the restriction
is released under RCW 23B.13.260.
(2) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until the effective date of
the proposed corporate action.
23B.13.250 PAYMENT.--(1) Except as provided in RCW 23B.13.270, within thirty
days of the later of the effective date of the proposed corporate action, or
the date the payment demand is received, the corporation shall pay each
dissenter who complied with RCW 23B.13.230 the amount the corporation
estimates to be the fair value of the shareholder's shares, plus accrued
interest.
(2) The payment must be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal year ending
not more than sixteen months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(b) An explanation of how the corporation estimated the fair value of the
shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under RCW
23B.13.280; and
(e) A copy of this chapter.
23B.13.260 FAILURE TO TAKE ACTION.--(1) If the corporation does not effect
the proposed action within sixty days after the date set for demanding payment
and depositing share certificates, the corporation shall return the deposited
certificates and release any transfer restrictions imposed on uncertificated
shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation wishes to undertake the proposed action, it must
send a new dissenters' notice under RCW 23B.13.220 and repeat the payment
demand procedure.
C-3
<PAGE>
23B.13.270 AFTER-ACQUIRED SHARES.--(1) A corporation may elect to withhold
payment required by RCW 23B.13.250 from a dissenter unless the dissenter was
the beneficial owner of the shares before the date set forth in the
dissenters' notice as the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action.
(2) To the extent the corporation elects to withhold payment under
subsection (1) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of the dissenter's demand. The corporation shall send with its offer an
explanation of how it estimated the fair value of the shares, an explanation
of how the interest was calculated, and a statement of the dissenter's right
to demand payment under RCW 23B.13.280.
23B.13.280 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.--
(1) A dissenter may notify the corporation in writing of the dissenter's own
estimate of the fair value of the dissenter's shares and amount of interest
due, and demand payment of the dissenter's estimate, less any payment under
RCW 23B.13.250, or reject the corporation's offer under RCW 23B.13.270 and
demand payment of the dissenter's estimate of the fair value of the
dissenter's shares and interest due, if:
(a) The dissenter believes that the amount paid under RCW 23B.13.250 or
offered under RCW 23B.13.270 is less than the fair value of the dissenter's
shares or that the interest due is incorrectly calculated;
(b) The corporation fails to make payment under RCW 23B.13.250 within
sixty days after the date set for demanding payment; or
(c) The corporation does not effect the proposed action and does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty days after the date set for
demanding payment.
(2) A dissenter waives the right to demand payment under this section unless
the dissenter notifies the corporation of the dissenter's demand in writing
under subsection (1) of this section within thirty days after the corporation
made or offered payment for the dissenter's shares.
23B.13.300 COURT ACTION.--(1) If a demand for payment under RCW 23B.13.280
remains unsettled, the corporation shall commence a proceeding within sixty
days after receiving the payment demand and petition the court to determine
the fair value of the shares and accrued interest. If the corporation does not
commence the proceeding within the sixty-day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
(2) The corporation shall commence the proceeding in the superior court of
the county where a corporation's principal office, or, if none in this state,
its registered office, is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state were the registered office of the domestic
corporation merged with or whose shares were acquired by the foreign
corporation was located.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled, parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(4) The corporation may join as a party to the proceeding any shareholder
who claims to be a dissenter but who has not, in the opinion of the
corporation, complied with the provisions of this chapter. If the court
determines that such shareholder has not complied with the provisions of this
chapter, the shareholder shall be dismissed as a party.
C-4
<PAGE>
(5) The jurisdiction of the court in which the proceeding is commenced under
subsection (2) of this section is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend decision
on the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to it. The dissenters are entitled
to the same discovery rights as parties in other civil proceedings.
(6) Each dissenter made a party to the proceeding is entitled to judgment
(a) for the amount, if any, by which the court finds the fair value of the
dissenter's shares, plus interest, exceeds the amount paid by the corporation,
or (b) for the fair value, plus accrued interest, of the dissenter's after-
acquired shares for which the corporation elected to withhold payment under
RCW 23B.13.270.
23B.13.310 COURT COSTS AND COUNSEL FEES.--(1) The court in a proceeding
commenced under RCW 23B.13.300 shall determine all costs of the proceeding,
including the reasonable compensation and expenses of appraisers appointed by
the court. The court shall assess the costs against the corporation, except
that the court may assess the costs against all or some of the dissenters, in
amounts the court finds equitable, to the extent the court finds the
dissenters acted arbitrarily, vexatiously, or not in good faith in demanding
payment under RCW 23B.13.280.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of RCW 23B.13.200 through 23B.13.280;
(b) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by Chapter 23B.13 RCW.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
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<PAGE>
FLUKE CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
For the Special Meeting of Stockholders - July 7, 1998
The undersigned hereby appoints WILLIAM G. PARZYBOK, JR. and DAVID E.
KATRI and each of them with full power of substitution, proxies of the
undersigned at the Special Meeting of Stockholders of Fluke Corporation
("Fluke"), to be held in the Auditorium at the corporate headquarters of Fluke,
6920 Seaway Boulevard, Everett, Washington, on Tuesday, July 7, 1998 at 1:00
p.m., and at all adjournments or postponements thereof, and hereby authorizes
them to represent and to vote all of the shares of the undersigned as fully as
the undersigned could do if personally present. Said proxies are herein
specifically authorized to vote the shares of Fluke which the undersigned is
entitled to vote upon a proposal to approve the Agreement and Plan of Merger,
dated April 24, 1998, among Danaher Corporation ("Danaher"), Falcon Acquisition
Corp. and Fluke (the "Merger Agreement") pursuant to which Fluke will become a
wholly-owned subsidiary of Danaher and to vote said shares upon such other
matters as may properly come before the Meeting and any adjournment or
postponement thereof, as the above named proxies shall determine.
The shares represented by this Proxy will be voted or not voted on the
matters set forth in accordance with the specifications indicated therein.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
<PAGE>
1. Approval of the Merger Agreement. To approve the Merger Agreement pursuant to
which Fluke will become a wholly-owned subsidiary of Danaher and all outstanding
shares of Fluke common stock, par value $.25 per share, will be converted into
shares of Danaher common stock, par value $.01 per share.
[_] FOR [_] AGAINST [_] ABSTAIN
2. Other Business. To transact such other business as may properly come before
the meeting and all adjournments or postponements thereof.
If no specification is made with respect hereto, such shares will be voted FOR
approval of the Merger Agreement and either for or against such other matters as
may properly come before the meeting or any adjournment or postponement thereof,
as the above named proxies may determine.
Signature: ________________________ Date: _________________
Signature: ________________________ Date: _________________
Sign exactly as the name appears on your stock certificate.
When signing as attorney, executor, administrator, guardian
or corporate official, please give your full title as such.
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