<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 8, 1995
REGISTRATION NO. 33-63643
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
HEWLETT-PACKARD COMPANY
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
CALIFORNIA 3571 94-1081436
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
3000 HANOVER STREET
PALO ALTO, CALIFORNIA 94304-1181
(415) 857-1501
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
------------------------
D. CRAIG NORDLUND
SECRETARY
HEWLETT-PACKARD COMPANY
3000 HANOVER STREET
PALO ALTO, CALIFORNIA 94304-1181
(415) 857-1501
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
------------------------
WITH A COPY TO:
PHILIP N. CARDMAN
SECRETARY
CONVEX COMPUTER CORPORATION
3000 WATERVIEW PARKWAY
RICHARDSON, TEXAS 75080
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the Registration Statement becomes
effective and certain other conditions under the Merger Agreement are met or
waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
CROSS REFERENCE SHEET
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FORM S-4 ITEM LOCATION IN PROXY STATEMENT/PROSPECTUS
- ------------------------------------------------- --------------------------------------------
<S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus.... Facing Page; Cross Reference Sheet; Outside
Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus............................. Table of Contents; Available Information;
Incorporation of Certain Documents by
Reference
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............. Summary; Selected Financial Data;
Comparative Per Share Data; Market Price
Information; Risk Factors; The Merger; The
Merger Agreement and Related Agreements;
Comparison of Stockholders' Rights
4. Terms of the Transaction.................. Summary; The Merger; The Merger Agreement
and Related Agreements; Comparison of
Stockholders' Rights
5. Pro Forma Financial Information........... Not applicable
6. Material Contacts with the Company Being
Acquired.................................. Summary; The Merger; The Merger Agreement
and Related Agreements
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters........................ Not applicable
8. Interests of Named Experts and Counsel.... Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................... Not applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3
Registrants............................... Available Information; Incorporation of
Certain Documents by Reference; Summary; The
Merger; The Merger Agreement and Related
Agreements; Selected Financial Data;
Comparative Per Share Data; Market Price
Information
11. Incorporation of Certain Information by
Reference................................. Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2 or S-3
Registrants............................... Not applicable
13. Incorporation of Certain Information by
Reference................................. Not applicable
</TABLE>
<PAGE> 3
<TABLE>
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FORM S-4 ITEM LOCATION IN PROXY STATEMENT/PROSPECTUS
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<S> <C>
14. Information with Respect to Registrants
Other Than S-2 or S-3 Registrants......... Not applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3
Companies................................. Available Information; Incorporation of
Certain Documents by Reference; Summary; The
Merger; The Merger Agreement and Related
Agreements; Selected Financial Data;
Comparative Per Share Data; Market Price
Information
16. Information with Respect to S-2 or S-3
Companies................................. Not applicable
17. Information with Respect to Companies
Other Than S-2 or S-3 Companies........... Not applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited........ Outside Front Cover Page; Summary; The
Special Meeting; The Merger; The Merger
Agreement and Related Agreements; Comparison
of Stockholders' Rights; Other Matters
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer...................... Not applicable
</TABLE>
<PAGE> 4
CONVEX COMPUTER CORPORATION
3000 WATERVIEW PARKWAY
RICHARDSON, TEXAS 75080
November 9, 1995
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders of
Convex Computer Corporation ("Convex") to be held at 10:00 a.m., local time, on
December 20, 1995, at the UTD Conference Center Auditorium, 2601 North Floyd
Road, Richardson, Texas 75080 (the "Special Meeting"). At the Special Meeting,
we will be voting on whether Convex should be acquired by Hewlett-Packard
Company ("HP") through the merger of a wholly-owned subsidiary of HP with and
into Convex (the "Merger"). The Merger is more fully described in the attached
Proxy Statement/Prospectus.
The entire Board of Directors of Convex (the "Convex Board") believes that
the Merger is of the utmost importance to you as a stockholder. To proceed with
the Merger, we must receive the approval of stockholders owning a majority of
outstanding shares of Convex's Common Stock. Even if you plan to attend the
Special Meeting, I urge you to sign and return the enclosed Proxy immediately.
If the Merger is approved, each share of Convex Common Stock will be
converted into and exchanged for that fraction of a share of HP Common Stock as
is determined by dividing $4.83 by the average closing price of HP Common Stock
for the ten trading day period ending two trading days prior to the effective
time of the Merger (the "Conversion Fraction"). Since only whole shares of HP
Common Stock will be issued in the Merger, cash will be paid in lieu of
fractional shares.
I urge you to read the Proxy Statement/Prospectus, particularly with regard
to the sections entitled "The Merger -- Convex's Reasons for the Merger," and
"-- Analysis of the Merger and Alternatives." The Convex Board evaluated a
number of alternatives in an effort to determine which course of action would
best maximize stockholder values given the current business and business
prospects of Convex. AFTER CAREFUL CONSIDERATION, THE CONVEX BOARD HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT, HAS DETERMINED THAT THE MERGER IS IN
THE BEST INTERESTS OF CONVEX AND ITS STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT
AND APPROVAL OF THE MERGER.
Once again, I urge you to sign, date and return the enclosed proxy
immediately.
Sincerely,
Robert J. Paluck
Chairman of the Board and
Chief Executive Officer
<PAGE> 5
CONVEX COMPUTER CORPORATION
3000 WATERVIEW PARKWAY
RICHARDSON, TEXAS 75080
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 20, 1995
TO THE STOCKHOLDERS OF CONVEX COMPUTER CORPORATION:
NOTICE IS HEREBY GIVEN that a special meeting of the stockholders of Convex
Computer Corporation, a Delaware corporation ("Convex"), will be held at 10:00
a.m., local time, on December 20, 1995, at the UTD Conference Center Auditorium,
2601 North Floyd Road, Richardson, Texas 75080 (the "Special Meeting"), to
consider and vote upon the following proposals:
1. To approve and adopt the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of September 21, 1995, by and among
Hewlett-Packard Company ("HP"), Gemini Project Corporation, a
wholly-owned subsidiary of HP ("Subsidiary"), and Convex and to approve
the merger (the "Merger") of Subsidiary with and into Convex pursuant
to the Merger Agreement. As a result of the Merger, Convex will become
a wholly-owned subsidiary of HP and each share of common stock of
Convex will be converted into that fraction of a share of HP common
stock as is determined by dividing $4.83 by the average closing price
of HP common stock for the ten trading day period ending two trading
days prior to the effective time of the Merger. A copy of the Merger
Agreement is attached as Annex A to the Proxy Statement/Prospectus
accompanying this Notice.
2. To transact such other business as may properly come before the Special
Meeting or any adjournments or postponements thereof.
Details of the proposed Merger and other important information concerning
HP and Convex are more fully described in the accompanying Proxy
Statement/Prospectus. Please give this material your careful attention.
All stockholders are cordially invited to attend the Special Meeting in
person. However, to ensure your representation at the Special Meeting, you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage prepaid envelope enclosed for that purpose.
YOU MAY REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS AT ANY TIME BEFORE IT HAS BEEN VOTED AT THE SPECIAL
MEETING. ANY STOCKHOLDER ATTENDING THE SPECIAL MEETING MAY VOTE IN PERSON EVEN
IF HE OR SHE HAS RETURNED A PROXY.
Sincerely,
Philip N. Cardman
Secretary
Richardson, Texas
November 9, 1995
<PAGE> 6
LOGO LOGO
CONVEX COMPUTER CORPORATION
PROXY STATEMENT
------------------------
HEWLETT-PACKARD COMPANY
PROSPECTUS
------------------------
This Proxy Statement/Prospectus is being furnished to holders of common
stock, $.01 par value ("Convex Common Stock"), of Convex Computer Corporation, a
Delaware corporation ("Convex"), in connection with the solicitation of proxies
by the Board of Directors of Convex (the "Convex Board") for use at a special
meeting of Convex stockholders (the "Special Meeting") to be held at 10:00 a.m.,
local time, on December 20, 1995, at the UTD Conference Center Auditorium, 2601
North Floyd Road, Richardson, Texas 75080, and at any adjournments or
postponements thereof, for the purposes set forth herein and in the accompanying
Notice of Special Meeting of Stockholders of Convex.
This Proxy Statement/Prospectus constitutes a prospectus of Hewlett-Packard
Company, a California corporation ("HP"), with respect to the issuance and
delivery of shares of common stock, $1.00 par value, of HP ("HP Common Stock")
in connection with the merger (the "Merger") of Gemini Project Corporation, a
Delaware corporation and wholly-owned subsidiary of HP ("Subsidiary"), with and
into Convex, pursuant to the Agreement and Plan of Merger, dated as of September
21, 1995, by and among HP, Subsidiary and Convex (the "Merger Agreement"). As a
result of the Merger, Convex will become a wholly-owned subsidiary of HP. Upon
the effectiveness of the Merger (the "Effective Time"), (i) each outstanding
share of Convex Common Stock will be converted into that fraction of a share
(the "Conversion Fraction") of HP Common Stock as is determined by dividing
$4.83 by the average closing price of HP Common Stock for the ten trading day
period ending two trading days prior to the Effective Time, and (ii) each
outstanding option to purchase Convex Common Stock will thereafter constitute an
option to acquire that number of whole shares of HP Common Stock equal to the
number of shares of Convex Common Stock issuable with respect to such option
multiplied by the Conversion Fraction, at a price equal to the exercise price
per share of Convex Common Stock divided by the Conversion Fraction.
SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE SECURITIES REFERRED TO HEREIN.
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.
------------------------
This Proxy Statement/Prospectus and the accompanying form of proxy are
first being mailed to stockholders of Convex on or about November 14, 1995.
The date of this Proxy Statement/Prospectus is November 9, 1995.
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
AVAILABLE INFORMATION................................................................. 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................................... 1
SUMMARY............................................................................... 3
Business of HP...................................................................... 3
Business of Convex.................................................................. 4
Date and Place of the Special Meeting............................................... 4
The Merger; Purpose of the Special Meeting.......................................... 4
Stockholders Entitled to Vote....................................................... 5
Vote Required....................................................................... 5
Recommendation...................................................................... 5
Effective Time of the Merger........................................................ 5
Solicitation of Other Proposals..................................................... 6
Conditions to the Merger............................................................ 6
Termination......................................................................... 6
Exchange of Certificates............................................................ 6
Accounting Treatment................................................................ 7
Certain Federal Income Tax Consequences............................................. 7
Regulatory Matters.................................................................. 7
Certain Legal Proceedings........................................................... 7
No Appraisal Rights................................................................. 8
SELECTED FINANCIAL DATA............................................................... 9
COMPARATIVE PER SHARE DATA............................................................ 11
MARKET PRICE INFORMATION.............................................................. 12
RISK FACTORS.......................................................................... 13
THE SPECIAL MEETING................................................................... 14
General............................................................................. 14
Matters to Be Considered at the Special Meeting; Recommendation of the Convex
Board............................................................................ 14
Record Date; Voting at the Special Meeting; Vote Required........................... 14
Proxies............................................................................. 15
THE MERGER............................................................................ 16
General............................................................................. 16
Background of the Merger............................................................ 16
Convex's Reasons for the Merger..................................................... 19
Analysis of the Merger and Alternatives............................................. 20
Role of Investment Banks............................................................ 23
Recommendation of the Convex Board.................................................. 24
HP's Reasons for the Merger......................................................... 24
Accounting Treatment................................................................ 24
Certain Federal Income Tax Consequences............................................. 24
Regulatory Matters.................................................................. 25
Certain Legal Proceedings........................................................... 25
THE MERGER AGREEMENT AND RELATED AGREEMENTS........................................... 27
Effective Time of the Merger........................................................ 27
Corporate Structure After the Merger................................................ 27
Conversion of Shares................................................................ 27
Treatment of Convex Stock Option Plans and Employee Stock Purchase Plan............. 28
Conduct of Business of Convex Pending the Merger.................................... 28
Solicitation of Other Proposals..................................................... 29
Certain Covenants................................................................... 29
Conditions to the Merger............................................................ 29
</TABLE>
i
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PAGE
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Termination; Amendment.............................................................. 30
Fees and Expenses................................................................... 31
Agreements of Convex Affiliates..................................................... 31
COMPARISON OF STOCKHOLDERS' RIGHTS.................................................... 32
EXPERTS............................................................................... 35
LEGAL MATTERS......................................................................... 35
OTHER MATTERS......................................................................... 35
ANNEX A: AGREEMENT AND PLAN OF MERGER
</TABLE>
ii
<PAGE> 9
AVAILABLE INFORMATION
HP and Convex are each subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by HP and Convex can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices at 7 World Trade Center, Suite 1300, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can also be obtained from the Public Reference
Section of the Commission, Washington, D.C. 20549 at prescribed rates. In
addition, the common stock of each of HP and Convex is listed on the New York
Stock Exchange ("NYSE"). Copies of reports, proxy statements and other
information can be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005.
HP has filed with the Commission a Registration Statement on Form S-4
(together with any amendments or supplements thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the HP Common Stock to be issued by HP in the Merger. This Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement and reference is hereby made to the Registration
Statement for further information regarding HP and the HP Common Stock. Copies
of the Registration Statement may be obtained from the Commission's principal
office in Washington, D.C.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by HP with the Commission are incorporated by
reference in this Proxy Statement/Prospectus:
1. Annual Report on Form 10-K for the fiscal year ended October 31, 1994.
2. Quarterly Report on Form 10-Q for the fiscal quarter ended January 31,
1995.
3. Quarterly Report on Form 10-Q for the fiscal quarter ended April 30,
1995.
4. Quarterly Report on Form 10-Q for the fiscal quarter ended July 31,
1995.
5. The description of HP's capital stock contained in HP's Registration
Statement under the Exchange Act filed on or about November 6, 1957 and
the Amended and Restated Articles of Incorporation which appeared as
Exhibit 3(i) to the Quarterly Report on Form 10-Q for the fiscal quarter
ended April 30, 1995.
The following documents filed by Convex with the Commission are
incorporated by reference in this Proxy Statement/Prospectus:
1. Annual Report on Form 10-K for the year ended December 31, 1994.
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1995.
3. Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.
4. Quarterly Report on Form 10-Q for the quarter ended September 30, 1995.
All documents filed by HP and Convex 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 date of the Special Meeting shall be deemed to be incorporated
by reference in this Proxy Statement/Prospectus and to be a part hereof from the
dates of filing of such documents. Statements contained in this Proxy
Statement/Prospectus as to the contents of any contract or other document
referred to herein are not necessarily complete and, in each instance, reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement, each such statement being qualified in all respects
by such reference. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
1
<PAGE> 10
superseded for purposes of this Proxy Statement/Prospectus to the extent that a
statement contained herein or in any other subsequently filed document that also
is or is 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.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (WITHOUT
EXHIBITS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED THEREIN BY
REFERENCE) ARE AVAILABLE WITHOUT CHARGE UPON REQUEST. REQUESTS FOR HP DOCUMENTS
SHOULD BE DIRECTED TO HEWLETT-PACKARD COMPANY, 3000 HANOVER STREET, PALO ALTO,
CALIFORNIA 94304 (TELEPHONE (415) 857-1501), ATTENTION: SECRETARY. REQUESTS FOR
CONVEX DOCUMENTS SHOULD BE DIRECTED TO CONVEX COMPUTER CORPORATION, 3000
WATERVIEW PARKWAY, RICHARDSON, TEXAS 75080 (TELEPHONE (214) 497-4000),
ATTENTION: INVESTOR RELATIONS. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE PRIOR TO DECEMBER 13, 1995.
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED OR INCORPORATED IN THIS PROXY STATEMENT/PROSPECTUS
IN CONNECTION WITH THE MATTERS REFERRED TO HEREIN AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN SO
AUTHORIZED BY HP OR BY CONVEX. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO
WHICH IT RELATES, OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER
WOULD BE UNLAWFUL. THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS SHALL NOT,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
2
<PAGE> 11
SUMMARY
The following is a summary of certain information about HP, Convex, the
Merger and the Merger Agreement and is qualified in its entirety by reference to
the full text of this Proxy Statement/Prospectus, the annex hereto and the
documents incorporated herein by reference. Stockholders are urged to read this
Proxy Statement/Prospectus and the accompanying annex in their entirety. See
"Risk Factors" for certain information that should be considered by the
stockholders of Convex.
BUSINESS OF HP
Hewlett-Packard Company, together with its consolidated subsidiaries, is
engaged worldwide in the design, manufacture and service of electronic equipment
and systems for measurement, computation and communications. HP offers a wide
variety of systems and standalone products, including computer systems, personal
computers, printers and other peripheral products, electronic test equipment and
systems, medical electronic equipment, calculators and other personal
information products, solid state components and instrumentation for chemical
analysis. These products are used in industry, business, engineering, science,
education and medicine.
HP's computers, computer systems, personal information products, personal
peripheral products and other peripherals are used in a variety of applications,
including scientific and engineering computation and analysis, instrument
control and business information management. HP's core computing products and
technologies include its PA-RISC architecture for systems and workstations and
software infrastructure for open systems. HP's general-purpose computers and
computer systems include scalable families of systems, servers and personal
computers for use in the home, small workgroups, larger departments and entire
data centers. HP offers software programming services, network services,
distributed system services and data management services. Customers of HP's
computers, computer systems and software infrastructure products include
original equipment manufacturers, dealers, value-added resellers and retailers,
as well as end users for a variety of applications.
HP's peripheral products include a variety of system and desktop printers,
such as the HP LaserJet family; the HP DeskJet family, which is based on HP's
thermal inkjet technology; a family of graphic plotters and page scanners; video
display terminals; disk (magnetic and optical) and tape drives and related
autochangers.
HP also produces measurement systems for use in electronics, medicine and
analytical chemistry. Test and measurement instruments include voltmeters and
multimeters that measure voltage, current and resistance; counters that measure
the frequency of an electrical signal; oscilloscopes and logic analyzers that
measure electrical changes in relation to time; signal generators that provide
the electrical stimulus for the testing of systems and components; specialized
communications and semiconductor test equipment; video servers used in broadband
information networks; and atomic frequency standards, which are used in accurate
time-interval and timekeeping applications. Instruments for medical applications
include continuous monitoring systems for critical-care patients, medical
data-management systems, fetal monitors, electrocardiographs, cardiac
catheterization laboratory systems, blood gas measuring instruments, diagnostic
ultrasonic imaging systems and cardiac defibrillators. Instruments for
analytical applications include gas and liquid chromatographs, mass
spectrometers, laboratory data systems and spectrophotometers.
HP also manufactures electronic component products consisting principally
of microwave semiconductor, fiber-optic and optoelectronic devices, including
light-emitting diodes (LEDs). The products primarily are sold to other
manufacturers for incorporation into their electronic products but also are used
in many of HP's products.
HP provides service for its equipment, systems and peripherals, including
support and maintenance services, parts and supplies for design and
manufacturing systems, office and information systems, general-purpose
instruments, computers and computer systems, peripherals and network products.
HP has approximately 600 sales offices and distributorships in more than
120 countries.
3
<PAGE> 12
HP's principal executive offices are located at 3000 Hanover Street, Palo
Alto, California 94304. Its telephone number is (415) 857-1501.
BUSINESS OF CONVEX
Convex Computer Corporation designs, manufactures, markets and supports
high performance computers for engineering, scientific and technical users.
Convex's current products include multiple processor Exemplar scalable parallel
processing ("SPP") systems, single and multiple processor C Series scalar/vector
systems and related software.
Exemplar SPP systems are based on HP's PA-RISC microprocessors and have an
operating system that is compatible with HP's HP-UX operating system. As a
result, application software written for HP's PA-RISC-based workstation products
will generally operate on Exemplar SPP systems without modification. Exemplar
SPP systems utilize a distributed, scalable operating system that has a shared
view of distributed memory. They also have a development and computing
environment that is easily integrated with other computing resources. Current
systems may include up to 128 processors with scalable memory, input/output
capability and operating system features that are balanced with the processing
capability of a specific configuration.
Convex C Series supercomputer systems use all three forms of processing
common in scientific and engineering applications: scalar processing, in which
operations are performed on one element at a time; vector processing, in which
simultaneous operations occur on arrays of data; and parallel processing, in
which two or more processors simultaneously operate on different portions of a
program. During 1994, Convex introduced its fourth generation scalar/vector
supercomputer, the C4 series.
Convex systems are used by scientists, engineers and other technical users
to design and develop new products and structures, to simulate physical and
other phenomena, to perform advanced research and to manage and analyze the
volumes of data generated or collected by modern computer networks. They are
typically integrated with third party applications software to analyze and solve
computationally intensive problems. For example, third party mechanical
computer-aided engineering applications, such as MSC/NASTRAN and ANSYS, are used
to perform structural analysis of automobile components and other products.
Researchers supplement traditional laboratory environments with complex
numerical simulations to advance the state-of-the-art in medicine, environmental
science, oceanography, chemistry and other fields. Government and defense
industry customers use Convex systems in a variety of areas, including
computational fluid dynamics, signal and image processing, telemetry,
cryptography and pattern recognition. In the oil and gas industry, Convex
systems are used to process and interpret seismic data, to analyze well logs and
to model reservoir behavior.
Convex sells and services its products through direct sales offices located
around the world and a distribution network which includes HP. Convex hardware
and software experts provide telephone and on-site support services, including
training, preventative maintenance and problem resolution services, for systems
installed in 48 countries.
Convex is a Delaware corporation and its principal executive offices are
located at 3000 Waterview Parkway, Richardson, Texas 75080. Its telephone number
at that location is (214) 497-4000.
DATE AND PLACE OF THE SPECIAL MEETING
The Special Meeting will be held on December 20, 1995, at 10:00 a.m., local
time, at the UTD Conference Center Auditorium, 2601 North Floyd Road,
Richardson, Texas 75080.
THE MERGER; PURPOSE OF THE SPECIAL MEETING
The Merger. As a result of the Merger, each outstanding share of Convex
Common Stock will be converted into the right to receive the Conversion Fraction
of a share of HP Common Stock. Cash will be paid in lieu of issuance of
fractional shares. Upon consummation of the Merger, each then outstanding option
to purchase Convex Common Stock will be assumed by HP and will thereafter
constitute an option to acquire
4
<PAGE> 13
that number of shares of HP Common Stock equal to the number of shares of Convex
Common Stock issuable with respect to such option multiplied by the Conversion
Fraction, at a price equal to the exercise price per share of Convex Common
Stock divided by the Conversion Fraction. Subject to the consummation of the
Merger, Convex will apply the funds credited as of the last payday on or prior
to the Effective Time in each participant's payroll withholdings account under
the Convex 1995 Employee Stock Purchase Plan to the purchase of whole shares of
Convex Common Stock. After the Effective Time, the 6% Convertible Subordinated
Debentures due March 1, 2012 (the "Debentures") issued by Convex will be
convertible, at the option of the holders, into whole shares of HP Common Stock
at a conversion price determined by dividing $21.75, the current price at which
the Debentures are convertible into Convex Common Stock, by the Conversion
Fraction. HP will not succeed to the rights and obligations of Convex under the
Indenture dated as of March 1, 1987 relating to the Debentures (the "Indenture")
at the Effective Time. See "The Merger Agreement and Related
Agreements -- Conversion of Shares" and "-- Treatment of Convex Stock Option
Plans and Employee Stock Purchase Plan."
Purpose of the Special Meeting. At the Special Meeting, the stockholders
of Convex will consider and vote upon proposals (i) to approve and adopt the
Merger Agreement and to approve the Merger and (ii) to transact such other
business as may properly come before the Special Meeting or any adjournments or
postponements thereof. See "The Special Meeting -- Matters to Be Considered at
the Special Meeting."
STOCKHOLDERS ENTITLED TO VOTE
The close of business on November 9, 1995 is the record date (the "Record
Date") for determining the holders of Convex Common Stock entitled to vote at
the Special Meeting. At that date, 26,796,302 shares of Convex Common Stock were
outstanding and were held by approximately 1,700 holders of record. At that
date, directors and executive officers of Convex and their affiliates owned
approximately 4.7% of the outstanding shares of Convex Common Stock. In
addition, at the Record Date HP owned approximately 4.5% of the outstanding
shares of Convex Common Stock. See "The Special Meeting -- Record Date; Voting
at the Special Meeting; Vote Required."
VOTE REQUIRED
Approval and adoption of the Merger Agreement and approval of the Merger
will require the affirmative vote of the holders of a majority of the shares of
Convex Common Stock outstanding as of the Record Date. Approximately 9.2% of the
shares of the Convex Common Stock is held by HP and the directors and executive
officers of Convex and their affiliates. See "The Special Meeting -- Record
Date; Voting at the Special Meeting; Vote Required."
RECOMMENDATION
After careful consideration, the Convex Board has unanimously approved the
Merger and the Merger Agreement and recommends that holders of Convex Common
Stock vote "FOR" the approval and adoption of the Merger Agreement and approval
of the Merger. The Convex Board will not receive a fairness opinion in
connection with this transaction. See "The Merger -- Convex's Reasons for the
Merger," "-- Analysis of the Merger and Alternatives" and "-- Recommendation of
the Convex Board."
The Executive Committee of the Board of Directors of HP has approved the
Merger Agreement and the issuance of HP Common Stock in the Merger. See "The
Merger -- HP's Reasons for the Merger."
EFFECTIVE TIME OF THE MERGER
As promptly as practicable after the satisfaction or waiver of the
conditions set forth in the Merger Agreement, the parties thereto will file a
Certificate of Merger with the Secretary of State of the State of Delaware. The
Merger will become effective upon such filing. See "The Merger Agreement and
Related Agreements -- Effective Time of the Merger."
5
<PAGE> 14
SOLICITATION OF OTHER PROPOSALS
Nothing in the Merger Agreement prevents the Convex Board from soliciting
or encouraging, or from considering or negotiating, another proposal for a
merger or similar transaction (an "Acquisition Proposal"). Convex, through its
financial advisors, PaineWebber Incorporated ("PaineWebber"), has commenced
efforts to solicit alternative proposals from potential acquirors. In addition,
nothing in the Merger Agreement prevents the Convex Board from approving or
recommending an Acquisition Proposal if the Convex Board determines that such
Acquisition Proposal would result in a transaction more favorable to Convex's
stockholders from a financial point of view than the transaction contemplated by
the Merger Agreement (a "Superior Proposal"). If Convex accepts or recommends to
its stockholders a Superior Proposal and either HP or Convex terminates the
Merger Agreement, Convex will be required to pay to HP the sum of $3,750,000,
plus HP's expenses. See "The Merger -- Analysis of the Merger and Alternatives"
and "The Merger Agreement and Related Agreements -- Solicitation of Other
Proposals," "-- Termination; Amendment" and "-- Fees and Expenses."
CONDITIONS TO THE MERGER
Consummation of the Merger is subject to the satisfaction of various
conditions, including that: (i) the Merger has been approved by the requisite
vote of the stockholders of Convex; (ii) any waiting period applicable to the
consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), has expired or been terminated; (iii)
the Registration Statement has become effective and no stop order suspending the
effectiveness thereof is in effect; (iv) no order, statute, rule, regulation,
executive order, decree or judgment has been enacted, entered, issued,
promulgated or enforced by any court or governmental authority which prohibits
or restricts the consummation of the Merger; (v) no injunction, restraining
order or other order has been issued that prohibits, restrains, seeks to
invalidate or seeks to set aside consummation of the Merger; (vi) HP and Convex
each have received from the other party certificates to the effect that such
party has performed and complied with the agreements and obligations contained
in the Merger Agreement and that the representations and warranties of such
party are true and correct in all material respects as of the Effective Time;
(vii) HP has received certain letters from Ernst & Young LLP and Price
Waterhouse LLP relating to the accounting treatment of the Merger; and (viii)
since the date of the Merger Agreement, there has been no material adverse
change in, and no event, occurrence or development in the business of either
Convex or HP that, taken together with other events, occurrences and
developments with respect to such business, would have or would reasonably be
expected to have a material adverse effect on, the business, operations or
financial condition of either Convex or HP and its respective subsidiaries,
taken as a whole. At any time prior to the Effective Time, to the extent legally
allowed, Convex (without the approval of its stockholders) and HP may waive
compliance with any of the agreements or satisfaction of any of the conditions
to closing contained in the Merger Agreement for the benefit of that company.
See "The Merger Agreement and Related Agreements -- Conditions to the Merger."
TERMINATION
The Merger Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time, whether before or after approval by the
stockholders of Convex, under the circumstances specified in the Merger
Agreement, including, without limitation, by mutual consent of HP and Convex, by
either party if the Merger is not consummated by January 31, 1996, and by either
party if Convex accepts or recommends to its stockholders a Superior Proposal.
Under certain circumstances, Convex may be required to pay a termination fee if
the Merger Agreement is terminated. See "The Merger Agreement and Related
Agreements -- Termination; Amendment" and "-- Fees and Expenses."
EXCHANGE OF CERTIFICATES
If the Merger becomes effective, HP will mail to each record holder of
Convex Common Stock a notice and form of letter of transmittal advising the
holder of the procedure for surrendering certificates representing Convex Common
Stock in exchange for certificates representing whole shares of HP Common Stock
to which
6
<PAGE> 15
the holder is entitled and cash payments in lieu of fractional shares. See "The
Merger Agreement -- Conversion of Shares."
CERTIFICATES SHOULD NOT BE SURRENDERED UNTIL THE LETTER OF TRANSMITTAL
IS RECEIVED.
ACCOUNTING TREATMENT
The Merger is expected to be accounted for as a pooling of interests under
Accounting Principles Board Opinion No. 16. It is a condition to HP's obligation
to consummate the Merger that HP has received letters from Ernst & Young LLP and
Price Waterhouse LLP to the effect that such accounting treatment is
appropriate. See "The Merger -- Accounting Treatment."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is expected to qualify as a tax-deferred reorganization under
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"). No
ruling has been or will be obtained from the Internal Revenue Service (the
"IRS") with respect to the Merger. Consummation of the Merger is not conditioned
on the receipt of opinions from counsel as to the tax consequences of the
Merger. Further, cash received in lieu of fractional shares will be taxable.
Holders of Convex Common Stock should consult with their tax advisors with
respect to the federal, state, local and foreign tax consequences of the Merger.
See "The Merger -- Certain Federal Income Tax Consequences."
REGULATORY MATTERS
Under the HSR Act, and the rules promulgated thereunder, the Merger may not
be consummated until notifications have been given and certain information has
been furnished to the Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Justice Department (the "Antitrust Division"), and
specified waiting period requirements have been satisfied. HP and Convex have
each filed with the FTC and the Antitrust Division a Notification and Report
Form with respect to the Merger. The required waiting period under the HSR Act
expired on November 5, 1995. See "The Merger -- Regulatory Matters."
CERTAIN LEGAL PROCEEDINGS
On September 22, 1995, an action titled Joanne Hoffman v. Robert J. Paluck,
Steven J. Wallach, Erich Bloch, H. Berry Cash, Max D. Hopper, Sam K. Smith,
Howard D. Wolfe, Convex Computer Corporation and Hewlett-Packard Company (the
"Hoffman Action") was filed in the State of Delaware against Convex, HP and the
individual members of the Convex Board. The Hoffman Action alleges, among other
things, that the proposed price per share for the Convex Common Stock in the
pending merger between Convex and a wholly-owned subsidiary of HP is unfairly
low and does not accurately reflect the intrinsic value of the Convex Common
Stock. The Hoffman Action further alleges that the members of the Convex Board
breached their fiduciary duties to Convex by failing to conduct an auction of
Convex before signing the Merger Agreement and that the Convex Board failed to
exercise independent judgment in agreeing to the Merger. The Hoffman Action
alleges that HP owes a fiduciary duty to the stockholders of Convex. The Hoffman
Action requests, among other things, that the court enjoin the consummation of
the Merger, as well as unspecified damages, and certification as a class action.
On October 2, 1995, a second action titled Gail Gomberg v. Robert J.
Paluck, Steven J. Wallach, Erich Bloch, H. Berry Cash, Max D. Hopper, Sam K.
Smith, Howard D. Wolfe, Convex Computer Corporation and Hewlett-Packard Company
(the "Gomberg Action") was filed in the State of Delaware against Convex, HP and
the Convex Board. The Gomberg Action alleges, among other things, that the
Merger is unfair to Convex and its stockholders for the following reasons: (i)
the Convex Board did not conduct an auction before entering into the Merger
Agreement, (ii) the price offered for shares of Convex Common Stock in the
Merger was below the market price on the date that the Merger Agreement was
signed, (iii) the Merger will deny the Convex stockholders the right to maximize
the value of their securities through the loss of a premium that could be
available from other suitors, and (iv) by conducting the foregoing acts, the
Convex Board breached
7
<PAGE> 16
their fiduciary duties to Convex and its stockholders. The Gomberg Action also
alleges that HP aided and abetted the members of the Convex Board in breaching
their fiduciary duties. The Gomberg Action seeks an injunction against the
Merger, as well as unspecified damages, certification as a class action and
other forms of relief.
On October 3, 1995, a third action titled Glenn Faegenburg v. Convex
Computer Corporation, Robert J. Paluck, Steven J. Wallach, Erich Bloch, H. Berry
Cash, Max D. Hopper, Sam K. Smith and Howard D. Wolfe (the "Faegenburg Action")
was filed in the State of Delaware against Convex and the individual members of
the Convex Board. The Faegenburg Action alleges, among other things, that the
proposed price per share is unfairly low and that the members of the Convex
Board breached their fiduciary duties to the Convex stockholders. The Faegenburg
Action seeks an injunction against the Merger, as well as unspecified damages
and certification as a class action as well as other forms of relief.
While no assurance can be given as to the result of the above described
actions, HP and Convex believe that each of the above actions lack merit and
intend to defend these actions vigorously.
NO APPRAISAL RIGHTS
Convex is incorporated in the State of Delaware, and, accordingly, is
governed by the provisions of the Delaware General Corporation Law (the
"Delaware Law"). Pursuant to Section 262(b)(1) of the Delaware Law, the
stockholders of Convex are not entitled to appraisal rights in connection with
the Merger because Convex Common Stock is listed on the NYSE and such
stockholders will receive as consideration in the Merger only shares of HP
Common Stock, which shares will also be listed on the NYSE as of the closing of
the Merger, and cash in lieu of fractional shares. See "Comparison of
Stockholders' Rights."
8
<PAGE> 17
SELECTED FINANCIAL DATA
The following selected financial data of HP and Convex has been derived
from their respective historical consolidated financial statements and should be
read in conjunction with such consolidated financial statements and the notes
thereto, which are incorporated by reference into this Proxy
Statement/Prospectus.
HEWLETT-PACKARD COMPANY
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE
NINE MONTHS
ENDED
JULY 31, FOR THE YEAR ENDED OCTOBER 31,
----------------- -----------------------------------------------
1995 1994 1994 1993 1992 1991 1990
------- ------- ------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND EMPLOYEES)
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. orders..................... $10,333 $ 8,285 $11,692 $ 9,462 $ 7,569 $ 6,484 $ 6,143
International orders............ 13,425 10,186 13,658 11,310 9,192 8,192 7,342
------- ------- ------- ------- ------- ------- -------
Total orders.................... $23,758 $18,471 $25,350 $20,772 $16,761 $14,676 $13,485
Net revenue..................... $22,471 $17,989 $24,991 $20,317 $16,410 $14,494 $13,233
Earnings from operations........ $ 2,631 $ 1,779 $ 2,549 $ 1,879 $ 1,404 $ 1,210 $ 1,162
Earnings before effect of 1992
accounting change............. $ 1,755 $ 1,123 $ 1,599 $ 1,177 $ 881 $ 755 $ 739
Net earnings.................... $ 1,755 $ 1,123 $ 1,599 $ 1,177 $ 549 $ 755 $ 739
Per share (1), (2):
Earnings before effect of 1992
accounting change............. $ 3.34 $ 2.15 $ 3.07 $ 2.33 $ 1.75 $ 1.51 $ 1.53
Net earnings.................. $ 3.34 $ 2.15 $ 3.07 $ 2.33 $ 1.09 $ 1.51 $ 1.53
Cash dividends................ $ .70 $ .55 $ .55 $ .45 $ .36 $ .24 $ .21
At period-end:
Total assets.................. $22,626 $18,503 $19,567 $16,736 $13,700 $11,973 $11,395
Employees..................... 99,900 97,900 98,400 96,200 92,600 89,000 92,200
</TABLE>
- ---------------
(1) All per share amounts have been restated to reflect the retroactive effect
of the March 1995 2-for-1 stock split.
(2) HP adopted, effective as of the beginning of the 1992 fiscal year, Statement
of Financial Accounting Standards ("SFAS") No. 106, "Employers' Accounting
for Postretirement Benefits Other than Pensions." The adoption of SFAS No.
106 resulted in a one-time charge to net earnings of $332 million in the
first quarter, after a reduction for income taxes of $212 million,
representing the transition effect of adopting SFAS No. 106 as of the
beginning of 1992.
9
<PAGE> 18
CONVEX COMPUTER CORPORATION
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------ ------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating data:
Revenue......... $ 95 $ 100 $ 144 $ 193 $ 232 $ 198 $ 209
Operating income
(loss)....... $ (27) $ (55)(1) $ (59)(1) $ (61)(1) $ 6 $ (9) $ 25
Net income
(loss)....... $ (29) $ (56) $ (61) $ (64) $ 3 $ (7) $ 18
Net income
(loss) per
share........ $(1.09) $(2.18) $(2.35) $(2.53) $ .11 $ (.31) $ .88
Shares used in
computing
earnings per
share........ 27 26 26 25 25 22 21
Balance sheet
data:
Working
capital...... $ 42 $ 58 $ 64 $ 104 $ 151 $ 144 $ 151
Total assets.... $ 141 $ 189 $ 186 $ 254 $ 312 $ 273 $ 267
Total long-term
debt......... $ 59 $ 62 $ 63 $ 68 $ 71 $ 64 $ 64
Shareholders'
equity....... $ 31 $ 61 $ 58 $ 112 $ 174 $ 146 $ 143
</TABLE>
- ---------------
(1) Includes restructuring and other charges of $18 million in 1994 and $36
million in 1993.
10
<PAGE> 19
COMPARATIVE PER SHARE DATA
The following table sets forth certain historical per share data of HP and
Convex and certain Equivalent Convex per share data. The Equivalent Convex per
share data is calculated based on HP historical data and an assumed exchange
ratio in the Merger of 0.0522 of a share of HP Common Stock for each share of
Convex Common Stock outstanding based on the average closing price ($92.61) of
HP Common Stock for the ten trading day period ended November 6, 1995 (the
latest practicable trading day prior to the printing of this Proxy
Statement/Prospectus). Pro forma HP data giving effect to the Merger on a
pooling of interests basis has not been presented because it is not materially
different from historical HP information. All stock splits have been
retroactively reflected herein.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
NINE MONTHS ENDED ----------------------
JULY 31, 1995 1994 1993 1992
----------------- ------ ----- -----
(UNAUDITED)
<S> <C> <C> <C> <C>
HISTORICAL -- HP
Earnings per share before 1992 accounting
change......................................... $ 3.34 $ 3.07 $2.33 $1.75
Cash dividends per share.......................... $ .70 $ .55 $ .45 $ .36
Book value per share.............................. $ 22.08 $19.48
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
NINE MONTHS ENDED -----------------------
SEPTEMBER 30, 1995 1994 1993 1992
------------------ ------ ------ -----
(UNAUDITED)
<S> <C> <C> <C> <C>
HISTORICAL -- CONVEX
Net income (loss) per share...................... $ (1.09) $(2.35) $(2.53) $ .11
Cash dividends per share......................... -- -- -- --
Book value per share............................. $ 1.15 $ 2.19
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
NINE MONTHS ENDED ----------------------
JULY 31, 1995 1994 1993 1992
----------------- ------ ----- -----
(UNAUDITED)
<S> <C> <C> <C> <C>
EQUIVALENT CONVEX PER SHARE DATA
Earnings per share before 1992 accounting
change......................................... $ .17 $ .16 $ .12 $ .09
Cash dividends per share.......................... $ .04 $ .03 $ .02 $ .02
Book value per share.............................. $ 1.15 $ 1.02
</TABLE>
11
<PAGE> 20
MARKET PRICE INFORMATION
The following tables set forth the range of high and low sales prices
reported on the NYSE Composite Transactions for each of HP Common Stock and
Convex Common Stock for the periods indicated. The closing prices for HP Common
Stock and Convex Common Stock on the NYSE Composite Transactions on September
21, 1995, the last trading day prior to public announcement of the Merger, were
$83 1/4 and $5 5/8, respectively. The closing prices for the HP Common Stock and
Convex Common Stock on November 6, 1995, the latest practicable trading day
before the printing of this Proxy Statement/Prospectus, were $91 1/4 and $4 1/2,
respectively. Share prices for HP Common Stock have been restated to reflect the
March 1995 two-for-one stock split.
<TABLE>
<CAPTION>
LOW HIGH
---- ----
<S> <C> <C>
HP COMMON STOCK
FISCAL 1993
First Quarter ended January 31, 1993.............................. 27 11/16 37 1/16
Second Quarter ended April 30, 1993............................... 33 11/16 39 1/8
Third Quarter ended July 31, 1993................................. 35 1/2 43 3/4
Fourth Quarter ended October 31, 1993............................. 32 3/8 37 13/16
FISCAL 1994
First Quarter ended January 31, 1994.............................. 35 3/4 43 3/8
Second Quarter ended April 30, 1994............................... 38 46
Third Quarter ended July 31, 1994................................. 36 40 15/16
Fourth Quarter ended October 31, 1994............................. 39 3/16 48 15/16
FISCAL 1995
First Quarter ended January 31, 1995.............................. 45 15/16 53 11/16
Second Quarter ended April 30, 1995............................... 50 1/8 66 3/8
Third Quarter ended July 31, 1995................................. 63 3/4 83 3/4
Fourth Quarter ended October 31, 1995............................. 70 96 5/8
FISCAL 1996
First Quarter through November 6, 1995............................ 90 1/2 94 7/8
CONVEX COMMON STOCK
1993
First Quarter ended March 31, 1993................................ 5 1/4 8 5/8
Second Quarter ended June 30, 1993................................ 4 1/4 6 7/8
Third Quarter ended September 30, 1993............................ 3 5/8 5 7/8
Fourth Quarter ended December 31, 1993............................ 5 6 1/8
1994
First Quarter ended March 31, 1994................................ 5 3/8 7 5/8
Second Quarter ended June 30, 1994................................ 4 3/8 7 1/8
Third Quarter ended September 30, 1994............................ 5 1/4 8 1/2
Fourth Quarter ended December 31, 1994............................ 5 1/2 8 7/8
1995
First Quarter ended March 31, 1995................................ 5 1/2 8 1/8
Second Quarter ended June 30, 1995................................ 3 3/4 6 5/8
Third Quarter ended September 30, 1995............................ 4 1/4 6 1/2
Fourth Quarter through November 6, 1995........................... 4 1/8 4 5/8
</TABLE>
12
<PAGE> 21
RISK FACTORS
The following risk factors should be considered by holders of Convex Common
Stock in evaluating whether to approve the Merger Agreement and the Merger and
thereby become holders of HP Common Stock. These factors should be considered in
conjunction with the other information included and incorporated by reference in
this Proxy Statement/Prospectus. For periods following the Merger, references to
HP should be considered to refer to HP and its subsidiaries, including Convex,
unless the context otherwise requires.
INTENSELY COMPETITIVE ENVIRONMENT; RAPID TECHNOLOGICAL CHANGE. HP
encounters aggressive competition in all areas of its business activity. HP's
competitors are numerous, ranging from some of the world's largest corporations
to many relatively small and highly specialized firms. HP competes primarily on
the basis of technology, performance, price, quality, reliability, distribution
and customer service and support. To remain competitive, HP will be required to
continue to develop new products, periodically enhance its existing products and
compete effectively in the areas described above. In particular, HP anticipates
that it will have to continue to adjust prices to stay competitive and to
effectively manage growth with correspondingly reduced profit margins. See
" -- New Product Introductions," and "-- Reliance on Distribution Channels."
NEW PRODUCT INTRODUCTIONS. HP's future operating results are dependent on
its ability to rapidly develop, manufacture and market technologically
innovative products that meet customers' needs. The process of developing new
high technology products is complex and uncertain and requires innovative
designs that anticipate customer needs and technological trends. In addition,
after the products are developed, HP must quickly manufacture such products in
sufficient volumes at acceptable costs to meet demand. Without the introduction
of new products and product enhancements, HP's products are likely to become
technologically obsolete, in which case revenues would be materially and
adversely affected. There can be no assurance that such new products, if and
when introduced, will receive market acceptance. In addition, HP anticipates
that it will continue to have significant research and development expenditures
in order to maintain its competitive position with a continuing flow of
innovative, high-quality products.
RELIANCE ON SUPPLIERS. A portion of HP's manufacturing operations is
dependent on the ability of significant suppliers to deliver completed products,
integral sub-assemblies and components in time to meet critical distribution and
manufacturing schedules. HP periodically experiences constrained supply of
certain component parts in some product lines as a result of strong demand in
those product lines as well as strong demand in the industry. Continued
constraints may adversely affect HP's operating results until alternate sourcing
is developed.
RELIANCE ON DISTRIBUTION CHANNELS. Changing industry practices and
customer preferences require HP to expand into new distribution channels. As
more of HP's products are distributed through dealer and other indirect
channels, these channels become more critical to HP's success. Some of these
dealers are thinly capitalized and may be unable to withstand changes in
business conditions. HP's financial results could be adversely affected in the
event that the financial condition of these sellers weakens.
VOLATILITY OF STOCK PRICE. The market price of HP's Common Stock may be
affected by quarterly fluctuations in HP's operating results, announcements by
HP or its competitors of technological innovations or new product introductions
and other factors. If revenue or earnings in any quarter fail to meet
expectations of the investment community, there could be an immediate impact on
HP's stock price. In addition, the stock market has from time to time
experienced extreme price and volume fluctuations, particularly among stocks of
high technology companies, which, on occasion, have been unrelated to the
operating performance of particular companies. Factors not directly related to
HP's performance, such as negative industry reports or disappointing earnings
announcements by publicly traded competitors, may have an adverse impact on the
market price of HP's Common Stock. See "Market Price Information."
QUARTERLY FLUCTUATIONS. A variety of factors may cause period-to-period
fluctuations in the operating results of HP. Such factors include, but are not
limited to, product mix, competitive pricing pressures, materials costs, revenue
and expenses related to new products and enhancements of existing products, as
well as delays in customer purchases in anticipation of the introduction of new
products or product enhancements by HP or its competitors. The majority of HP's
revenues in each quarter results from orders received in that
13
<PAGE> 22
quarter. As a result, HP establishes its production, inventory and operating
expenditure levels based on anticipated revenue levels. Thus, if sales do not
occur when expected, expenditure levels could be disproportionately high and
operating results for that quarter, and potentially future quarters, would be
adversely affected.
INTERNATIONAL. HP derives a significant portion of its revenue from
international sales and, as such, is subject to the risks associated with
fluctuations in local economies and currency exchange rates around the world. HP
is also subject to other risks associated with international operations,
including tariff regulations and requirements for export licenses.
ENVIRONMENTAL. HP's operations involve the use of substances regulated
under various federal, state, local and foreign laws governing the environment.
Liability for environmental remediation is accrued when it is considered
probable and costs can be estimated.
EARTHQUAKE. A portion of HP's research and development activities, its
corporate headquarters and other critical business operations are located near
major earthquake faults. Operating results could be materially affected in the
event of an earthquake. HP is predominantly self-insured for losses and
interruptions caused by earthquakes.
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to holders of Convex
Common Stock in connection with the solicitation of proxies by the Convex Board
for use at the Special Meeting to be held at 10:00 a.m., local time, on December
20, 1995, at the UTD Conference Center Auditorium, 2601 North Floyd Road,
Richardson, Texas, or at any adjournments or postponements thereof, for the
purposes set forth herein and in the accompanying Notice of Special Meeting of
Stockholders of Convex.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING; RECOMMENDATION OF THE CONVEX
BOARD
At the Special Meeting, stockholders of record of Convex as of the close of
business on the Record Date will be asked to consider and vote upon the
following proposals: (i) to approve and adopt the Merger Agreement and to
approve the Merger; and (ii) to transact such other business as may properly
come before the Special Meeting or any adjournments or postponements thereof.
After careful consideration, the Convex Board has determined that the
Merger is advisable and in the best interest of Convex and its stockholders, has
unanimously approved the Merger Agreement and the Merger and recommends that
stockholders of Convex vote "FOR" approval and adoption of the Merger Agreement
and approval of the Merger.
RECORD DATE; VOTING AT THE SPECIAL MEETING; VOTE REQUIRED
The Convex Board has fixed November 9, 1995 as the Record Date for the
determination of the stockholders of Convex entitled to notice of and to vote at
the Special Meeting. Only holders of record of Convex Common Stock on the Record
Date will be entitled to notice of and to vote at the Special Meeting. As of the
Record Date, there were 26,796,302 shares of Convex Common Stock outstanding and
entitled to vote, which were held by approximately 1,700 holders of record. Each
record holder of Convex Common Stock on the Record Date is entitled to cast one
vote per share, exercisable in person or by properly executed proxy, on each
matter properly submitted for the vote of the stockholders of Convex at the
Special Meeting.
The presence at the Special Meeting, in person or by properly executed
proxy, of the holders of a majority of the outstanding shares of Convex Common
Stock as of the Record Date is necessary to constitute a quorum at the Special
Meeting. The approval of the Merger Agreement and the Merger will require the
affirmative vote of the holders of at least a majority of the shares of Convex
Common Stock outstanding as of the Record Date. Abstentions and broker nonvotes
will be counted for purposes of establishing a quorum but are treated as a vote
"AGAINST" approval and adoption of the Merger Agreement and approval of the
Merger since they cannot be counted toward achieving the requisite majority
vote.
14
<PAGE> 23
As of the Record Date, directors and executive officers of Convex and their
affiliates owned approximately 4.7% of the outstanding shares of Convex Common
Stock. As of the Record Date, HP owned approximately 4.5% of the outstanding
shares of Convex Common Stock.
PROXIES
This Proxy Statement/Prospectus is being furnished to holders of Convex
Common Stock in connection with the solicitation of proxies by and on behalf of
the Convex Board for use at the Special Meeting.
All shares of Convex Common Stock that are entitled to vote and are
represented at the Special Meeting by properly executed proxies received prior
to or at the Special Meeting, and not duly revoked, will be voted at the Special
Meeting in accordance with the instructions indicated on such proxies. If no
instructions are indicated, such proxies will be voted "FOR" approval and
adoption of the Merger Agreement and approval of the Merger.
If any other matters are properly presented for consideration at the
Special Meeting (or any adjournments or postponements thereof), including, among
other things, consideration of a motion to adjourn or postpone the Special
Meeting to another time or place (including, without limitation, for the purpose
of soliciting additional proxies), the persons named in the enclosed form of
proxy and voting thereunder will have discretion to vote on such matters in
accordance with their best judgment.
Any proxy given may be revoked by the person giving it at any time before
it is voted. Proxies may be revoked by: (i) filing with the Secretary of Convex
at or before the taking of the vote at the Special Meeting, a written notice of
revocation bearing a later date than the proxy; (ii) duly executing a
later-dated proxy relating to the same shares and delivering it to the Secretary
of Convex before the taking of the vote at the Special Meeting; or (iii)
attending the Special Meeting and voting in person. Attendance at the Special
Meeting will not in and of itself constitute a revocation of a proxy. Any
written notice of a revocation or subsequent proxy should be sent so as to be
delivered to Convex at 3000 Waterview Parkway, Richardson, Texas 75080,
Attention: Secretary, or hand-delivered to the Secretary of Convex at or before
taking the vote at the Special Meeting.
In addition to solicitation by the use of the mails, proxies may be
solicited by directors, officers and employees of Convex in person or by
telephone, telegram or other means of communication. Such directors, officers
and employees will not be additionally compensated, but may be reimbursed for
reasonable out-of-pocket expenses in connection with the solicitation. Convex
has engaged D.F. King & Co., Inc., an independent proxy solicitor, to solicit
proxies and to assist in the distribution of proxy materials for a fee of
$10,000, plus reimbursement of reasonable out-of-pocket expenses. Arrangements
will also be made with custodians, nominees and fiduciaries for forwarding proxy
solicitation materials to beneficial owners of shares held of record by such
custodians, nominees and fiduciaries. Convex will reimburse such custodians,
nominees and fiduciaries for reasonable expenses incurred in connection
therewith.
STOCKHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES
WITH THEIR PROXY CARDS
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THE MERGER
GENERAL
Under the Merger Agreement, Subsidiary, a wholly-owned subsidiary of HP
formed for this purpose, will merge with and into Convex and Convex will
continue as the surviving corporation. At the Effective Time, each outstanding
share of Convex Common Stock (other than shares owned by HP, Subsidiary or any
other direct or indirect subsidiary of HP, or held in treasury by Convex) will
be converted into the right to receive the Conversion Fraction of a share of HP
Common Stock. All then outstanding shares of common stock of Subsidiary will be
converted into newly issued shares of common stock of the surviving corporation.
No fractional shares of HP Common Stock will be issued in the Merger, but cash
payments will be made in lieu of fractional share interests. Convex will become
a wholly-owned subsidiary of HP and the stockholders of Convex will become
stockholders of HP. See "The Merger Agreement and Related
Agreements -- Conversion of Shares."
Upon consummation of the Merger, each then outstanding option to purchase
shares of Convex Common Stock (each, a "Convex Option") will be assumed by HP
and will thereafter constitute an option to acquire the number of whole shares
of HP Common Stock equal to the number of shares of Convex Common Stock issuable
with respect to such Convex Option multiplied by the Conversion Fraction, at a
price equal to the exercise price per share of Convex Common Stock divided by
the Conversion Fraction, and a cash payment in lieu of any remaining fractional
shares of HP Common Stock. See "The Merger Agreement and Related
Agreements -- Treatment of Convex Stock Option Plans and Employee Stock Purchase
Plan."
Subject to the consummation of the Merger, Convex will apply the funds
credited as of the Final Convex Exercise Date (as described below) in each
participant's payroll withholdings account under the Convex 1995 Employee Stock
Purchase Plan to the purchase of whole shares of Convex Common Stock. See "The
Merger Agreement and Related Agreements -- Treatment of Convex Stock Option
Plans and Employee Stock Purchase Plan."
After the Effective Time, the Debentures will be convertible, at the option
of the holders, into whole shares of HP Common Stock at a conversion price
determined by dividing $21.75, the current price at which the Debentures are
convertible into Convex Common Stock, by the Conversion Fraction. HP will not
succeed to the rights and obligations of Convex under the Indenture at the
Effective Time.
BACKGROUND OF THE MERGER
In March 1992, Convex and HP entered into a series of technology and
commercial agreements pursuant to which the companies, among other things,
cross-licensed certain core technologies and entered into certain supply and
distribution arrangements. At that time, HP acquired close to 5% of Convex's
Common Stock. Under the terms of the Stock Purchase Agreement, the two companies
agreed to meet in 1994 and again in 1996 to discuss possible increases in HP's
ownership of Convex Common Stock, although no right or obligation to purchase
additional shares was established. HP has not acquired any additional Convex
Common Stock or other equity since its original investment in March 1992. In
addition, in connection with their technology and commercial agreements,
representatives of Convex and HP have met frequently, from March 1992 through
the present, to discuss a broad range of technical and business issues facing
the two companies, including general discussions of how the two companies could
work more closely together.
The following is a summary of the principal contacts that have occurred
between Convex and HP relating to the Merger.
Throughout 1994 and continuing through September 1995, Convex actively
sought financing from various sources, including HP. Convex contacted HP to
discuss various financing arrangements, including an increase by HP of its
equity interest in Convex and various loan or loan guarantee arrangements. At
Convex's request, HP introduced Convex to certain of HP's bank contacts. No
financing arrangements were concluded with either HP or third parties.
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On April 26, 1995, Robert Paluck, Chairman of the Convex Board and Chief
Executive Officer of Convex, had a discussion with Bernard Guidon, then General
Manager of HP's Workstation Systems Group and currently Vice President and
General Manager of HP's Computer Systems Group ("CSG"), regarding the continuing
business relationship between Convex and HP. Messrs. Paluck and Guidon also
discussed customer perceptions of the arrangement and the fact that, from a
competitive standpoint, the joint selling efforts of Convex and HP were not
proving to be as effective as the selling efforts of their competitors that
offer a full line of products from a single company. Mr. Paluck and Mr. Guidon
also discussed concerns raised by potential customers regarding Convex's
financial stability and the negative impact that these concerns were having on
sales by Convex and sales of Convex products by HP. Mr. Paluck discussed
Convex's requirements for additional financing and the potential difficulties in
obtaining that financing given Convex's recent operating results and near term
prospects. The parties then discussed a range of possibilities for HP and Convex
to work more effectively together.
On May 1 and May 2, 1995, Mr. Paluck and Mr. Guidon held additional
discussions regarding Convex's outlook and opportunities as an independent
entity and in a potential business combination with HP. Mr. Guidon indicated
that Convex's products had become part of CSG's strategy to offer complete
solutions to its technical customers.
On May 11, 1995, the Convex Board met and discussed, among other things,
the status of the relationship with HP and the potential for increasing HP's
level of involvement with Convex. The Convex Board also discussed the strategic
and financing alternatives available to Convex and the possibility of a business
combination with HP. Management was directed to continue to explore
opportunities with representatives of HP as well as alternative financing
opportunities.
On May 17, 1995, in a telephone conversation with Mr. Paluck, Mr. Guidon
indicated that HP had organized an internal team (the "HP Team") headed by Jon
Flaxman, controller of CSG, to evaluate HP's possible role in assisting Convex
with finding financing or developing other business solutions.
On June 6, 1995, at a meeting in Richardson, Texas, Mr. Paluck, Philip
Cardman, Convex's Vice President and General Counsel, and David Craig, Convex's
Vice President, Finance and Chief Financial Officer, met with members of the HP
Team including Mr. Flaxman, William Kelly, Workstation Systems Division Program
Manager, and Betsey Nelson, Corporate Development Project Manager. The parties
discussed the current relationship between the two companies and Convex's need
for financing. Mr. Paluck presented four financing alternatives to HP for HP's
consideration: (i) a guarantee by HP of a Convex bank loan; (ii) an extension of
HP's terms on payment dates for Convex's purchases of HP products; (iii) an
additional equity investment by HP in Convex; and (iv) a business combination
with HP.
On June 14, 1995, at a meeting in Cupertino, California, members of the HP
Team, including Mr. Kelly, Mr. Flaxman and Ms. Nelson, met with representatives
of Convex, including Mr. Paluck and Mr. Craig. At the meeting, Convex provided
HP with certain confidential company materials relating to its business
operations, including sales and marketing, human resources and finances.
Following the meeting, Mr. Flaxman indicated that the HP Team would be working
over the ensuing days to present their findings and recommendations to HP
management.
On June 15, 1995, in a telephone conversation, Mr. Paluck and Mr. Guidon
discussed business issues and the status of financing alternatives available to
Convex with HP's assistance or otherwise. Mr. Paluck reviewed Convex's current
financial position and reiterated the necessity of obtaining additional
financing as quickly as possible in order to respond to customers' concerns
about Convex's viability.
On June 19, 1995, Mr. Flaxman called Mr. Paluck to discuss the results of
HP's internal meeting with HP management. Messrs. Flaxman and Paluck reviewed
four possible financing alternatives: (i) HP providing a guarantee for a Convex
bank loan; (ii) HP increasing its equity investment in Convex; (iii) HP funding
a joint research and development project; or (iv) a business combination between
HP and Convex. Mr. Flaxman noted that the HP Team was considering the proposed
alternatives and exploring other feasible alternatives. Mr. Flaxman informed Mr.
Paluck that the HP Team had been authorized to continue investigating a possible
business combination with Convex.
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On July 18, 1995, at a meeting in Palo Alto, California between HP and
Convex, the HP Team explained that it had considered the four alternatives
discussed on June 19 and the additional alternative of pursuing an internal
development effort. Mr. Flaxman indicated that HP had made a preliminary
determination that supporting Convex was preferable to an independent
development effort and that, in this context, the alternative that made the most
economic and business sense to HP was the acquisition of Convex. HP then
presented the general terms of a proposed business combination with Convex,
including a price of $4.00 per share.
On July 21 and July 24, 1995, Mr. Paluck spoke with Mr. Guidon, Mr. Flaxman
and Ms. Nelson primarily concerning the per share price at which HP would be
willing to acquire Convex in a merger. In particular, Mr. Paluck noted that the
proposed per share price of $4.00 would not be acceptable to Convex in part
because that price was below the then current market price of Convex Common
Stock. The parties discussed pricing the acquisition at the market price of
Convex Common Stock. The members of the HP Team expressed concerns that the
prevailing market price for Convex Common Stock overstated its value, in part
because Convex's second quarter results had not yet been announced. They agreed
to hold further discussions after Convex released its second quarter results.
Such results were released on July 28, 1995.
On July 27, August 2 and August 18, 1995, the Convex Board met to discuss,
among other things, Convex's current financial position and need for additional
capital, as well as the financing alternatives available to maximize stockholder
values. Options evaluated included continuing to operate Convex as an
independent entity, seeking a significant minority equity investor or other
equity capital and seeking to combine Convex with HP or another party. At each
of these meetings, the Convex Board also reviewed the status of discussions with
HP regarding the possibility of a business combination with HP. The Convex Board
also authorized management to continue in its discussions with HP and to
continue pursuing other financing opportunities. Representatives of Wilson,
Sonsini, Goodrich and Rosati, Professional Corporation, Convex's outside legal
counsel ("WSGR"), and Robertson, Stephens & Co., an investment banking firm
("RS&Co."), participated in the discussions at all of these Board meetings
except that WSGR did not attend the meeting held on August 18, 1995.
On August 21, 1995, Mr. Paluck, Steve Wallach, Convex's Senior Vice
President, Technology, Terrence Rock, Convex's President, and Mr. Cardman,
together with representatives of WSGR and RS&Co., met with members of the HP
Team, including Messrs. Flaxman and Kelly, Ms. Nelson and legal counsel to HP,
to discuss the structure and valuation of Convex in a business combination of
Convex with HP. The parties discussed the possibility of a cash or stock
transaction and concluded that a stock transaction would be more advantageous to
the stockholders of Convex for a variety of reasons, including allowing such
stockholders to retain an equity interest in the ongoing business and the
ability to structure the transaction as a tax-deferred reorganization. Convex
indicated that any agreement for a combination with HP would need to permit
Convex to conduct a market check by contacting other potential acquirors to
determine if a more favorable transaction might be available (a "Market Check").
Convex indicated that following conclusion of any satisfactory agreement with
HP, Convex would retain investment bankers to seek out other companies with
which it might negotiate an alternative business combination, pending its
stockholders' approval of any such combination with HP. No agreement was
reached, but the parties agreed to continue the discussions.
On August 29 and August 31, 1995, the Convex Board, together with
representatives of WSGR and RS&Co., again met to discuss the status of
discussions with HP as well as other financing alternatives available to Convex.
At each of these meetings, the Convex Board again authorized and directed
management to continue its discussions with HP as well as to pursue other
financing opportunities.
On August 30, 1995, Messrs. Paluck and Cardman, together with
representatives of WSGR and RS&Co., met with members of the HP Team, including
Ms. Nelson and legal counsel to HP, to further discuss the structure and price
of an acquisition of Convex by HP. The parties discussed pricing the transaction
at the average closing price of Convex Common Stock since the date of the
announcement of Convex's financial results for the quarter ended June 30, 1995,
which was $4.83 per share at that time. The parties also discussed other terms
of the proposed transaction and agreed to hold further discussions.
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On September 11 through September 13, 1995, members of the HP Team met with
officers and other representatives of Convex in Richardson and Dallas, Texas to
conduct further due diligence inquiries and to discuss various employment and
other transition issues.
On September 14, 1995, the Convex Board, together with representatives of
WSGR and RS&Co., held a regular meeting where they reviewed the status of
discussions with HP and other potential sources of financing. The Convex Board
again authorized Convex management to proceed with its discussions with HP and
other potential sources of financing.
On September 19, 1995, Messrs. Paluck and Cardman, together with outside
legal counsel, met with members of the HP Team, including Mr. Flaxman, Ms.
Nelson and legal counsel to HP, to further discuss the principal terms of a
business combination with Convex. At this meeting, after a lengthy discussion,
the parties agreed on a price of $4.83 per share of Convex Common Stock.
On September 20, 1995, at a special telephonic meeting of the Convex Board,
with representatives of WSGR and RS&Co. in attendance, the Convex Board
discussed the developments and course of discussions between Convex and HP to
date. After presentation of the history of negotiations between HP and Convex,
the Convex Board discussed the terms of the proposed Merger Agreement, including
the right of Convex to solicit and accept a more favorable proposal, the fee to
be paid to HP in such circumstances and the lack of other financing alternatives
available to Convex to maximize stockholder values. Following this discussion,
the Convex Board unanimously approved the Merger and the Merger Agreement,
subject to stockholder approval. See "-- Analysis of the Merger and
Alternatives" and "-- Recommendation of the Convex Board."
CONVEX'S REASONS FOR THE MERGER
Early in the development of Convex's current product offerings, Convex
evaluated the then-available microprocessor technologies and determined that the
technology best-suited to implement Convex's long-term business strategy was
HP's PA-RISC microprocessor. Having made that determination, Convex developed
licensing and other technology-related arrangements with HP that would enable
Convex to carry out its business strategy. The Merger will further implement
this strategy by affording to Convex's business the marketing, technical and
financial resources of HP.
The Convex Board believes that the Merger will be beneficial to Convex and
its stockholders given the complementary nature of the two companies' products,
the financial strength of HP and for the following additional reasons:
- The Merger is an extension of Convex's long-term business strategy
described above;
- The Merger is expected to enable Convex to compete more effectively
against competitors having greater financial and technical resources than
Convex;
- Convex stockholders will have the opportunity to receive, on a
tax-deferred basis, HP Common Stock that will enable them to participate
in opportunities for growth in the business of Convex after the Merger;
- Convex expects to derive benefits from HP's larger size, including
broader access to leading technologies, increased purchasing power with
suppliers, increased cooperation with independent software vendors and
increased market awareness of products;
- The Merger will allow Convex to focus its development efforts on its core
technologies and to leverage related development efforts undertaken by
HP;
- Following the Merger, customers will be able to purchase a full line of
computer products from a single source as their needs evolve rather than
having to purchase from both Convex and HP. This factor, combined with
HP's larger and more diversified sales force and the elimination of
customer concerns regarding Convex's viability, should facilitate the
broader distribution of Convex's products and increased penetration into
traditional markets with better gross margins; and
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- The alternatives to the Merger with HP, including continued operation of
Convex as an independent entity, are, in the judgment of the Convex
Board, significantly less attractive to Convex and its stockholders.
ANALYSIS OF THE MERGER AND ALTERNATIVES
The Convex Board, which consists of seven members including five
independent directors, conducted a thorough analysis of the Merger and the
alternatives available to Convex at eight Board meetings held between May 11,
1995 and September 20, 1995. The independent Convex directors met with and
without management present to evaluate the alternatives available to Convex and
the role of management in evaluating each of such alternatives. In conducting
its analysis, the Board obtained the advice of WSGR and RS&Co.
The following is a summary of the factors, analyses and alternatives
considered by the Convex Board in arriving at its recommendation.
BACKGROUND. As a background for its analysis of the Merger and for each
alternative available to Convex, the Convex Board discussed and was mindful of
many general factors affecting Convex's current business and prospects,
including the following:
- Recent Convex operating results and trends, including the fact that
Convex has experienced losses in three of the last five years and nine of
the last ten quarters;
- Trends in order rates and the expectation that Convex's results of
operations were expected to be below break even for at least the last two
quarters of 1995 and potentially beyond;
- Recent and expected operating losses that have caused, and are expected
to continue to cause, an accelerating decline in capital resources and
Convex will experience liquidity problems by early to mid-1996 unless
Convex can eliminate or significantly reduce operating losses or obtain
additional capital;
- The lack of an established borrowing facility for Convex or other
committed sources of additional capital after a thorough investigation of
financing alternatives;
- The need, to be successful in the long term, for Convex to continue to
devote significant resources to technology and product development and
the likelihood that its liquidity problems might cause Convex to curtail
or eliminate some of these activities;
- Convex's prospects as an independent company given the intense
competition in the high performance computing industry, both from large
integrated computer systems manufacturers, such as International Business
Machines Corporation ("IBM") and Silicon Graphics, Inc. ("SGI"), as well
as from smaller, more focused computer manufacturers;
- The difficulty of raising capital given the fact that virtually all of
the independent supercomputer manufacturers still in business in 1994,
including Kendall Square Research Corporation, Thinking Machines
Corporation and Cray Computer Corporation, either are experiencing
financial difficulties or have recently filed for bankruptcy;
- The risk that HP may develop products that could directly or indirectly
compete with Convex's products and as a result may either directly or
indirectly reduce its level of support of Convex and its products;
- Many of Convex's competitors have successfully raised concerns in the
minds of prospective customers regarding Convex's financial difficulties,
causing customers to delay orders or to select products from vendors with
greater financial resources;
- Convex's ability to attract and retain the highly skilled technical
personnel necessary for Convex to successfully develop and introduce new
technologies and products in light of employee concerns about Convex's
financial stability and longer term viability; and
- Convex had adopted a strategy of developing products based on HP's
microprocessors and operating environment. That strategy makes Convex
substantially dependent on the competitiveness of HP's processors and
Convex's ability to obtain access to, and to develop expertise with, HP's
current and future product developments. Convex has licensed certain core
technology from and to, and has an
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ongoing joint marketing arrangement with, HP and HP is currently Convex's
sole-source supplier of the PA-RISC processors used in Convex's Exemplar
family of products.
ALTERNATIVES CONSIDERED. Since early 1994, the Convex Board evaluated a
number of alternatives in an effort to determine which course of action would
best maximize stockholder values given the current business and business
prospects of Convex. The alternatives considered included the following:
Continuing as an Independent Company. The Convex Board considered Convex's
business prospects as an independent company in light of the factors affecting
Convex's business described above, including its view that success as an
independent company is substantially dependent upon the continuation of the
technical, marketing and sales activities between Convex and HP. The Convex
Board evaluated Convex's prospects without raising additional debt or equity
capital, the ability of Convex to raise additional debt or equity capital given
its financial condition and its prospects assuming such capital could be raised.
For the reasons described above, proceeding without additional capital was not
viewed as a viable alternative. The Convex Board therefore considered
alternatives to raise additional capital.
The approaches analyzed included raising debt or equity capital in the
public markets, either through a primary offering of debt or equity securities
or through a restructuring of Convex's existing debt. In this regard, Convex
held discussions with several investment bankers about the prospects for raising
capital in the public markets given the state of Convex's business and prospects
as well as general market factors, including the fact that virtually all of the
independent supercomputer manufacturers still in business in 1994, including
Kendall Square Research, Thinking Machines Corporation and Cray Computer
Corporation, either were experiencing financial difficulties or had recently
filed for bankruptcy. While some of these investment bankers expressed some
interest in attempting to arrange a transaction for Convex, no investment
bankers were able to express a high level of confidence in the ultimate success
of the attempt given Convex's history of losses and near term prospects. In
addition, none of these transactions appeared to satisfy fully Convex's
longer-term capital requirements. Convex also evaluated asset-based borrowing
alternatives. While it appeared that a limited amount of asset-based financing
might be available to Convex, the terms offered were onerous and the amount of
financing available was not sufficient to satisfy Convex's capital requirements.
The Convex Board also considered raising capital from current or potential
vendors, customers or other companies with a strategic interest in the continued
success of Convex. Alternatives considered and discussed with potential
investors included: (i) Convex selling minority equity interests to such
parties; (ii) Convex borrowing funds from such parties or having such parties
guarantee third party loans; (iii) Convex selling licenses to certain technology
to such parties; and (iv) Convex entering into funded research projects with
such parties. Based upon these discussions and the results of management's
investigation of financing alternatives, it appeared that opportunities existed
to raise some capital through one or more of these approaches. The amount of
such capital did not, however, appear to be sufficient to satisfy Convex's
near-term requirements. Moreover, such transactions would have involved either
diluting Convex's intellectual property portfolio value (through either selling
or licensing key technology assets), diluting the interests of Convex
stockholders, increasing Convex's debt burden to an unsupportable level or
distracting Convex's development efforts from the tasks which Convex believes to
be critical to its business prospects. Convex management also held a series of
discussions with potential strategic investors, including discussions held in
Japan and the United States with potential Japanese strategic investors. The
Japanese parties contacted stated that they were either unable or not interested
in making an investment in Convex at the present time.
The Convex Board also considered and discussed the following alternatives
for HP to assist Convex: (i) having HP make an additional equity investment in
Convex while remaining a minority investor; (ii) having HP loan funds to Convex;
(iii) having HP provide guarantees of third party loans to Convex; (iv) having
HP fund research and development projects; and (v) having HP enter into a
business combination with Convex. HP expressed to Convex its determination that
a business combination with Convex was the alternative that made the most
business and economic sense to HP and that HP was not interested in pursuing the
other alternatives. See "The Merger -- Background of the Merger."
Sale of Convex to Another Party. The Convex Board also considered
attempting to solicit alternative acquisition proposals. The Convex Board
analyzed whether it was appropriate to initiate a public "auction" of
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Convex prior to any announcement of the Merger. This approach was rejected by
the Convex Board after careful analysis given concerns that any such
announcement could cause an immediate stop to customer orders while customers
waited to see whether they were comfortable with the acquiror, if any. In
addition, the Convex Board was very concerned that such an approach would risk
significant attrition of key employees. In the judgment of the Convex Board, the
risk of a substantial adverse impact on orders, employee retention and customer
confidence, and on the ultimate value to be received by Convex stockholders
outweighed any benefit to be gained from conducting a public auction of Convex
prior to announcing the Merger. Moreover, it was noted that, other than HP, no
other party had ever expressed to Convex, since its incorporation in 1982, an
interest in acquiring Convex.
As an alternative to the pre-announcement auction approach, Convex
negotiated with HP for the right to actively solicit and negotiate alternative
acquisition proposals prior to the closing of the Merger. As a result of those
negotiations, unlike most agreements of its type, the Merger Agreement contains
no restriction on Convex's ability to seek out other potential business
combinations. Indeed, during the course of negotiations with HP, Convex's
representatives explicitly informed HP that Convex intended to conduct actively
a search for other possible business combinations. Convex, through PaineWebber,
has commenced that search. Accordingly, if the Convex Board determines in good
faith after consultation with PaineWebber that an alternative acquisition
proposal would result in a transaction more favorable to Convex's stockholders
from a financial point of view, then the Convex Board may approve and recommend
that alternative proposal and terminate the Merger Agreement. In the event of
such a termination, Convex would be obligated to pay HP the sum of $3,750,000
plus HP's expenses. The amount of the termination fee was arrived at through
negotiations between Convex and HP, and was believed to be in line with fees
customarily negotiated in similar transactions.
EVALUATION OF HEWLETT-PACKARD TRANSACTION. The Convex Board considered a
number of factors in evaluating the Merger and Merger Agreement with HP. The
factors considered included the matters discussed above and also included:
- The technical and market synergies that would arise from the Merger. As
described above, HP and Convex entered into a series of technology and
commercial agreements beginning in 1992. As a part of these agreements,
Convex has obtained access to key HP technologies and has designed its
Exemplar family of products around HP's PA-RISC architecture. This has
enabled Convex to position its products as a next logical step when a
customer's requirements exceed the capabilities of HP's products. In
effect, when HP products and Convex products are viewed together,
customers can purchase compatible systems ranging from a single work
station to a 128-processor supercomputer. The Convex Board believes that
the opportunity exists for further synergies if the two companies'
development efforts are combined;
- The increasingly expressed desire of customers to purchase a full range
of products from a single vendor. While Convex and HP products offer
compatible solutions across a broad range of needs, customers must
nonetheless purchase two companies' products and maintenance services.
Many of Convex's competitors offer a full range of products and are able
to offer better prices as a result of having one less layer of
distribution. The Convex Board believes that, from a competitive
standpoint, Convex's prospects will be greatly enhanced as a result of
the business combination with HP;
- Current financial conditions, market conditions and historical market
prices, volatility and trading information with respect to Convex and HP
Common Stock. While Convex Common Stock has under-performed the NASDAQ
Composite Index since the beginning of 1990, HP Common Stock has
outperformed that index over the same time frame;
- The consideration to be received by Convex stockholders in the Merger and
their relationship between the market value of HP Common Stock to be
issued in exchange for Convex Common Stock, including the treatment of
the Merger as a tax-deferred reorganization under the Code;
- The ability of Convex to solicit alternative offers as described above;
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- The absence of any inquiry with respect to an acquisition of Convex by
any person (other than HP) since the founding of Convex in 1982; and
- The belief that the terms of the Merger Agreement, including the parties'
representations, warranties and covenants, and the conditions to the
respective obligations, are fair and reasonable.
In addition, the Convex Board considered carefully quantitative analyses of
Convex, HP and the opportunity presented to the Convex stockholders by the
Merger, based in part on certain financial compilations and analyses, dated
August 29, 1995, provided by, and discussions with, RS&Co. The following is a
summary of the material considerations evaluated by the Convex Board in its
quantitative analyses:
- The relative price performance of Convex Common Stock and HP Common Stock
as compared to various market indices and groupings of comparable
companies;
- A summary of commentary by independent financial analysts on the
prospects of both Convex and HP;
- An analysis of Convex's recent financial performance;
- A discounted cash flow analysis of Convex's value under various
scenarios;
- Analyses of the implied exchange ratios of HP Common Stock for Convex
Common Stock based upon relative trading prices of the two stocks, the
trading volumes for Convex Common Stock and the potential impact of the
proposed Merger on HP's prospective earnings per share; and
- A summary of selected precedent acquisition transactions.
The Convex Board also considered a variety of potentially negative factors
in its deliberations concerning the Merger, including but not limited to: (i)
the risk that the potential benefits of the Merger might not be fully realized;
(ii) the risk that the Merger might not be consummated and the effect that the
failure to consummate the Merger would have on (a) sales and operating results,
(b) Convex's ability to attract and retain key management, marketing and
technical personnel, (c) the progress of certain development projects, and (d)
stockholder value; and (iii) the other risks described under "Risk Factors."
ROLE OF INVESTMENT BANKS
Representatives of RS&Co., which co-managed Convex's initial public
offering in 1986 and subsequent financings, provided the Convex Board with
certain quantitative analyses of Convex, HP and various acquisition scenarios
and met or spoke by telephone with Convex management regarding financing
alternatives and a proposed business combination with HP. Representatives of
RS&Co. participated by telephone in six Convex Board meetings held between July
and September 1995. Representatives of RS&Co. also attended in person the August
29, 1995 Convex Board meeting, at which such representatives presented certain
financial compilations and analyses, and two meetings between Convex and HP held
in August 1995.
From June through the beginning of October 1995, Convex and RS&Co.
discussed terms of an engagement, including RS&Co.'s performance of financial
advisory services, delivery of a fairness opinion related to the Merger and
assistance in conducting a post-announcement Market Check, and exchanged drafts
of an engagement letter. Prior to the execution of the Merger Agreement, RS&Co.
elected not to provide a fairness opinion related to the proposed Merger. On
October 10, 1995, RS&Co. informed Convex that RS&Co. was declining to be engaged
by Convex as a financial advisor or to conduct a post-announcement Market Check.
RS&Co. subsequently indicated that among the reasons for its decision not to
render a fairness opinion in the transaction were the facts that no Market Check
was to be conducted prior to signing the Merger Agreement and that it appeared
that HP would not be offering a premium to the then-current market price of the
Convex Common Stock.
On October 13, 1995, Convex engaged PaineWebber, a nationally recognized
investment banking firm, as its financial advisor in connection with the Merger
and to solicit and analyze Acquisition Proposals. PaineWebber will review any
Acquisition Proposals received with Convex and its legal advisors and
appropriate action will be taken. Convex has paid PaineWebber a retention fee of
$200,000 to provide these services. If a Superior Proposal is recommended by the
Convex Board, Convex will pay PaineWebber a transaction fee equal to (i)
eight-tenths of one percent (0.80%) of the value of such Superior Proposal if
the
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acquiror is a party other than HP or (ii) five percent (5%) of the amount by
which HP's revised offer exceeds $4.83 per share if HP is the acquiror, provided
that HP's revised offer exceeds its current offer by 10% or more. Convex will
also reimburse PaineWebber for its reasonable out of pocket expenses.
RECOMMENDATION OF THE CONVEX BOARD
After a review of the factors and alternatives summarized above, at a
meeting held on September 20, 1995 the Convex Board determined that the Merger
is fair to, and in the best interests of Convex and its stockholders. In view of
the variety of factors considered in connection with its evaluation of the
Merger, the Convex Board did not deem it practicable to and in fact did not
quantify or otherwise assign relative weights to the specific factors considered
in reaching its determination that the Merger would be beneficial to Convex and
its stockholders. The Convex Board unanimously approved the Merger and the
Merger Agreement, and unanimously recommends that Convex stockholders vote "FOR"
approval and adoption of the Merger Agreement and approval of the Merger.
HP'S REASONS FOR THE MERGER
HP's management believes the business combination with Convex will enable
HP to provide its customers with a broader, fully compatible product offering
from desktop to supercomputers. HP previously provided its customers with high
end computing solutions through its reseller agreements and other business
arrangements with Convex. Recent customer concerns over Convex's financial
viability and its ability to fund future generations of its SPP product line had
hampered the effectiveness of this selling arrangement.
HP determined that it must either provide support to Convex or develop its
own product line internally to compete effectively in the high end market. HP
ultimately determined that its best option was to pursue a business combination
with Convex.
In addition, HP's customers have indicated a preference for working with a
single, financially stable computer systems vendor. HP's business combination
with Convex will provide HP with a focused and established team of high end
computing specialists. Convex will bring to HP its expertise in parallel
computing technologies, technical application specialists, knowledge of high end
markets and an experienced sales and support team skilled in providing its
customers with supercomputing solutions. The Merger will allow HP to meet the
future high end computing needs of its technical customers in a more timely
manner than might have been possible through internal development.
ACCOUNTING TREATMENT
The Merger is expected to be treated as a "pooling of interests" for
accounting purposes. This accounting method permits the recorded assets and
liabilities of both HP and Convex to be carried forward to the surviving
corporation at their recorded historical amounts and no recognition of goodwill
in the combination is required by either company in the Merger.
It is a condition to HP's obligation to effect the Merger that HP receive
letters from Ernst & Young LLP, the independent auditors of Convex, and Price
Waterhouse LLP, independent accountants of HP, to the effect that, based upon
certain material facts and certain representations and warranties described in
such letters, the Merger will qualify for accounting treatment as a pooling of
interests under Accounting Principles Board Opinion No. 16.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material federal income tax
consequences of the Merger to Convex and its stockholders and reflects the
opinion of tax counsel included in the Registration Statement of which this
Proxy Statement/Prospectus is a part. Such tax opinion is based on certain
assumptions set forth in such opinion. The discussion is based on current law.
The discussion does not address aspects of federal taxation other than income
taxation, nor does it address all aspects of federal income taxation including,
without limitation, aspects of federal income taxation that may be applicable to
particular stockholders, including, without limitation, stockholders who are (i)
dealers in securities, (ii) foreign persons, or
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(iii) persons who acquired Convex Common Stock in a compensation transaction. In
addition, it does not address the state, local or foreign tax consequences of
the Merger, if any.
HOLDERS OF CONVEX COMMON STOCK ARE URGED TO CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE MERGER.
The principal federal income tax consequences of the Merger to Convex and
the holders of Convex Common Stock will be as follows:
- The Merger will qualify as a reorganization within the meaning of Section
368 of the Code;
- No gain or loss will be recognized by Convex, Subsidiary or HP solely as
a result of the Merger;
- No gain or loss will be recognized by holders of Convex Common Stock upon
their receipt of HP Common Stock in exchange for their Convex Common
Stock, except that holders of Convex Common Stock who receive cash
proceeds in lieu of fractional shares of HP Common Stock will recognize
gain or loss equal to the difference, if any, between such proceeds and
the tax basis of Convex Common Stock allocated to their fractional share
interests,
(i) such gain or loss, if any, will constitute capital gain or loss
if the fractional share interests exchanged are held as capital
assets at the time of the Merger, and
(ii) such capital gain or loss will be long-term capital gain or loss
if the holding period for the fractional share interests
(including the holding period of Convex Common Stock attributed
thereto) exceeds one year at the Effective Time;
- The tax basis of HP Common Stock received by holders of Convex Common
Stock will be the same as the tax basis of the Convex Common Stock
exchanged therefor less the tax basis, if any, allocated to fractional
share interests; and
- The holding period of HP Common Stock in the hands of holders of Convex
will include the holding period of Convex Common Stock exchanged
therefor, provided that such Convex Common Stock is held as a capital
asset at the time of the Merger.
No ruling has been or will be obtained from the IRS with respect to the
Merger.
REGULATORY MATTERS
Under the HSR Act and the rules promulgated thereunder by the FTC, certain
acquisition transactions may not be consummated unless notice has been given and
certain information has been furnished to the FTC and the Antitrust Division and
specified waiting period requirements have been satisfied. HP and Convex have
each filed with the FTC and the Antitrust Division a Notification and Report
Form (an "HSR Notice") with respect to the Merger and the required waiting
period under the HSR Act expired on November 5, 1995. At any time before or
after the Effective Time, the FTC or the Antitrust Division could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the Merger or seeking the divestiture or
compulsory licensing of substantial assets of HP, Convex or their respective
subsidiaries. State attorneys general and private parties may also bring legal
actions under federal or state antitrust laws under certain circumstances.
CERTAIN LEGAL PROCEEDINGS
On September 22, 1995, the Hoffman Action was filed in the State of
Delaware against Convex, HP and the individual members of the Convex Board. The
Hoffman Action alleges, among other things, that the proposed price per share
for the Common Stock of Convex in the pending Merger between Convex and a
wholly-owned subsidiary of HP is unfairly low and does not accurately reflect
the intrinsic value of the Convex Common Stock. The Hoffman Action further
alleges that the members of the Convex Board breached their fiduciary duties to
Convex by failing to conduct an auction of Convex before signing the Merger
Agreement and that the Convex Board failed to exercise independent judgment in
agreeing to the Merger. The Hoffman
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Action alleges that HP owes a fiduciary duty to the stockholders of Convex. The
Hoffman Action requests, among other things, that the court enjoin the
consummation of the Merger, as well as unspecified damages, and certification as
a class action.
On October 2, 1995, the Gomberg Action was filed in the State of Delaware
against Convex, HP and the Convex Board. The Gomberg Action alleges, among other
things, that the Merger is unfair to Convex and its stockholders for the
following reasons: (i) the Convex Board did not conduct an auction before
entering into the Merger Agreement, (ii) the price offered for shares of Convex
Common Stock in the Merger was below the market price on the date that the
Merger Agreement was signed, (iii) the Merger will deny the Convex stockholders
the right to maximize the value of their securities through the loss of a
premium that could be available from other suitors, and (iv) by conducting the
foregoing acts, the Convex Board breached their fiduciary duties to Convex and
its stockholders. The Gomberg Action also alleges that HP aided and abetted the
members of the Convex Board in breaching their fiduciary duties. The Gomberg
Action seeks an injunction against the Merger, as well as unspecified damages,
certification as a class action and other forms of relief.
On October 3, 1995, the Faegenburg Action was filed in the State of
Delaware against Convex and the individual members of the Convex Board. The
Faegenburg Action alleges, among other things, that the proposed price per share
is unfairly low and that the members of the Convex Board breached their
fiduciary duties to the Convex stockholders. The Faegenburg Action seeks an
injunction against the Merger, as well as unspecified damages and certification
as a class action as well as other forms of relief.
While no assurance can be given as to the result of the above described
actions, HP and Convex believe that each of the above actions lack merit and
intend to defend these actions vigorously.
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THE MERGER AGREEMENT AND RELATED AGREEMENTS
The following paragraphs summarize, among other things, the material terms
of the Merger Agreement, which is attached hereto as Annex A and incorporated
herein by reference. Stockholders of Convex are urged to read the Merger
Agreement in its entirety for a more complete description of the Merger.
EFFECTIVE TIME OF THE MERGER
As promptly as practicable after the satisfaction or waiver of the
conditions set forth in the Merger Agreement, the parties thereto will file a
Certificate of Merger with the Secretary of State of the State of Delaware. The
Merger will become effective at the time of such filing which is referred to
herein as the Effective Time.
CORPORATE STRUCTURE AFTER THE MERGER
At the Effective Time, Subsidiary will be merged with and into Convex,
which will be the surviving corporation and will thereby become a wholly-owned
subsidiary of HP. The Certificate of Incorporation and By-Laws of Convex, as in
effect immediately prior to the Effective Time, will be the Certificate of
Incorporation and By-Laws of the surviving corporation until thereafter amended.
The directors and officers of Subsidiary immediately prior to the Effective Time
will be the initial directors and officers of the surviving corporation.
CONVERSION OF SHARES
At the Effective Time, each outstanding share of Convex Common Stock (other
than shares of Convex Common Stock to be canceled as described below) will be
converted into the right to receive the Conversion Fraction of a share of HP
Common Stock. Based upon the average closing price ($92.61) of HP Common Stock
for the ten trading day period ending November 6, 1995 (the latest practicable
trading day prior to the printing of this Proxy Statement/Prospectus), the
Conversion Fraction would have been 0.0522, or approximately 19 shares of Convex
Common Stock for each share of HP Common Stock. Cash will be paid in lieu of
fractional shares. Each share of Convex Common Stock owned by HP, Subsidiary or
any other direct or indirect subsidiary of HP, or held in treasury by Convex,
will be canceled. All then outstanding shares of common stock of Subsidiary will
be converted into one hundred newly issued shares of common stock of the
surviving corporation.
As soon as practicable after the Effective Time, HP will cause its exchange
agent to mail to each record holder of Convex Common Stock, a notice and form of
letter of transmittal advising such holder of the effectiveness of the Merger
and the procedure for surrendering Convex stock certificates to the exchange
agent to be exchanged for certificates representing the number of whole shares
of HP Common Stock to which such person is entitled and cash payments in lieu of
fractional shares. Until certificates representing Convex Common Stock are
delivered in exchange for certificates representing HP Common Stock, the holders
of such certificates will not be entitled to vote or receive any dividend or
other distribution payable to holders of shares of HP Common Stock, provided
that upon the surrender of such certificates for exchange, the record holder of
such certificates will be paid the amount of dividends or other distributions
which became payable and were not paid to such record holder with respect to the
number of shares of HP Common Stock represented by the certificates issued upon
such exchange. No interest will be paid on any dividends or other distributions
payable with respect to such shares of HP Common Stock.
No fractional shares of HP Common Stock will be issued in the Merger, but
in lieu thereof each holder of Convex Common Stock otherwise entitled to a
fraction of a share of HP Common Stock will be entitled to receive an amount of
cash (without interest) determined by multiplying the fractional share interests
to which such holder would otherwise be entitled by the Conversion Fraction.
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TREATMENT OF CONVEX STOCK OPTION PLANS AND EMPLOYEE STOCK PURCHASE PLAN
Convex Stock Option Plans. At the Effective Time, each then outstanding
Convex Option granted under the Convex 1983 or 1991 Stock Option Plan
(collectively, the "Option Plans") will be assumed by HP and will thereafter be
deemed to constitute an option to acquire, on the same terms and conditions as
were applicable under such option, the number of whole shares of HP Common Stock
equal to the number of shares of Convex Common Stock issuable with respect to
such Convex Option multiplied by the Conversion Fraction, at a price equal to
the exercise price per share of Convex Common Stock divided by the Conversion
Fraction.
Convex Employee Stock Purchase Plan. Convex will take such actions as are
necessary to cause the Exercise Date (as such term is used in the Convex 1995
Employee Stock Purchase Plan (the "1995 ESPP")) applicable to the then current
Exercise Period (as such term is used in the 1995 ESPP) to be the last Convex
payday on or prior to the Effective Time (the "Final Convex Exercise Date"),
subject to the consummation of the Merger. On the Final Convex Exercise Date,
Convex will apply the funds credited as of such date under the 1995 ESPP in each
participant's payroll withholdings account to the purchase of whole shares of
Convex Common Stock in accordance with the terms of the 1995 ESPP. Shares of
Convex Common Stock purchased on the Final Convex Exercise Date will be
converted in the same manner as described above in the "The Merger
Agreement -- Conversion of Shares."
CONDUCT OF BUSINESS OF CONVEX PENDING THE MERGER
During the period from the date of the Merger Agreement to the Effective
Time, and except as contemplated by the Merger Agreement or otherwise consented
to by HP in writing, Convex and its subsidiaries will, among other things,
conduct their operations only in, and will not take any action except in, the
ordinary course of business and will use all reasonable efforts to preserve
intact their respective business organizations, assets, prospects and
advantageous business relationships, to keep available the services of their
respective officers and key employees and to maintain satisfactory relationships
with their respective licensors, licensees, suppliers, contractors,
distributors, customers and others having advantageous business relationships
with them.
In particular, neither Convex nor any of its subsidiaries will take any of
the following actions without the prior written consent of HP: (i) amend its
Articles or Certificate of Incorporation or By-Laws, or similar organizational
documents, or change its authorized numbers of directors; (ii) split, combine or
reclassify any shares of its capital stock, declare, pay or set aside for
payment any dividend or other distribution in respect of its capital stock, or
directly or indirectly, redeem, purchase or otherwise acquire any shares of its
capital stock or other securities, including, without limitation, any debt
securities; (iii) authorize for issuance, issue, sell or deliver or agree or
commit to issue, sell or deliver any of its capital stock or any securities
convertible into or exercisable or exchangeable for shares of its capital stock,
other than grants of a limited number of stock options to newly hired employees
and the issuance of shares of Convex Common Stock pursuant to the exercise of
employee stock options and other outstanding rights; (iv) incur any material
liability or obligation other than in the ordinary course of business or issue
any debt securities or assume, guarantee, endorse or otherwise become
responsible for the obligations of any other individual or entity, or change any
assumption underlying, or methods of calculating, any bad debt, contingency or
other reserve; (v) enter into, adopt or amend any employment-related agreement,
plan or employee benefit plan or grant, or become obligated to grant, any
increase in the compensation payable or to become payable to any of their
officers or directors or any general increase in the compensation payable or to
become payable to their employees, other than in connection with individual
performance reviews in the ordinary course of business and consistent with past
practice; (vi) acquire or make any investment in any corporation, partnership or
other business organization or division thereof; (vii) pay, discharge or satisfy
any material claims, liabilities or obligations, other than the payment,
discharge or satisfaction in the ordinary course of business of liabilities
reflected or reserved against on the balance sheet as of June 30, 1995 delivered
to HP or subsequently incurred in the ordinary course of business; (viii)
acquire any material assets or properties or dispose of, mortgage or encumber
any material assets or properties other than in the ordinary course of business;
(ix) waive, release, grant or transfer any material rights or modify or change
any material existing license, lease, contract or other document other than
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in the ordinary course of business and consistent with past practice; or (x)
take any action or agree, in writing or otherwise, to take any of the foregoing
actions or any action which would at any time make any representation or
warranty in Article III of the Merger Agreement untrue or incorrect.
SOLICITATION OF OTHER PROPOSALS
Nothing in the Merger Agreement prevents the Convex Board in the exercise
of its fiduciary duties from soliciting or encouraging, or from considering or
negotiating, an Acquisition Proposal. In addition, nothing in the Merger
Agreement prevents the Convex Board from approving or recommending an
Acquisition Proposal if Convex, acting through its disinterested directors,
determines in good faith, after consultation with its financial advisors, that
such Acquisition Proposal is a Superior Proposal.
If Convex receives a Superior Proposal, the Convex Board may recommend or
accept a Superior Proposal in the circumstances contemplated by the Merger
Agreement, and may in such case terminate the Merger Agreement or withdraw or
modify its recommendation concerning the Merger Agreement and the Merger, but
only if Convex has, prior to such termination, approval or recommendation, given
HP reasonable notice of the identity of the offeror and the terms and
conditions, including a copy of any such proposal or a summary of its principal
terms. In such an event, Convex will be required to pay to HP, in cash, the sum
of $3,750,000, plus HP's expenses and fees incurred in connection with the
Merger and the Merger Agreement. See "The Merger Agreement -- Fees and
Expenses."
CERTAIN COVENANTS
HP and the surviving corporation have agreed that, for a period of six
years from the Effective Time and subject to certain customary qualifications,
they will indemnify each person entitled to indemnity under Convex's Certificate
of Incorporation (an "Indemnified Party") to the same extent provided for under
such Certificate of Incorporation and as permitted under Delaware law. From and
after the Effective Time, HP has also agreed to assume Convex's obligations
under certain indemnification agreements to the extent such agreements are
enforceable under Delaware law.
From and after the Effective Time, Indemnified Parties who are defendants
in litigation commenced by stockholders of Convex with respect to such parties'
performance of their duties as officers or directors and HP's offer or proposal
to acquire Convex will be entitled to be represented, at the reasonable expense
of HP, in such litigation by one counsel selected by a plurality of such
defendants.
HP and the surviving corporation have agreed that for a period of six years
from the Effective Time they will use all reasonable efforts to maintain in
effect, if available, directors' and officers' liability insurance covering
those persons who are currently covered by Convex's directors' and officers'
liability insurance policy on terms comparable to those applicable to the then
current directors and officers of HP. In no event will HP or the surviving
corporation be required to expend in excess of 110% of the annual premium
currently paid by Convex for such coverage.
CONDITIONS TO THE MERGER
Consummation of the Merger is subject to the satisfaction of various
conditions, including that: (i) the Merger has been approved by the requisite
vote of the stockholders of Convex; (ii) any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act has
expired or been terminated; (iii) the Registration Statement has become
effective and no stop order suspending the effectiveness thereof is in effect
and no proceedings for such purpose are pending or threatened before the
Commission; (iv) the shares of HP Common Stock issuable in the Merger are
authorized for listing on the NYSE upon official notice of issuance; (v) no
order, statute, rule, regulation, executive order, decree or judgment has been
enacted, entered, issued, promulgated or enforced by any court or governmental
authority which prohibits or restricts the consummation of the Merger; (vi) no
injunction, restraining order or other order has been issued that prohibits,
restrains, seeks to invalidate or seeks to set aside consummation of the Merger;
(vii) HP and Convex each have received from the other party certificates to the
effect that such party has performed and complied with the agreements and
obligations contained in the Merger Agreement
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required to be performed and complied with at or prior to the Effective Time and
that the representations and warranties of such party are true and correct in
all material respects at and as of the Effective Time; (viii) any and all
consents required from third parties relating to contracts, licenses, leases and
other agreements and instruments material to the financial condition or results
of operations of the surviving corporation, have been obtained and all consents,
waivers, approvals, authorizations or orders required to be obtained, and all
filings required to be made, by Convex for the authorization, execution and
delivery of the Merger Agreement and the consummation by Convex of the
transactions contemplated thereby have been obtained and made by Convex; (ix) HP
has received the Affiliate Agreements (as described below); (x) HP has received
from Ernst & Young LLP a copy of a letter addressed to Convex dated on or prior
to the date of the Effective Time in substance reasonably satisfactory to HP to
the effect that Ernst & Young LLP is aware of no significant matters with
respect to Convex or any of its subsidiaries which would preclude HP from
accounting for the business combination as a pooling of interests; (xi) HP has
received from Price Waterhouse LLP, a letter dated the date of the Effective
Time confirming, as of that date, that the Merger can be treated for accounting
purposes as a "pooling of interests" under Opinion No. 16 of the Accounting
Principles Board; (xii) since the date of the Merger Agreement, there has been
no material adverse change in, and no event, occurrence or development in the
business of either Convex or HP that, taken together with other events,
occurrences and developments with respect to such business, would have or would
reasonably be expected to have a material adverse effect on, the business,
operations or financial condition of either Convex or HP and its respective
subsidiaries, taken as a whole; (xiii) HP has received certain estoppel
certificates relating to the lease of real property in Richardson, Texas and to
certain limited partnership matters; and (xiv) the Convex Board has adopted a
resolution, contingent upon the closing of the Merger and satisfactory to HP,
that terminates the "Convex Renewal Program (Sabbatical)." At any time prior to
the Effective Time, to the extent legally allowed, Convex (without the approval
of its stockholders) and HP may waive compliance with any of the agreements or
satisfaction of any of the conditions to closing contained in the Merger
Agreement for the benefit of that company.
TERMINATION; AMENDMENT
The Merger Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time whether before or after the approval by the
stockholders of Convex, under the circumstances specified therein, including:
(i) by mutual consent of HP and Convex; (ii) by either HP or Convex after
January 31, 1996, if the closing of the Merger has not occurred for any reason
other than a breach of the Merger Agreement by the terminating party; (iii) by
either HP or Convex, if there has been a breach by Convex, on the one hand, or
HP or Subsidiary, on the other hand, of any agreement, covenant, obligation,
representation or warranty contained in the Merger Agreement and such breach has
not been waived by the terminating party; (iv) by either HP or Convex, if a
court of competent jurisdiction or governmental agency has taken action
restraining, enjoining or otherwise prohibiting the Merger; (v) by either HP or
Convex, if Convex accepts or recommends to its stockholders a Superior Proposal;
(vi) by either HP or Convex if Convex's stockholders fail to approve the Merger
by the requisite vote; (vii) by HP, if it is not in material breach of its
obligations under the Merger Agreement and the Convex Board has withdrawn or
modified in a manner adverse to HP its recommendation of the Merger; or (viii)
by HP, if a tender offer or exchange offer for twenty percent or more of the
outstanding shares of capital stock of Convex is commenced and the Convex Board,
within ten business days after such tender offer or exchange offer is so
commenced, either fails to recommend against acceptance of such tender offer or
exchange offer by its stockholders, or takes no position with respect to
acceptance of such tender offer or exchange offer by its stockholders.
The Merger Agreement may be amended, modified or supplemented only by
written agreement of HP, Subsidiary and Convex at any time prior to the
Effective Time with respect to any of its terms except that, after the approval
by holders of a majority of the outstanding shares of Convex Common Stock, the
amount or form of consideration to be received by the holders of Convex Common
Stock may not be decreased or altered without the approval of such holders.
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FEES AND EXPENSES
Except as described below, all costs and expenses incurred in connection
with the Merger Agreement and the transactions contemplated thereby will be paid
by the party incurring such expenses, except that expenses incurred in
connection with the printing and mailing of the Proxy Statement/Prospectus will
be shared equally by HP and Convex.
Convex has agreed to pay to HP, in cash, the sum of $3,750,000, plus all
out-of-pocket expenses and fees incurred by HP, or on its behalf, in connection
with the Merger and the negotiation, preparation, execution and performance of
the transactions contemplated by the Merger Agreement if: (i) either HP or
Convex terminates the Merger Agreement because Convex has accepted or
recommended to its stockholders a Superior Proposal; (ii) HP terminates the
Merger Agreement because (a) there has been a breach by Convex of any agreement,
covenant, obligation, representation or warranty contained in the Merger
Agreement and such breach has not been waived by HP or cured by Convex, (b) the
Convex Board withdraws or modifies its recommendation of the Merger or (c) a
tender offer or exchange offer for twenty percent or more of the outstanding
shares of capital stock of Convex is commenced and the Convex Board either fails
to recommend against acceptance of such tender offer or exchange offer or takes
no position with respect to the acceptance of such tender offer or exchange
offer; (iii) if Convex or HP terminates this Agreement because Convex's
stockholders have voted on and failed to approve the Merger by the requisite
vote and at the time of the failure of Convex's stockholders to approve the
Merger (a) there exists a competing Acquisition Proposal, and (b) the Convex
Board has withdrawn or modified its recommendation of the Merger in a manner
adverse to HP, or has resolved to do so, or has recommended to Convex's
stockholders any Superior Proposal; or (iv) if Convex or HP terminates this
Agreement after January 31, 1996 and thereafter, within six months, the Convex
Board recommends to its stockholders a Superior Proposal.
AGREEMENTS OF CONVEX AFFILIATES
Rule 145 promulgated under the Securities Act regulates the disposition of
securities by "affiliates" of Convex in connection with the Merger. At least ten
days prior to the Effective Time, Convex will deliver to HP a list (the
"Affiliate List") identifying all persons who might in Convex's opinion, at the
time of the Special Meeting, be deemed to be "affiliates" of Convex for purposes
of Rule 145 under the Securities Act (the "Affiliates"). Convex has also agreed
to use all reasonable efforts to cause each person who is identified as a
possible Affiliate to deliver to HP, on or prior to the Effective Time, a
written agreement (an "Affiliate Agreement"). Under the Affiliate Agreements,
each Affiliate represents that he or she will not offer to sell, sell or
otherwise dispose of HP Common Stock issued to such person in the Merger except
pursuant to an effective registration statement or in compliance with Rule 145
or another exemption from the registration requirements of the Securities Act,
and, further, that such person will not otherwise engage in transactions with
respect to HP Common Stock for the period described therein in order to support
the pooling of interests accounting treatment intended by HP to apply to the
Merger. The form of Affiliate Agreement is included as an exhibit to the Merger
Agreement.
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COMPARISON OF STOCKHOLDERS' RIGHTS
In connection with the Merger, Convex stockholders will be converting their
shares of Convex Common Stock into shares of HP Common Stock. The charter and
bylaws of HP differ from those of Convex in several significant respects. HP is
a California corporation and Convex is a Delaware corporation. Because of the
differences between the California Corporations Code and the Delaware Law and
the differences in HP's and Convex's respective charter documents, the rights of
a holder of Convex Common Stock differ from the rights of a holder of HP Common
Stock. Below is a summary of some of the important differences between the
organizational documents of HP and Convex and between the California
Corporations Code and Delaware Law. It is not practical to summarize all of such
differences in this Proxy Statement/Prospectus, but some of the principal
differences which could materially affect the rights of stockholders include the
following:
CAPITALIZATION. The Certificate of Incorporation of Convex currently
provides that Convex is authorized to issue up to 85,000,000 shares of its
capital stock, including 80,000,000 shares of common stock and 5,000,000 shares
of preferred stock. The Articles of Incorporation of HP currently provide that
HP is authorized to issue up to 1,500,000,000 shares of its capital stock,
including 1,200,000,000 shares of common stock and 300,000,000 shares of
preferred stock.
INDEMNIFICATION AND LIMITATION OF LIABILITY. Under the California
Corporations Code, California corporations are permitted to adopt a provision in
their articles of incorporation reducing or eliminating the personal liability
of a director to the corporation or its shareholders for monetary damages for
breach of fiduciary duty as a director, provided that such liability does not
arise from certain proscribed conduct (including intentional misconduct and
breach of the duty of loyalty). Delaware corporations are permitted under the
Delaware Law to adopt a similar provision. HP has adopted such a provision in
its Articles of Incorporation limiting the liability of HP's directors for
monetary damages to the fullest extent possible under California law. Convex has
adopted a provision in its Certificate of Incorporation limiting the liability
of Convex's directors for monetary damages to the fullest extent permissible
under the Delaware Law.
AMENDMENT OF BYLAWS. The Certificate of Incorporation of Convex provides
that the Convex Board is expressly authorized to adopt, amend or repeal Convex's
By-Laws. The Articles of Incorporation of HP contain no similar provision,
although the California Corporations Code would permit such actions by the HP
board of directors, except for certain limitations provided in the California
Corporations Code.
SIZE OF BOARD OF DIRECTORS. Under the California Corporations Code,
although changes in the number of directors must in general be approved by the
shareholders, the board of directors may fix the exact number of directors
within a stated range set forth in the articles of incorporation or bylaws, if
the stated range has been approved by the shareholders. The By-Laws of HP
provide the directors with authority to fix the number of directors within a
range from 11 to 21, with the exact number currently set at 15. Any change in
the range of the number of authorized directors must be approved by the
shareholders of HP. The Delaware Law permits the board of directors to change
the authorized number of directors by amendment to the bylaws or in the manner
provided in the bylaws, unless the number of directors is fixed in the
certificate of incorporation, in which case a change in the number of directors
may be made only by amendment to the certificate of incorporation. The number of
directors of Convex is currently fixed at seven. The Convex Certificate of
Incorporation does not fix the number of directors and, as a result, the Convex
Board acting without stockholder approval may change such number.
CLASSIFIED BOARD OF DIRECTORS. A classified board is one on which a
certain number, but not all, of the directors are elected on a rotating basis
each year. Under the California Corporations Code, directors generally must be
elected annually; however, a "listed" corporation is permitted to adopt a
classified board. A "listed" corporation is defined under the California
Corporations Code as a corporation with (i) outstanding securities listed on the
New York or American Stock Exchange, or (ii) a class of securities designated as
a national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. if the corporation has at least
800 holders of its equity securities. The Delaware Law permits, but does not
require, a classified board of directors, pursuant to which the directors can be
divided into as many as three classes with staggered terms of office, with only
one class of directors standing for election each year. Neither the charter
documents of HP nor those of Convex provide for a classified board.
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REMOVAL OF DIRECTORS. Under the California Corporations Code, any director
or the entire board of directors may be removed, with or without cause, with the
approval of a majority of the outstanding shares entitled to vote; however, no
directors may be removed (unless the entire board is removed) if the number of
votes cast against the removal would be sufficient to elect the director under
cumulative voting. In contrast, under the Delaware Law, a director of a
corporation that does not have a classified board of directors or cumulative
voting may be removed without cause only by a majority stockholder vote.
CUMULATIVE VOTING. The California Corporations Code provides that any
shareholder is entitled to cumulate his or her votes in the election of
directors upon proper notice of his or her intention to do so. However, a
"listed" corporation (as defined above in the section entitled "Classified Board
of Directors") may eliminate shareholders' cumulative voting rights. In
contrast, under the Delaware Law, cumulative voting in the election of directors
is not available unless specifically provided for in the Certificate of
Incorporation. In an election of directors under cumulative voting, each share
of stock normally having one vote is entitled to a number of votes equal to the
number of directors to be elected. A shareholder may then cast all such votes
for a single candidate or may allocate them among as many candidates as the
shareholder may choose. Convex has not provided for cumulative voting in its
Certificate of Incorporation. HP has not eliminated the right of cumulative
voting.
LOANS TO OFFICERS AND EMPLOYEES. Under the Delaware Law, a corporation may
make loans to, guarantee the obligations of, or otherwise assist its officers or
other employees and those of its subsidiaries when such action, in the judgment
of the directors, may reasonably be expected to benefit the corporation. Under
the California Corporations Code, any such loan or guaranty to or for the
benefit of a director or officer of the corporation or any of its subsidiaries
requires approval of the shareholders, unless such loan or guaranty is provided
under a plan approved by shareholders owning a majority of the outstanding
shares of the corporation. In addition, under the California Corporations Code,
shareholders of any corporation with 100 or more shareholders of record may
approve a bylaw authorizing the board of directors alone to approve a loan or
guaranty to or on behalf of an officer (whether or not a director) if the board
determines that such a loan or guaranty may reasonably be expected to benefit
the corporation. HP shareholders have not adopted such a bylaw provision.
POWER TO CALL SPECIAL SHAREHOLDERS' MEETING. Under the California
Corporations Code, a special meeting of shareholders may be called by the board
of directors, the Chairman of the Board, the President and the holders of shares
entitled to cast not less than 10% of the votes at such meeting and such persons
are so authorized to call shareholder meetings by HP's By-Laws. In contrast,
under the Delaware Law, a special meeting of stockholders may be called by the
board of directors or by any other person authorized to do so in the certificate
of incorporation or the by-laws. Under Convex's By-Laws, a majority in amount of
the outstanding capital stock of Convex may call a special meeting of
stockholders.
INSPECTION OF SHAREHOLDERS' LIST. Both the California Corporations Code
and the Delaware Law allow any shareholder to inspect the shareholders' list for
a purpose reasonably related to such person's interest as a shareholder. The
California Corporations Code provides, in addition, an absolute right to inspect
and copy the corporation's shareholders' list by a person or persons holding 5%
or more of a corporation's voting shares, or any shareholder or shareholders
holding 1% or more of such shares who has filed certain documents with the SEC
relating to the election of directors. The Delaware Law does not provide for any
such absolute right of inspection.
DIVIDENDS AND REPURCHASES OF SHARES. Under the California Corporations
Code, a corporation may not make any distribution (including dividends, whether
in cash or other property, and repurchases of its shares) unless either the
corporation's retained earnings immediately prior to the proposed distribution
equal or exceed the amount of the proposed distribution or, immediately after
giving effect to such distribution, the corporation's assets (exclusive of
goodwill, capitalized research and development expenses and deferred charges)
would be at least equal to 1 1/4 times its liabilities (not including deferred
taxes, deferred income and other deferred credits), and the corporation's
current assets, as defined, would be at least equal to its current liabilities
(or 1 1/4 times its current liabilities if the average pre-tax and pre-interest
earnings for the preceding two fiscal years were less than the average interest
expenses for such years). Such tests are applied to
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California corporations on a consolidated basis. Under the California
Corporations Code, there are certain exceptions to the foregoing rules for
repurchases of shares in connection with certain rescission actions or pursuant
to certain employee stock plans.
The Delaware Law permits a corporation, unless otherwise restricted by its
certificate of incorporation, to declare and pay dividends out of its surplus
or, if there is no surplus, out of net profits for the fiscal year in which the
dividend is declared or for the preceding fiscal year as long as the amount of
capital of the corporation is not less than the aggregate amount of the capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. In addition, the Delaware Law
generally provides that a corporation may redeem or repurchase its shares only
if such redemption or repurchase would not impair the capital of the
corporation. The ability of a Delaware corporation to pay dividends on, or to
make repurchases or redemptions of, its shares is dependent on the financial
status of the corporation standing alone and not on a consolidated basis. In
determining the amount of surplus of a Delaware corporation, the assets of the
corporation, including stock of subsidiaries owned by the corporation, must be
valued at their fair market value as determined by the board of directors,
regardless of their historical book value.
APPROVAL OF CERTAIN CORPORATE TRANSACTIONS. Under both the California
Corporations Code and Delaware Law, with certain exceptions, any merger,
consolidation or sale of all or substantially all the assets must be approved by
the board of directors and a majority of the outstanding shares entitled to
vote. Under the California Corporations Code, similar board and shareholder
approval is also required in connection with certain additional acquisition
transactions.
CLASS VOTING IN CERTAIN CORPORATE TRANSACTIONS. Under the California
Corporations Code, with certain exceptions, any merger, certain sales of all or
substantially all the assets of a corporation and certain other transactions
must be approved by a majority of the outstanding shares of each class of stock
(without regard to limitations on voting rights). The Delaware Law does not
generally require a class vote, except in connection with certain amendments to
the certificate of incorporation that, among other things, adversely affect a
class of stock.
APPRAISAL RIGHTS. Under the California Corporations Code and the Delaware
Law, a shareholder of a corporation participating in certain major corporate
transactions may, under varying circumstances, be entitled to appraisal rights
pursuant to which such stockholder may receive cash in the amount of the fair
market value of the shares held by such shareholder (as determined by a court or
by agreement of the corporation and the shareholder) in lieu of the
consideration such shareholder would otherwise receive in the transaction. The
limitations on the availability of appraisal rights under the California
Corporations Code are different from those under the Delaware Law. Shareholders
of a California corporation whose shares are listed on a national securities
exchange or on a list of over-the-counter margin stocks issued by the Board of
Governors of the Federal Reserve System generally do not have such appraisal
rights unless the holders of at least 5% of the class of outstanding shares
claim the right. Appraisal rights are unavailable, however, if the shareholders
of a corporation or the corporation itself, or both, immediately prior to a
reorganization shall own (immediately after the reorganization) more than
five-sixths of the voting power of the surviving or acquiring corporation or its
parent.
Under the Delaware Law, appraisal rights are not available to: (i)
stockholders with respect to a merger or consolidation by a corporation, the
shares of which are either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or are held of
record by more than 2,000 holders if such stockholders receive only shares of
the surviving corporation or shares of any other corporation which are either
listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or are held of record by more than 2,000 holders; or
(ii) stockholders of a corporation surviving a merger if no vote of the
stockholders of the surviving corporation is required to approve the merger
because, among other things, the number of shares to be issued in the merger
does not exceed 20% of the shares of the surviving corporation outstanding
immediately prior to the merger, and if certain other conditions are met.
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The Delaware Law also does not provide stockholders of a corporation with
appraisal rights when the corporation acquires another business through the
issuance of its capital stock: (i) in exchange for the assets of the business to
be acquired, (ii) in exchange for the outstanding capital stock of the
corporation to be acquired, or (iii) in a merger of the corporation to be
acquired with a subsidiary of the acquiring corporation. The California
Corporations Code treats these kinds of acquisitions in the same manner as a
direct merger of the acquiring corporation with the corporation to be acquired.
APPRAISAL RIGHTS ARE NOT AVAILABLE TO STOCKHOLDERS OF CONVEX WITH RESPECT
TO THE MERGER.
DISSOLUTION. Under the California Corporations Code, shareholders holding
50% or more of the voting power may authorize a corporation's dissolution, with
or without the approval of the corporation's board of directors, and this right
may not be modified by the articles of incorporation. Under the Delaware Law, a
dissolution must be approved by stockholders holding 100% of the total voting
power or the dissolution must be initiated by the board of directors and
approved by a simple majority of the stockholders of the corporation.
SUPERMAJORITY PROVISIONS IN HP ARTICLES OF INCORPORATION. HP's Articles of
Incorporation provide that certain transactions, including a merger or
consolidation or a sale, lease, exchange, mortgage, pledge, transfer or other
disposition of all or substantially all of the assets of HP or one of its
majority-owned subsidiaries with a fair market value of more than 10% of the
total value of the assets of HP and its consolidated subsidiaries, with or to
shareholders who are, or after such transactions will be, the beneficial owner
of 20% or more of the total outstanding voting stock of HP, must be approved by
the affirmative vote of holders of at least 80% of the then outstanding voting
stock (the "Supermajority Provision").
Notwithstanding the foregoing, no such shareholder vote is required if such
transaction is either approved by at least a majority of the directors of HP who
are not associated with the shareholder proposing such transaction
("Disinterested Directors") or certain minimum price and procedural requirements
are met.
The Supermajority Provision will not impede an acquisition of HP that is
approved by the Disinterested Directors of HP or that provides to all
shareholders substantially the same consideration for their shares.
EXPERTS
The consolidated financial statements of HP incorporated in this Proxy
Statement/Prospectus by reference to HP's Annual Report on Form 10-K for the
year ended October 31, 1994, have been so incorporated in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements and schedules of Convex appearing in
its Annual Report (Form 10-K) for the year ended December 31, 1994, incorporated
by reference in this Proxy Statement/Prospectus, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon included
therein and incorporated herein by reference. Such consolidated financial
statements and schedules are incorporated herein by reference in reliance upon
such reports given upon the authority of such firm as experts in accounting and
auditing.
LEGAL MATTERS
The validity of the HP Common Stock issuable in the Merger will be passed
upon by D. Craig Nordlund, Associate General Counsel and Secretary for HP.
Wilson, Sonsini, Goodrich & Rosati, Professional Corporation, Palo Alto,
California, is acting as counsel for Convex in connection with certain legal
matters relating to the Merger and the transactions contemplated thereby.
OTHER MATTERS
The Convex Board does not intend to bring any matters before the Special
Meeting other than those specifically set forth in the Notice of Special Meeting
and does not know of any matters to be brought before the meeting by others. If
any other matters properly come before the Special Meeting, it is the intention
of the persons named in the accompanying proxy to vote such proxy in accordance
with the judgment of the Convex Board.
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ANNEX A
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
HEWLETT-PACKARD COMPANY,
GEMINI PROJECT CORPORATION
AND
CONVEX COMPUTER CORPORATION
SEPTEMBER 21, 1995
- --------------------------------------------------------------------------------
<PAGE> 45
<TABLE>
<S> <C> <C>
ARTICLE I
THE MERGER.............................................................................. A-1
Section 1.01 The Merger............................................................. A-1
Section 1.02 Effective Time......................................................... A-1
Section 1.03 Certificate of Incorporation and By-Laws of the Surviving
Corporation............................................................ A-1
Section 1.04 Board of Directors and Officers........................................ A-1
Section 1.05 Conversion of Shares................................................... A-2
Section 1.06 Adjustments to Conversion Number....................................... A-2
Section 1.07 Surrender of Certificates; Payment for and Exchange of Shares.......... A-2
Section 1.08 No Fractional Shares................................................... A-3
Section 1.09 No Further Transfers................................................... A-4
Section 1.10 Tax-Free Reorganization................................................ A-4
ARTICLE II
RELATED MATTERS......................................................................... A-4
Section 2.01 Company Stock Option Plans; Employee Stock Purchase Plans.............. A-4
Section 2.02 Stockholder Approvals.................................................. A-5
Section 2.03 Proxy Statement, Etc. ................................................. A-5
Section 2.04 Registration Statement................................................. A-5
Section 2.05 Compliance with the Securities Act..................................... A-5
Section 2.06 Stock Exchange Listing................................................. A-6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................... A-6
Section 3.01 Corporate Organization................................................. A-6
Section 3.02 Authorization.......................................................... A-6
Section 3.03 Capitalization......................................................... A-6
Section 3.04 Affiliated Entities.................................................... A-7
Section 3.05 SEC Reports and Financial Statements................................... A-7
Section 3.06 Absence of Certain Changes or Events................................... A-8
Section 3.07 Consents and Approvals; No Violation................................... A-8
Section 3.08 Undisclosed Liabilities................................................ A-8
Section 3.09 Taxes.................................................................. A-8
Section 3.10 Title and Related Matters Concerning Real Property, Leaseholds and
Tangible Personal Property............................................. A-10
Section 3.11 Patents, Trademarks, and Other Intellectual Property................... A-11
Section 3.12 Material Contracts..................................................... A-12
Section 3.13 Litigation............................................................. A-13
Section 3.14 Insurance.............................................................. A-13
Section 3.15 Compliance with Laws................................................... A-13
Section 3.16 Employee Benefit Plans................................................. A-13
Section 3.17 Employment Related Agreements.......................................... A-14
Section 3.18 Labor Agreements and Controversies..................................... A-14
Section 3.19 Environmental Matters.................................................. A-14
</TABLE>
A-i
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<TABLE>
<S> <C> <C>
Section 3.20 Absence of Questionable Payments; Indebtedness to and from Officers,
Directors and Stockholders............................................. A-16
Section 3.21 Ownership of HP Shares................................................. A-16
Section 3.22 Certain Fees........................................................... A-16
Section 3.23 Disclosure............................................................. A-16
Section 3.24 Proxy Statement, Etc. ................................................. A-16
Section 3.25 Accounts Receivable; Inventory; Goodwill; and Leasing Transactions..... A-17
Section 3.26 Post-Retirement and Post-Employment Benefit Obligations................ A-17
Section 3.27 Powers of Attorney and Suretyships..................................... A-17
Section 3.28 Customers.............................................................. A-17
Section 3.29 Conflicts of Interest.................................................. A-17
Section 3.30 Licenses and Permits................................................... A-18
Section 3.31 Accounting Matters..................................................... A-18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
HEWLETT-PACKARD AND THE SUBSIDIARY.................................................... A-18
Section 4.01 Corporate Organization................................................. A-18
Section 4.02 Authorization.......................................................... A-18
Section 4.03 Capitalization......................................................... A-18
Section 4.04 SEC Reports and Financial Statements................................... A-19
Section 4.05 Absence of Certain Changes............................................. A-19
Section 4.06 Consents and Approvals; No Violations.................................. A-19
Section 4.07 Litigation............................................................. A-20
Section 4.08 Compliance with Laws................................................... A-20
Section 4.09 Registration Statement................................................. A-20
Section 4.10 No Undisclosed Liabilities............................................. A-20
Section 4.11 Disclosure............................................................. A-20
ARTICLE V
COVENANTS............................................................................... A-21
Section 5.01 Conduct of Business of the Company..................................... A-21
Section 5.02 Solicitation of Other Proposals........................................ A-22
Section 5.03 Access to Information.................................................. A-22
Section 5.04 Agreements of Affiliates............................................... A-22
Section 5.05 All Reasonable Efforts................................................. A-23
Section 5.06 Communications; Public Announcements................................... A-23
Section 5.07 Notification of Certain Matters........................................ A-23
Section 5.08 Indemnification and Insurance.......................................... A-23
Section 5.09 Regulatory Approvals................................................... A-25
Section 5.10 Pooling................................................................ A-25
Section 5.11 Employee Matters....................................................... A-25
Section 5.12 Termination of Stock Plans; No Acceleration of Options................. A-25
Section 5.13 Consents............................................................... A-25
</TABLE>
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<TABLE>
<S> <C> <C>
Section 5.14 Distributor, Dealer and Representative Agreements...................... A-26
Section 5.15 Brokers or Finders..................................................... A-26
ARTICLE VI
CLOSING................................................................................. A-26
Section 6.01 Time and Place......................................................... A-26
Section 6.02 Deliveries at the Closing.............................................. A-26
ARTICLE VII
CONDITIONS TO THE MERGER................................................................ A-27
Section 7.01 Conditions to the Obligations of HP, the Subsidiary and the Company.... A-27
Section 7.02 Additional Conditions to the Obligations of HP and the Subsidiary...... A-27
Section 7.03 Additional Conditions to the Obligations of the Company................ A-29
ARTICLE VIII
TERMINATION AND ABANDONMENT............................................................. A-29
Section 8.01 Termination............................................................ A-29
Section 8.02 Fees and Expenses...................................................... A-30
Section 8.03 Procedure and Effect of Termination.................................... A-30
ARTICLE IX
GENERAL PROVISIONS...................................................................... A-31
Section 9.01 Amendment and Modification............................................. A-31
Section 9.02 Waiver of Compliance; Consents......................................... A-31
Section 9.03 Validity............................................................... A-31
Section 9.04 Parties in Interest.................................................... A-31
Section 9.05 Survival of Representations, Warranties, Covenants and Agreements...... A-31
Section 9.06 Notices................................................................ A-32
Section 9.07 Governing Law.......................................................... A-32
Section 9.08 Counterparts........................................................... A-32
Section 9.09 Table of Contents and Headings......................................... A-32
Section 9.10 Entire Agreement....................................................... A-33
Section 9.11 Miscellaneous.......................................................... A-33
</TABLE>
A-iii
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of September 21, 1995 (the
"Agreement"), is among Hewlett-Packard Company, a California corporation ("HP"),
Gemini Project Corporation, a Delaware corporation and a direct wholly-owned
subsidiary of HP (the "Subsidiary"), and Convex Computer Corporation, a Delaware
corporation (the "Company").
RECITALS
A. The Executive Committee of the Board of Directors of HP and the Boards
of Directors of the Subsidiary and the Company have approved the merger of the
Subsidiary with and into the Company (the "Merger"). The Merger will have the
effects set forth in this Agreement and, as a result of the Merger, shares of
common stock of the Company will be converted into shares of common stock of HP.
The Company will become a wholly-owned subsidiary of HP.
B. For accounting purposes, it is intended that the Merger shall be
recorded as a pooling of interests and for tax purposes it is intended that the
Merger shall qualify as a tax-free reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration for the mutual agreements of the parties,
intending to be legally bound, HP, the Company and the Subsidiary hereby agree
as follows:
ARTICLE I
THE MERGER
SECTION 1.01 THE MERGER
(a) Upon the terms and subject to the satisfaction or, if permissible,
waiver of the conditions of this Agreement, at the Effective Time (as defined in
Section 1.02 hereof), the Subsidiary shall be merged with and into the Company
in accordance with the applicable provisions of Delaware law and the separate
existence of Subsidiary shall thereupon cease, and the Company, which shall be
and which is hereinafter sometimes referred to as the "Surviving Corporation,"
shall continue its corporate existence under the laws of the State of Delaware
under the name "Convex Technology Center, Inc."
(b) From and after the Effective Time, the Company shall possess all of the
rights, privileges, powers and franchises of a public as well as of a private
nature, and be subject to all the restrictions, disabilities and duties of each
of the Company and the Subsidiary (hereinafter, collectively, the "Constituent
Corporations"), all as set forth in Section 259 of the General Corporation Law
of the State of Delaware (the "DGCL").
SECTION 1.02 EFFECTIVE TIME
On the date of the closing of the Merger referred to in Section 6.01
hereof, a Certificate of Merger in such form as required by, and executed in
accordance with, the relevant provisions of the DGCL shall be filed with the
Secretary of State of Delaware. The Merger shall become effective at the time of
such filing, and the date and time of such filing is hereinafter referred to as
the "Effective Time."
SECTION 1.03 CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION
The Certificate of Incorporation and By-laws of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation and By-laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by law.
SECTION 1.04 BOARD OF DIRECTORS AND OFFICERS
The directors and officers of the Subsidiary immediately prior to the
Effective Time shall be the initial directors and officers of the Surviving
Corporation, each of such directors and officers to hold office, subject to
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the applicable provisions of the Certificate of Incorporation and By-Laws of the
Surviving Corporation, until their successors are duly elected and qualified, or
their earlier death, resignation or removal.
SECTION 1.05 CONVERSION OF SHARES
At the Effective Time, by virtue of the Merger and without any action on
the part of the holder thereof:
(a) each share of Common Stock, $.01 par value, of the Company (the
"Company Common Stock") then owned by HP, the Subsidiary or any other direct or
indirect subsidiary of HP and each share of Company Common Stock then held in
the treasury of the Company shall be canceled, and no payment shall be made nor
other consideration paid with respect thereto;
(b) each then remaining outstanding share of Company Common Stock shall be
converted into the right to receive that fraction of a share (subject to
adjustment pursuant to Section 1.06 below, the "Conversion Number") of Common
Stock, $1.00 par value, of HP (the "HP Common Stock") to be determined by
dividing $4.83 by the average closing price of HP Common Stock as reported on
the New York Stock Exchange ("NYSE") Composite Transactions for the ten trading
day period ending two trading days prior to the Effective Time (collectively,
the "Merger Consideration");
(c) all then outstanding shares of Common Stock of the Subsidiary shall be
converted into one hundred newly issued shares of Common Stock of the Surviving
Corporation.
SECTION 1.06 ADJUSTMENTS TO CONVERSION NUMBER
In the event of any change in HP Common Stock between the date of this
Agreement and the Effective Time by reason of any stock dividend, split-up,
reclassification, recapitalization, combination, exchange of shares or the like
(an "Adjustment Event"), the Conversion Number shall be appropriately adjusted.
SECTION 1.07 SURRENDER OF CERTIFICATES; PAYMENT FOR AND EXCHANGE OF SHARES
(a) Prior to the Effective Time, HP shall designate a bank or trust company
to act as exchange agent (the "Exchange Agent") for the purpose of effecting the
issuance of certificates contemplated hereby and making cash payments in lieu of
fractional shares. As soon as practicable after the Effective Time, HP shall
cause the Exchange Agent to mail to each record holder of a certificate or
certificates, which immediately prior to the Effective Time represented shares
of Company Common Stock (other than those owned by HP, the Subsidiary or any
other subsidiary of HP), a notice and form of letter of transmittal advising
such holder of the effectiveness of the Merger and the procedure for
surrendering such certificate or certificates to the Exchange Agent for exchange
for the Merger Consideration in accordance with this Agreement. Upon the
surrender to the Exchange Agent of such certificate or certificates, together
with a letter of transmittal duly executed and completed in accordance with the
instructions thereon, the Exchange Agent shall promptly cause to be issued to
such person the number of whole shares of HP Common Stock to which such person
is entitled and cash payments in lieu of fractional shares, as provided in
Section 1.08. No interest shall be paid or accrued in respect of such cash
payments.
(b) Until surrendered in accordance with the provisions hereof, each
certificate representing shares of Company Common Stock outstanding immediately
prior to the Effective Time (other than shares owned by HP, the Subsidiary or
any other subsidiary of HP) shall, except as provided in the following sentence,
be deemed for all purposes to solely represent (i) the ownership of the number
of whole shares of HP Common Stock into which such shares of Company Common
Stock have been converted in accordance with this Agreement, and (ii) the right
to receive cash in lieu of fractional share interests pursuant to Section 1.08
hereof. Until such certificates are so surrendered, the holders thereof shall
not be entitled to vote or receive any dividend or other distribution payable to
holders of shares of HP Common Stock; provided, however, that upon the surrender
of such certificates representing shares of Company Common Stock in exchange for
certificates representing shares of HP Common Stock, there shall be paid to the
record holder of the certificate or certificates representing shares of HP
Common Stock issued upon such exchange, the amount of dividends or other
distributions which theretofore became payable and were not paid to such record
holder
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with respect to the number of shares of HP Common Stock represented by the
certificate or certificates issued upon such surrender. In no event shall the
persons entitled to receive such dividends or distributions be entitled to
receive interest thereon.
(c) All dividends or other distributions declared after the Effective Time
with respect to HP Common Stock and payable to the holders of record thereof
after the Effective Time which are payable to holders of certificates
representing shares of Company Common Stock not theretofore surrendered and
exchanged for certificates representing shares of HP Common Stock shall be paid
or delivered by HP to the Exchange Agent in trust for the benefit of such
holders. All such dividends or other distributions held by the Exchange Agent
for payment or delivery to the holders of unsurrendered certificates
representing Company Common Stock and unclaimed at the end of one year from the
Effective Time shall be repaid or redelivered by the Exchange Agent to HP, after
which time any holder of certificates representing Company Common Stock who has
not theretofore surrendered such certificates to the Exchange Agent shall,
subject to applicable law, look as a general creditor only to HP for payment or
delivery of such dividends or distributions.
(d) Any certificates for shares of HP Common Stock and any cash payable in
lieu of fractional share interests delivered or made available to the Exchange
Agent pursuant to this Agreement and not exchanged for certificates representing
Company Common Stock within one year after the Effective Time shall also be
returned by the Exchange Agent to HP subject to the rights of holders of
unsurrendered certificates for shares of Company Common Stock. Notwithstanding
the foregoing, neither HP, the Exchange Agent nor any other party hereto shall
be liable to any holder of Company Common Stock for any HP Common Stock or
dividends or distributions thereon, or cash in lieu of fractional share
interests, delivered to a public official pursuant to applicable escheat or
similar laws.
(e) If payment is to be made or any certificates for shares of HP Common
Stock are to be issued to a person other than the person in whose name the
certificate for shares of Company Common Stock surrendered in exchange therefor
is registered, it shall be a condition of such payment or exchange that the
certificate so surrendered shall be properly endorsed (with such signature
guarantees as may be required by the letter of transmittal) and otherwise in
proper form for transfer and that the person requesting such payment or exchange
shall pay any transfer or other taxes required by reason of the payment and
issuance of certificates for shares of HP Common Stock to a person other than
the registered holder of the certificate surrendered or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable.
(f) Prior to the Effective Time, HP shall reserve a sufficient number of
authorized but unissued shares of HP Common Stock for issuance in connection
with the conversion of Company Common Stock into HP Common Stock as provided
herein. Promptly after the Effective Time, HP shall make available, or cause to
be made available, to the Exchange Agent the shares of HP Common Stock and shall
make arrangements to provide the Exchange Agent with sufficient funds as and
when necessary to enable the Exchange Agent to effect the exchange of
certificates and to make the cash payments in lieu of fractional shares
contemplated hereby.
(g) In the event that any certificate for Company Common Stock shall have
been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for
such lost, stolen or destroyed certificate, upon the making of an affidavit of
that fact by the holder thereof, such shares of HP Common Stock and cash in lieu
of fractional shares, if any, as may be required pursuant to this Agreement;
provided, however, that HP may, in its discretion and as a condition precedent
to the issuance thereof, require the owner of such lost, stolen or destroyed
certificate to indemnify HP and deliver a bond in such sum as it may direct as
indemnity against any claim that may be made against HP or the Exchange Agent
with respect to the certificate alleged to have been lost, stolen or destroyed.
SECTION 1.08 NO FRACTIONAL SHARES
No fractions of a share of HP Common Stock shall be issued in the Merger,
but in lieu thereof each holder of shares of Company Common Stock otherwise
entitled to a fraction of a share of HP Common Stock shall, upon surrender of
his certificate or certificates, be entitled to receive an amount of cash
(without interest) determined by multiplying the average closing price of HP
Common Stock as reported on the NYSE
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Composite Transactions for the ten trading day period ending two trading days
prior to the Effective Time, by the fractional share interest to which such
holder would otherwise be entitled.
SECTION 1.09 NO FURTHER TRANSFERS
After the Effective Time, there shall be no transfers on the stock transfer
books of the Surviving Corporation of any shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates for shares of Company Common Stock are presented to
the Surviving Corporation for transfer, they shall be canceled and exchanged for
the Merger Consideration as provided herein.
SECTION 1.10 TAX-FREE REORGANIZATION
The parties intend to adopt this Agreement as a plan of reorganization
under section 368(a) of the Code as described in the provisions of sections
368(a)(1)(A) and section 368(a)(2)(E). The HP Common Stock issued in the Merger
will be issued solely in exchange for the Company Common Stock, and no other
transaction, other than the Merger, represents, provides for, or is intended to
be an adjustment to the consideration paid for the Company Common Stock. Except
for cash paid in lieu of fractional shares, no consideration that could
constitute "other property" within the meaning of Section 356(b) of the Code is
being transferred by HP for the Company Common Stock in the Merger. The parties
shall not take a position on any tax return inconsistent with this Section 1.10.
In addition, HP represents that as of the date of this Agreement and as of the
Closing Date it intends to continue the Company's historic business or use a
significant portion of the Company's business assets in a trade or business.
ARTICLE II
RELATED MATTERS
SECTION 2.01 COMPANY STOCK OPTION PLANS; EMPLOYEE STOCK PURCHASE PLANS
(a) At the Effective Time, each then outstanding option to purchase shares
of Company Common Stock (whether or not then currently exercisable) (each, a
"Company Option") granted under the Company's 1983 or 1991 Stock Option Plans
(collectively, the "Option Plans") shall, by virtue of the Merger and without
any action on the part of the holder thereof, be assumed by HP and shall
thereafter be deemed to constitute an option to acquire, on the same terms and
conditions as were applicable under such option, the number of whole shares of
HP Common Stock equal to the number of shares of Company Common Stock issuable
with respect to such Company Option multiplied by the Conversion Number, at a
price equal to the exercise price per share of Company Common Stock divided by
the Conversion Number. As promptly as practicable after the Effective Time, HP
shall issue to each holder of a Company Option under the Option Plans a written
instrument evidencing HP's assumption of such option. Prior to the Effective
Time, the Company shall take such additional actions as are necessary or
desirable under applicable law and the applicable agreements and Option Plans to
assure that each outstanding Company Option shall, from and after the Effective
Time, represent only the right to purchase, upon exercise, whole shares of HP
Common Stock and cash in lieu of any fractional shares.
(b) The Company shall take such actions as are necessary to cause the
Exercise Date (as such term is used in the Company's 1995 Employee Stock
Purchase Plan (the "1995 ESPP")) applicable to the then current Exercise Period
(as such term is used in the 1995 ESPP) to be the last Company payday on or
prior to the Effective Time (the "Final Company Exercise Date"); provided, that
such change in the Exercise Date shall be conditioned upon the consummation of
the Merger. On the Final Company Exercise Date, the Company shall apply the
funds credited as of such date under the 1995 ESPP within each participant's
payroll withholdings account to the purchase of whole shares of Company Common
Stock in accordance with the terms of the 1995 ESPP.
(c) As soon as practicable after the Effective Time, HP shall file and use
reasonable efforts to cause to become effective a registration statement under
the Securities Act of 1933, as amended (the "Securities
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Act") with respect to the issuance of shares of HP Common Stock issuable upon
exercise of those Company options assumed by HP pursuant to Section 2.01(a).
SECTION 2.02 STOCKHOLDER APPROVALS
The Company shall take all action necessary in accordance with applicable
law and its Certificate of Incorporation and By-Laws to convene a meeting of its
stockholders as promptly as practicable following the date on which the
Registration Statement (as defined below) is declared effective to consider and
vote upon the Merger (the "Proposal"). The Company shall consult with HP and,
subject to the fiduciary duties of the Board of Directors of the Company, shall
not postpone or adjourn (other than for the absence of a quorum) its meeting of
stockholders without the consent of HP, which consent shall not be unreasonably
withheld. At the meeting of the Company's stockholders, all shares of Company
Common Stock then owned by HP, the Subsidiary or any other subsidiary of HP
shall be voted in favor of the Merger. Subject to its fiduciary duty under
applicable law, the Board of Directors of the Company shall recommend that its
stockholders vote in favor of the Proposal and will use all reasonable efforts
to solicit proxies from its stockholders in favor of the Proposal and to take
all other action necessary or advisable to secure the vote or consent of
stockholders required to effect the Merger.
SECTION 2.03 PROXY STATEMENT, ETC.
The Company shall promptly prepare and file with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and shall use all reasonable efforts to have
cleared by the SEC, and shall thereafter promptly mail to its stockholders, a
proxy statement (the "Proxy Statement") with respect to the stockholders'
meeting referred to in Section 2.02 hereof (which Proxy Statement will also
constitute the prospectus of HP to be included in the Registration Statement to
be filed by HP pursuant to Section 2.04 hereof, the "Proxy
Statement/Prospectus").
SECTION 2.04 REGISTRATION STATEMENT
HP shall promptly prepare and file with the SEC under the Securities Act, a
Registration Statement on Form S-4 (the "Registration Statement") with respect
to the shares of HP Common Stock to be issued in the Merger and shall use all
reasonable efforts to have the Registration Statement declared effective by the
SEC as promptly as practicable. HP shall also take any action required to be
taken under state blue sky or securities laws in connection with the issuance of
shares of HP Common Stock in the Merger and the Company shall furnish HP with
all information and shall take such other action as HP may reasonably request in
connection with any such action.
SECTION 2.05 COMPLIANCE WITH THE SECURITIES ACT
At least ten (10) business days prior to the Effective Time, the Company
shall cause to be delivered to HP a list (satisfactory to counsel for HP)
identifying all persons who might in the Company's opinion, at the time of the
meeting of the stockholders of the Company convened in accordance with Section
2.02 hereof, be deemed to be "affiliates" of the Company for purposes of Rule
145 under the Securities Act (the "Affiliates"). The Company shall use all
reasonable efforts to cause each person who is identified as a possible
Affiliate in such opinion to deliver to HP on or prior to the Effective Time a
written agreement, in the form of Exhibit A, that such person will not offer to
sell, sell or otherwise dispose of any of the shares of HP Common Stock issued
to such person in the Merger, except pursuant to an effective registration
statement or in compliance with Rule 145 or another exemption from the
registration requirements of the Securities Act, and further that such person
will not otherwise engage in transactions with respect to shares of HP Common
Stock for the period described therein in order to support the pooling of
interests accounting treatment intended by HP with respect to the Merger.
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SECTION 2.06 STOCK EXCHANGE LISTING
HP shall use all reasonable efforts to cause HP Common Stock to be issued
in the Merger to be listed on the NYSE prior to the Effective Time, subject to
official notice of issuance and evidence of satisfactory distribution.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Company Disclosure Schedule which the Company
shall have delivered to HP and the Subsidiary immediately prior to the execution
of this Agreement (the "Company Disclosure Schedule"), the Company represents
and warrants to HP and the Subsidiary as follows:
SECTION 3.01 CORPORATE ORGANIZATION
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with all requisite corporate
power and authority to own, operate and lease its properties and to carry on its
business as now being conducted, and is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which its ownership or
leasing of property or conduct of business requires such licensing or
qualification, except where the failure to be so qualified would not have a
material adverse effect on the Company. The Company has delivered to HP complete
and correct copies of its Certificate of Incorporation and By-Laws as in effect
on the date hereof.
SECTION 3.02 AUTHORIZATION
The Company has the requisite corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. The execution and
delivery by the Company of this Agreement, the performance by the Company of its
obligations hereunder and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by the Company's Board of
Directors and no other corporate proceeding on the part of the Company is
necessary for the execution and delivery thereof, subject only to obtaining any
necessary approval of the stockholders of the Company to the Merger, the
performance by the Company of its obligations hereunder and the consummation by
the Company of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Company and is a legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
subject to the laws of general application relating to bankruptcy, insolvency
and the relief of debtors and the rules of law governing specific performance,
injunctive relief or other equitable remedies.
SECTION 3.03 CAPITALIZATION
The authorized capital stock of the Company, as well as the number of
outstanding shares of each class of capital stock of the Company and the amount
of the Company's outstanding Debentures, is as set forth on Section 3.03 of the
Company Disclosure Schedule. All of such outstanding shares have been duly and
validly issued, were not issued in violation of any preemptive rights, were
issued in compliance with all applicable state and federal securities laws and
are fully paid and non-assessable with no personal liability attaching to the
ownership thereof. Except as set forth on Section 3.03 of the Company Disclosure
Schedule, there are no options, warrants, subscriptions, conversion or other
rights, agreements, commitments, arrangements or understandings with respect to
the issuance of shares of capital stock of the Company or any other securities
convertible into, exchangeable for or evidencing the right to subscribe for any
such shares. Section 3.03 of the Company Disclosure Schedule lists each of the
Company's Option Plans and other stock award or stock purchase plans (the "Stock
Plans"), true and correct copies of which have been provided by the Company to
HP.
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SECTION 3.04 AFFILIATED ENTITIES
(a) Except as set forth in Section 3.04 of the Company Disclosure Schedule,
the Company has no direct or indirect affiliated entities (which term includes
each direct or indirect subsidiary of the Company and each business entity in
which the Company has any direct or indirect interest and for which it accounts
on the equity method of accounting). For purposes of this Agreement, a
"subsidiary" of a person shall mean a corporation, company or other entity more
than 50% of whose outstanding shares, securities, or ownership interest
(representing the right to vote for the election of directors or other managing
authority) is now or hereafter owned or controlled directly or indirectly by
such person. Each subsidiary of the Company listed on the Company Disclosure
Schedule is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, with all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as now being conducted, and is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which its
ownership or leasing of property or conduct of business requires such
qualification or licensing, except where the failure to be so qualified would
not have a material adverse effect on the Company. The Company has delivered to
HP complete and correct copies of the Articles or Certificate of Incorporation
and By-Laws, or similar organizational documents, of each such subsidiary as in
effect on the date hereof.
(b) Except as set forth in Section 3.04 of the Company Disclosure Schedule,
the Company is, directly or indirectly, the record and beneficial owner of all
of the outstanding shares of capital stock of each of its subsidiaries, and all
of the outstanding shares of capital stock of each such subsidiary are duly and
validly issued, were not issued in violation of any preemptive rights, are fully
paid and non-assessable and are owned free and clear of any claim, lien,
encumbrance or agreement with respect thereto. Except as and to the extent set
forth in Section 3.04(b) of the Company Disclosure Schedule, there are not any
options, warrants, subscriptions, conversion or other rights, agreements, or
commitments, arrangements or understandings with respect to the issuance of
capital stock of any subsidiary of the Company or any other securities
convertible into, exchangeable for or evidencing the right to subscribe for any
such shares.
(c) Except as set forth in Section 3.04 of the Company Disclosure Schedule,
the Company does not own, directly or indirectly, any capital stock or other
equity securities of any corporation other than of its subsidiaries, does not
have any direct or indirect equity or ownership interest in any other business
or entity, and does not have any direct or indirect obligation or any commitment
to invest any funds in any corporation or other business or entity other than
investments previously made in its subsidiaries.
SECTION 3.05 SEC REPORTS AND FINANCIAL STATEMENTS
Since January 1, 1992, the Company has filed with the SEC all reports,
registration statements and all other filings required to be filed with the SEC
under the rules and regulations of the SEC (collectively, the "Required Company
Reports") all of which, as of their respective effective dates, complied with
all applicable requirements of the Securities Act and the Exchange Act. The
Company has previously delivered to HP true and complete copies of its (i)
Annual Reports on Form 10-K for the years ended December 31, 1994, December 31,
1993, and December 31, 1992 as filed with the SEC; (ii) Quarterly Reports on
Form 10-Q for the three month periods ended March 31, 1995 and June 30, 1995,
respectively, as filed with the SEC; (iii) proxy statements relating to all
meetings of its stockholders (whether annual or special) held since January 1,
1992; and (iv) all other reports, statements and registration statements
(including Current Reports on Form 8-K) filed by it with the SEC since January
1, 1992 (collectively, the "Company SEC Filings"). As of their respective dates,
none of the Required Company Reports or the Company SEC Filings contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
consolidated financial statements of the Company included or incorporated by
reference in the Company SEC Filings were prepared in accordance with GAAP
applied on a consistent basis (except as otherwise stated in such financial
statements or, in the case of audited statements, the related report thereon of
independent certified public accountants), and present fairly the financial
position and results of operations, cash flows and changes in stockholders'
equity of the Company and its consolidated subsidiaries as of the dates
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and for the periods indicated, subject, in the case of unaudited interim
financial statements, to the absence of notes and to normal year-end
adjustments.
SECTION 3.06 ABSENCE OF CERTAIN CHANGES OR EVENTS
Except as set forth in the Company SEC Filings or in Section 3.06 of the
Company Disclosure Schedule, since December 31, 1994, the Company and its
subsidiaries have conducted its business only in the ordinary and usual course
and there has not been any event, change or development which has affected or be
likely to affect materially and adversely the business, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
SECTION 3.07 CONSENTS AND APPROVALS; NO VIOLATION
There is no requirement applicable to the Company or any of its
subsidiaries to make any filing with, or to obtain any permit, authorization,
consent or approval of, any governmental or regulatory authority as a condition
to the lawful consummation of the transactions contemplated by this Agreement,
other than (i) requirements of Section 251 of the DGCL for filing of appropriate
documents to effect the Merger, (ii) requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, (the "HSR Act"), (iii) filings
with the SEC pursuant to the Securities Act and the Exchange Act, (iv) such
filings and approvals as may be required under the "blue sky," takeover or
securities laws of various states, or (v) where the failure to make any such
filing, or to obtain such permit, authorization, consent or approval, would not
prevent or delay consummation of the Merger or would not otherwise prevent the
Company from performing its obligations under this Agreement. Except as set
forth in Section 3.07 of the Company Disclosure Schedule, neither the execution
and delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) result in the acceleration of, or the creation in
any party of any right to accelerate, terminate, modify or cancel any material
indenture, contract, lease, sublease, loan agreement, note or other obligation
or liability to which the Company or any subsidiary is a party or by which any
of them is bound or to which any of their assets is subject, (ii) conflict with
or result in a breach of or constitute a default under any provision of the
Certificate of Incorporation or By-Laws (or other charter documents) of the
Company or any subsidiary, or a default under or violation of any material
restriction, lien, encumbrance, indenture, contract, lease, sublease, loan
agreement, note or other obligation or liability to which any of them is a party
or by which any of them is bound or to which any of their assets is subject or
result in the creation of any lien or encumbrance upon any of said assets, or
(iii) violate or result in a breach of or constitute a default under any
judgment, order, decree, rule or regulation of any court or governmental agency
to which the Company or any subsidiary is subject.
SECTION 3.08 UNDISCLOSED LIABILITIES
Except as and to the extent set forth on the consolidated balance sheet of
the Company as of December 31, 1994 (the "Latest Balance Sheet"), included in
the Required Company Reports, neither the Company nor any of its subsidiaries
had, at such date, any liabilities or obligations (absolute, accrued, contingent
or otherwise) material to the Company and its subsidiaries taken as a whole and
since that date neither the Company nor any of its subsidiaries has incurred any
such liabilities or obligations material to the Company and its subsidiaries
taken as a whole except those incurred in the ordinary and usual course of
business and consistent with past practice or in connection with or as a result
of the transactions contemplated by this Agreement.
SECTION 3.09 TAXES
(a) For purposes of this Agreement, the following terms have the following
meanings: "Tax" (and, with correlative meaning, "Taxes" and "Taxable") means any
and all taxes, including without limitation (i) any income, profits, alternative
or add-on minimum tax, gross receipts, sales, use, value-added, ad valorem,
transfer, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, net worth, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or assessment
or charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed by any court, administrative
agency, commission, regulatory authority or other
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governmental authority or instrumentality, whether domestic or foreign (a
"Governmental Entity") responsible for the imposition of any such tax (domestic
or foreign) (a "Taxing Authority"), (ii) any liability for the payment of any
amounts of the type described in clause (i) above as a result of being a member
of an affiliated, consolidated, combined or unitary group for any Taxable period
or as the result of being a transferee or successor thereof, and (iii) any
liability for the payment of any amounts of the type described in clause (i) or
(ii) above as a result of any express or implied obligation to indemnify any
other person.
(b) All Tax returns, statements, reports and forms (including estimated Tax
returns and reports and information returns and reports) required to be filed
with any Taxing Authority with respect to any Taxable period ending on or before
the Effective Time, by or on behalf of the Company (collectively, the "Company
Returns"), have been or will be filed when due (including any extensions of such
due date), and all amounts shown to be due thereon on or before the Effective
Time have been or will be paid on or before such date. The Company's financial
statements fully accrue all actual and contingent liabilities for Taxes with
respect to all periods through the dates thereof in accordance with GAAP. The
Latest Balance Sheet (i) fully accrues consistent with past practices and in
accordance with GAAP all actual and contingent liabilities for Taxes with
respect to all periods through December 31, 1994, and (ii) properly accrues
consistent with past practices and in accordance with GAAP all liabilities for
Taxes payable after December 31, 1994 with respect to all transactions and
events occurring on or prior to such date. All information set forth in the
notes to the Company's financial statements relating to Tax matters is true,
complete and accurate in all material respects.
(c) No Tax liability since December 31, 1994 has been incurred other than
in the ordinary course of business and adequate provision has been made for all
Taxes since that date in accordance with GAAP on at least a quarterly or, with
respect to employment taxes, monthly basis. The Company has withheld and paid to
the applicable financial institution or Taxing Authority all amounts required to
be withheld. All the Company Returns filed with respect to federal income tax
returns for Taxable years of the Company through the Taxable year ended December
31, 1994, in the case of the United States, have been examined and closed and
copies of audit reports previously have been provided to HP or are the Company
Returns with respect to which the applicable period for assessment under
applicable law, after giving effect to extensions or waivers, has expired. The
Company has not granted any extension or waiver of the limitation period
applicable to any Company Returns.
(d) There is no claim, audit, action, suit, proceeding, or investigation
now pending or, to the Knowledge of the Company, threatened against or with
respect to the Company in respect of any Tax or assessment. There are no
liabilities for Taxes with respect to any notice of deficiency or similar
document of any Tax Authority received by the Company which have not been
satisfied in full (including liabilities for interest, additions to tax and
penalties thereon and related expenses). Neither the Company nor any person on
behalf of the Company has entered into or will enter into any agreement or
consent pursuant to Section 341(f) of the Code. There are no liens for Taxes
upon the assets of the Company except liens for current Taxes not yet due.
Except as may be required as a result of the Merger, the Company has not been
and will not be required to include any adjustment in Taxable income for any Tax
period (or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Closing.
(e) There is no contract, agreement, plan or arrangement, including without
limitation the provisions of this Agreement, covering any employee or
independent contractor or former employee or independent contractor of the
Company that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to Section 280G or Section 162
of the Code (as determined without regard to Section 280G(b)(4)). Other than
pursuant to this Agreement, the Company is not a party to or bound by (or will
prior to the Effective Date become a party to or bound by) any tax indemnity,
tax sharing or tax allocation agreement (whether written, unwritten or arising
under operation of federal law as a result of being a member of a group filing
consolidated tax returns, under operation of certain state laws as a result of
being a member of a unitary group, or under comparable laws of other states or
foreign jurisdictions) which includes a party other than the Company. None of
the assets of the Company (i) is property that the Company is required to treat
as owned by any other person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Code, (ii) directly or indirectly
secures any debt the interest on which is tax
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exempt under Section 103(a) of the Code, or (iii) is "tax exempt use property"
within the meaning of Section 168(h) of the Code. The Company has not
participated in (and prior to the Effective Time the Company will not
participate in) an international boycott within the meaning of Section 999 of
the Code. The Company has previously provided or made available to HP true and
correct copies of all the Company Returns, and, as reasonably requested by HP,
prior to or following the date hereof, presently existing information
statements, reports, work papers, Tax opinions and memoranda and other Tax data
and documents.
(f) The Company Disclosure Schedule lists (i) any foreign Tax holidays that
the Company has in any jurisdiction, including the nature, amount and lengths of
such Tax holiday, (ii) any intercompany transfer pricing agreements or other
arrangements that have been established by the Company in any foreign
jurisdiction and (iii) any expatriate tax programs or policies affecting the
Company.
SECTION 3.10 TITLE AND RELATED MATTERS CONCERNING REAL PROPERTY, LEASEHOLDS
AND TANGIBLE PERSONAL PROPERTY
(a) Except as set forth in Section 3.10(a) of the Company Disclosure
Schedule, the Company and each of its subsidiaries has good title to all of the
properties and assets, other than those that are leased, which are material to
the business, operations or financial condition of the Company and its
subsidiaries, including, without limitation, the properties reflected in the
Latest Balance Sheet (other than those which have been disposed of since the
date thereof in the ordinary course of business), free and clear of all security
interests, claims, charges or other encumbrances ("Liens") other than (i) Liens
reflected on the Company's June 30, 1995 balance sheet, (ii) statutory Liens
arising or incurred in the ordinary course of business with respect to which the
underlying obligations are not delinquent, (iii) Liens which do not materially
affect the value of, or interfere with the past or future use or ability to
convey, the property subject thereto or affected thereby, and (iv) Liens for
taxes and special assessments not yet due and payable in the ordinary course of
business.
(b) Set forth in Section 3.10(b) of the Company Disclosure Schedule is a
complete and accurate list of all the real property owned by, leased to or, to
the Knowledge of the Company, used in the business of the Company or any
subsidiary. No parcel of real property so listed as owned, leased or used is, or
its use is, in violation of any applicable zoning laws nor in violation of any
other local, state or federal laws and regulations affecting the use and
occupancy of such property, which violation could have a material adverse effect
on the Company. All of the buildings, fixtures and other improvements described
in Section 3.10(b) of the Company Disclosure Schedule are in good condition and
have been maintained in accordance with reasonable industry practices. Except as
indicated in Section 3.10(b) of the Company Disclosure Schedule, (i) neither the
Company nor any subsidiary is in default with respect to any material term or
condition of any lease, (ii) nor has any event occurred which through the
passage of time or the giving of notice, or both, would constitute a default
thereunder by the Company or any subsidiary or would cause the acceleration of
any obligation of the Company or any subsidiary or the creation of a lien or
encumbrance upon any asset of the Company or any subsidiary, except for items
which either individually or in the aggregate would not have a material adverse
effect on the Company.
(c) Set forth in Section 3.10(c) of the Company Disclosure Schedule is (i)
a description of each item of tangible personal property owned by the Company or
any subsidiary having on the date hereof either a depreciated book value or
estimated fair market value per unit in excess of $500,000 or not owned by the
Company or any subsidiary but in the possession of or used in the business of
the Company or any subsidiary and having rental payments therefor in excess of
$100,000 per month or $1,000,000 per year; and (ii) a description of the owner
of, and any agreement relating to the use of, each such item of tangible
personal property not owned by the Company or any subsidiary and the
circumstances under which such property is used. Except as indicated in Section
3.10(c) of the Company Disclosure Schedule:
(1) The Company or the relevant subsidiary, as the case may be, has
good and marketable title to each item of such tangible personal property
free and clear of all liens, leases, encumbrances, claims under bailment
and storage agreements, equities, conditional sales contracts, security
interests, charges and restrictions, except for liens, if any, for personal
property taxes not due;
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(2) Each item of such tangible personal property not owned by the
Company or a subsidiary is in such condition that upon the return of such
property to its owner in its present condition at the end of the relevant
lease term or as otherwise contemplated by the applicable agreement between
the Company or the relevant subsidiary, as the case may be, and the owner
or lessor thereof, the obligations of the Company or the relevant
subsidiary, as the case may be, to such owner or lessor will be discharged;
(3) Each item of tangible personal property listed in Section 3.10(c)
of the Company Disclosure Schedule is in good operating condition and
repair and is fit for its intended purposes; and
(4) The Company and each subsidiary own or otherwise have the right to
use all of the tangible personal properties now used by them in the
operation of their respective businesses or the use of which is necessary
for the performance of any material contract, letter of intent or proposal
to which any of them is a party, except for items which either individually
or in the aggregate would not have a material adverse effect on the
Company.
SECTION 3.11 PATENTS, TRADEMARKS, AND OTHER INTELLECTUAL PROPERTY
(a) To the Knowledge of the Company, the Company owns, or is licensed or
otherwise entitled to exercise, without restriction, all rights to, all patents,
trademarks, trade names, service marks, copyrights, mask work rights, trade
secret rights and other intellectual property rights, and any applications or
registrations therefor, and all material mask works, net lists, schematics,
technology, source code, know-how, computer software programs and all material
other tangible and intangible information or material, that are used or
currently proposed to be used in the business of the Company as currently
conducted or as currently proposed to be conducted (collectively, the "Company
Intellectual Property Rights").
(b) The Company Disclosure Schedule lists (i) all patents, trademarks,
trade names, service marks and other company, product or service identifiers and
mask work rights, registered and unregistered copyrights, and any applications
or registrations therefor, assigned to the Company or issued in the name of the
Company and specifies the jurisdictions in which each such Company Intellectual
Property Right has been issued or registered or in which an application for such
issuance or registration has been filed, including the respective registration
or application numbers and expiration dates; (ii) except for agreements with HP,
all source code licenses (other than maintenance source and source escrow
agreements), patent licenses (other than the 1983 patent license with Cray
Research) or trademark licenses (other than trademark licenses granted in the
ordinary course of business for distribution or incorporation into products and
other than the agreements with (i) Hoyos International for a Mongolian
supercomputer center and a Russian aerospace project and (ii) Convex Computer
SAE in Spain) as to which the Company is a party and pursuant to which the
Company or any other person is authorized to use any Company Intellectual
Property Right and includes the identity of all parties thereto, a description
of the nature and subject matter thereof, all material rights, restrictions,
conditions, or other terms pertaining to each Company Intellectual Property
Right, the applicable royalty or other consideration and the term thereof, and
including the extent to which rights with respect to Company Intellectual
Property Rights survive termination or expiration thereof; and (iii) all parties
to whom the Company has delivered copies of Company source code, whether
pursuant to an escrow arrangement or otherwise, or parties who have the right to
receive such source code, except parties who have or have the right to receive
maintenance source code. The Company owns all of the Company Intellectual
Property Rights listed in clause (i) above. Copies of all such licenses
identified pursuant to clause (ii) above have been delivered by the Company to
HP.
(c) The Company is not, and as a result of the execution and delivery of
this Agreement or the performance of the Company's obligations hereunder will
not be, in violation of, or lose any rights pursuant to any license, sublicense
or agreement described in the Company Disclosure Schedule.
(d) To the Knowledge of the Company, the Company is the owner or licensee
of, with all necessary right, title and interest in and to (free and clear of
any liens, encumbrances or security interests), the Company Intellectual
Property Rights and has rights (and except as set forth in the Company
Disclosure Schedule is not contractually obligated to pay any compensation to
any third party in respect thereof) to the
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use thereof or the material covered thereby in connection with the services or
products in respect of which the Company Intellectual Property Rights are being
used.
(e) No claims with respect to the Company Intellectual Property Rights have
been asserted or, to the Knowledge of the Company, are threatened by any person,
and the Company does not know of any claims (i) against the use by the Company
of any Company Intellectual Property Rights, or (ii) challenging the ownership,
validity or effectiveness of any of the Company Intellectual Property Rights.
(f) To the Knowledge of the Company, all patents and registered trademarks,
service marks, and other company, product or service identifiers and registered
copyrights held by the Company are not invalid and have not been fraudulently
procured or enforced.
(g) To the Knowledge of the Company, there has not been and there is not
now any material unauthorized use, infringement or misappropriation of any of
the Company Intellectual Property Rights by any third party, including without
limitation any employee or former employee of the Company; the Company has not
been sued or charged in writing as a defendant in any claim, suit, action or
proceeding which involves a claim of infringement of any patents, trademarks,
service marks, copyrights or other intellectual property rights and which has
not been finally terminated prior to the date hereof; there are no such charges
or claims outstanding; and the Company does not have any infringement liability
with respect to any patent, trademark, service mark, copyright or other
intellectual property right of another.
(h) No Company Intellectual Property Right is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting in any manner the
licensing thereof by the Company. Except for intellectual property
indemnification provided to third parties in the ordinary course of business,
the Company has not entered into any agreement or offered to indemnify any other
person against any charge of infringement of any Company Intellectual Property
Right. The Company has not entered into any agreement granting any third party
the right to bring infringement actions with respect to, or otherwise to enforce
rights with respect to, any Company Intellectual Property Right. The Company had
or has the exclusive right to file, prosecute and maintain all applications and
registrations with respect to the Company Intellectual Property Rights.
SECTION 3.12 MATERIAL CONTRACTS
(a) Set forth in Section 3.12(a) of the Company Disclosure Schedule is a
complete and accurate listing, with respect to the Company and its subsidiaries,
of (i) any contract for the lease of property from third parties providing for
aggregate lease payments in excess of one million dollars ($1,000,000) per
annum; (ii) any contract in effect on the date hereof which involves more than
one million dollars ($1,000,000) for the current or future obligation to
purchase materials, commodities, supplies or other personal property or
services; (iii) any contract for the sale of products manufactured by the
Company which involves more than two million dollars ($2,000,000), other than
those entered into in the ordinary course of business; (iv) any partnership or
joint venture agreement; and (v) any agreement or instrument under which the
Company or any subsidiary is indebted for borrowed money.
(b) The Company Disclosure Schedule sets forth a true and complete list,
and the Company has delivered or made available to HP true and correct copies,
of each distributor, dealer or representative agreement for the sale of the
Company's products or services which relates to more than $1,500,000 of revenues
in the twelve (12) months preceding the date of this Agreement (a "Distributor
Agreement"). Each Distributor Agreement listed in the Company Disclosure
Schedule is valid and in full force and effect, and neither the Company nor any
of its subsidiaries (and to the Knowledge of the Company, no other party) has
breached any material provision of, or is in default in any material respect
under the terms of, any such Distributor Agreement. No Distributor Agreement
will be, by its terms, terminated or impaired by reason of the consummation of
the Merger.
(c) All outstanding purchase orders or purchasing commitments and all
outstanding sales orders and commitments of the Company and its subsidiaries
have been entered into in the ordinary course of business.
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(d) No event has occurred and is continuing under any of the contracts or
obligations listed in Section 3.12(a) of the Company Disclosure Schedule, which
(with or without notice, lapse of time, or both) would constitute a default
thereunder on the part of the Company or any subsidiary and which would have a
material adverse effect on the Company.
(e) Neither the Company nor any subsidiary is a guarantor or otherwise
liable for any indebtedness of any other person which would have a material
adverse effect on the Company.
SECTION 3.13 LITIGATION
Except as set forth in Section 3.13 of the Company Disclosure Schedule,
there is no action, proceeding or investigation pending or, to the Knowledge of
the Company, threatened against or involving the Company or any of its
subsidiaries or any of their respective properties, assets, rights or
obligations before any court, arbitrator or administrative or governmental body,
nor is there any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding against the Company or any of its subsidiaries in which a decision
could have a material adverse effect on the Company. Neither the Company nor any
of its subsidiaries is in violation of any term of any judgment, decree,
injunction or order outstanding against it. There are no actions, suits or
proceedings pending or, to the Knowledge of the Company, threatened against the
Company or any of its subsidiaries arising out of or in any way related to this
Agreement or any of the transactions contemplated hereby.
SECTION 3.14 INSURANCE
(a) All material policies of fire, liability, workmen's compensation and
other similar forms of insurance owned or held by the Company and each
subsidiary are in full force and effect, and no notice of cancellation or
termination has been received with respect to any such policy. Such policies are
valid, outstanding and enforceable policies, and will not in any way be affected
by, or terminate or lapse by reason of, the transactions contemplated by this
Agreement. Such policies, together with the self-insurance reserves reflected on
the Company's August 31, 1995 balance sheet, and such other policies and
reserves added since such date, provide insurance coverage that is adequate for
the assets and operations of the Company.
(b) Section 3.14(b) of the Company Disclosure Schedule identifies all
key-man life and other similar forms of insurance policies covering directors or
officers of the Company and naming the Company or a subsidiary. All such
policies are valid, outstanding and enforceable policies, and name the Company
as the sole beneficiary, and will not be affected by, or terminate or lapse by
reason of, the transactions contemplated by this Agreement.
SECTION 3.15 COMPLIANCE WITH LAWS
The Company and each subsidiary have complied with the laws and regulations
of federal, state, local and foreign governments and all agencies thereof which
are applicable to the business or properties of the Company or any subsidiary,
except where non-compliance individually, or in the aggregate, would not have a
material adverse effect on the Company.
SECTION 3.16 EMPLOYEE BENEFIT PLANS
(a) Except as set forth in Section 3.16(a) to the Company Disclosure
Schedule, (i) neither the Company nor any entity that together with the Company
is treated as a single employer pursuant to Section 414(b) or (c) of the Code or
Section 3(5) or 4001(b) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") (an "ERISA Affiliate"), maintains or in the past has
maintained any (1) pension, profit-sharing, thrift or other retirement plan,
employee stock ownership plan, deferred compensation, stock ownership, stock
purchase, performance share, bonus or other incentive plan, severance plan,
health or group insurance plan or welfare plan (a "Plan") whether or not such
Plan is intended to be qualified under Section 401(a) of the Code or otherwise
subject to ERISA, or (2) any employee benefit plan within the meaning of Section
3(3) of ERISA (an "Employee Benefit Plan") under which the Company or any of its
subsidiaries has any present or future obligation or liability or under which
any present or former
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employee of the Company or its subsidiaries has any present or future rights to
benefits, (ii) each such Employee Benefit Plan has been administered in material
compliance with the applicable requirements of ERISA and the Code, and in the
case of any such Employee Benefit Plan that is funded for purposes of ERISA and
the Code, has not incurred any federal income or excise tax liability, (iii) all
material reports and information required to be filed with the United States
Department of Labor, Internal Revenue Service or Pension Benefit Guaranty
Corporation, or distributed to participants and their beneficiaries with respect
to each such Employee Benefit Plan, has been timely filed or distributed and,
with respect to each Employee Benefit Plan for which an Annual Report has been
filed, no material change has occurred with respect to the matters covered by
the Annual Report since the date of the most recent such Annual Report, and (iv)
there have been no non-exempt "prohibited transactions" (as that term is defined
in the Code or in ERISA) with respect to any such Employee Benefit Plan and no
material penalty or tax under ERISA or the Code has been imposed upon the
Company or any of its subsidiaries with respect to any such Employee Benefit
Plan and there are no pending or, to the Company's Knowledge, threatened claims
by or on behalf of any such Employee Benefit Plan, by any employee or
beneficiary covered by such Employee Benefit Plan, or otherwise involving such
Employee Benefit Plan, other than claims for benefits in the ordinary course.
(b) Each such Employee Benefit Plan which is an "employee pension benefit
plan," as defined in ERISA and which is intended to be "qualified" within the
meaning of Section 401(a) of the Code, is so qualified to the best Knowledge of
the Company, and, except as set forth in Section 3.16(b) of the Company
Disclosure Schedule, a favorable determination letter has been issued by the
Internal Revenue Service with respect to such plan and no such plan has been
amended since the issuance of the most recent determination letter issued by the
Internal Revenue Service with respect thereto. No such Employee Benefit Plan is
subject to Title IV of ERISA or Section 412 of the Code.
(c) The Company has not maintained or contributed to, or been obligated or
required to contribute to, a "multiemployer plan," as such term is defined in
Section 3(37) of ERISA.
SECTION 3.17 EMPLOYMENT RELATED AGREEMENTS
Except as described in Section 3.17 of the Company Disclosure Schedule, (i)
neither the Company nor any of its subsidiaries is a party to any bonus,
profit-sharing, stock option, stock purchase or stock award, incentive, pension,
retirement, deferred compensation, consulting, severance, indemnification,
employment or similar arrangement or agreement with officers or directors of the
Company or any of its subsidiaries ("Employment Related Agreements"); (ii)
neither the Company nor any of its subsidiaries is a party to any stock option,
stock purchase or stock award, pension, retirement, deferred compensation,
consulting, or similar arrangement or agreement with any employees of the
Company or any of its subsidiaries; and (iii) to the Company's Knowledge,
neither the Company nor any of its subsidiaries is a party to any bonus,
profit-sharing, incentive, severance, indemnification, employment or similar
arrangement or agreement with employees of the Company or any of its
subsidiaries.
SECTION 3.18 LABOR AGREEMENTS AND CONTROVERSIES
Except as set forth in Section 3.18 of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries is a party to any collective
bargaining agreement nor are there any union representation proceedings or labor
controversies pending or, to the Knowledge of the Company, threatened against
the Company or any of its subsidiaries.
SECTION 3.19 ENVIRONMENTAL MATTERS
(a) Except as disclosed in Section 3.19(a) of the Company Disclosure
Schedule, the Company and each of its subsidiaries has obtained all permits,
licenses and other authorizations required by all Environmental Laws (as defined
below) and is in compliance with all of the respective terms and conditions of
all such permits, licenses and authorizations.
(b) Except as disclosed in Section 3.19(b) of the Company Disclosure
Schedule, there is not constructed, placed, deposited, stored, disposed of nor
located on or under (including any underground
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improvements, including, but not limited to, treatment or storage tanks, sumps
or water, gas or oil wells) any real property owned or leased by the Company or
any subsidiary any Hazardous Material (as defined below) or facility for holding
any Hazardous Material, nor have any Hazardous Materials migrated from such
property upon or beneath other properties, nor have any Hazardous Materials
migrated or threatened to migrate from other properties upon, about or beneath
any real property owned or leased by the Company or any subsidiary.
(c) Except as disclosed in Section 3.19(c) of the Company Disclosure
Schedule, (i) no notices of any violation or alleged violation of any
Environmental Laws have been received by the Company or any subsidiary with
respect to any real property owned or leased by the Company or any subsidiary,
and (ii) there are no writs, injunctions, decrees, orders or judgments
outstanding, or any actions, suits, claims, proceedings or investigations
pending or threatened, relating to the ownership, use, maintenance or operation
of any real property owned or leased by the Company or any subsidiary nor is
there any basis for any such actions, suits, claims, proceedings or
investigations being instituted or filed.
(d) "Environmental Law" shall mean all applicable statues, regulations,
rules, ordinances, codes, licenses, permits, orders, approvals, authorizations
and similar items of all governmental agencies, departments, commissions,
boards, bureaus or instrumentalities of the United States, states and political
subdivisions thereof and all applicable judicial and administrative and
regulatory decrees, judgments and orders relating to the protection of human
health or the environment, including, without limitation:
(1) all requirements, including, but not limited to, those pertaining
to reporting, licensing, permitting, investigation and remediation of
emissions, discharges, releases or threatened releases of "Hazardous
Materials," substances, pollutants, contaminants or hazardous or toxic
substances, materials or wastes whether solid, liquid or gaseous in nature,
into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of substances, pollutants, contaminants or hazardous
or toxic substances, materials, or wastes, whether solid, liquid or gaseous
in nature, including by way of illustration and not by way of limitation,
(x) the Clean Air Act (42 U.S.C. sec.sec. 7401 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. sec.sec. 1251), the Safe Drinking Water
Act (42 U.S.C. sec.sec. 300f et seq.), the Toxic Substances Control Act (15
U.S.C. sec.sec. 2601 et seq.), the Endangered Species Act (16 U.S.C.
sec.sec. 1531 et seq.), the Emergency Planning and Community Right-to-Know
Act of 1986 (42 U.S.C. sec.sec. 11001 et seq.), and (y) analogous state and
local provisions; and
(2) all requirements pertaining to the protection of the health and
safety of employees or the public.
(e) "Hazardous Material" means any chemical substance:
(1) the presence of which requires investigation or remediation under
any federal, state or local statute, regulation, ordinance, order, action
or policy, administrative request or civil complaint under any of the
foregoing or under common law; or
(2) which is defined as a "hazardous waste" or "hazardous substance"
under any federal, state or local statute, regulation or ordinance or
amendments thereto including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section
9601 et seq.) and the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.); or
(3) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is
regulated by any governmental authority, agency, department, commission,
board, agency or instrumentality of the United States, or any state or any
political subdivision thereof having or asserting jurisdiction over any of
the business of the Company; or
(4) the presence of which on any of the property owned or leased by
the Company causes a nuisance upon such property or to adjacent properties
or poses a hazard to the health or safety or persons on or about any of the
property; or
(5) without limitation, which contains gasoline, diesel fuel or other
petroleum hydrocarbons, polychlorinated biphenols (PCBs) or asbestos.
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SECTION 3.20 ABSENCE OF QUESTIONABLE PAYMENTS; INDEBTEDNESS TO AND FROM
OFFICERS, DIRECTORS AND STOCKHOLDERS
(a) Neither the Company nor any subsidiary, nor any director, officer or,
to the Knowledge of the Company, any agent or employee or any other person
authorized to act on behalf of the Company or any subsidiary has used any
corporate or other funds for unlawful contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to political activity,
government officials or others and neither the Company nor any subsidiary nor
any director, officer, or, to the Knowledge of the Company, any agent or
employee or any other person authorized to act on behalf of the Company or any
subsidiary has accepted or received any unlawful contributions, payments, gifts
or expenditures.
(b) Except as listed in Section 3.20(b) of the Company Disclosure Schedule
and except for intercompany indebtedness payable among the Company and the
subsidiaries or among the subsidiaries, neither the Company nor any subsidiary
is indebted, directly or indirectly, to any person who is an officer, director
or stockholder of any of the foregoing or any affiliate of any such person in
any amount whatsoever, other than for salaries for services rendered or
reimbursable business expenses, nor is any such officer, director, stockholder
or affiliate indebted to the Company or any subsidiary except for advances made
to employees of the Company or any subsidiary in the ordinary course of business
to meet reimbursable business expenses anticipated to be incurred by such
obligor.
SECTION 3.21 OWNERSHIP OF HP SHARES
Neither the Company nor any subsidiary owns directly or indirectly any HP
Common Stock or has rights to purchase such shares, and will not purchase any
such shares in a fashion that would prevent the accounting treatment of the
Merger as a pooling of interests.
SECTION 3.22 CERTAIN FEES
Except as described in Section 3.22 of the Company Disclosure Schedule,
neither the Company, nor any of its subsidiaries nor any of their directors or
officers has employed any broker or finder or incurred any liability for any
financial advisory, brokerage or finders' fees or similar fees or commissions in
connection with the transactions contemplated by this Agreement.
SECTION 3.23 DISCLOSURE
No representation or warranty by the Company in this Agreement and no
statement contained in any document, certificate or other writing furnished or
to be furnished by the Company to HP or the Subsidiary contains or will contain
any untrue statement of a material fact or omits or will omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
SECTION 3.24 PROXY STATEMENT, ETC.
The Proxy Statement (as defined in Section 2.03) and all amendments and
supplements thereto will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder. Neither the Proxy Statement, nor any amendments thereof or
supplements thereto, will, on the date the Proxy Statement is first mailed to
stockholders of the Company, at the time the meeting of the stockholders of the
Company referred to in Section 2.02 hereof is convened or at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representation or warranty with
respect to any information furnished to it by HP or Subsidiary or any of their
accountants, counsel or other authorized representatives in writing specifically
for inclusion in the Proxy Statement. None of the information with respect to
the Company or any affiliate or associate of the Company that has been supplied
by the Company or any of its accountants, counsel or other authorized
representatives in writing (the "Company Information") specifically for use in
the Registration Statement will, at the time the Registration Statement
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becomes effective, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
SECTION 3.25 ACCOUNTS RECEIVABLE; INVENTORY; GOODWILL; AND LEASING
TRANSACTIONS
(a) Accounts receivable reflected on the Company's June 30, 1995, balance
sheet, including receivables associated with equipment shipped but not billed,
have been properly stated at their realizable value after consideration of all
allowances and reserves required in accordance with GAAP.
(b) Inventories reflected on the Company's June 30, 1995, balance sheet are
properly stated at the lower of cost or market value in accordance with GAAP and
to properly reflect excess and obsolete inventories at net realizable value.
SECTION 3.26 POST-RETIREMENT AND POST-EMPLOYMENT BENEFIT OBLIGATIONS
Except as described in Section 3.26 of the Company Disclosure Schedule, all
obligations associated with benefits to be provided to present and former
employees after retirement or termination have been properly recognized as
liabilities on the Company's July 31, 1995 balance sheet in accordance with
Statement Financial Accounting Standards No. 106 and 112.
SECTION 3.27 POWERS OF ATTORNEY AND SURETYSHIPS
Except as disclosed in Section 3.27 of the Company Disclosure Schedule,
neither the Company nor any of the subsidiaries has any general or special
powers of attorney outstanding (whether as grantor or grantee thereof) or has
any obligation or liability (whether actual, accrued, accruing, contingent or
otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person, corporation, partnership,
joint venture, association, organization or other entity, except as endorser or
maker of checks or letters of credit, respectively, endorsed or made in the
ordinary course of business.
SECTION 3.28 CUSTOMERS
Except as disclosed in Section 3.28 of the Company Disclosure Schedule,
during the fiscal year of the Company ended December 31, 1994 and the seven
months ended July 31, 1995, not more than five percent (5%) of the consolidated
revenues of the Company and the subsidiaries during either of such periods were
attributable to any single customer or to any group of affiliated customers.
SECTION 3.29 CONFLICTS OF INTEREST
No officer, director or, to the Knowledge of the Company, stockholder who
owns 5% or more of the outstanding capital stock of the Company or any
subsidiary or any affiliate of any such person now has or within the last three
(3) years had, either directly or indirectly:
(a) an equity or debt interest in any corporation, partnership, joint
venture, associates, organization or other person or entity which furnishes or
sells or during such period furnished or sold services or products to the
Company or any subsidiary, or purchases or during such period purchased from the
Company or any subsidiary any goods or services, or otherwise does or during
such period did business with the Company or any subsidiary in which the amount
involved exceeds $60,000; or
(b) a beneficial interest in any contract, commitment or agreement to which
the Company or any subsidiary is or was a party or under which any of them is or
was obligated or bound or to which any of their respective properties may be or
may have been subject, other than stock options and other contracts, commitments
or agreements between the Company or any subsidiary and such persons in their
capacities as employees, officers or directors of the Company or such
subsidiary.
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SECTION 3.30 LICENSES AND PERMITS
The Company and its subsidiaries have all governmental licenses, permits
and authorizations necessary to carry on their businesses as currently
conducted, except for such governmental licenses, permits and authorizations,
the absence of which would not have a material adverse effect on the Company.
SECTION 3.31 ACCOUNTING MATTERS
Neither the Company, its subsidiaries, nor any of its affiliates has taken
or agreed to take any action that would adversely affect the ability of HP and
the Subsidiary to account for the Merger as a pooling of interests.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
HEWLETT-PACKARD AND THE SUBSIDIARY
Except as set forth on the HP Disclosure Schedule to this Agreement
executed by HP and delivered to the Company immediately prior to the execution
of this Agreement (the "HP Disclosure Schedule"), HP and the Subsidiary
represent and warrant to the Company as follows:
SECTION 4.01 CORPORATE ORGANIZATION
HP and the Subsidiary are corporations duly organized, validly existing and
in good standing under the laws of the States of California and Delaware,
respectively, with all requisite corporate power and authority to own, operate
and lease their respective properties and to carry on their respective
businesses as now being conducted and are duly qualified or licensed to do
business and are in good standing in each jurisdiction in which their ownership
or leasing of property or conduct of business requires such licensing or
qualification, except where the failure to be so qualified would not have a
material adverse effect on HP.
SECTION 4.02 AUTHORIZATION
HP and the Subsidiary have the requisite corporate power and authority to
enter into this Agreement and to carry out their respective obligations
hereunder. The execution and delivery by HP and the Subsidiary of this Agreement
and the performance by each of them of their respective obligations hereunder
and the consummation by each of them of the transactions contemplated hereby
have been duly authorized by their respective Boards of Directors and by HP as
the sole stockholder of the Subsidiary and no other corporate proceeding on
their part is necessary for the execution and delivery thereof, and the
performance of their respective obligations hereunder, and the consummation by
each of them of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of them and it is a legal, valid and binding
obligation of HP and the Subsidiary enforceable against each of them in
accordance with its terms, subject to the laws of general application relating
to bankruptcy, insolvency and the relief of debtors and the rules of law
governing specific performance, injunctive relief or other equitable remedies.
SECTION 4.03 CAPITALIZATION
The authorized capital stock of HP and Subsidiary as well as the number of
outstanding shares of each class of capital stock of HP and Subsidiary is as set
forth on Section 4.03 of the HP Disclosure Schedule. All of such outstanding
shares have been duly and validly issued, were not issued in violation of any
preemptive rights and are fully paid and non-assessable with no personal
liability attaching to the ownership thereof. Except as set forth on Section
4.03 of the HP Disclosure Schedule, there are no options, warrants,
subscriptions, conversion or other rights, agreements, commitments, arrangements
or understandings with respect to the issuance of shares of capital stock of HP
or Subsidiary or any other securities convertible into, exchangeable for or
evidencing the right to subscribe for any such shares.
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SECTION 4.04 SEC REPORTS AND FINANCIAL STATEMENTS
Since November 1, 1992, HP has filed with the SEC all reports, registration
statements and all other filings required to be filed with the SEC under the
rules and regulations of the SEC (collectively, the "Required HP Reports"), all
of which, as of their respective effective dates, complied with all applicable
requirements of the Securities Act and the Exchange Act. HP has delivered to the
Company true and complete copies of (i) HP's Annual Reports on Form 10-K for the
fiscal years ended October 31, 1994 and October 31, 1993, as filed with the SEC,
(ii) Quarterly Reports on Form 10-Q for the three month periods ended January
31, 1995, and April 30, 1995, as filed with the SEC, (iii) proxy statements
relating to all meetings of HP's shareholders (whether annual or special) held
since November 1, 1992, and (iv) all other forms, reports, statements and
documents filed by HP with the SEC since November 1, 1992 (collectively the "HP
SEC Filings"). As of their respective dates, none of the Required HP Reports or
HP SEC Filings contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The consolidated financial statements of HP included or
incorporated by reference in HP SEC Filings were prepared in accordance with
GAAP applied on a consistent basis (except as otherwise stated in such financial
statements or, in the case of audited statements, the related report thereon of
independent certified public accountants), and present fairly the financial
position and results of operations, cash flows and changes in shareholders'
equity of HP and its consolidated subsidiaries as of the dates and for the
periods indicated, subject, in the case of unaudited interim financial
statements, to the absence of notes and to normal year-end adjustments.
SECTION 4.05 ABSENCE OF CERTAIN CHANGES
Except as set forth in HP SEC Filings or in Section 4.05 of the HP
Disclosure Schedule, since October 31, 1994, HP and Subsidiary, and each other
subsidiary of HP, have conducted their respective businesses only in the
ordinary and usual course and there has not been any event, change or
development which has affected or will affect materially and adversely the
business, financial condition or results of operations of HP, the Subsidiary, or
any other subsidiaries of HP, taken as a whole.
SECTION 4.06 CONSENTS AND APPROVALS; NO VIOLATIONS
There is no requirement applicable to HP or the Subsidiary to make any
filing with, or to obtain any permit, authorization, consent or approval of, any
governmental or regulatory authority as a condition to the lawful consummation
of the transactions contemplated by this Agreement, other than (i) requirements
of Section 251 of the DGCL for filing of appropriate documents to effect the
Merger, (ii) requirements of the HSR Act, (iii) filings with the SEC pursuant to
the Securities Act and the Exchange Act, (iv) such filings and approvals as may
be required under the "blue sky," takeover or securities laws of various states,
(v) listing of HP Common Stock pursuant to the requirements of the NYSE, or (vi)
where the failure to make any such filing, or to obtain such permit,
authorization, consent or approval, would not prevent or delay consummation of
the Merger or would not otherwise prevent HP from performing its obligations
under this Agreement. Except as set forth in Section 4.06 of the HP Disclosure
Schedule, neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) result in the
acceleration of, or the creation in any party of any right to accelerate,
terminate, modify or cancel any material indenture, contract, lease, sublease,
loan agreement, note or other obligation or liability to which HP or any
subsidiary is a party or by which any of them is bound or to which any of their
assets is subject, (ii) conflict with or result in a breach of or constitute a
default under any provision of the Articles of Incorporation or By-Laws (or
other charter documents) of HP or any subsidiary, or a default under or
violation of any material restriction, lien, encumbrance, indenture, contract,
lease, sublease, loan agreement, note or other obligation or liability to which
any of them is a party or by which any of them is bound or to which any of their
assets is subject or result in the creation of any lien or encumbrance upon any
of said assets, or (iii) violate or result in a breach of or constitute a
default under any judgment, order, decree, rule or regulation of any court or
governmental agency to which HP or any subsidiary is subject, except for the
occurrence of any item specified in clause (iii) of this sentence which would
not individually, or in the aggregate, have a material adverse effect on HP.
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SECTION 4.07 LITIGATION
Except as set forth in Section 4.07 of the HP Disclosure Schedule, there is
no action, proceeding or investigation pending or, to the Knowledge of HP,
threatened against or involving HP or any of its subsidiaries or any of their
respective properties, assets, rights or obligations before any court,
arbitrator or administrative or governmental body nor is there any judgment,
decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator outstanding against HP or any
of its subsidiaries in which a decision could have a material adverse effect on
HP. Neither HP nor any of its subsidiaries is in violation of any term of any
judgment, decree, injunction or order outstanding against it. There are no
actions, suits or proceedings pending or, to the Knowledge of HP, threatened
against HP or any of its subsidiaries arising out of or in any way related to
this Agreement or any of the transactions contemplated hereby.
SECTION 4.08 COMPLIANCE WITH LAWS
HP and each subsidiary have complied with the laws and regulations of
federal, state, local and foreign governments and all agencies thereof which are
applicable to the business or properties of HP or any subsidiary, except where
non-compliance individually, or in the aggregate, would not have a material
adverse effect on the Company.
SECTION 4.09 REGISTRATION STATEMENT
The Registration Statement (as defined in Section 2.04) and all amendments
and supplements thereto will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations promulgated
thereunder. Neither the Registration Statement, nor any amendments thereof or
supplements thereto, will, on the date it becomes effective or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that HP makes no representation or warranty with
respect to any information furnished to it by the Company or any of its
accountants, counsel or other authorized representatives in writing specifically
for inclusion in the Registration Statement. None of the information with
respect to HP or any affiliate or associate of HP that has been supplied by HP
or any of its accountants, counsel or other authorized representatives in
writing (the "HP Information") specifically for use in the Proxy Statement will,
at the time the Proxy Statement is first mailed to stockholders of the Company,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
SECTION 4.10 NO UNDISCLOSED LIABILITIES
Except as and to the extent set forth on the consolidated balance sheet of
HP as of October 31, 1994, included in the Required HP Reports, neither HP nor
any of its subsidiaries had, at such date, any liabilities or obligations
(absolute, accrued, contingent or otherwise) material to HP and its subsidiaries
taken as a whole and since that date neither HP nor any of its subsidiaries has
incurred any such liabilities or obligations material to HP and its subsidiaries
taken as a whole except those incurred in the ordinary and usual course of
business and consistent with past practice or in connection with or as a result
of the transactions contemplated by this Agreement.
SECTION 4.11 DISCLOSURE
No representation or warranty by HP or the Subsidiary in this Agreement and
no statement contained or to be contained in any document, certificate or other
writing furnished or to be furnished by either HP or the Subsidiary to the
Company, contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
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ARTICLE V
COVENANTS
SECTION 5.01 CONDUCT OF BUSINESS OF THE COMPANY
Except as contemplated by this Agreement or to the extent that HP shall
otherwise consent in writing, during the period from the date of this Agreement
to the Effective Time, the Company and its subsidiaries will conduct their
respective operations only in, and the Company and its subsidiaries will not
take any action except in, the ordinary course of business and the Company and
its subsidiaries will use all reasonable efforts to preserve intact their
respective business organizations, assets, prospects and advantageous business
relationships, to keep available the services of their respective officers and
key employees and to maintain satisfactory relationships with their respective
licensors, licensees, suppliers, contractors, distributors, customers and others
having advantageous business relationships with them. Without limiting the
generality of the foregoing, except as contemplated by this Agreement, neither
the Company nor any of its subsidiaries will, without the prior written consent
of HP:
(a) amend its Articles or Certificate of Incorporation or By-Laws, or
similar organizational documents, or change its authorized number of directors;
(b) split, combine or reclassify any shares of its capital stock, declare,
pay or set aside for payment any dividend or other distribution in respect of
its capital stock, or directly or indirectly, redeem, purchase or otherwise
acquire any shares of its capital stock or other securities except repurchases
at cost under the Option Plans, consistent with past practice, including,
without limitation, any debt securities;
(c) authorize for issuance, issue, sell or deliver or agree or commit to
issue, sell, or deliver (whether through the issuance or granting of any
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any of its capital stock or any securities convertible into or exercisable or
exchangeable for shares of its capital stock, other than stock option grants to
newly hired employees consistent with past practice representing in no event
greater than an aggregate of 5,000 shares and the issuance by the Company of
shares of its Common Stock pursuant to the exercise of employee stock options
and other rights outstanding on the date of this Agreement set forth in Section
3.03 of the Company Disclosure Schedule.
(d) incur any material liability or obligation (absolute, accrued,
contingent or otherwise) other than in the ordinary course of business or issue
any debt securities or assume, guarantee, endorse or otherwise as an
accommodation become responsible for, the obligations of any other individual or
entity, or change any assumption underlying, or methods of calculating, any bad
debt, contingency or other reserve;
(e) enter into, adopt or, except as otherwise provided herein or as
determined by the Company to be necessary to comply with applicable law or
maintain tax-favored status (and any nonmaterial changes incidental thereto),
amend any Employment Related Agreement, Plan, or Employee Benefit Plan or grant,
or become obligated to grant, any increase in the compensation payable or to
become payable to any of their officers or directors or any general increase in
the compensation payable or to become payable to their employees (including, in
each case, any such increase pursuant to any Employment Related Agreement, Plan
or Employee Benefit Plan, other than an increase pursuant to the terms of such
an Employment Related Agreement, Plan or Employee Benefit Plan in effect on the
date of this Agreement and reflected on the Company Disclosure Schedule), other
than in connection with individual performance reviews in the ordinary course of
business and consistent with past practice;
(f) acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership or other business organization or division thereof
or make any investment either by purchase of stock or securities, contributions
to capital, property transfer, or purchase of any material amount of properties
or assets of any other individual or entity, other than any such transaction
described in Section 3.12 of the Company Disclosure Schedule;
(g) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business of
liabilities
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reflected or reserved against on the Latest Balance Sheet, or subsequently
incurred in the ordinary course of business, or disclosed pursuant to this
Agreement;
(h) acquire (including by lease) any material assets or properties or
dispose of, mortgage or encumber any material assets or properties, other than
in the ordinary course of business;
(i) waive, release, grant or transfer any material rights or modify or
change any material existing license, lease, contract or other document, other
than in the ordinary course of business and consistent with past practice; or
(j) take any action or agree, in writing or otherwise, to take any of the
foregoing actions or any action which would at any time make any representation
or warranty in Article III untrue or incorrect.
SECTION 5.02 SOLICITATION OF OTHER PROPOSALS
(a) Nothing contained in this Agreement shall prevent the Board of
Directors of the Company in the exercise of its fiduciary duties from soliciting
or encouraging (whether by press release or otherwise), or from considering or
negotiating another proposal for a merger, consolidation, sale of all or
substantially all assets, or similar transaction (an "Acquisition Proposal"). In
addition, nothing contained in this Agreement shall prevent the Board of
Directors of the Company from approving or recommending an Acquisition Proposal
if the Company, acting through its disinterested directors, determines in good
faith, after consultation with its financial advisors, that such Acquisition
Proposal would result in a transaction more favorable to the Company's
stockholders from a financial point of view than the transaction contemplated by
this Agreement (any such Acquisition Proposal referred to herein as a "Superior
Proposal").
(b) The Company may, subject to the execution of a customary
confidentiality agreement, (i) provide non-public information regarding the
Company to persons who may make an Acquisition Proposal, and (ii) afford access
to persons who may make an Acquisition Proposal to the Company, its management,
employees, affiliates and the like to no greater extent than that provided to HP
in Section 5.03 below.
(c) The Board of Directors of the Company may, subject to Section 8.01(e)
below, recommend or accept a Superior Proposal in the circumstances contemplated
by Section 5.02(a), and may in such case terminate this Agreement as provided in
Section 8.01(e) hereof or withdraw or modify its recommendation concerning this
Agreement and the Merger subject to HP's rights in Section 8.02, but only if the
Company has, prior to such termination approval or recommendation, given HP
reasonable notice of the identity of the offeror and the terms and conditions,
including a copy of any such proposal or a summary of its principal terms.
SECTION 5.03 ACCESS TO INFORMATION
(a) Between the date of this Agreement and the Effective Time, the Company
will upon reasonable notice give to HP and HP's authorized representatives
access during regular business hours to all of its personnel, plants, offices,
warehouses and other facilities and to all of its books and records and will
permit HP and such representatives to make such inspections as it may require
and will cause its officers and those of its subsidiaries to furnish HP with
such financial and operating data and other information with respect to its
business and properties as HP and its representatives may from time to time
reasonably request.
(b) Information obtained by the parties hereto pursuant to this Section
5.03 shall be subject to the provisions of that certain Confidential Disclosure
Agreement between HP and the Company effective May 1, 1995, which agreement
remains in full force and effect. In addition, if this Agreement is terminated,
neither party shall disclose, except as required by law, the basis or reason for
such termination, without the prior written consent of the other party.
SECTION 5.04 AGREEMENTS OF AFFILIATES
The Company will use its reasonable efforts to cause each person who is so
identified as an "affiliate" pursuant to the list specified in Section 2.06
hereof to deliver to HP on or prior to the Effective Time a written
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agreement substantially in the form of Exhibit A to this Agreement with respect
to the shares of Common Stock of HP to be received by such affiliate in the
Merger.
SECTION 5.05 ALL REASONABLE EFFORTS
Upon the terms and subject to the conditions hereof, and subject to the
fiduciary duties of the Board of Directors of the Company under applicable law,
HP, the Subsidiary and the Company each agree to use all reasonable efforts
promptly to take, or cause to be taken, all appropriate action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement and will use all reasonable efforts to obtain all
waivers, permits, consents and approvals and to effect all registrations,
filings and notices with or to third parties or governmental or public bodies or
authorities which are in the opinion of HP or the Company necessary or desirable
in connection with the transactions contemplated by this Agreement, including,
without limitation, filings and approvals to the extent required under the DGCL,
the Securities Act, the Exchange Act and the HSR Act. If at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers, directors or representatives of
HP, the Subsidiary and the Company will take such action.
SECTION 5.06 COMMUNICATIONS; PUBLIC ANNOUNCEMENTS
Except as provided in (i) Section 2.03 above with respect to the Company's
Proxy Statement, or (ii) Section 5.02(c) in connection with a recommendation by
the Company's Board of Directors of a Superior Proposal, between the date of
this Agreement and the Effective Time, the Company will not furnish or make any
written or oral communication to its stockholders relating to the transactions
contemplated by this Agreement which is inconsistent with or supplemental to any
communication previously approved by both HP and the Company. No party to this
Agreement will make any press release or otherwise make any public statement
with respect to this Agreement or the transactions contemplated hereby and will
not issue any such press release or make any such public statement without the
prior consent of HP and the Company. In no event shall the Company or any
director, officer, employee, advisor or agent make any written or oral
communication that is inconsistent with or in addition to any statements
previously approved by HP regarding any of the business or affairs of the
Surviving Corporation after the Merger. Notwithstanding the foregoing, HP and
Company shall not be prohibited from issuing any press release or making any
public statement as may be required under applicable law, but in any such event,
HP or the Company, as the case may be, shall consult with the other party
reasonably in advance of taking any such action.
SECTION 5.07 NOTIFICATION OF CERTAIN MATTERS
HP, the Subsidiary and the Company will give prompt notice to one another
of (i) the occurrence, or failure to occur, of any event which occurrence or
failure would or would be likely to cause any of their respective
representations or warranties contained in this Agreement to be untrue or
inaccurate or would or would likely cause any condition in Article VII to become
impossible to fulfill at any time from the date hereof to the Effective Time,
and (ii) any failure on its part or on the part of any of their respective
officers, directors, employees, representatives or agents to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
them under this Agreement; provided, however, that no such notification will
alter or otherwise affect such representations, warranties, covenants,
conditions or agreements.
SECTION 5.08 INDEMNIFICATION AND INSURANCE
(a) From and after the Effective Time, subject to the limitations in this
Section 5.08, HP and the Surviving Corporation (subject to Section 5.08(e)
below) shall indemnify each person entitled to indemnity under the terms of
Article 9 (hereinafter, "Article 9") of the Company's Certificate of
Incorporation (an "Indemnified Party") to the same extent (but only to the
extent) provided for under the terms of Article 9 and permitted under Delaware
law, with respect to any matter or fact (i) arising, existing or occurring prior
to the Effective Time or (ii) based upon or arising out of the Merger and the
other transactions contemplated by this Agreement, in each case regardless
whether any action, suit or proceeding referred to in said Article 9 is
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commenced prior to, at or after the Effective Time. HP acknowledges that the
Company has also agreed to indemnify certain Indemnified Parties pursuant to
indemnification agreements in the form attached to or described in the Company
Disclosure Schedule. From and after the Effective Time, HP agrees to assume the
Company's obligations pursuant to such indemnification agreements, to the extent
they are enforceable under Delaware law.
(b) From and after the Effective Time, subject to the limitations in this
Section 5.08, the Indemnified Parties that are defendants in litigation
commenced by stockholders of the Company with respect to (1) the performance of
their duties as officers and/or directors under federal or state law (including
litigation under federal and state securities laws) and (2) HP's offer or
proposal to acquire the Company (collectively, the "Subject Litigation") shall
be entitled to be represented, subject to Section 5.08(d)(2) below, at the
reasonable expense of HP, in the Subject Litigation by one counsel who shall be
selected by a plurality of such defendants.
(c) HP and the Surviving Corporation shall use all reasonable efforts to
maintain in effect, if available, 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 previously
delivered to HP) on terms comparable to those applicable to the then current
directors and officers of HP; provided, however, that in no event shall HP or
the Surviving Corporation be required to expend in excess of 110% of the annual
premium currently paid by the Company for such coverage or such coverage as is
available for such 110% of the annual premium.
(d) The rights of Indemnified Parties pursuant to this Section 5.08 are
subject to the following conditions and limitations:
(1) Any Indemnified Party, upon learning of any action, suit or
proceeding as to which such Party intends to claim indemnity under this
Section 5.08, shall promptly notify HP (but the failure so to notify HP
shall not relieve it from any liability which HP may have under this
Section 5.08, except to the extent such failure materially prejudices HP).
Such Indemnified Party shall deliver to HP any undertaking required by
Article 9 or applicable law, and shall otherwise cooperate with HP and HP's
counsel in all material respects reasonably requested by HP or by such
counsel in connection with evaluation and defense of such action, suit or
proceeding.
(2) Such Indemnified Parties shall initially be represented in any
action, suit or proceeding as to which indemnification is sought pursuant
to this Section 5.08 by counsel selected by HP to represent HP, the
Surviving Corporation, and such Indemnified Parties. It shall be a
condition to HP's obligation to bear the expense of additional counsel for
such Indemnified Parties, as provided above in Section 5.08(b), that HP's
counsel shall have determined, in such counsel's sole discretion, that such
a legal conflict exists between HP and/or the Company, on the one hand, and
such Indemnified Parties, on the other hand, that separate counsel is
required to represent the interests of such Indemnified Parties.
(3) Neither HP nor the Surviving Corporation shall be liable to an
Indemnified Party under this Section 5.08, nor under any indemnification
agreement referenced in Section 5.08(a) above, for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld), and a condition to any indemnification payment provided for in
this Section 5.08, or under any such agreement shall be that such
Indemnified Party not have settled any Subject Litigation without the
consent of HP.
(4) HP and the Surviving Corporation shall have no obligation under
this Section 5.08 to any Indemnified Party if and to the extent that a
court of competent jurisdiction shall ultimately determine, and such
determination shall have become final and non-appealable, that
indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable law.
(5) Nothing herein shall preclude an Indemnified Party from selecting
counsel of such Party's choice, at such Party's sole expense, in any
action, suit or proceeding referred to herein. Whether or not HP is
obligated to bear the expenses of such counsel pursuant to this Section
5.08, as long as HP remains liable to indemnify such Indemnified Party
under the terms of this Section 5.08, HP shall have the
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exclusive right, without the consent of any Indemnified Party, to control
and direct any such action, suit or proceeding, through counsel of HP's
choice, and to settle such proceeding, including as to any Indemnified
Party, provided that, without such Party's agreement, such Party incurs no
responsibility for payment of any portion of such settlement, nor any legal
disability as the result thereof and provided further that HP may not enter
into any settlement which includes an admission of wrongdoing by the
Indemnified Party without such Party's consent, which consent will not be
unreasonably withheld.
(e) The obligations of HP and, subject to the limitation below, the
Surviving Corporation under this Section 5.08 shall continue in full force and
effect for a period of six years from the Effective Time, except with respect to
matters then pending as to which such obligations shall survive until final
resolution of such matters. The obligations of HP and the Surviving Corporation
under this Section 5.08 are intended to benefit, and be enforceable against HP
and the Surviving Corporation directly by, the Indemnified Parties, and shall be
binding on all successors of HP. Nothing in this Section 5.08 shall be construed
to preclude HP from merging, disposing of or liquidating the Surviving
Corporation, and in such event the Surviving Corporation shall be relieved of
further obligation under this Section 5.08, provided that in all events HP shall
remain severally liable to the Indemnified Parties under the terms of this
Section 5.08.
SECTION 5.09 REGULATORY APPROVALS
The Company and HP will take all such action as may be necessary under
federal or state securities laws or the HSR Act applicable to or necessary for,
and will file and, if appropriate, use their all reasonable efforts to have
declared effective or approved all documents and notifications with the SEC and
other governmental or regulatory bodies which they deem necessary or appropriate
for the consummation of the Merger and the transactions contemplated hereby, and
each party shall give the other information reasonably requested by such other
party pertaining to it and its subsidiaries and affiliates to enable such other
party to take such actions, and the Company and HP shall file in a timely manner
all reports and documents required to be so filed by or under the 1934 Act which
they deem necessary or appropriate in relation to the Merger.
SECTION 5.10 POOLING
Each of HP and the Company agrees that it will not take any action that
would adversely affect the ability of HP to treat the Merger as a
"pooling-of-interests" for accounting purposes and neither party has any reason
to believe that a "pooling-of-interests" will not be available for the Merger.
SECTION 5.11 EMPLOYEE MATTERS
The following terms and conditions regarding benefits shall apply to the
employees of the Company and its subsidiaries that the Surviving Corporation
shall retain or HP shall decide to hire at or after the Effective Time. HP
agrees to maintain and honor all outstanding severance and employment agreements
that are listed in Section 5.11 of the Company Disclosure Schedule. The relevant
date for the determination of benefits under HP's employee benefit plans for any
Company employee that becomes an HP employee as a consequence of the Merger
shall be the date that the Company first hired such employee; provided that the
date of the Effective Time shall be the relevant date for any such employee for
determination of benefits under HP's Retirement Plan and for purposes of
providing any service-based retiree health benefits.
SECTION 5.12 TERMINATION OF STOCK PLANS; NO ACCELERATION OF OPTIONS
At the Effective Time, each of the Stock Plans shall be terminated.
Beginning at the Effective Time, neither HP nor the Surviving Corporation shall
have any obligation or liability to any person with respect to any option or
other right under the Stock Plans, except as provided herein. The Company agrees
that no option vesting schedule under any of the Stock Plans shall be
accelerated.
SECTION 5.13 CONSENTS
The Company and HP shall use all reasonable efforts to obtain all consents,
waivers, approvals, authorizations or orders (including, without limitation, all
United States and foreign governmental and
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regulatory rulings and approvals), and the Company and HP shall make all filings
(including, without limitation, all filings with United States and foreign
governmental or regulatory agencies) required in connection with the
authorization, execution and delivery of this Agreement by the Company and HP
and the consummation of the transactions contemplated hereby. The Company and HP
shall furnish all information required to be included in the Proxy Statement and
the Registration Statement, or for any application or other filing to be made
pursuant to the rules and regulations of any United States or foreign
governmental body in connection with the transactions contemplated by this
Agreement.
SECTION 5.14 DISTRIBUTOR, DEALER AND REPRESENTATIVE AGREEMENTS
The Company shall deliver the following documents to HP at least 15
business days prior to the Effective Time, each of which shall be complete and
correct:
(a) a list of each distributor, dealer and representative agreement for the
sale of the Company's products and services; and
(b) a copy of each such agreement described in clause (a) above.
SECTION 5.15 BROKERS OR FINDERS
Except as set forth on the Company Disclosure Schedule, neither HP and the
Subsidiary nor the Company or any of their subsidiaries shall enter into any
agreement or arrangement with any agent, broker, investment banker or other firm
or person pursuant to which such person shall be entitled to any broker or
finder's fee or any other commissions or similar fee in connection with any of
the transactions contemplated by this Agreement.
ARTICLE VI
CLOSING
SECTION 6.01 TIME AND PLACE
Subject to the provisions of Articles VII and VIII, the consummation of the
transactions contemplated by this Agreement (the "Closing") will take place at
the offices of Hewlett-Packard Company, 3000 Hanover Street, Palo Alto,
California 94304 as promptly as practicable after the last to occur of (i) the
approval of stockholders of the Company referred to in Section 2.02 hereof, and
(ii) the fulfillment of the other conditions to the Merger set forth in Article
VII hereof, or at such other place or at such other time as may be mutually
agreed upon by HP and the Company.
SECTION 6.02 DELIVERIES AT THE CLOSING
Subject to the provisions of Articles VII and VIII, at the Closing:
(a) There will be delivered to HP and the Company the certificates and
other documents and instruments the delivery of which is contemplated under
Article VII; and
(b) HP, the Subsidiary and the Company will cause appropriate documents
necessary to effect the Merger to be filed in accordance with the provisions of
251 of the DGCL and shall take any and all other lawful actions and do any and
all other lawful things necessary to cause the Merger to become effective.
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<PAGE> 74
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 CONDITIONS TO THE OBLIGATIONS OF HP, THE SUBSIDIARY AND THE
COMPANY
The respective obligations of HP, the Subsidiary and the Company to effect
the Merger are subject to fulfillment at or prior to the date of the Closing of
the following conditions:
(a) Any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated;
(b) The Merger shall have been approved by the requisite vote of the
stockholders of the Company required by the DGCL and the Company's Certificate
of Incorporation and Bylaws;
(c) The Registration Statement shall have become effective and no stop
order suspending the effectiveness thereof shall be in effect and no proceedings
for such purpose shall be pending or threatened before the Commission;
(d) The shares of HP Common Stock issuable in the Merger shall be
authorized for listing on the NYSE upon official notice of issuance;
(e) No order, statute, rule, regulation, executive order, decree or
judgment shall have been enacted, entered, issued, promulgated or enforced by
any court or governmental authority which prohibits or restricts the
consummation of the Merger; and
(f) No injunction, restraining order or other order shall have been issued
that prohibits, restrains, seeks to invalidate or seeks to set aside
consummation of the Merger.
SECTION 7.02 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF HP AND THE
SUBSIDIARY
The obligations of HP and the Subsidiary to effect the Merger are also
subject to the fulfillment at or prior to the date of the Closing of the
following additional conditions:
(a) The Company shall have performed and complied with the agreements and
obligations contained in this Agreement that are required to be performed and
complied with by it at or prior to the date of the Closing;
(b) The representations and warranties of the Company contained in this
Agreement shall be true and correct as of the date hereof and shall be deemed to
have been made again at and as of the date of the Closing and shall then be true
and correct in all material respects;
(c) All corporate actions on the part of the Company necessary to authorize
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby or thereby shall have been duly and
validly taken;
(d) HP shall have received from each person who is identified as an
"affiliate" of the Company for purposes of Rule 145 under the Securities Act, as
identified in the list delivered pursuant to Section 2.06, a written agreement
substantially in the form of Exhibit A to this Agreement with respect to the
shares of HP Common Stock to be received by such affiliate in the Merger;
(e) Any and all consents required from third parties relating to contracts,
licenses, leases and other agreements and instruments material to the financial
condition or results of operations of the Surviving Corporation, shall have been
obtained. All consents, waivers, approvals, authorizations or orders required to
be obtained, and all filings required to be made, by the Company for the
authorization, execution and delivery of this Agreement and the consummation by
it of the transactions contemplated hereby shall have been obtained and made by
the Company;
(f) HP shall have received from Ernst & Young LLP, independent auditors for
the Company, a copy of a letter addressed to the Company dated on or prior to
the date of the Effective Time, in substance reasonably satisfactory to HP, to
the effect that Ernst & Young LLP is aware of no significant matters with
respect to the
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<PAGE> 75
Company or any of its subsidiaries which would preclude HP from accounting for
the business combination as a pooling of interests
(g) HP shall have received from independent auditors for HP, a letter dated
the date of the Effective Time confirming, as of that date, that the Merger can
be treated for accounting purposes as a "pooling of interests" under Opinion No.
16 of the Accounting Principles Board;
(h) HP shall have received such certificates of the Chief Executive Officer
and the Chief Financial Officer of the Company and such certificates of others
to evidence compliance with the conditions set forth in this Section and in
Section 7.01 as may be reasonably requested by HP;
(i) Since the date of this Agreement and except as set forth in the Company
Disclosure Schedule, there shall have been no material adverse change in, and no
event, occurrence or development in the business of the Company that, taken
together with other events, occurrences and developments with respect to such
business, would have or would reasonably be expected to have a material adverse
effect on, the business, operations or financial condition of the Company and
its subsidiaries, taken as a whole; and
(j) HP shall have received the following certificates:
(1) An estoppel certificate from Ambvex, Ltd. stating that the Lease
Agreement dated January 23, 1989 between Synergy Park Associates No. 1
Limited Partnership and the Company; as amended by Supplemental Lease
Agreement dated October 31, 1990 between Chamansynergy Limited Partnership
and the Company, Second Amendment to Lease Agreement dated October 1991
between Chamansynergy Limited Partnership and the Company, and Third
Amendment to Lease Agreement dated July 13, 1994 between Ambvex, Ltd. and
the Company; and as assigned pursuant to Assignment of Lease and Service
Contracts and Assumption Agreement dated June 5, 1989 between Synergy Park
Associates No. 1 Limited Partnership and Chamansynergy Limited Partnership
and to Assignment of Lease and Service Contracts and Assumption Agreement
dated July 13, 1994 between Chamansynergy Limited Partnership and Ambvex,
Ltd. (the "Lease") is in full force and effect and that there are no
defaults under the Lease on the part of either the Company or Ambvex, Ltd.
as Lessor and confirming the monthly rent, deposit, term and other basic
terms of the Lease.
(2) An estoppel certificate from Mantax (America), Inc. as General
Partner stating that no defaults exist under the Limited Partnership
Agreement dated March 21, 1994 between Mantax (America), Inc., Amber
Realty, Inc. and the Company, as amended by First Amendment to Limited
Partnership Agreement dated June 10, 1994 and Second Amendment to Limited
Partnership Agreement dated July 13, 1994 (the "Limited Partnership
Agreement") describing Ambvex, Ltd., a Texas limited partnership (the
"Limited Partnership") and confirming (i) the Company's percentage interest
in and current capital account with the Limited Partnership, (ii) that HP
will have the right, at any time following the Merger, to become a
substituted limited partner in the Limited Partnership in place of the
Company, and (iii) that the consummation of the Merger and the other
transactions contemplated in this Agreement will not require the consent of
the General Partner nor will it trigger the right of first refusal set
forth in the Limited Partnership Agreement.
(3) An estoppel certificate from Hartford Life Insurance Company as
lender to the Limited Partnership stating that there are no defaults under
the loan (the "Loan") and confirming the principal amount and term of the
Loan, the interest rate and other basic terms of the Loan and that the
consummation of the Merger and the other transactions contemplated by this
Agreement will not cause a default or acceleration of any kind under the
Loan; and
(k) The Board of Directors of the Company shall have adopted a resolution,
contingent upon the Closing and satisfactory to HP, that terminates the "Convex
Renewal Program (Sabbatical)" which provided for six weeks of sabbatical with
pay and benefits after each seven full years of continuous active service.
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<PAGE> 76
SECTION 7.03 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligations of the Company to effect the Merger are also subject to the
fulfillment at or prior to the date of the Closing of the following additional
conditions:
(a) HP and the Subsidiary shall have performed and complied with the
agreements and obligations contained in this Agreement that are required to be
performed and complied with by them at or prior to the date of the Closing;
(b) The representations and warranties of HP and the Subsidiary contained
in this Agreement shall be true and correct as of the date hereof and shall be
deemed to have been made again at and as of the date of the Closing and shall
then be true and correct in all material respects;
(c) All corporate actions on the part of HP and the Subsidiary necessary to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and thereby shall have been
duly and validly taken;
(d) Since the date of this Agreement, there shall have been no material
adverse change in, and no event, occurrence or development in the business of HP
that, taken together with other events, occurrences and developments with
respect to such business, would have or would reasonably be expected to have a
material adverse effect on, the business, operations or financial condition of
HP and its subsidiaries, taken as a whole; and
(e) The Company shall have received such certificates of officers of HP and
the Subsidiary and such certificates of others to evidence compliance with the
conditions set forth in this Section and in Section 7.01 as may be reasonably
requested by the Company.
ARTICLE VIII
TERMINATION AND ABANDONMENT
SECTION 8.01 TERMINATION
This Agreement may be terminated and the Merger abandoned at any time prior
to the Effective Time, whether before or after the approval by stockholders
referred to in Section 2.02:
(a) after January 31, 1996, by either the Company or HP, if the Closing has
not occurred for any reason other than a breach of this Agreement by the
terminating party;
(b) by HP, if there has been a breach by the Company of any agreement,
covenant, obligation, representation or warranty contained in this Agreement in
either case such that the conditions set forth in Sections 7.02(a) or 7.02(b)
would not be satisfied as of the time of such breach and such breach has not
been waived by HP; provided, that if in HP's sole reasonable judgment such
breach is curable by the Company through the exercise of reasonable efforts and
so long as the Company continues to exercise such reasonable efforts
continuously and diligently and is able to cure such breach within a period of
60 days, HP may not terminate this Agreement under this Section 8.01(b);
(c) by the Company, if there has been a breach by HP or the Subsidiary of
any agreement, covenant, obligation, representation or warranty contained in
this Agreement and such breach has not been waived by the Company;
(d) by HP or the Company, if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued a final, nonappealable order, decree or ruling, in each case restraining,
enjoining or otherwise prohibiting the Merger;
(e) by HP or the Company, if the Company shall have accepted or recommended
to the stockholders of the Company a Superior Proposal;
(f) by either HP or the Company if the Company's stockholders shall have
voted on and failed to approve the Merger by the requisite vote;
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<PAGE> 77
(g) by mutual consent of HP and the Company; or
(h) by HP, if it is not in material breach of its obligations under this
Agreement and if the Board of Directors of the Company shall have withdrawn or
modified in a manner adverse to HP its recommendation of the Merger as provided
in Section 2.02.
(i) by HP, if a tender offer or exchange offer for twenty percent or more
of the outstanding shares of capital stock of the Company is commenced, and the
Board of Directors of the Company, within ten business days after such tender
offer or exchange offer is so commenced, either fails to recommend against
acceptance of such tender offer or exchange offer by its stockholders, or takes
no position with respect to its acceptance of such tender offer or exchange
offer by its stockholders.
SECTION 8.02 FEES AND EXPENSES
(a) For purposes of this Section, a "Termination Fee Event" shall have
occurred if (i) the Company terminates this Agreement pursuant to Section
8.01(e) above; or (ii) HP terminates this Agreement pursuant to Sections
8.01(b), (e), (h) or (i) above; or (iii) if the Company or HP shall terminate
this Agreement pursuant to Section 8.01(f) above and at the time of the failure
of the Company's stockholders to approve the Merger (A) there shall exist a
competing Acquisition Proposal and (B) the Company's Board of Directors shall
have withdrawn or modified its recommendation of the Merger in a manner adverse
to HP, or shall have resolved to do so, or shall have recommended to the
Company's stockholders any Superior Proposal; or (iv) if the Company or HP shall
terminate this Agreement pursuant to Section 8.01(a) and thereafter, within six
months, the Company's Board of Directors recommends to the stockholders a
Superior Proposal.
(b) If a Termination Fee Event, as described above occurs, then the Company
shall pay to HP, in cash, the sum of $3,750,000, plus all of HP's out-of-pocket
expenses and fees incurred by it, or on its behalf, in connection with the
Merger and the negotiation, preparation, execution and performance of all
transactions contemplated by this Agreement ("HP's Expenses"). Such payment
shall be made to HP, in the manner provided below, not later than five business
days after delivery to the Company of notice of demand for payment and an
itemization setting forth in reasonable detail HP Expenses. Such itemization of
HP Expenses may be supplemented and updated from time to time by HP until the
60th day after HP delivers such notice of demand for payment, and the Company
shall make payment for such supplemental expenses within five business days
after receipt thereof in the manner provided below. Any payment required by this
Section 8.02(b) shall be made to HP by wire transfer of immediately available
funds to an account designated by HP in the notice of demand for payment
delivered to the Company pursuant to this Section 8.02(b).
(c) The payment provided for in Section 8.02(b) shall be the sole and
exclusive remedy of HP upon any termination of this Agreement as described in
Section 8.02(b), regardless of the circumstances giving rise to such
termination. The Company and HP agree that the amount payable to HP following a
Termination Fee Event is reasonable under the circumstances to induce HP to
enter into this Agreement since it would be impracticable and extremely
difficult to fix the actual damage to HP in the case of such a termination, and
in light of the value that would have been provided to the Company and its
stockholders, if such a Termination Fee Event should occur, by virtue of HP's
willingness to enter into this Agreement, including particularly, Section 5.02
above.
(d) Except as provided in Section 8.02(b), all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by such of HP, the Subsidiary or the Company incurring such expenses,
except that expenses incurred in connection with printing and mailing the Proxy
Statement/Prospectus shall be shared equally by HP and the Company.
SECTION 8.03 PROCEDURE AND EFFECT OF TERMINATION
In the event of termination and abandonment of the Merger by HP or the
Company pursuant to Section 8.01, written notice thereof shall forthwith be
given to the other and this Agreement and the Merger Agreement shall terminate
and the Merger shall be abandoned, without further action by any of HP, the
Subsidiary or the Company. If this Agreement is terminated as provided herein
there shall be no liability or
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<PAGE> 78
further obligation hereunder on the part of HP, the Subsidiary or the Company,
except as set forth in this Section 8.03 and in Sections 5.02, 5.03(b), 8.02 and
Article IX. Nothing in this Section 8.03 shall relieve any party to this
Agreement of liability for willful breach of this Agreement.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 AMENDMENT AND MODIFICATION
Subject to applicable law, this Agreement may be amended, modified or
supplemented only by written agreement of HP, the Subsidiary and the Company at
any time prior to the Effective Time with respect to any of the terms contained
herein except that after the approvals by stockholders contemplated by Section
2.02, the amount or form of consideration to be received by the holders of
voting shares of the Company may not be decreased or altered without the
approval of such holders.
SECTION 9.02 WAIVER OF COMPLIANCE; CONSENTS
Any failure of HP or the Subsidiary, on the one hand, or the Company on the
other hand, to comply with any obligation, covenant, agreement or condition
herein may be waived in writing by the Company or HP, respectively, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of HP, the Subsidiary or the
Company, such consent shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section.
SECTION 9.03 VALIDITY
The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provisions of this
Agreement, which shall remain in full force and effect.
SECTION 9.04 PARTIES IN INTEREST
This Agreement shall be binding upon and inure solely to the benefit of HP,
the Subsidiary and the Company, and except as otherwise expressly provided in
Section 5.08 above, nothing in this Agreement, express or implied, is intended
to confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
SECTION 9.05 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS
The respective representations and warranties of HP, the Subsidiary and the
Company shall not survive the Effective Time, but covenants that specifically
relate to periods, activities or obligations subsequent to the Merger shall
survive the Merger to the extent of any such subsequent period. In addition, if
this Agreement is terminated pursuant to Section 8.01, the covenants contained
in Sections 5.02, 5.03(b) and 8.02 shall survive such termination.
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<PAGE> 79
SECTION 9.06 NOTICES
All notices and other communications hereunder shall be in writing and
shall be deemed given on the date of delivery, if delivered personally or faxed
during normal business hours of the recipient, or three days after deposit in
the U.S. Mail, postage prepaid, if mailed by registered or certified mail
(return receipt requested) as follows:
(a) if to HP, the Subsidiary or the Surviving Corporation after the
Effective Time, to:
Hewlett-Packard Company
3000 Hanover Street, MS 20BT
Palo Alto, California 94304
Attention: Director, Corporate Development
Fax: (415) 852-8342
with a copy to:
Hewlett-Packard Company
3000 Hanover Street, MS 20BX
Palo Alto, California 94304
Attention: General Counsel
Fax: (415) 852-8019
(b) if to the Company prior to the Effective Time, to:
Convex Computer Corporation
3000 Waterview Parkway
Richardson, TX 75080
Attention: General Counsel
Fax: (214) 497-4083
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Larry W. Sonsini, Esq.
Fax: (415) 493-6811
SECTION 9.07 GOVERNING LAW
The Agreement shall be governed by and construed in accordance with the law
of the State of Delaware without regard to the conflicts of law rules thereof.
SECTION 9.08 COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same agreement.
SECTION 9.09 TABLE OF CONTENTS AND HEADINGS
The table of contents and article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not affect in any way the meaning or interpretation of
this Agreement.
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<PAGE> 80
SECTION 9.10 ENTIRE AGREEMENT
This Agreement, including the exhibits and schedules hereto and the
documents and instruments referred to herein, embodies the entire agreement and
understanding of HP, the Subsidiary and the Company in respect of the subject
matter contained herein and supersedes all prior agreements and understandings
among them with respect to such subject matter including, without limitation,
the Common Stock Purchase Agreement dated as of March 18, 1992 between the
Company and HP.
SECTION 9.11 MISCELLANEOUS
(a) HP hereby agrees to cause the Subsidiary to comply with its obligations
hereunder and to cause the Subsidiary to consummate the Merger as contemplated
herein.
(b) For purposes of this Agreement, the term "Knowledge" of an entity means
knowledge actually possessed, after conducting a reasonable inquiry into the
relevant subject matter, by any director, officer, employee or representative of
such entity.
IN WITNESS WHEREOF, HP, the Subsidiary and the Company have caused this
Agreement to be signed on their behalf by their respective duly authorized
representatives on the date first above written.
HEWLETT-PACKARD COMPANY
By: /s/ WILLEM P. ROELANDTS
--------------------------------------
Its: Senior Vice President and General
Manager of Computer Systems
Organization
GEMINI PROJECT CORPORATION
By: /s/ ANN O. BASKINS
--------------------------------------
Its: Treasurer and Secretary
CONVEX COMPUTER CORPORATION
By: /s/ ROBERT J. PALUCK
--------------------------------------
Its: Chairman of the Board and Chief
Executive Officer
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<PAGE> 81
EXHIBIT A
AFFILIATES LETTER
, 1995
Hewlett-Packard Company
3000 Hanover Street MS 20BQ
Palo Alto, California 94304
Attention: Marie Oh Huber, Esq.
Gentlemen:
I have been advised that I may be an "affiliate" of Convex Computer
Corporation, a Delaware corporation (the "Company"), as that term is defined for
purposes of Rule 145 of the General Rules and Regulations of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933 (the
"Securities Act").
I understand that the Company has entered into an Agreement and Plan of
Merger dated as of , 1995 (the "Merger Agreement") with
Hewlett-Packard Company, a California corporation ("HP"), and Gemini Project
Corporation, a Delaware corporation (the "Subsidiary") and a wholly-owned
subsidiary of HP, providing for the merger (the "Merger") of the Company and the
Subsidiary. As a result of the Merger, I may receive shares of Common Stock of
HP (the "HP Common Stock") in exchange for shares of capital stock of the
Company owned by me at the Effective Time of the Merger (as defined in the
Merger Agreement.)
A. In connection with my receipt of HP Common Stock as a result of the
Merger, I represent, warrant to and agree with HP that:
1. I have been advised that the issuance of the shares of HP Common
Stock that are issued to me as a result of the Merger will be registered
with the Commission under the Securities Act. However, I have also been
advised that, because at the time the Merger will be submitted for a vote
of the stockholders of the Company I may be an "affiliate" of the Company
and the distribution by me of the shares of HP Common Stock that I receive
in the Merger has not been registered under the Securities Act, such shares
must be held by me indefinitely unless (a) such distribution of such shares
has been registered under the Securities Act, (b) a sale of such shares is
made in conformity with the provisions of Rule 145(d) under the Securities
Act, or (c) in the opinion of counsel acceptable to HP some other exemption
from registration under the Securities Act is available with respect to any
such proposed sale, transfer or other disposition of such shares.
2. I will not sell, transfer or otherwise dispose of the shares of HP
Common Stock that I receive as a result of the Merger in violation of the
Securities Act or the rules and regulations thereunder.
3. I also will not sell, transfer or otherwise dispose of any shares
of capital stock of the Company or HP, or reduce my interest in or my risk
relating to any such shares, during the period beginning 30 days prior to
the Merger and ending on the date that financial results covering at least
30 days of post-Merger combined operations of HP and the Company have been
published.
B. I understand and I agree with HP that:
1. HP is under no further obligation to register the sale, transfer or
other disposition of the shares of HP Common Stock that I receive as a
result of the Merger or to take any other action necessary in order to make
an exemption from registration available to me.
2. Stop transfer instructions may be given to the transfer agents of
HP with respect to the shares of HP Common Stock that I receive as a result
of the Merger, and there will be placed on the certificates
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<PAGE> 82
representing such shares, or any certificates delivered in substitution
therefor, a legend stating in substance:
"The shares represented by this certificate were issued
in a transaction to which Rule 145 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 dated as of , 1995, between the
registered holder and Hewlett-Packard Company, a copy of which
agreement is on file at the principal offices of
Hewlett-Packard Company."
Very truly yours,
--------------------------------------
Accepted this day of
1995 by
HEWLETT-PACKARD COMPANY
By:
Title:
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<PAGE> 83
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 204 of the California Corporations Code authorizes a corporation to
adopt a provision in its articles of incorporation reducing or eliminating the
personal liability of directors to the corporation or its shareholders for
monetary damages for breach or alleged breach of directors' "duty of care."
Following a California corporation's adoption of such a provision, its directors
are not accountable to the corporation or its shareholders for monetary damages
for conduct constituting negligence (or gross negligence) in the exercise of
their fiduciary duties; however, directors continue to be subject to equitable
remedies such as injunction or rescission. Under the California Corporations
Code, a director also continues to be liable for (1) a breach of his or her duty
of loyalty; (2) acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law; (3) illegal payments of dividends; and
(4) approval of any transaction from which the director derives and improper
personal benefit. The adoption of such a provision in the articles of
incorporation also does not limit directors' liability for violations of the
federal securities laws.
Section 317 of the California Corporations Code makes provision for the
indemnification of officers, directors and other corporate agents in terms
sufficiently broad to indemnify such persons, under certain circumstances, for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act. An amendment to Section 317 provides that the indemnification
provided by this section is not exclusive to the extent additional rights are
authorized in a corporation's articles of incorporation.
HP has adopted provisions in its Amended Articles of Incorporation which
eliminate the personal liability of its directors to HP and its shareholders for
monetary damages for breach of the directors' fiduciary duties in certain
circumstances and authorize HP to indemnify its officers, directors and other
agents to the fullest extent permitted by law. In addition, HP has a directors'
and officers' liability insurance policy which provides insurance coverage to
directors and officers for losses arising from claims based on breaches of duty,
negligence, error and other wrongful acts.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following documents are filed as part of this Registration Statement.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------------------------------------------------------------------------
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of September 21, 1995, among the
Registrant, Convex and Subsidiary
5.1 -- Opinion re: legality
8.1 -- Opinion re: tax matters
23.1 -- Consent of Price Waterhouse LLP, independent accountants
23.2 -- Consent of Ernst & Young LLP, independent auditors
23.3 -- Consent of D. Craig Nordlund, Associate General Counsel and Secretary of
HP
23.4 -- Consent of Wilson, Sonsini, Goodrich & Rosati, Professional Corporation
24.1 -- Power of Attorney
99.1 -- Form of Proxy
</TABLE>
(b) Financial Statement Schedules
None.
(c) Reports, Opinions and Appraisals
None.
II-1
<PAGE> 84
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(b) The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(c) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (b) immediately preceding or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(e) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
(f) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-2
<PAGE> 85
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Palo
Alto, State of California, on the 8th day of November, 1995.
HEWLETT-PACKARD COMPANY
By D. CRAIG NORDLUND
------------------------------------
D. Craig Nordlund
Secretary and Associate
General Counsel
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- -------------------------------- ------------------
<C> <S> <C>
LEWIS E. PLATT* Chairman of the Board and Chief November 8, 1995
- ---------------------------------------- Executive Officer and Director
Lewis E. Platt (Principal Executive Officer)
ROBERT P. WAYMAN* Executive Vice President, November 8, 1995
- ---------------------------------------- Finance and Administration and
Robert P. Wayman Chief Financial Officer
(Principal Financial Officer)
RAYMOND W. COOKINGHAM* Vice President and Controller November 8, 1995
- ---------------------------------------- (Principal Accounting Officer)
Raymond W. Cookingham
THOMAS E. EVERHART* Director November 8, 1995
- ----------------------------------------
Thomas E. Everhart
JOHN B. FERY* Director November 8, 1995
- ----------------------------------------
John B. Fery
JEAN-PAUL G. GIMON* Director November 8, 1995
- ----------------------------------------
Jean-Paul G. Gimon
</TABLE>
II-3
<PAGE> 86
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- -------------------------------- ------------------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
HAROLD J. HAYNES* Director November 8, 1995
- ----------------------------------------
Harold J. Haynes
WALTER B. HEWLETT* Director November 8, 1995
- ----------------------------------------
Walter B. Hewlett
SHIRLEY M. HUFSTEDLER* Director November 8, 1995
- ----------------------------------------
Shirley M. Hufstedler
GEORGE A. KEYWORTH II* Director November 8, 1995
- ----------------------------------------
George A. Keyworth II
DAVID M. LAWRENCE* Director November 8, 1995
- ----------------------------------------
David M. Lawrence
PAUL F. MILLER, JR.* Director November 8, 1995
- ----------------------------------------
Paul F. Miller, Jr.
SUSAN P. ORR* Director November 8, 1995
- ----------------------------------------
Susan P. Orr
DONALD E. PETERSEN* Director November 8, 1995
- ----------------------------------------
Donald E. Petersen
*By: D. CRAIG NORDLUND
- ----------------------------------------
D. Craig Nordlund, Attorney-in-Fact
</TABLE>
II-4
<PAGE> 87
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Merger dated as of September 21, 1995, among the Registrant,
Convex and Subsidiary (included as Annex A to Proxy Statement/Prospectus which is
part of this Registration Statement)
5.1 Opinion re: legality
8.1 Opinion re: tax matters
23.1 Consent of Price Waterhouse LLP, independent accountants
23.2 Consent of Ernst & Young LLP, independent auditors
23.3 Consent of D. Craig Nordlund, Associate General Counsel and Secretary of HP
(included in Exhibit No. 5.1)
23.4 Consent of Wilson, Sonsini, Goodrich & Rosati, Professional Corporation (included
in Exhibit No. 8.1)
24.1* Power of Attorney
99.1* Form of Proxy
</TABLE>
- ---------------
* Previously filed
<PAGE> 1
EXHIBIT 5.1
HEWLETT-PACKARD COMPANY
3000 HANOVER STREET
PALO ALTO, CALIFORNIA 94304-1181
November 7, 1995
Re: Registration Statement on Form S-4
File No. 33-63643
Ladies and Gentlemen:
I have examined the Registration Statement on Form S-4 filed by
Hewlett-Packard Company ("HP") with the Securities and Exchange Commission on
October 24, 1995 (Registration No. 33-63643) and Amendment No. 1 thereto to be
filed on or about November 7, 1995 (the "Registration Statement"), in connection
with the registration under the Securities Act of 1933, as amended, of shares of
HP Common Stock, $1.00 par value (the "Shares"). The Shares are to be issued in
connection with the merger (the "Merger") of Gemini Project Corporation, a
Delaware corporation and wholly-owned subsidiary of HP ("Subsidiary"), with and
into Convex Computer Corporation, a Delaware corporation ("Convex"), pursuant to
an Agreement and Plan of Merger dated September 21, 1995 among HP, Subsidiary
and Convex (the "Merger Agreement") described in the Registration Statement and
filed as Annex A thereto. As counsel to HP, I have examined the Merger Agreement
and the proceedings proposed to be taken in connection with the Merger and the
issuance of the Shares.
Based upon the foregoing, I am of the opinion that, upon completion of the
proceedings being taken or contemplated to be taken prior to the issuance of the
Shares, the Shares when issued pursuant to the terms of the Merger Agreement
will be legally and validly issued, fully paid and nonassessable.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption "Legal
Matters" therein.
Sincerely,
D. CRAIG NORDLUND
--------------------------------------
D. Craig Nordlund
Associate General Counsel and
Secretary
<PAGE> 1
EXHIBIT 8.1
WILSON SONSINI GOODRICH & ROSATI
650 PAGE MILL ROAD
PALO ALTO, CA 94304
NOVEMBER 8, 1995
Convex Computer Corporation
3000 Waterview Parkway
Richardson, Texas 75080
Ladies and Gentlemen:
We have acted as counsel for Convex Computer Corporation, a Delaware
corporation ("Convex") in connection with the preparation and execution of the
Agreement and Plan of Merger dated as of September 21, 1995 (the Merger
Agreement") among Hewlett-Packard Company, a California corporation ("HP"),
Gemini Project Corporation, a wholly-owned subsidiary of HP incorporated in
Delaware ("Merger Sub"), and Convex. Pursuant to the Merger Agreement, Merger
Sub will merge with and into Convex (the "Merger"), and Convex will become a
wholly-owned subsidiary of HP. Unless otherwise defined, capitalized terms
referred to herein have the meanings set forth in the Merger Agreement. All
section references, unless otherwise indicated, are to the Internal Revenue Code
of 1986, as amended (the "Code").
You have requested our opinion regarding certain United States federal
income tax consequences of the Merger. In delivering this opinion, we have
reviewed and relied upon the facts, statements, descriptions and representations
set forth in the Merger Agreement (including Exhibits) and such other documents
pertaining to the Merger as we have deemed necessary or appropriate including
the Registration Statement filed on Form S-4 by HP with the Securities and
Exchange Commission. We have also relied upon certificates of officers of HP and
Convex respectively (the "Officers' Certificates").
In connection with rendering this opinion, we have also assumed (without
any independent investigation) that:
1. Original documents (including signatures) are authentic, documents
submitted to us as copies conform to the original documents, and there has been
(or will be by the Effective Time) due execution and delivery of all documents
where due execution and delivery are prerequisites to effectiveness thereof;
2. Any statement made in any of the documents referred to herein,"to the
best of the knowledge" of any person or party, is correct without such
qualification;
3. All statements, descriptions and representations contained in any of the
documents referred to herein or otherwise made to us are true and correct in all
material respects and no actions have been (or will be) taken which are
inconsistent with such representations; and
4. The Merger will be reported by HP and Convex on their respective federal
income tax returns in a manner consistent with the opinion set forth below.
5. The Merger will be consummated pursuant to the Merger Agreement and will
be effective under the laws of the State of Delaware.
6. The shareholders of Convex do not, and will not on or before the
Effective Time, have an existing plan or intent to dispose of an amount of HP
capital stock to be received in the Merger (or to dispose of Convex capital
stock in anticipation of the Merger) such that the shareholders of Convex will
not receive and retain a meaningful continuing equity ownership in HP that is
sufficient to satisfy the continuity of interest requirement as specified in
Treas. Reg. Section 1.368-1(b) and as interpreted in certain Internal Revenue
Service rulings and federal judicial decisions.
<PAGE> 2
7. After the Merger, Convex will hold "substantially all" of its and Merger
Sub's properties within the meaning of Section 368(a)(2)(E)(i) of the Code and
the regulations promulgated thereunder and will continue its historic business
or use a significant portion of its historic business assets in a business.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, we are
of the opinion that:
(i) For federal income tax purposes, the Merger will qualify as a
"reorganization" as defined in Section 368(a) of the Code; and
(ii) The discussion entitled "Certain Federal Income Tax Consequences"
in the Registration Statement is correct in all material respects.
This opinion represents and is based upon our best judgment regarding the
application of federal income tax laws arising under the Code, existing judicial
decisions, administrative regulations and published rulings and procedures. Our
opinion is not binding upon the Internal Revenue Service or the courts, and
there is no assurance that the Internal Revenue Service will not successfully
assert a contrary position. Furthermore, no assurance can be given that future
legislative, judicial or administrative changes, on either a prospective or
retroactive basis, would not adversely affect the accuracy of the conclusions
stated herein. Nevertheless, we undertake no responsibility to advise you of any
new developments in the application or interpretation of the federal income tax
laws.
This opinion addresses only the classification of the Merger as a
reorganization under Section 368(a) of the Code, and does not address any other
federal, state, local or foreign tax consequences that may result from the
Merger or any other transaction (including any transaction undertaken in
connection with the Merger).
No opinion is expressed as to any transaction other than the Merger as
described in the Merger Agreement or to any transaction whatsoever, including
the Merger, if all the transactions described in the Merger Agreement are not
consummated in accordance with the terms of such Merger Agreement and without
waiver or breach of any material provision thereof or if all of the
representations, warranties, statements and assumptions upon which we relied are
not true and accurate at all relevant times. In the event any one of the
statements, representations, warranties or assumptions upon which we have relied
to issue this opinion is incorrect, our opinion might be adversely affected and
may not be relied upon.
This opinion is intended solely for your benefit and may not be relied upon
for any other purpose or by any other person or entity, and may not be made
available to any other person or entity without our prior written consent. We
hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Proxy
Statement/Prospectus constituting part of this Registration Statement on Form
S-4 of Hewlett-Packard Company of our report dated November 21, 1994, which
appears on page 43 of Hewlett-Packard Company's 1994 Annual Report to
Shareholders, which is incorporated by reference in its Annual Report on Form
10-K for the year ended October 31, 1994. We also consent to the reference to us
under the heading "Experts" in such Proxy Statement/Prospectus.
PRICE WATERHOUSE LLP
San Francisco, California
November 7, 1995
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP
We consent to the references to our firm in the Amendment No. 1 to the
Registration Statement on Form S-4 and related Proxy Statement/Prospectus of
Hewlett-Packard Company ("HP") for the registration of shares of HP common stock
to be issued in connection with the merger of a subsidiary of HP with and into
Convex Computer Corporation ("Convex") and to the incorporation by reference
therein of our reports dated February 17, 1995 with respect to the consolidated
financial statements and schedules of Convex included in its Annual Report (Form
10-K) for the year ended December 31, 1994, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
Dallas, Texas
November 7, 1995
