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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
July 1, 1996
Date of Report
(Date of earliest event reported)
INTERPOINT CORPORATION
(Exact name of registrant as specified in its charter)
Washington 0-11069 91-0850556
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
10301 Willows Road
Redmond, Washington 97005
(Address of principal executive offices, including zip code)
(206) 882-3100
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On July 1, 1996, Interpoint Corporation ("Interpoint") entered into an
Agreement and Plan of Merger (the "Merger Agreement") by and among Crane Co.
("Crane"), a Delaware corporation, Interpoint and Crane Acquisition Corp., a
Washington corporation and a wholly owned subsidiary of Crane ("Acquisition
Corp."), pursuant to which Acquisition Corp. will be merged (the "Merger") with
and into Interpoint. Before the closing of the Merger, Interpoint will spin off
its Advanced Digital Information Corporation ("ADIC") data storage subsidiary as
a separate Nasdaq-listed company, the shares of which will be distributed to
Interpoint shareholders. In the Merger, outstanding shares of Interpoint common
stock will be converted in the aggregate into shares of Crane common stock
having a value of $59 million less the amount of Interpoint oustanding debt and
certain other balance sheet adjustments. The number of shares of Crane common
stock to be issued in the Merger will be based on the average trading price of
the Crane common stock for the ten trading days before the closing of the
Merger. Pursuant to the Merger Agreement, Interpoint is obligated to terminate
its existing stock option plans and must use its best efforts to terminate all
underlying stock options in exchange for cash payments.
The closing of the Merger is subject to, among other things, approval
of the Merger Agreement by Interpoint shareholders by a two-thirds vote. A proxy
statement describing the transaction is expected to be mailed to all Interpoint
shareholders within approximately 60 days. The Interpoint shareholders' meeting
and the closing of the Merger are expected to occur in late September 1996.
Crane will file a Registration Statement on Form S-4 with the
Securities and Exchange Commission registering the shares of Crane common stock
to be issued to Interpoint shareholders in the Merger.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
2.1 Agreement and Plan of Merger among Crane Co.,
Interpoint Corporation and Crane Acquisition Corp.
dated as of July 1, 1996
99.1 Press Release issued July, 1, 1996
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
INTERPOINT CORPORATION
Dated: July 2, 1996
By /s/ Peter H. van Oppen
----------------------
Peter H. van Oppen, Chief Executive Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description Page No.
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<S> <C> <C>
2.1 Agreement and Plan of Merger among Crane Co.,
Interpoint Corporation and Crane Acquisition Corp.
dated as of July 1, 1996
99.1 Press Release issued July, 1, 1996
</TABLE>
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AGREEMENT AND PLAN OF MERGER
dated as of July 1, 1996
by and among
CRANE CO.,
CRANE ACQUISITION CORP.
and
INTERPOINT CORPORATION
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.
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ARTICLE I
THE MERGER AND SPINOFF............................................................. 2
1.01 The Merger........................................................................................ 2
1.02 Closing .......................................................................................... 2
1.03 Effective Time.................................................................................... 2
1.04 Articles of Incorporation and Bylaws of the
Surviving Corporation..................................................................... 2
1.05 Directors and Officers of the Surviving
Corporation............................................................................... 3
1.06 Effects of the Merger............................................................................. 3
1.07 Further Assurances................................................................................ 3
1.08 The Spinoff....................................................................................... 3
ARTICLE II
CONVERSION OF SHARES............................................................... 3
2.01 Conversion of Capital Stock....................................................................... 3
2.02 Exchange of Certificates.......................................................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................... 8
3.01 Organization and Qualification.................................................................... 8
3.02 Capital Stock..................................................................................... 9
3.03 Authority Relative to this Agreement.............................................................. 10
3.04 Non-Contravention; Approvals and Consents......................................................... 11
3.05 SEC Reports and Financial Statements.............................................................. 12
3.06 Absence of Certain Changes or Events.............................................................. 13
3.07 Absence of Undisclosed Liabilities................................................................ 13
3.08 Legal Proceedings................................................................................. 14
3.09 Information Supplied.............................................................................. 14
3.10 Compliance with Laws and Orders................................................................... 15
3.11 Compliance with Agreements; Certain Agreements.................................................... 15
3.12 Taxes .......................................................................................... 16
3.13 Employee Benefit Plans; ERISA..................................................................... 18
3.14 Labor Matters..................................................................................... 22
3.15 Environmental Matters............................................................................. 22
3.16 Intellectual Property Rights...................................................................... 24
3.17 Vote Required..................................................................................... 25
3.18 Insurance......................................................................................... 25
3.19 Ownership of Parent Common Stock.................................................................. 26
3.20 Article XII of the Company's Articles of
Incorporation and State Takeover Laws..................................................... 26
3.21 No Affiliated Transactions........................................................................ 26
</TABLE>
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3.22 Spinoff Sub....................................................................................... 26
3.23 Real Property..................................................................................... 26
3.24 Contracts......................................................................................... 27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB................................... 29
4.01 Organization and Qualification.................................................................... 29
4.02 Capital Stock..................................................................................... 29
4.03 Authority Relative to this Agreement.............................................................. 30
4.04 Non-Contravention; Approvals and Consents......................................................... 30
4.05 SEC Reports and Financial Statements.............................................................. 32
4.06 Information Supplied.............................................................................. 32
4.07 Ownership of Company Common Stock................................................................. 33
ARTICLE V
COVENANTS.......................................................................... 33
5.01 Covenants of the Company and Parent............................................................... 33
5.02 No Solicitations.................................................................................. 36
5.03 Conduct of Business of Sub........................................................................ 37
5.04 Third Party Standstill Agreements................................................................. 38
5.05 Purchases of Common Stock of the Other Party...................................................... 38
5.06 Spinoff .......................................................................................... 38
5.07 Spinoff Sub Transactions.......................................................................... 38
ARTICLE VI
ADDITIONAL AGREEMENTS.............................................................. 38
6.01 Access to Information; Confidentiality............................................................ 38
6.02 Preparation of Registration Statement, Proxy
Statement and Form 10..................................................................... 39
6.03 Approval of Stockholders.......................................................................... 40
6.04 Company Affiliates................................................................................ 40
6.05 Stock Exchange Listing............................................................................ 41
6.06 Outstanding Indebtedness.......................................................................... 41
6.07 Regulatory and Other Approvals.................................................................... 41
6.08 Employee Benefit Plans............................................................................ 41
6.09 Company Option Plans.............................................................................. 42
6.10 Directors' and Officers' Indemnification and
Insurance................................................................................. 42
6.11 Expenses.......................................................................................... 44
6.12 Brokers or Finders................................................................................ 44
6.13 Takeover Statutes................................................................................. 44
6.14 Conveyance Taxes.................................................................................. 44
6.15 Certain Tax Matters............................................................................... 44
ARTICLE VII
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CONDITIONS......................................................................... 45
7.01 Conditions to Each Party's Obligation to Effect
the Merger................................................................................ 45
7.02 Conditions to Obligation of Parent and Sub to
Effect the Merger......................................................................... 46
7.03 Conditions to Obligation of the Company to Effect
the Merger................................................................................ 47
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER.................................................. 48
8.01 Termination....................................................................................... 48
8.02 Effect of Termination............................................................................. 50
8.03 Amendment......................................................................................... 50
8.04 Waiver .......................................................................................... 51
ARTICLE IX
GENERAL PROVISIONS................................................................. 51
9.01 Non-Survival of Representations, Warranties,
Covenants and Agreements.................................................................. 51
9.02 Notices .......................................................................................... 51
9.03 Entire Agreement; Incorporation of Exhibits....................................................... 52
9.04 Public Announcements.............................................................................. 52
9.05 No Third Party Beneficiary........................................................................ 53
9.06 No Assignment; Binding Effect..................................................................... 53
9.07 Headings.......................................................................................... 53
9.08 Invalid Provisions................................................................................ 53
9.09 Governing Law..................................................................................... 53
9.10 Enforcement of Agreement.......................................................................... 54
9.11 Certain Definitions............................................................................... 54
9.12 Counterparts...................................................................................... 55
</TABLE>
EXHIBITS
EXHIBIT A Form of Affiliate Agreement
EXHIBIT B Form of Articles of Merger
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding Sections of this Agreement listed below:
"affiliate" -- Section 9.11(a)
"Affiliate Agreement" -- Section 6.04
"Aggregate Share Distribution Amount" -- Section 2.01(b)
"Agreement" -- Preamble
"Alternative Proposal" -- Section 5.02
"Antitrust Division" -- Section 6.07
"Articles of Merger" -- Section 1.03
"Average Price" -- Section 2.01(b)
"beneficially" -- Section 9.11(b)
"Benefit Plan" -- Section 3.13
"business day" -- Section 9.11(c)
"CERCLA" -- Section 3.15(b)
"Certificates" -- Section 2.02(b)
"Closing" -- Section 1.02
"Closing Date" -- Section 1.02
"COBRA" -- Section 3.13(d)
"Code" -- Recitals
"Company" -- Preamble
"Company Affiliates" -- Section 6.04
"Company Common Stock" -- Section 2.01(b)
"Company Disclosure Letter" -- Section 3.01
"Company Financial Statements" -- Section 3.05
"Company Option Plan" -- Section 2.01(d)
"Company Permits" -- Section 3.10
"Company SEC Reports" -- Section 3.05
"Company Stockholders' Approval" -- Section 6.03
"Company Stockholders' Meeting" -- Section 6.03
"Confidentiality Agreement" -- Section 6.01(b)
"Constituent Corporations" -- Section 1.01
"Contracts" -- Section 3.04(a)
"control," "controlling," "controlled
by" and "under common control with" -- Section 9.11(a)
"Conversion Number" -- Section 2.01(b)
"Conveyance Taxes" -- Section 6.14
"Defined Benefit Plan" -- Section 3.13
"Dissenting Share" -- Section 2.01(c)(i)
"Effective Time" -- Section 1.03
"Environmental Law" -- Section 3.15(f)(i)
"Environmental Permits" -- Section 3.15(h)
"ERISA" -- Section 3.13(n)(ii)
"ERISA Affiliate" -- Section 3.13
"Exchange Act" -- Section 3.04(b)
"Exchange Agent" -- Section 2.02(a)
"Exchange Fund" -- Section 2.02(a)
"Form 10" -- Section 3.04(b)(v)
"FTC" -- Section 6.07
"GAAP" -- Section 3.13
"Governmental or Regulatory Authority" -- Section 3.04(a)
"group" -- Section 9.11(f)
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"Hazardous Material" -- Section 3.15(h)(ii)
"HSR Act" -- Section 3.04(b)
"Indemnified Liabilities" -- Section 6.10(a)
"Indemnified Parties" -- Section 6.10(a)
"Indemnifying Party" -- Section 6.10(a)
"Intellectual Property" -- Section 3.16
"knowledge" -- Section 9.11(d)
"laws" -- Section 3.04(a)
"Lien" -- Section 3.02(b)
"material", "material adverse
effect" and "materially adverse" -- Section 9.11(e)
"Merger" -- Recitals
"NYSE" -- Section 2.01(c)
"Options" -- Section 3.02
"orders" -- Section 3.04(a)
"Parent" -- Preamble
"Parent Common Stock" -- Section 2.01(c)
"Parent Disclosure Letter" -- Section 4.02
"Parent Financial Statements" -- Section 4.05
"Parent Preferred Stock" -- Section 4.02(a)
"Parent Rights" -- Section 4.02(a)
"Parent Rights Agreement" -- Section 4.02(a)
"Parent SEC Reports" -- Section 4.05
"Parent Series A Preferred Stock" -- Section 4.02(a)
"person" -- Section 9.11(f)
"Plan" -- Section 3.13(b)(ii)
"Proxy Statement" -- Section 3.09
"Qualified Plan" -- Section 3.13
"Registration Statement" -- Section 4.06
"Representatives" -- Section 9.11(g)
"SEC" -- Section 3.04(b)
"Secretary of State" -- Section 1.03
"Securities Act" -- Section 3.04(b)
"Segregated Account" -- Section 6.06
"Significant Subsidiaries" -- Section 9.11(h)
"Spinoff" -- Recitals
"Spinoff Agreements" -- Recitals
"Spinoff Memorandum" -- Recitals
"Spinoff Sub" -- Recitals
"Sub" -- Preamble
"Sub Common Stock" -- Section 2.01(a)
"Subject Defined Benefit Plan" -- Section 3.13
"Subsidiary" -- Section 9.11(i)
"Surviving Corporation" -- Section 1.01
"Surviving Corporation Common Stock" -- Section 2.01
"Taiwan Sub" -- Section 3.04(b)
"Taxes" -- Section 3.12.1
"Tax Return" -- Section 3.12.1
"Trading Day" -- Section 2.01(b)(i)
"WBCA" -- Section 1.01
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This AGREEMENT AND PLAN OF MERGER dated as of July 1, 1996
("this Agreement") is made and entered into by and among CRANE CO., a Delaware
corporation ("Parent"), CRANE ACQUISITION CORP., a Washington corporation wholly
owned by Parent ("Sub"), and INTERPOINT CORPORATION, a Washington corporation
(the "Company").
WHEREAS, Parent and the Company have determined to engage in a
business combination with respect to the microelectronics business of the
Company, and Sub has been formed to participate in such business combination;
WHEREAS, in furtherance thereof, the respective Boards of
Directors of Parent, the Company and Sub have approved the merger of Sub with
and into the Company with the Company becoming a wholly owned subsidiary of
Parent (the "Merger") immediately following the pro rata distribution (the
"Spinoff") by the Company to its stockholders of all of the stock of Advanced
Digital Information Corporation ("Spinoff Sub"), all pursuant to the terms and
conditions set forth in this Agreement and agreements or arrangements to be
entered into between the Company and Spinoff Sub (the "Spinoff Agreements"), the
essential terms of which have been described in a memorandum heretofore
distributed by the Company to Parent (the "Spinoff Memorandum") providing for
the deconsolidation of the Company and Spinoff Sub, including, without
limitation, the restructuring of outstanding stock options which currently
relate only to the shares of the Company;
WHEREAS, the Board of Directors of Parent has determined that
the Merger is in furtherance of and consistent with its business strategies and
is in the best interests of Parent's stockholders, and the Board of Directors of
the Company has determined that the Merger and the Spinoff are in the best
interests of the Company's stockholders;
WHEREAS, for federal income tax purposes, it is intended that
(a) the Spinoff be a transaction that qualifies under Section 355 of the
Internal Revenue Code of 1986, as amended (the "Code") and (b) the Merger shall
qualify as a reorganization within the meaning of Section 368(a) of the Code;
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and
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sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
THE MERGER AND SPINOFF
1.01 The Merger. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time (as defined in Section 1.03), Sub shall
be merged with and into the Company in accordance with the Washington Business
Corporation Act, Title 23B of the Revised Code of Washington (the "WBCA"). At
the Effective Time, the separate existence of Sub shall cease and the Company
shall continue as the surviving corporation in the Merger (the "Surviving
Corporation"). Sub and the Company are sometimes referred to herein as the
"Constituent Corporations". As a result of the Merger, the outstanding shares of
capital stock of the Constituent Corporations shall be converted or cancelled in
the manner provided in Article II.
1.02 Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 8.01, and subject to the satisfaction or waiver (where applicable) of
the conditions set forth in Article VII, the closing of the Merger (the
"Closing") will take place at the offices of Perkins Coie, 1201 Third Avenue,
Seattle, Washington 98101, at 10:00 a.m., local time, as soon as practicable,
but no later than the fifth (5th) business day, following satisfaction of the
condition set forth in Section 7.01(a), unless another date, time or place is
agreed to in writing by the parties hereto (the "Closing Date"). At the Closing
there shall be delivered to Parent, Sub and the Company the certificates and
other documents and instruments required to be delivered under Article VII.
1.03 Effective Time. At the Closing, the articles of merger
substantially in the form of Exhibit B hereto (the "Articles of Merger") shall
be executed by the Company in its capacity as the Surviving Corporation, and
such Articles of Merger, to which a plan of merger shall be attached, shall be
delivered to the Secretary of State of the State of Washington (the "Secretary
of State") for filing as provided in RCW 23B.11.050 of the WBCA on the Closing
Date. The Merger shall become effective at the date and time stated in the
Articles of Merger (the "Effective Time").
1.04 Articles of Incorporation and Bylaws of the Surviving
Corporation. At the Effective Time, (i) the Articles of Incorporation of Sub, as
amended by the Articles of Merger, shall be the Articles of Incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
Articles of Incorporation, and (ii) the Bylaws of Sub shall be the Bylaws of the
Surviving Corporation until thereafter amended
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as provided by law, the Articles of Incorporation of the Surviving Corporation
and such Bylaws.
1.05 Directors and Officers of the Surviving Corporation. The
directors of Sub and the officers of Sub immediately prior to the Effective Time
shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors shall have
been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's Articles
of Incorporation and Bylaws.
1.06 Effects of the Merger. Subject to the foregoing,
the effects of the Merger shall be as provided in the applicable provisions of
the WBCA.
1.07 Further Assurances. Each party hereto will, either prior
to or after the Effective Time, execute such further documents, instruments,
deeds, bills of sale, assignments and assurances and take such further actions
as may reasonably be requested by one or more of the others to consummate the
Merger, to vest the Surviving Corporation with full title to all assets,
properties, rights, approvals, immunities and franchises of either of the
Constituent Corporations or to effect the other purposes of this Agreement.
1.08 The Spinoff. The Spinoff shall occur prior to the
Effective Time in accordance with the terms of this Agreement and the Spinoff
Agreements.
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof:
(a) Capital Stock of Sub. Each issued and outstanding share of
the common stock, without par value, of Sub ("Sub Common Stock") shall be
converted into and become one fully paid and nonassessable share of common
stock, without par value, of the Surviving Corporation ("Surviving Corporation
Common Stock"). Each certificate representing outstanding shares of Sub Common
Stock shall at the Effective Time represent an equal number of shares of
Surviving Corporation Common Stock.
(b) Exchange Ratio for Company Common Stock. (i) Each issued
and outstanding share of common stock, without par value, of the Company
("Company Common Stock") (other than Dissenting Shares (as defined in Section
2.01(c))) shall be converted into the right to receive the number (the
"Conversion Number") of fully paid and nonassessable shares of voting common
stock, par
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value $1.00 per share, of Parent ("Parent Common Stock") represented by a
fraction determined by dividing the Aggregate Share Distribution Amount (as
defined below) by the product of (x) the Average Price (as hereinafter defined)
and (y) the number of shares of Company Common Stock outstanding immediately
prior to the Effective Time. The Aggregate Share Distribution Amount shall be
$59 million, less (i) the aggregate principal amount of interest-bearing
indebtedness of the Company and the Subsidiaries outstanding immediately prior
to the Effective Time, plus accrued and unpaid interest thereon, as reduced by
the principal amount of the Apex Microtechnology Corp. note, and (ii) the net
amount of intercompany advances made by the Company to Spinoff Sub subsequent to
April 30, 1996 from any source other than the indebtedness referred to in clause
(i) hereof and outstanding immediately prior to the Effective Time, excluding
only amounts advanced to satisfy a management service charge of $10,000 per
month which the Company has prior to April 30, 1996 customarily provided for
through intercompany advances but including the fair market value of property
other than cash, excluding (A) all of the Company's interest in Spinoff Sub
Europe and Visual Technologies, Limited and (B) any additional property (other
than cash) to be transferred by the Company to Spinoff Sub pursuant to the
Spinoff Agreements and approved by Parent. The "Average Price" shall be equal to
the arithmetic average of the Sales Price (as hereinafter defined) for the ten
(10) consecutive Trading Days (as hereinafter defined) ending on (and including)
the Trading Day immediately preceding the Closing Date. The term "Sales Price"
shall mean, on any Trading Day, the closing sales price of Parent Common Stock
reported on the New York Stock Exchange, Inc. ("NYSE") Composite Tape on such
day. The term "Trading Day" shall mean any day on which securities are traded on
the NYSE.
(ii) All shares of Company Common Stock converted in
accordance with paragraph (i) of this Section 2.01(b) shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares shall cease
to have any rights with respect thereto, except the right to receive the shares
of Parent Common Stock and any cash in lieu of fractional shares of Parent
Common Stock to be issued or paid in consideration therefor (determined in
accordance with Section 2.02(e)), upon the surrender of such certificate in
accordance with Section 2.02, without interest.
(c) Dissenting Shares. (i) Notwithstanding any provision of
this Agreement to the contrary, each outstanding share of Company Common Stock
which is held by a holder who has properly preserved and perfected such holder's
right to dissent in accordance with the applicable provisions of the WBCA and
has not effectively withdrawn or lost such right to dissent (a "Dissenting
Share"), shall not be converted into or represent a right to receive shares of
Parent Common Stock pursuant to Section 2.01(b), but the holder thereof shall be
entitled only to
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such rights to payment as are granted by the applicable provisions of the WBCA
solely from the Surviving Corporation and not from Parent; provided, however,
that any Dissenting Share held by a person at the Effective Time who shall,
after the Effective Time, withdraw such person's dissent, or lose the right to
dissent, in either case pursuant to the WBCA, shall be deemed to be converted
into, as of the Effective Time, the right to receive shares of Parent Common
Stock pursuant to Section 2.01(b).
(ii) The Company shall give Parent (x) prompt notice of any
written notice of dissent, withdrawals of dissent and any other instruments
served pursuant to the applicable provisions of the WBCA relating to the dissent
process received by the Company and (y) the opportunity to direct all
negotiations and proceedings with respect to such dissent under the WBCA. The
Company will not voluntarily make any payment with respect to any dissent and
will not, except with the prior written consent of Parent, settle or offer to
settle any related demand for the payment of fair value for the Dissenting
Share.
(d) Stock Options. On or before the Closing Date, the Company
shall have terminated all stock option plans or other plans or arrangements for
the issuance of capital stock of the Company (the "Company Option Plans") and as
of the Closing Date there shall be no options or other rights to acquire capital
stock of the Company. The Company hereby agrees to use its best efforts to cause
stock options or other rights to acquire capital stock of the Company issued and
outstanding to be validly satisfied in full and terminated in exchange for cash
payments. In no event shall Parent provide any funds hereunder for the
extinguishment of options.
(e) Parent Rights. Each share of Parent Common Stock issued to
holders of Company Common Stock in the Merger shall be issued together with one
associated Parent Right (as defined in Section 4.02(a)) in accordance with the
Parent Rights Agreement (as defined in Section 4.02(a)). References herein to
the shares of Parent Common Stock issuable in the Merger shall be deemed to
include the associated Parent Rights.
2.02 Exchange of Certificates.
(a) Exchange Agent. Promptly following the Effective Time,
Parent shall make available to the Surviving Corporation for deposit with a bank
or trust company designated before the Closing Date by Parent and reasonably
acceptable to the Company (the "Exchange Agent"), certificates representing the
number of duly authorized whole shares of Parent Common Stock issuable in
connection with the Merger plus an amount of cash equal to the aggregate amount
payable in lieu of fractional shares in accordance with Section 2.02(e), to be
held for the benefit of and distributed to such holders in accordance with this
Section. The Exchange Agent shall agree to hold such shares of Parent
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Common Stock and funds (such shares of Parent Common Stock and funds, together
with earnings thereon, being referred to herein as the "Exchange Fund") for
delivery as contemplated by this Section and upon such additional terms as may
be agreed upon by the Exchange Agent, the Company and Parent.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall cause the Exchange
Agent to mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates") whose shares are converted pursuant to
Section 2.01(b) into the right to receive shares of Parent Common Stock (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as the Surviving Corporation may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock and cash in lieu of
fractional shares. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal duly executed and
completed in accordance with its terms, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of Parent Common Stock, plus the cash amount payable in lieu of
fractional shares in accordance with Section 2.02(e), which such holder has the
right to receive pursuant to the provisions of this Article II, and the
Certificate so surrendered shall forthwith be canceled. In no event shall the
holder of any Certificate be entitled to receive interest on any funds to be
received in the Merger. In the event of a transfer of ownership of Company
Common Stock which is not registered in the transfer records of the Company, a
certificate representing that number of whole shares of Parent Common Stock,
plus the cash amount payable in lieu of fractional shares in accordance with
Section 2.02(e), may be issued to a transferee if the Certificate representing
such Company Common Stock is presented to the Exchange Agent accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.02(b), each Certificate shall be deemed at any
time after the Effective Time for all corporate purposes of Parent, except as
limited by paragraph (c) below, to represent ownership of the number of shares
of Parent Common Stock into which the number of shares of Company Common Stock
shown thereon have been converted as contemplated by this Article II.
Notwithstanding the foregoing, Certificates representing Company Common Stock
surrendered for exchange by any person constituting an "affiliate" of the
Company for purposes of Section 6.04 shall not be exchanged until Parent has
received an Affiliate Agreement (as defined in Section 6.04) as provided in
Section 6.04.
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(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock with a record date on or after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.02(e)
until the holder of record of such Certificate shall surrender such Certificate
in accordance with this Section. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions, if any, with a record
date on or after the Effective Time which theretofore became payable, but which
were not paid by reason of the immediately preceding sentence, with respect to
such whole shares of Parent Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date on or
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 2.02(e)) shall be deemed to have been issued at the
Effective Time in full satisfaction of all rights pertaining to the shares of
Company Common Stock represented thereby. From and after the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Section.
(e) No Fractional Shares. No certificate or scrip representing
fractional shares of Parent Common Stock will be issued in the Merger upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any rights of a stockholder of
Parent. In lieu of any such fractional shares, each holder of Company Common
Stock who would otherwise have been entitled to a fraction of a share of Parent
Common Stock in exchange for Certificates pursuant to this Section shall receive
from the Exchange Agent a cash payment in lieu of such fractional share
determined by multiplying (A) the arithmetic average of the Sales Price of a
whole share of Company Common Stock for the ten (10) consecutive Trading Days
ending on (and including) the Trading Day immediately preceding the Closing Date
by (B) the
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fractional share interest to which such holder would otherwise be entitled. Such
payment with respect to fractional shares is merely intended to provide a
mechanical rounding off of, and is not separately bargained for, consideration.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the stockholders of the Company for six (6)
months after the Effective Time shall be delivered to Parent, upon demand, and
any stockholders of the Company who have not theretofore complied with this
Article II shall thereafter look only to Parent (subject to abandoned property,
escheat and other similar laws) as general creditors for payment of their claim
for Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to Parent Common Stock.
Neither Parent nor the Surviving Corporation shall be liable to any holder of
shares of Company Common Stock for shares of Parent Common Stock (or dividends
or distributions with respect thereto) or cash payable in respect of fractional
share interests delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
3.01 Organization and Qualification. Each of the Company and
its Subsidiaries is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has full
corporate power and authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties. Each of the
Company and its Subsidiaries is duly qualified, licensed or admitted to do
business and is in good standing in each jurisdiction in which the ownership,
use or leasing of its assets and properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary, except for
such failures to be so qualified, licensed or admitted and in good standing
which, individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect (as defined in Section
9.11) on the Company and its Subsidiaries taken as a whole. Section 3.01 of the
letter dated the date hereof and delivered to Parent and Sub by the Company
concurrently with the execution and delivery of this Agreement (the "Company
Disclosure Letter") sets forth (i) the name and jurisdiction of incorporation of
each Subsidiary of the Company, (ii) its authorized capital stock, (iii) the
number of issued and outstanding shares of capital stock and (iv) the record
owners of such shares. Except for interests in Spinoff Sub, the Subsidiaries of
the Company and as disclosed in
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Section 3.01 of the Company Disclosure Letter, the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
The Company has previously delivered to Parent correct and complete copies of
the certificate or articles of incorporation and bylaws (or other comparable
charter documents) of the Company and each of its Subsidiaries. The Company has
made available to Parent prior to the execution of this Agreement the minute
books and other similar records of the Company which contain a true and complete
record, in all material respects, of all action taken at all meetings and by all
written consents in lieu of meetings of the stockholders, the boards of
directors and committees of the boards of directors of the Company since January
1, 1991.
3.02 Capital Stock. (a) The authorized capital stock of the
Company consists solely of 20,000,000 shares of Company Common Stock and 500,000
shares of preferred stock, par value $1.00 per share ("Company Preferred
Stock"). As of the close of business on June 26, 1996 and after giving effect to
the two-for-one stock split effective June 28, 1996, 7,931,598 shares of Company
Common Stock were issued and outstanding and 857,080 shares were reserved for
issuance pursuant to Company Option Plans. Since June 26, 1996, except as set
forth in Section 3.02 of the Company Disclosure Letter, there has been no change
in the number of issued and outstanding shares of Company Common Stock or shares
of Company Common Stock reserved for issuance. As of the date hereof, no shares
of Company Preferred Stock are issued and outstanding. All of the issued and
outstanding shares of Company Common Stock are, and all shares reserved for
issuance will be, upon issuance in accordance with the terms specified in the
instruments or agreements pursuant to which they are issuable, duly authorized,
validly issued, fully paid and nonassessable. Except pursuant to this Agreement
and except as set forth in Section 3.02 of the Company Disclosure Letter, there
are no outstanding subscriptions, options, warrants, rights (including "phantom"
stock rights), preemptive rights or other contracts, commitments, understandings
or arrangements, including any right of conversion or exchange under any
outstanding security, instrument or agreement (together, "Options"), obligating
the Company or any of its Subsidiaries to issue or sell any shares of capital
stock of the Company or to grant, extend or enter into any Option with respect
thereto.
(b) Except as disclosed in Section 3.02 of the Company
Disclosure Letter, all of the outstanding shares of capital stock of each
Subsidiary of the Company are duly authorized, validly issued, fully paid and
nonassessable and are owned, beneficially and of record, by the Company or a
Subsidiary wholly owned, directly or indirectly, by the Company, free and clear
of any liens, claims, mortgages, encumbrances, pledges, security interests,
equities and charges of any kind (each a "Lien").
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Except as disclosed in Section 3.02 of the Company Disclosure Letter, there are
no (i) outstanding Options obligating the Company or any of its Subsidiaries to
issue or sell any shares of capital stock of any Subsidiary of the Company or to
grant, extend or enter into any such Option or (ii) voting trusts, proxies or
other commitments, understandings, restrictions or arrangements in favor of any
person other than the Company or a Subsidiary wholly owned, directly or
indirectly, by the Company with respect to the voting of or the right to
participate in dividends or other earnings on any capital stock of any
Subsidiary of the Company.
(c) Except as disclosed in Section 3.02 of the Company
Disclosure Letter, there are no outstanding contractual obligations of the
Company or any Subsidiary of the Company to repurchase, redeem or otherwise
acquire any shares of Company Common Stock or any capital stock of any
Subsidiary of the Company or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any Subsidiary of the
Company or any other person.
3.03 Authority Relative to this Agreement. The Company has
full corporate power and authority to enter into this Agreement and the Spinoff
Agreements and, subject to obtaining the Company Stockholders' Approval (as
defined in Section 6.03(b)), to perform its obligations hereunder and to
consummate the transactions contemplated hereby including, without limitation,
the Spinoff. The execution, delivery and performance of this Agreement and the
Spinoff Agreements by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby have been or in the case of the
Spinoff Agreements, will be duly and validly approved by the Board of Directors
of the Company; the Board of Directors of the Company has resolved to recommend
adoption of this Agreement by the stockholders of the Company and directed that
this Agreement be submitted to the stockholders of the Company for their
consideration, and no other corporate proceedings on the part of the Company or
its stockholders are necessary to authorize the execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby, other than obtaining the Company
Stockholders' Approval. This Agreement has been, and the Spinoff Agreements when
entered into will be, duly and validly executed and delivered by the Company
and, subject to the obtaining of the Company Stockholders' Approval, each
constitutes or will constitute a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
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3.04 Non-Contravention; Approvals and Consents. Except as
disclosed in Section 3.04 of the Company Disclosure Letter, (a) The execution
and delivery of this Agreement and the Spinoff Agreements by the Company do not,
and the performance by the Company of its obligations hereunder and thereunder
and the consummation of the transactions contemplated hereby and thereby will
not, conflict with, result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under, result in or give to
any person any right of payment or reimbursement, termination, cancellation,
modification or acceleration of, or result in the creation or imposition of any
Lien upon any of the assets or properties of the Company or any of its
Subsidiaries, including Spinoff Sub, under, any of the terms, conditions or
provisions of (i) the certificates or articles of incorporation or bylaws (or
other comparable charter documents) of the Company or any of its Subsidiaries,
including Spinoff Sub, or (ii) subject to the obtaining of the Company
Stockholders' Approval and the taking of the actions described in paragraph (b)
of this Section, (x) any statute, law, rule, regulation or ordinance (together,
"laws"), or any judgment, decree, order, writ, permit or license (together,
"orders"), of any court, tribunal, arbitrator, authority, agency, commission,
official or other instrumentality of the United States, any foreign country or
any domestic or foreign state, county, city or other political subdivision (a
"Governmental or Regulatory Authority") applicable to the Company or any of its
Subsidiaries, including Spinoff Sub, or any of their respective assets or
properties, or (y) any note, bond, mortgage, security agreement, indenture,
license, franchise, permit, concession, contract, lease or other instrument,
obligation or agreement of any kind (together, "Contracts") to which the Company
or any of its Subsidiaries, including Spinoff Sub, is a party or by which the
Company or any of its Subsidiaries, including Spinoff Sub, or any of their
respective assets or properties is bound, excluding from the foregoing clauses
(x) and (y) conflicts, violations, breaches, defaults, terminations,
modifications, accelerations and creations and impositions of Liens which,
individually or in the aggregate, could not be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole or
on the ability of the Company to consummate the transactions contemplated by
this Agreement.
(b) Except (i) for the filing of a premerger notification
report by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act"), (ii)
for the filing of the Proxy Statement (as defined in Section 3.09) and the
Registration Statement (as defined in Section 4.06) with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder (the "Exchange Act"), and
the Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), the declaration of the effectiveness of the Registration
Statement by the SEC and filings with various
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state securities authorities that are required in connection with the
transactions contemplated by this Agreement, (iii) for the filing of the
Articles of Merger and other appropriate merger documents required by the WBCA
with the Secretary of State and appropriate documents with the relevant
authorities of other states in which the Constituent Corporations are qualified
to do business, (iv) for the filing of the Registration Statement on Form 10
(the "Form 10") with the SEC pursuant to the Exchange Act in connection with the
Spinoff and the declaration of the effectiveness of the Form 10 by the SEC, and
(v) as disclosed in Section 3.04 of the Company Disclosure Letter, no consent,
approval or action of, filing with or notice to any Governmental or Regulatory
Authority or other public or private third party is necessary or required under
any of the terms, conditions or provisions of any law or order of any
Governmental or Regulatory Authority or any Contract to which the Company or any
of its Subsidiaries, including Spinoff Sub, is a party or by which the Company
or any of its Subsidiaries, including Spinoff Sub, or any of their respective
assets or properties is bound for the execution and delivery of this Agreement
and the Spinoff Agreements by the Company, the performance by the Company of its
obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby, other than such consents, approvals, actions,
filings and notices which the failure to make or obtain, as the case may be,
individually or in the aggregate, could not be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole or
on the ability of the Company to consummate the transactions contemplated by
this Agreement and the Spinoff Agreements. Section 3.04 of the Company
Disclosure Letter sets forth (a) the procedure required to effect the transfer
of the nominee shares issued by Interpoint Taiwan Corporation ("Taiwan Sub") and
(b) any consents, approvals or actions of, filings with or notice to any
Governmental or Regulatory Authority or other public or private third party
necessary or required with respect to Taiwan Sub in connection with the
transactions contemplated by this Agreement.
(c) The Company and each of its Subsidiaries are in compliance
with all laws and orders governing the importing or exporting of goods and
services into or out of the United States, and all good manufacturing practice
standards established by the EPA, OSHA, FDA or any other Governmental or
Regulatory Authority. Without limitation as to the foregoing, neither the
Company nor any of its Subsidiaries, including Spinoff Sub, nor any of their
respective agents or representatives, have taken or omitted to take any action,
which constitutes a violation of the Foreign Corrupt Practices Act of 1977, as
amended, 15 U.S.C. Section 78dd.
3.05 SEC Reports and Financial Statements. The Company
delivered or made available to Parent prior to the execution of this Agreement,
a true and complete copy of each form, report, schedule, registration statement,
definitive proxy statement and other document (together with all amendments
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thereof, supplements thereto and documents incorporated therein by reference)
filed by the Company or any of its Subsidiaries with the SEC since October 31,
1993 (as such documents have since the time of their filing been amended or
supplemented, the "Company SEC Reports"), which are all the documents (other
than preliminary material) that the Company and its Subsidiaries were required
to file with the SEC since such date. As of their respective dates, the Company
SEC Reports (i) complied as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial statements and unaudited
interim consolidated financial statements (including, in each case, the notes,
if any, thereto) included in the Company SEC Reports (the "Company Financial
Statements") complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated therein or in the
notes thereto and except with respect to unaudited statements as permitted by
Form 10-Q of the SEC) and fairly present (subject, in the case of the unaudited
interim financial statements, to normal, recurring year-end audit adjustments
(which are not expected to be, individually or in the aggregate, materially
adverse to the Company and its Subsidiaries taken as a whole)) the consolidated
financial position of the Company and its consolidated subsidiaries as at the
respective dates thereof and the consolidated results of their operations and
cash flows for the respective periods then ended. Except as set forth in Section
3.05 of the Company Disclosure Letter, each Subsidiary, including Spinoff Sub,
of the Company is treated as a consolidated subsidiary of the Company in the
Company Financial Statements for all periods covered thereby.
3.06 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Reports filed prior to the date of this Agreement, (a) since
April 30, 1996 there has not been any change, event or development having, or
that could be reasonably expected to have, individually or in the aggregate, a
material adverse effect on the Company and its Subsidiaries taken as a whole,
and (b) except as disclosed in Section 3.06 of the Company Disclosure Letter,
between such date and the date hereof (i) the Company and its Subsidiaries,
including Spinoff Sub, have conducted their respective businesses only in the
ordinary course consistent with past practice and (ii) neither the Company nor
any of its Subsidiaries, including Spinoff Sub, has taken any action which, if
taken after the date hereof, would constitute a breach of any provision of
clause (ii) of Section 5.01(b).
3.07 Absence of Undisclosed Liabilities. Except for
matters reflected or reserved against in the balance sheet for
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the period ended April 30, 1996 included in the Company Financial Statements or
as disclosed in Section 3.07 of the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries, including Spinoff Sub, had at such date, or
has incurred since that date, any liabilities or obligations (whether absolute,
accrued, contingent, fixed or otherwise, or whether due or to become due) of any
nature that would be required by generally accepted accounting principles to be
reflected on a consolidated balance sheet of the Company and its consolidated
subsidiaries (including the notes thereto), except liabilities or obligations
(i) which were incurred in the ordinary course of business consistent with past
practice or (ii) which have not been, and could not be reasonably expected to
be, individually or in the aggregate, materially adverse to the Company and its
Subsidiaries taken as a whole.
3.08 Legal Proceedings. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement or in Section 3.08 of the
Company Disclosure Letter, (i) there are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of the Company, threatened against,
relating to or affecting, nor are there any Governmental or Regulatory Authority
investigations or audits pending or to the knowledge of the Company threatened
against, relating to or affecting, the Company or any of its Subsidiaries,
including Spinoff Sub, or any of their respective assets and properties which,
individually or in the aggregate, could be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole or
on the ability of the Company to consummate the transactions contemplated by
this Agreement, and (ii) neither the Company nor any of its Subsidiaries,
including Spinoff Sub, is subject to any order of any Governmental or Regulatory
Authority which, individually or in the aggregate, is having or could be
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Company to consummate the
transactions contemplated by this Agreement.
3.09 Information Supplied. The proxy statement relating to the
Company Stockholders' Meeting (as defined in Section 6.03), as amended or
supplemented from time to time (as so amended and supplemented, the "Proxy
Statement"), the Form 10 and any other documents to be filed by the Company with
the SEC or any other Governmental or Regulatory Authority in connection with the
Merger, the Spinoff and the other transactions contemplated hereby will (in the
case of the Proxy Statement, Form 10 and any such other documents filed with the
SEC under the Exchange Act or the Securities Act) comply as to form in all
material respects with the requirements of the Exchange Act and the Securities
Act, respectively, and will not, on the date of its filing or, in the case of
the Proxy Statement, at the date it is mailed to stockholders and at the time of
the Company Stockholders' Meeting, in the case of the Form 10, at the time it
becomes effective under the Exchange Act, contain any untrue
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statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to information supplied in
writing by or on behalf of Parent or Sub expressly for inclusion therein and
information incorporated by reference therein from documents filed by Parent or
any of its Subsidiaries with the SEC.
3.10 Compliance with Laws and Orders. The Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental and Regulatory Authorities necessary for the
lawful conduct of their respective businesses (the "Company Permits"), except
for failures to hold such permits, licenses, variances, exemptions, orders and
approvals which, individually or in the aggregate, are not having and could not
be reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole. The Company and its Subsidiaries are in
compliance with the terms of the Company Permits, except failures so to comply
which, individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole. Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement, the Company and its Subsidiaries are
not in violation of or default under any law or order of any Governmental or
Regulatory Authority, except for such violations or defaults which, individually
or in the aggregate, are not having and could not be reasonably expected to have
a material adverse effect on the Company and its Subsidiaries taken as a whole.
3.11 Compliance with Agreements; Certain Agreements. Except as
disclosed in the Company SEC Reports filed prior to the date of this Agreement,
neither the Company nor any of its Subsidiaries, including Spinoff Sub, nor, to
the knowledge of the Company, any other party thereto is in breach or violation
of, or in default in the performance or observance of any term or provision of,
and no event has occurred which, with notice or lapse of time or both, could be
reasonably expected to result in a default under, (i) the certificates or
articles of incorporation or bylaws (or other comparable charter documents) of
the Company or any of its Subsidiaries, including Spinoff Sub, or (ii) any
Contract to which the Company or any of its Subsidiaries, including Spinoff Sub,
is a party or by which the Company or any of its Subsidiaries or any of their
respective assets or properties is bound, except in the case of clause (ii) for
breaches, violations and defaults which, individually or in the aggregate, are
not having and could not be reasonably expected to have a material adverse
effect on the Company and its Subsidiaries taken as a whole.
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3.12 Taxes.
3.12.1 DEFINITIONS
(a) Taxes. "Taxes" means any federal, state, county, local or
foreign taxes, charges, fees, levies, other assessments, or withholding taxes or
charges imposed by any governmental entity, and includes any interest and
penalties (civil or criminal) on or additions to any taxes.
(b) Tax Return. "Tax Return" means a report, return or other
information (including any amendments) required to be supplied to a governmental
entity by the Company with respect to Taxes including, where permitted or
required, combined or consolidated returns for any group of entities that
includes the Company.
(c) Company. For purposes of this section Company means the
Company and each Subsidiary, including Spinoff Sub, of the Company.
3.12.2 REPRESENTATIONS
3.12.2.1 Tax Return Filings. Except as set forth in Section
3.12.2.1 of the Company Disclosure Letter, the Company has filed all Tax Returns
(or the Tax Returns have been filed on behalf of the Company) required to be
filed by applicable law prior to the Closing Date. All Tax Returns were (and, as
to Tax Returns not filed as of the date hereof, will be) true, complete and
correct in all material respects and filed on a timely basis. The Company (i)
has paid all Taxes that are due for the periods covered by the Tax Returns or
(ii) has duly and fully provided reserves adequate to pay all Taxes in
accordance with GAAP.
3.12.2.2 Tax Reserves. Except as set forth in Section 3.12.2.2
of the Company Disclosure Letter, the Company has maintained on its books and
records reserves adequate to pay all Taxes not yet due and payable.
3.12.2.3 Tax Liens. Except as set forth in Section 3.12.2.3 of
the Company Disclosure Letter, there are no Tax liens upon the assets of the
Company except liens for Taxes not yet due.
3.12.2.4 Withholding Taxes. Except as set forth in Section
3.12.2.4 of the Company Disclosure Letter, the Company has complied in all
material respects with all applicable laws, rules, and regulations relating to
the payment and withholding of Taxes (including withholding and reporting
requirements under Code Sections 1441 through 1464, 3401 through 3406, 6041
and 6049 and similar provisions under any other laws) and has, within the time
and in the manner prescribed by law, withheld from employee wages and paid over
to the proper governmental authorities all required amounts.
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3.12.2.5 Extensions of Time for Filing Returns. Except as set
forth in Section 3.12.2.5 of the Company Disclosure Letter, the Company has not
requested (and no request has been made on its behalf) any extension of time
within which to file any Tax Return.
3.12.2.6 Waivers of Statute of Limitations. Except as set
forth in Section 3.12.2.6 of the Company Disclosure Letter, the Company has not
executed any outstanding waivers or comparable consents regarding the
application of the statute of limitations for any Taxes or Tax Returns (and no
extensions have been executed on its behalf).
3.12.2.7 Expiration of Statute of Limitations. Except as set
forth in Section 3.12.2.7 of the Company Disclosure Letter, (i) Tax Returns have
been examined by the appropriate taxing authorities for the 1992-1993 taxable
year; and (ii) no deficiency for any Taxes has been suggested, proposed,
asserted or assessed against the Company that has not been resolved and paid in
full.
3.12.2.8 Audit, Administrative and Court Proceedings. Except
as set forth in Section 3.12.2.8 of the Company Disclosure Letter, no audits or
other administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of the Company.
3.12.2.9 Tax Rulings. Except as set forth in Section 3.12.2.9
of the Company Disclosure Letter, the Company has not received any written
ruling of a taxing authority relating to Taxes, or any other written and legally
binding agreement with a taxing authority relating to Taxes.
3.12.2.10 Availability of Tax Returns and Associated Work
Papers. Company has made available (or, in the case of Tax Returns to be filed
on or before the Closing Date, will make available) to Parent complete and
accurate copies of all Tax Returns and associated work papers filed by or on
behalf of the Company for all taxable years ending on or prior to the Closing
Date.
3.12.2.11 Tax Sharing Agreements. Except for complete and
accurate copies of tax sharing agreements provided to Parent, no agreements
relating to allocating or sharing of Taxes exist among Company and any
Subsidiaries. The Company shall not amend any tax sharing agreements, or other
arrangements to which the Company is a party prior to the Closing.
3.12.2.12 Code Section 341(f). Except as set forth in Section
3.12.2.12 of the Company Disclosure Letter, the Company has not filed (and will
not file prior to the Closing Date) a consent pursuant to Code Section 341(f) or
agreed to have Code Section 341(f)(2) apply to any disposition of a subsection
(f) asset.
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3.12.2.13 Code Section 481 Adjustments. Except as set forth in
Section 3.12.2.13 of the Company Disclosure Letter, the Company is not required
to include in income any adjustment pursuant to Code Section 481(a) by reason of
a voluntary change in accounting method initiated by the Company, and the
Internal Revenue Service has not proposed an adjustment or change in accounting
method.
3.12.2.14 Code Section 280G. Except as set forth in Section
3.12.2.14 of the Company Disclosure Letter, the Company is not a party to any
agreement, contract, or arrangement that would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Code Section 280G.
3.12.2.15 Code Sections 6661 and 6662. All transactions
that could give rise to an understatement of federal income tax (within the
meaning of Code Section 6661 for Tax Returns filed on or before December 31,
1989, and within the meaning of Code Section 6662 for tax returns filed after
December 31, 1989) by the Company have been adequately disclosed on the
Company's Tax Returns in accordance with Code Section 6661(b)(2)(B) for Tax
Returns filed on or prior to December 31, 1989, and in accordance with Code
Section 6662(d)(2)(B) for Tax Returns filed after December 31, 1989.
3.13 Employee Benefit Plans; ERISA.
(a) Section 3.13(a) of the Company Disclosure Letter (i)
contains a true and complete list and description of each Benefit Plan, (ii)
identifies each Benefit Plan that is a Qualified Plan, (iii) identifies each
Benefit Plan which at any time during the five-year period preceding the date of
this Agreement was a Defined Benefit Plan and (iv) lists, describes and
identifies each other Plan maintained, established, sponsored or contributed to
by an ERISA Affiliate, or any predecessor thereof, which, during the five-year
period preceding the date of this Agreement, was at any time a Defined Benefit
Plan. Neither the Company, Spinoff Sub nor any Subsidiary of the Company has
scheduled or agreed upon future increases of benefit levels (or creations of new
benefits) with respect to any Benefit Plan, and no such increases or creation of
benefits have been proposed, made the subject of representations to employees or
requested or demanded by employees under circumstances which make it reasonable
to expect that such increases will be granted.
(b) Neither the Company, Spinoff Sub nor any Subsidiary of the
Company maintains or is obligated to provide benefits under any life, medical or
health plan (other than as an incidental benefit under a Qualified Plan) which
provides benefits to retirees or other terminated employees other than benefits
mandated by applicable law, including, but not limited to, continuation coverage
required to be provided under Section 4980B of the Code or Sections 601 through
609 of ERISA.
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(c) Neither the Company, Spinoff Sub, any Subsidiary of the
Company nor any ERISA Affiliate has at any time contributed to any
"multiemployer plan", as that term is defined in Section 4001 of ERISA.
(d) Except as set forth in Section 3.13(d) of the Company
Disclosure Letter, each of the Benefit Plans is, and its administration is and
has been since inception, in all material respects in compliance with, and
neither the Company, Spinoff Sub nor any Subsidiary of the Company has received
any claim or notice that any such Benefit Plan is not in material compliance
with, all applicable laws and orders and prohibited transactions exemptions,
including the requirements of ERISA, the Code, the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), the Age Discrimination in
Employment Act, the Equal Pay Act and Title VII of the Civil Rights Act of 1964.
Each Qualified Plan is qualified under Section 401(a) of the Code, and, if
applicable, complies with the requirements of Section 401(k) of the Code.
(e) Neither the Company, Spinoff Sub nor any Subsidiary of the
Company is in default in performing any of its contractual obligations under any
Benefit Plan or any related trust agreement or insurance contract. All
contributions and other payments required to be made by the Company, Spinoff Sub
or any Subsidiary of the Company to any Benefit Plan with respect to any period
ending before or at or including the Closing Date have been made or reserves
adequate for such contributions or other payments have been or will be set aside
therefor and have been or will be reflected in financial statements in
accordance with GAAP. There are no material outstanding liabilities of any
Benefit Plan other than liabilities for benefits to be paid to participants in
such Benefit Plan and their beneficiaries in accordance with the terms of such
Benefit Plan.
(f) No event has occurred, and there exists no condition or
set of circumstances in connection with any Benefit Plan, under which the
Company, the Surviving Corporation, Spinoff Sub or any Subsidiary of the
Company, directly or indirectly (through any indemnification agreement or
otherwise), could reasonably be expected to be subject to a material liability
under Section 409 of ERISA, Section 502(i) of ERISA or Section 4975 of the Code.
(g) No transaction contemplated by this Agreement will result
in material liability to the PBGC under Section 4062, 4063, 4064 or 4069 of
ERISA, or otherwise, with respect to any Benefit Plan by the Company, the
Surviving Corporation, Spinoff Sub or any Subsidiary of the Company or ERISA
Affiliate, and no event or condition exists or has existed which could
reasonably be expected to result in any such liability with respect to any such
corporation or organization. No "reportable event" within the meaning of Section
4043 of ERISA has occurred with respect to any Subject Defined Benefit Plan. No
termination
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re-establishment or spin-off re-establishment transaction has occurred with
respect to any material Subject Defined Benefit Plan. No Subject Defined Benefit
Plan has incurred any accumulated funding deficiency whether or not waived. No
filing has been made and no proceeding has been commenced for the complete or
partial termination of, or withdrawal from, any Qualified Plan.
(h) Except as set forth in Section 3.13(h) of the Company
Disclosure Letter, no benefit under any Benefit Plan, including, without
limitation, any severance or parachute payment plan or agreement, will be
established or become accelerated, vested, funded or payable by reason of any
transaction contemplated under this Agreement.
(i) Except as set forth in Section 3.13(i) of the Company
Disclosure Letter, to the knowledge of the Company, other than routine claims
for benefits, there are no pending or threatened claims by or on behalf of any
Benefit Plan, by any person covered thereby, or otherwise, which allege
violations of law which could reasonably be expected to result in material
liability on the part of the Company, any Subsidiary of the Company or any
fiduciary (with respect to whom the Company or any Subsidiary of the Company has
an indemnification obligation) of any such Benefit Plan, nor is there any
reasonable basis for such a claim, nor are there any ongoing IRS, DOL or other
agency audits or investigations of any Benefit Plans.
(j) Except as set forth in Section 3.13(j) of the Company
Disclosure Letter, no employer securities, employer real property or other
employer property is included in the assets of any Benefit Plan.
(k) The fair market value of the assets of each Subject
Defined Benefit Plan, as determined as of the last day of the plan year of such
plan which coincides with or first precedes the date of this Agreement, was not
materially less than the present value of the accumulated benefit obligations
under such plan at such date as established on the basis of the actuarial
assumptions applicable under such Subject Defined Benefit Plan at said date and,
to the knowledge of the Company, there have been no material changes in such
values since said date.
(l) Complete and correct copies of the following documents
have been furnished to Parent prior to the execution of this Agreement:
(i) the Company Savings & Investment Plan 401K, and any
related agreements thereto;
(ii) current summary Plan descriptions of each Benefit Plan
subject to ERISA, and any similar descriptions of all other Benefit
Plans;
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(iii) the most recent Form 5500 series filings and schedules
thereto for each Benefit Plan subject to ERISA reporting requirements;
(iv) the most recent determination of the Internal Revenue
Service with respect to the qualified status of each Qualified Plan;
(v) the most recent accountings with respect to any Benefit
Plan funded through a trust; and
(vi) the most recent actuarial report of the qualified actuary
of any Subject Defined Benefit Plan or any other Benefit Plan with
respect to which actuarial valuations are conducted.
(m) For purposes of this Agreement, the following terms shall
have the following meanings:
(i) "Benefit Plan" means any Plan, existing at the Closing
Date, maintained by the Company or any Subsidiary of the Company, or
by Spinoff Sub, to which the Company or any Subsidiary of the Company
or Spinoff Sub contributes or has contributed, or under which any
employee, former employee or director of the Company or any Subsidiary
of the Company or Spinoff Sub or any beneficiary thereof is covered,
is eligible for coverage or has benefit rights due to such
individual's status as an employee, former employee or director of the
Company or any Subsidiary of the Company or Spinoff Sub.
(ii) "Defined Benefit Plan" means each Benefit Plan which is
subject to Part 3 of Title I of ERISA (other than a money purchase
pension plan), Section 412 of the Code (other than a money purchase
pension plan) or Title IV of ERISA (other than a money purchase
pension plan).
(iii) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations promulgated
thereunder.
(iv) "ERISA Affiliate" means any person who is in the same
controlled group of corporations or who is under common control with
the Company or, before the Closing, the Company or any Subsidiary,
including Spinoff Sub, of the Company (within the meaning of Section
414(b) or (c) of the Code).
(v) "GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and in the
immediately prior comparable period.
(vi) "PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA.
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(vii) "Plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase,
stock option, stock ownership, stock appreciation rights, phantom
stock, leave of absence, layoff, vacation, day or dependent care,
legal services, cafeteria, life, health, accident, disability,
workmen's compensation or other insurance, severance, separation or
other employee benefit plan, practice, policy or arrangement of any
kind, whether written or oral, including, but not limited to, any
"employee benefit plan" within the meaning of Section 3(3) of ERISA.
(viii) "Qualified Plan" means each Benefit Plan which is
intended to qualify under Section 401(a) of the Code.
(ix) "Subject Defined Benefit Plan" means each Defined Benefit
Plan listed and described in Section 3.13(a) of the Company Disclosure
Letter.
3.14 Labor Matters. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement or in Section 3.14 of the
Company Disclosure Letter, there are no material controversies pending or, to
the knowledge of the Company, threatened between the Company or any of its
Subsidiaries and any of its employees or their representatives and, to the
knowledge of the Company, there are no material organizational efforts presently
being made involving any of the now unorganized employees of the Company or any
of its Subsidiaries. Since January 1, 1993, there has been no work stoppage,
strike or other concerted action by employees of the Company or any of its
Subsidiaries.
3.15 Environmental Matters. (a) Each of the Company and its
Subsidiaries, including Spinoff Sub, has obtained all licenses, permits,
authorizations, registrations, approvals and consents from Governmental or
Regulatory Authorities which are required under any applicable Environmental Law
(as defined below) in respect of its business or operations ("Environmental
Permits"). Each of such Environmental Permits is in full force and effect and
each of the Company and its Subsidiaries, including Spinoff Sub, is in
compliance with the terms and conditions of all such Environmental Permits and
with any applicable Environmental Law.
(b) No site or facility now or previously owned, operated or
leased by the Company or any of its Subsidiaries, including Spinoff Sub, is
listed or proposed for listing on the National Priorities List promulgated
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, and the rules and regulations thereunder ("CERCLA"), or
on any similar state or local list of sites requiring investigation or clean-up.
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(c) No Liens have arisen under or pursuant to any
Environmental Law on any site or facility now or previously owned, operated or
leased by the Company or any of its Subsidiaries, including Spinoff Sub, and no
action of any Governmental or Regulatory Authority has been taken or is in
process which could subject any of such properties to such Liens, and neither
the Company nor any of its Subsidiaries, including Spinoff Sub, would be
required to place any notice or restriction relating to the presence of
Hazardous Materials at any such site or facility owned by it in any deed to the
real property on which such site or facility is located.
(d) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by, or which are in the
possession of, the Company or any of its Subsidiaries, including Spinoff Sub, in
relation to any site or facility now or previously owned, operated or leased by
the Company or any of its Subsidiaries, including Spinoff Sub, which have not
been delivered to Parent prior to the execution of this Agreement.
(e) There has been no release or disposal of Hazardous
Materials at, on, under, from, to or in connection with (i) the Company or any
of its Subsidiaries, including Spinoff Sub, or (ii) any site or facility now or
previously owned, operated or leased by the Company or any of its Subsidiaries,
including Spinoff Sub, or (iii) any off-site location, such as a landfill.
(f) There is no Environmental Claim pending, or to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries, including Spinoff Sub.
(g) There is no asbestos, PCBs or underground storage tank at
any site or facility currently owned or leased by the Company or any of its
Subsidiaries, including Spinoff Sub.
(h) As used herein:
(i) "Environmental Law" means any law or order of any
Governmental or Regulatory Authority, or any interpretation thereof,
relating to the regulation or protection of human health, safety or
the environment or to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic
or hazardous substances or wastes into the environment (including,
without limitation, ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata), or otherwise relating to the
manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes; and
(ii) "Hazardous Material" means (A) any petroleum or petroleum
products, flammable explosives, radioactive
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materials, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation and transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated
biphenyls (PCBs); (B) any chemicals or other materials or substances
which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants" or words of similar
import under any Environmental Law; and (C) any other chemical or
other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated by any Governmental or Regulatory
Authority under any Environmental Law.
(iii) "Environmental Claim" means any written notice by any
person alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property
damages, personal injuries or penalties) arising out of, based on or
relating to (A) the presence, or release into the environment, of any
Hazardous Materials or (B) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
3.16 Intellectual Property Rights. Section 3.16 of the Company
Disclosure Letter provides a true and correct list of all patents and patent
rights, trademarks and trademark rights, copyrights and copyright rights and all
pending applications for and registrations of any of the foregoing owned or used
by the Company or a Subsidiary of the Company. The Company and each Subsidiary
of the Company has all right, title and interest in, or a valid, binding and
enforceable license to use all of the Intellectual Property owned or used by the
Company or such Subsidiary of the Company in its business or operations. The
Company and each Subsidiary of the Company has the right to use all Intellectual
Property necessary to conduct its business as currently conducted and as
proposed to be conducted. Neither the Company nor any Subsidiary of the Company
is in default (or with the giving of notice or lapse of time or both, would be
in default) under any license to use or contract regarding such Intellectual
Property, such Intellectual Property is not being infringed by any third party,
and neither the Company nor any Subsidiary of the Company is infringing or has
received notice that it is infringing any Intellectual Property of any third
party, and no claim is pending or, to the knowledge of the Company, has been
made to such effect that has not been resolved. Except as disclosed in Section
3.16 of the Company Disclosure Letter, (i) the Company and each of its
Subsidiaries has the exclusive right to use its Intellectual Property, (ii) all
registrations with and applications to Governmental or Regulatory Authorities in
respect of its Intellectual Property are valid and in full force and effect and
are not subject to the payment of any taxes or maintenance fees or the taking of
any other actions
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by the Company or a Subsidiary of the Company to maintain their validity or
effectiveness, (iii) there are no restrictions on the direct or indirect
transfer of any contract, or any interest therein, held by the Company or any
Subsidiary of the Company in respect of its Intellectual Property, and (iv) the
Company and the Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of their trade secrets and other
proprietary information or materials not patentable or otherwise protected as a
trade secret. For purposes of this Agreement, "Intellectual Property" means
patents and patent rights, trademarks and trademark rights, trade names and
trade name rights, service marks and service mark rights, service names and
service name rights, brand names, inventions, processes, formulae, copyrights
and copyright rights, trade dress, business and product names, logos, slogans,
trade secrets, industrial models, processes, designs, methodologies, computer
programs (including all source codes) and related documentation, technical
information, manufacturing, engineering and technical drawings, know-how and
other proprietary intellectual property rights and all pending applications for
and registrations of any of the foregoing.
3.17 Vote Required. (a) The affirmative vote of the holders of
record of at least two-thirds of the outstanding shares of Company Common Stock
with respect to the adoption of this Agreement is the only vote of the holders
of any class or series of the capital stock of the Company required to adopt
this Agreement and approve the Merger and the other transactions contemplated
hereby.
(b) The Company has obtained an undertaking from each of
Walter P. Kistler, John W. Stanton and Peter H. van Oppen that they will vote
all of their shares of Company Common Stock owned on the record date of the
Merger in favor of the Merger.
3.18 Insurance. Section 3.18 of the Company Disclosure Letter
sets forth an accurate and complete list and description of coverage of all
policies of or binders for casualty, liability, property, worker's compensation
and other forms of insurance owned or held by the Company and its Subsidiaries
and all pending or, to the knowledge of the Company, threatened, claims
thereunder. Except as set forth in Section 3.18 of the Company Disclosure
Letter, each of the Company and its Subsidiaries is, and continuously since at
least April 30, 1993, has been, insured with reputable insurers against all
risks and in such amounts normally insured against by companies of the same type
and in the same line of business as the Company and its Subsidiaries. Except as
set in Section 3.18 of the Company Disclosure Letter, since April 30, 1993,
there have been no claims by the Company or its Subsidiaries under any insurance
policy.
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3.19 Ownership of Parent Common Stock. Neither the Company nor
any of its Subsidiaries or other affiliates beneficially owns any shares of
Parent Common Stock.
3.20 Article XII of the Company's Articles of Incorporation
and State Takeover Laws. The Company has taken all necessary actions so that
this Agreement, the Merger or the other transactions contemplated hereby or
thereby shall be exempt from the requirements of any "moratorium," "control
share," "fair price" or other anti-takeover laws or regulations of any state as
well as Article XII of the Company's Articles of Incorporation.
3.21 No Affiliated Transactions. After giving effect to the
Spinoff and the Merger, neither the Company nor any of its Subsidiaries will
have any agreement or arrangement with Spinoff Sub or any of its Subsidiaries
other than this Agreement and the Spinoff Agreements.
3.22 Spinoff Sub. Spinoff Sub designs, assembles and markets
automated data libraries for computer networks and work stations. Spinoff Sub
will not be in any way engaged in the micro-electronics business carried on by
the Company. Section 3.22 of the Company Disclosure Letter contains a pro forma
balance sheet of Spinoff Sub as of April 30, 1996.
3.23 Real Property. (a) Section 3.23(a) of the Company
Disclosure Letter contains a true and correct list of (i) each parcel of real
property owned by the Company or any Subsidiary of the Company, (ii) each parcel
or real property leased by the Company or any Subsidiary of the Company (as
lessor or lessee) and (iii) all Liens relating to or affecting any parcel of
real property referred to in clause (i).
(b) Except as disclosed in Section 3.23(b) of the Company
Disclosure Letter, the Company or a Subsidiary of the Company has good and
marketable fee simple title to each parcel of real property owned by it, free
and clear of all Liens. Except for the real property leased to others referred
to in clause (ii) of paragraph (a) above, the Company or a Subsidiary of the
Company is in possession of each parcel of real property owned by it, together
with all buildings, structures, facilities, fixtures and other improvements
thereon. The Company and the Subsidiaries have adequate rights of ingress and
egress with respect to the real property listed in Section 3.23(b) of the
Company Disclosure Letter and all buildings, structures, facilities, fixtures
and other improvements thereon. None of such real property, buildings,
structures, facilities, fixtures or other improvements, or the use thereof,
contravenes or violates any building, zoning, administrative, occupational
safety and health or other applicable Law in any material respect (whether or
not permitted on the basis of prior nonconforming use, waiver or variance).
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(c) The Company or a Subsidiary of the Company has a valid and
subsisting leasehold estate in and the right to quiet enjoyment of the real
properties leased by it for the full term of the lease thereof. Each lease
referred to in clause (ii) of paragraph (a) above is a legal, valid and binding
agreement, enforceable in accordance with its terms, of the Company or a
Subsidiary of the Company and of each other person that is a party hereto, and
except as set forth in Section 3.23(c) of the Company Disclosure Letter, there
is no, and neither the Company nor any Subsidiary of the Company has received
notice of any, default (or any condition or event which, after notice or lapse
of time or both, would constitute a default) thereunder. Neither the Company nor
any Subsidiary of the Company owes any brokerage commissions with respect to any
such leased space.
(d) Except as disclosed in Section 3.23(d) of the Company
Disclosure Letter, no tenant or other party in possession of any of the real
properties owned by the Company and the Subsidiaries, has any right to purchase,
or holds any right of first refusal to purchase, such properties.
(e) Except as disclosed in Section 3.23(e) of the Company
Disclosure Letter, the improvements on the real property are in good operating
condition and in a state of good maintenance and repair, ordinary wear and tear
excepted, are adequate and suitable for the purposes for which they are
presently being used and, to the knowledge of Company, there are no condemnation
or appropriation proceedings pending or threatened against any of such real
property or the improvements thereon.
3.24 Contracts. (a) Section 3.24 of the Company Disclosure
Letter (with paragraph references corresponding to those set forth below)
contains a true and complete list of each of the following Contracts (true and
complete copies or, if none, reasonably complete and accurate written
descriptions of which, together with all amendments and supplements thereto,
have been delivered or made available to Parent prior to the execution of this
Agreement), to which the Company or any Subsidiary of the Company is a party or
by which any of their respective assets and properties is bound:
(i) all Contracts (excluding Benefit Plans) providing for a
commitment of employment or consultation services for a specified or
unspecified term or otherwise relating to employment or the
termination of employment, the name, position and rate of compensation
of each person party to such a Contract and the expiration date of
each such Contract;
(ii) all Contracts with any person containing any provision or
covenant prohibiting or materially limiting the ability of the Company
or any Subsidiary of the Company to engage in any business activity or
compete with any person
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or prohibiting or materially limiting the ability of any person to
compete with the Company or any Subsidiary of the Company;
(iii) all partnership, joint venture, shareholders' or other
similar Contracts with any person;
(iv) all Contracts relating to indebtedness of the Company or
any Subsidiary of the Company in excess of
$25,000;
(v) all Contracts with distributors, dealers, manufacturer's
representatives, customers, sales agencies or franchisees which in any
case involve the payment or potential payment, pursuant to the terms
of any such Contract, by or to the Company or any Subsidiary of the
Company of more than $25,000 annually;
(vi) all Contracts relating to (A) the future disposition or
acquisition of any assets and properties individually or in the
aggregate material to the business or condition of the Company, and
(B) any merger or other business combination;
(vii) all Contracts between or among the Company or any
Subsidiary of the Company, on the one hand, and any officer, director
or Affiliate (other than the Company or any Subsidiary) of the
Company, on the other hand, and providing for annual payments by or to
the Company or any Subsidiary of the Company exceeding $25,000;
(viii) all collective bargaining or similar labor Contracts;
(ix) all Contracts (other than this Agreement) that (A) limit
or contain restrictions on the ability of the Company or any
Subsidiary of the Company to declare or pay dividends on, to make any
other distribution in respect of or to issue or purchase, redeem or
otherwise acquire its capital stock, to incur Indebtedness, to incur
or suffer to exist any Lien, to purchase or sell any assets and
properties, to change the lines of business in which it participates
or engages or to engage in any merger or other business combination or
(B) require the Company or any Subsidiary of the Company to maintain
specified financial ratios or levels of net worth or other indicia of
financial condition; and
(x) all other Contracts (other than Benefit Plans, leases
listed in and insurance policies listed in Section 3.18 of the Company
Disclosure Letter that (A) involve the payment or potential payment,
pursuant to the terms of any such Contract, by or to the Company or
any Subsidiary of the Company of more than $25,000 annually and (B)
cannot be
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terminated within thirty (30) days after giving notice of termination
without resulting in any substantial cost or penalty to the Company or
any Subsidiary of the Company.
(b) Each Contract required to be disclosed in Section 3.24(a)
of the Company Disclosure Letter is in full force and effect and constitutes a
legal, valid and binding agreement, enforceable in accordance with its terms, of
the Company or a Subsidiary of the Company and, to the knowledge of the Company,
of each other party thereto; and except as disclosed in Section 3.24(b) of the
Company Disclosure Letter neither the Company, any Subsidiary of the Company
nor, to the knowledge of the Company, any other party to such Contract is in
violation or breach of or default under any such Contract (or with notice or
lapse of time or both, would be in violation or breach of or default under any
such Contract), the effect of which, individually or in the aggregate, could
reasonably be expected to be materially adverse to the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
4.01 Organization and Qualification. Each of Parent and Sub is
a corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has full corporate power and
authority to conduct its business as and to the extent now conducted and to own,
use and lease its assets and properties. Sub was formed solely for the purpose
of engaging in the transactions contemplated by this Agreement, has engaged in
no other business activities and has conducted its operations only as
contemplated hereby. Each of Parent and Sub is duly qualified, licensed or
admitted to do business and is in good standing in each jurisdiction in which
the ownership, use or leasing of its assets and properties, or the conduct or
nature of its business, makes such qualification, licensing or admission
necessary, except for such failures to be so qualified, licensed or admitted and
in good standing which, individually or in the aggregate, are not having and
could not be reasonably expected to have a material adverse effect on Parent and
its Subsidiaries taken as a whole.
4.02 Capital Stock. The authorized capital stock of Parent
consists solely of 80,000,000 shares of Parent Common Stock and 5,000,000 shares
of preferred stock, par value $.01 per share ("Parent Preferred Stock"). As of
June 25, 1996, 30,364,464 shares of Parent Common Stock were issued and
outstanding and 17,920,462 shares were held in the treasury of Parent. Since
such date, except as set forth in Section 4.02 of the letter dated the date
hereof and delivered by Parent to the
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Company concurrently with the execution and delivery of this Agreement (the
"Parent Disclosure Letter"), there has been no change in the number of issued
and outstanding shares of Parent Common Stock or shares of Parent Common Stock
held in treasury or reserved for issuance since such date. As of the date
hereof, no shares of Parent Preferred Stock are issued and outstanding and
250,000 shares are designated Series A Junior Participating Preferred Stock
("Parent Series A Preferred Stock") and are reserved for issuance in accordance
with the Preferred Share Purchase Rights Agreement dated as of July 27, 1988, as
amended, by and between Parent and Morgan Shareholder Services Trust Company, as
Rights Agent (the "Parent Rights Agreement"), pursuant to which Parent has
issued rights (the "Parent Rights") to purchase shares of Parent Series A
Preferred Stock. All of the issued and outstanding shares of Parent Common Stock
are, and all shares reserved for issuance will be, upon issuance in accordance
with the terms specified in the instruments or agreements pursuant to which they
are issuable, duly authorized, validly issued, fully paid and nonassessable.
Except (i) for Options issued pursuant to Parent's option arrangements disclosed
in Parent's SEC Reports, (ii) pursuant to this Agreement and the Parent Rights
Agreement and (iii) as set forth in Section 4.02 of the Parent Disclosure
Letter, there are no outstanding Options obligating Parent or any of its
Subsidiaries to issue or sell any shares of capital stock of Parent or to grant,
extend or enter into any Option with respect thereto.
4.03 Authority Relative to this Agreement. Each of Parent and
Sub has full corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by each of Parent and Sub and the consummation by each of Parent and Sub of the
transactions contemplated hereby have been duly and validly approved by its
Board of Directors and by Parent in its capacity as the sole stockholder of Sub,
and no other corporate proceedings on the part of either of Parent or Sub or
their stockholders are necessary to authorize the execution, delivery and
performance of this Agreement by Parent and Sub and the consummation by Parent
and Sub of the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent and Sub and constitutes a
legal, valid and binding obligation of each of Parent and Sub enforceable
against each of Parent and Sub in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.04 Non-Contravention; Approvals and Consents. (a) The
execution and delivery of this Agreement by each of Parent and Sub do not, and
the performance by each of Parent and
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Sub of its obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under,
result in or give to any person any right of payment or reimbursement,
termination, cancellation, modification or acceleration of, or result in the
creation or imposition of any Lien upon any of the assets or properties of
Parent under, any of the terms, conditions or provisions of (i) the certificates
or articles of incorporation or bylaws (or other comparable charter documents)
of Parent, or (ii) subject to the taking of the actions described in paragraph
(b) of this Section, (x) any laws or orders of any Governmental or Regulatory
Authority applicable to Parent or any of its assets or properties, or (y) any
Contracts to which Parent is a party or by which Parent or any of its assets or
properties is bound, excluding from the foregoing clauses (x) and (y) conflicts,
violations, breaches, defaults, terminations, modifications, accelerations and
creations and impositions of Liens which, individually or in the aggregate,
could not be reasonably expected to have a material adverse effect on Parent and
its Subsidiaries taken as a whole or on the ability of Parent and Sub to
consummate the transactions contemplated by this Agreement.
(b) Except (i) for the filing of a premerger notification
report by Parent under the HSR Act, (ii) for the filing of the Proxy Statement,
Registration Statement and Form 10 with the SEC pursuant to the Exchange Act and
the Securities Act, the declaration of the effectiveness of the Registration
Statement and Form 10 by the SEC and filings with various state securities
authorities that are required in connection with the transactions contemplated
by this Agreement, (iii) for the filing of the Articles of Merger and other
appropriate merger documents required by the WBCA with the Secretary of State
and appropriate documents with the relevant authorities of other states in which
the Constituent Corporations are qualified to do business, and (iv) as disclosed
in Section 4.04 of the Parent Disclosure Letter, no consent, approval or action
of, filing with or notice to any Governmental or Regulatory Authority or other
public or private third party is necessary or required under any of the terms,
conditions or provisions of any law or order of any Governmental or Regulatory
Authority or any Contract to which Parent is a party or by which Parent or any
of its assets or properties is bound for the execution and delivery of this
Agreement by each of Parent and Sub, the performance by each of Parent and Sub
of its obligations hereunder or the consummation of the transactions
contemplated hereby, other than such consents, approvals, actions, filings and
notices which the failure to make or obtain, as the case may be, individually or
in the aggregate, could not be reasonably expected to have a material adverse
effect on Parent and its Subsidiaries taken as a whole or on the ability of
Parent and Sub to consummate the transactions contemplated by this Agreement.
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4.05 SEC Reports and Financial Statements. Parent has made
available to the Company prior to the execution of this Agreement a true and
complete copy of each form, report, schedule, registration statement, definitive
proxy statement and other document (together with all amendments thereof and
supplements thereto) filed by Parent with the SEC since December 31, 1993 (as
such documents have since the time of their filing been amended or supplemented,
the "Parent SEC Reports"), which are all the documents (other than preliminary
material) that Parent was required to file with the SEC since such date. As of
their respective dates, the Parent SEC Reports (i) complied as to form in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The audited consolidated financial
statements and unaudited interim consolidated financial statements (including,
in each case, the notes, if any, thereto) included in the Parent SEC Reports
(the "Parent Financial Statements") complied as to form in all material respects
with the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to unaudited statements
as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case
of the unaudited interim financial statements, to normal, recurring year-end
audit adjustments (which are not expected to be, individually or in the
aggregate, materially adverse to Parent and its Subsidiaries taken as a whole))
the consolidated financial position of Parent and its consolidated subsidiaries
as at the respective dates thereof and the consolidated results of their
operations and cash flows for the respective periods then ended. Except as set
forth in Section 4.05 of the Parent Disclosure Letter, each Significant
Subsidiary of Parent is treated as a consolidated subsidiary of Parent in the
Parent Financial Statements for all periods covered thereby.
4.06 Information Supplied. The registration statement on Form
S-4 to be filed with the SEC by Parent in connection with the issuance of shares
of Parent Common Stock in the Merger, as amended or supplemented from time to
time (as so amended and supplemented, the "Registration Statement"), and any
other documents to be filed by Parent with the SEC or any other Governmental or
Regulatory Authority in connection with the Merger and the other transactions
contemplated hereby will (in the case of the Registration Statement and any such
other documents filed with the SEC under the Securities Act or the Exchange Act)
comply as to form in all material respects with the requirements of the Exchange
Act and the Securities Act, respectively, and will not, on the date of its
filing or, in the case of the Registration Statement, at the time it becomes
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effective under the Securities Act, at the date the Proxy Statement is mailed to
stockholders and at the time of the Company Stockholders' Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, except
that no representation is made by Parent or Sub with respect to information
supplied in writing by or on behalf of the Company expressly for inclusion
therein and information incorporated by reference therein from documents filed
by Parent with the SEC.
4.07 Ownership of Company Common Stock. Neither Parent nor any
of its Subsidiaries beneficially owns any shares of Company Common Stock.
ARTICLE V
COVENANTS
5.01 Covenants of the Company and Parent. At all times from
and after the date hereof until the Effective Time, the Company and, solely
where indicated below, Parent, each covenants and agrees as to itself and its
Subsidiaries that (except as expressly contemplated or permitted by this
Agreement, or to the extent that the other parties hereto shall otherwise
previously consent in writing):
(a) Ordinary Course. The Company and each of its Subsidiaries
shall conduct their respective businesses only in, and none of the Company and
such Subsidiaries shall take any action except in, the ordinary course
consistent with past practice.
(b) Without limiting the generality of paragraph (a) of this
Section, (i) the Company and its Subsidiaries shall use all commercially
reasonable efforts to preserve intact in all material respects their present
business organizations and reputation, to keep available the services of their
key officers and employees, to maintain their assets and properties in good
working order and condition, ordinary wear and tear excepted, to maintain
insurance on their tangible assets and businesses in such amounts and against
such risks and losses as are currently in effect, to preserve their
relationships with customers and suppliers and others having significant
business dealings with them and to comply in all material respects with all laws
and orders of all Governmental or Regulatory Authorities applicable to them, and
(ii) the Company shall not, nor shall it permit any of its Subsidiaries to,
except as otherwise expressly provided for in this Agreement:
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(A) amend or propose to amend its articles of incorporation or
bylaws (or other comparable corporate charter documents);
(B) (w) declare, set aside or pay any dividends on or make
other distributions in respect of any of its capital stock, (x) split,
combine, reclassify or take similar action with respect to any of its
capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for
shares of its capital stock, (y) adopt a plan of complete or partial
liquidation or resolutions providing for or authorizing such
liquidation or a dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization or (z) directly or indirectly
redeem, repurchase or otherwise acquire any shares of its capital
stock or any Option with respect thereto;
(C) issue, deliver, sell or exchange, or authorize or propose
the issuance, delivery, sale or exchange of, any shares of its capital
stock or any Options with respect thereto, other than (v) the issuance
or exchange of capital stock necessary for the extinguishment of
Options and the termination of Company Option Plans solely as provided
in Section 2.01(d), provided that the Company may only issue shares of
Company Common Stock after using its best efforts to cash-out options
as provided in Section 2.01(d), or (w) the issuance by a wholly owned
Subsidiary of its capital stock to its parent corporation;
(D) acquire (by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner) any business or any
corporation, partnership, association or other business organization
or division thereof or otherwise acquire or agree to acquire any
assets other than in the ordinary course of its business consistent
with past practice;
(E) other than dispositions in the ordinary course of its
business consistent with past practice, sell, lease, grant any
security interest in or otherwise dispose of or encumber any of its
assets or properties;
(F) except to the extent required by applicable law, (x)
permit any material change in (A) any pricing, marketing, purchasing,
investment, accounting, financial reporting, inventory, credit,
allowance or tax practice or policy or (B) any method of calculating
any bad debt, contingency or other reserve for accounting, financial
reporting or tax purposes or (y) make any material tax election or
settle or compromise any material income tax liability with any
Governmental or Regulatory Authority;
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(G) (x) incur any indebtedness for borrowed money or guarantee
any such indebtedness, or (y) voluntarily purchase, cancel, prepay or
otherwise provide for a complete or partial discharge in advance of a
scheduled repayment date with respect to, or waive any right under,
any indebtedness for borrowed money other than in the ordinary course
of its business consistent with past practice; provided, however, that
the Company may incur indebtedness to fund the cash needs of Spinoff
Sub and to fund the retirement of the outstanding options;
(H) enter into, adopt, amend (except as may be required by
applicable law) or terminate any Company Employee Benefit Plan or
other agreement, arrangement, plan or policy between such party or one
of its Subsidiaries and one or more of its directors, officers or
employees, or increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not
required by any plan or arrangement in effect as of the date hereof;
(I) enter into any Contract or amend or modify any existing
Contract, or engage in any new transaction outside the ordinary course
of business consistent with past practice or not on an arm's length
basis, with any affiliate of such party or any of its Subsidiaries;
(J) make any capital expenditures or commitments for additions
to plant, property or equipment constituting capital assets in excess
of $25,000, not to exceed $75,000 in the aggregate;
(K) make any change in the lines of business in which it
participates or is engaged; or
(L) enter into any Contract, commitment or arrangement to do
or engage in any of the foregoing.
(c) Advice of Changes. Each of Parent, the Company and Sub
shall confer on a regular and frequent basis with the other with respect to its
business and operations and other matters relevant to the Merger, and shall
promptly advise the other, orally and in writing, of any change or event,
including, without limitation, any complaint, investigation or hearing by any
Governmental or Regulatory Authority (or communication indicating the same may
be contemplated) or the institution or threat of litigation, having, or which,
insofar as can be reasonably foreseen, could have, a material adverse effect on
the Company or Parent, as the case may be, and its Subsidiaries taken as a whole
or on the ability of the Company or Parent, as the case may be, to consummate
the transactions contemplated hereby; provided that no party shall be required
to make any disclosure to the extent such disclosure would constitute a
violation of any applicable law.
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(d) Notice and Cure. Each of Parent and the Company will
notify the other of, and will use all commercially reasonable efforts to cure
before the Closing, any event, transaction or circumstance, as soon as practical
after it becomes known to such party, that causes or will cause any covenant or
agreement of Parent or the Company under this Agreement to be breached or that
renders or will render untrue any representation or warranty of Parent or the
Company contained in this Agreement. Each of Parent and the Company also will
notify the other in writing of, and will use all commercially reasonable efforts
to cure, before the Closing, any violation or breach, as soon as practical after
it becomes known to such party, of any representation, warranty, covenant or
agreement made by Parent or the Company. No notice given pursuant to this
paragraph shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein.
(e) Fulfillment of Conditions. Subject to the terms and
conditions of this Agreement, each of Parent and the Company will take or cause
to be taken all commercially reasonable steps necessary or desirable and proceed
diligently and in good faith to satisfy each condition to the other's
obligations contained in this Agreement and to consummate and make effective the
transactions contemplated by this Agreement, and neither Parent nor the Company
will, nor will it permit any of its Subsidiaries to, take or fail to take any
action that could be reasonably expected to result in the nonfulfillment of any
such condition.
5.02 No Solicitations. Prior to the Effective Time, the
Company agrees (a) that neither it nor any of its Subsidiaries shall, and it
shall cause their respective Representatives (as defined in Section 9.11) not
to, directly or indirectly, initiate, solicit or encourage, or take any other
action to facilitate any inquiries or the making or implementation of any
proposal or offer (including, without limitation, any proposal or offer to its
stockholders) with respect to a recapitalization, merger, consolidation or other
business combination including the Company or any of its Subsidiaries or any
acquisition or similar transaction (including, without limitation, a tender or
exchange offer) involving the purchase of (i) all or any significant portion of
the assets of the Company or its Subsidiaries, (ii) 5% or more of the
outstanding shares of Company Common Stock or (iii) 5% of the outstanding shares
of the capital stock of any Subsidiary of the Company (any such proposal or
offer being hereinafter referred to as an "Alternative Proposal"), or engage or
participate in any negotiations concerning, or provide any information or data
to, or have any discussions with, or otherwise cooperate with any person or
group relating to an Alternative Proposal (excluding the transactions
contemplated by this Agreement), or otherwise facilitate any effort or attempt
to make or implement an Alternative Proposal; (b) that it will immediately cease
and
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cause to be terminated any existing activities, discussions or negotiations with
any parties with respect to any of the foregoing, and it will take the necessary
steps to inform such parties of its obligations under this Section; and (c) that
it will notify Parent immediately if any such inquiries, proposals or offers are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, it or any of such
persons; provided, however, that nothing contained in this Section 5.02 shall
prohibit the Board of Directors of the Company from furnishing information to
(but only pursuant to a confidentiality agreement in customary form and having
terms and conditions no less favorable to the Company than the Confidentiality
Agreement (as defined in Section 6.01)) or entering into discussions or
negotiations with any person or group that makes an unsolicited bona fide
Alternative Proposal, if, and only to the extent that, (A) the Board of
Directors of the Company, based upon the written opinion of outside legal
counsel (a copy of which shall be provided promptly to Parent), determines in
good faith that such action is required for the Board of Directors to comply
with its fiduciary duties to stockholders imposed by law, (B) such Alternative
Proposal is not conditioned on the receipt of financing, the Board of Directors
has reasonably concluded in good faith that the person or group making such
Alternative Proposal will have adequate sources of financing to consummate such
Alternative Proposal and that such Acquisition Proposal is more favorable to the
Company's stockholders than the Merger, (C) prior to furnishing such information
to, or entering into discussions or negotiations with, such person or group, the
Company provides written notice to Parent to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or group, and (D) the Company keeps Parent informed of the status and all
material information with respect to any such discussions or negotiations.
Nothing in this Section 5.02 shall (x) permit the Company to terminate this
Agreement (except as specifically provided in Article VIII), (y) permit the
Company to enter into any agreement (other than a confidentiality agreement
under the circumstances described above), including without limitation an
agreement in principle, or make any public announcement with respect to an
Alternative Proposal for so long as this Agreement remains in effect, or (z)
affect any other obligation of the Company under this Agreement. It is hereby
agreed that, notwithstanding anything herein to the contrary, the Company shall
not enter into any agreement (including an agreement in principle) with any
person or group that provides for, or in any way facilitates, an Alternative
Proposal (other than a confidentiality agreement under the circumstances
described above) or make any public announcement with respect thereto unless and
until this Agreement is validly terminated pursuant to Article VIII and the
Company pays Parent the termination fee provided for in Section 8.02(b).
5.03 Conduct of Business of Sub. Prior to the Effective Time,
except as may be required by applicable law and
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subject to the other provisions of this Agreement, Parent shall cause Sub to (a)
perform its obligations under this Agreement in accordance with its terms, (b)
not incur directly or indirectly any liabilities or obligations other than those
incurred in connection with the Merger, (c) not engage directly or indirectly in
any business or activities of any type or kind and not enter into any agreements
or arrangements with any person, or be subject to or bound by any obligation or
undertaking, which is not contemplated by this Agreement and (d) not create,
grant or suffer to exist any Lien upon its properties or assets which would
attach to any properties or assets of the Surviving Corporation after the
Effective Time.
5.04 Third Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, neither the Company nor
any of its Subsidiaries shall terminate, amend, modify or waive any provision of
any confidentiality or standstill agreement to which it is a party. During such
period, the Company shall enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreement, including, but not limited
to, by obtaining injunctions to prevent any breaches of such agreements and to
enforce specifically the terms and provisions thereof in any court having
jurisdiction.
5.05 Purchases of Common Stock of the Other Party. During the
period from the date hereof through the Effective Time, neither Parent nor any
of its Subsidiaries or other affiliates will purchase any shares of stock in the
Company, Spinoff Sub or any of the Company's Subsidiaries and neither the
Company nor any of its Subsidiaries or other affiliates will purchase any shares
of Parent Common Stock.
5.06 Spinoff. The Company shall take all actions as
may be necessary to effect the Spinoff as contemplated herein.
5.07 Spinoff Sub Transactions. The Company shall not, nor
permit any of its Subsidiaries to, transfer, or cause to be transferred, any
assets to Spinoff Sub or assume any liabilities, contingent or otherwise, of
Spinoff Sub, other than as expressly permitted by this Agreement, the Spinoff
Agreements and provided for in the pro forma balance sheet of Spinoff Sub
contained in Section 3.23 of the Company Disclosure Letter.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Access to Information; Confidentiality. The Company
shall, and shall cause each of its Subsidiaries to, throughout the period from
the date hereof to the Effective Time, (i) provide Parent and its
Representatives with full access, upon reasonable prior notice and during normal
business hours, to all
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officers, employees, agents and accountants of the Company and its Subsidiaries
and their respective assets, properties, books and records, but only to the
extent that such access does not unreasonably interfere with the business and
operations of the Company and its Subsidiaries, and (ii) furnish promptly to
such persons (x) a copy of each report, statement, schedule and other document
filed or received by the Company or any of its Subsidiaries pursuant to the
requirements of federal or state securities laws and each material report,
statement, schedule and other document filed with any other Governmental or
Regulatory Authority, and (y) all other information and data (including, without
limitation, copies of the Company's Contracts or Company Employee Benefit Plans,
and other books and records) concerning the business and operations of the
Company and its Subsidiaries as Parent or any of such other persons reasonably
may request. No investigation pursuant to this paragraph or otherwise shall
affect any representation or warranty contained in this Agreement or any
condition to the obligations of the parties hereto. Any such information or
material obtained pursuant to this Section 6.01 that constitutes Confidential
Information (as such term is defined in the Confidentiality Agreement dated as
of June 25, 1996 between the Company and Parent (the "Confidentiality
Agreement")) shall be governed by the terms of the Confidentiality Agreement.
6.02 Preparation of Registration Statement, Proxy Statement
and Form 10. The Company and Parent shall prepare and file with the SEC as soon
as reasonably practicable after the date hereof the Proxy Statement, Parent
shall prepare and file with the SEC as soon as reasonably practicable after the
date hereof the Registration Statement, in which the Proxy Statement will be
included as the prospectus and the Company shall prepare and file with the SEC
as soon as reasonably practicable after the date hereof the Form 10. Parent and
the Company shall use their best efforts to have the Registration Statement
declared effective by the SEC as promptly as practicable after such filing. The
Company shall use its best efforts to have the Form 10 declared effective by the
SEC as promptly as practicable after such filing. Parent shall also take any
action (other than qualifying as a foreign corporation or taking any action
which would subject it to service of process in any jurisdiction where Parent is
not now so qualified or subject) required to be taken under applicable state
blue sky or securities laws in connection with the issuance of Parent Common
Stock in connection with the Merger. If at any time prior to the Effective Time
any event shall occur that should be set forth in an amendment of or a
supplement to the Registration Statement or Form 10, Parent or the Company, as
the case may be, shall prepare and file with the SEC such amendment or
supplement as soon thereafter as is reasonably practicable. Parent, Sub and the
Company shall cooperate with each other in the preparation of the Registration
Statement, Form 10 and the Proxy Statement and any amendment or supplement
thereto, and each shall notify the other of the receipt of any comments of the
SEC with respect to the
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Registration Statement, Form 10 or the Proxy Statement and of any requests by
the SEC for any amendment or supplement thereto or for additional information,
and shall provide to the other promptly copies of all correspondence between
Parent or the Company, as the case may be, or any of its Representatives with
respect to the Registration Statement, Form 10 or the Proxy Statement. The
Company shall give Parent and its counsel the opportunity to review the Form 10
and all responses to requests for additional information by and replies to
comments of the SEC before their being filed with, or sent to, the SEC. Parent
shall give the Company and its counsel the opportunity to review the
Registration Statement and all responses to requests for additional information
by and replies to comments of the SEC before their being filed with, or sent to,
the SEC. Each of the Company, Parent and Sub agrees to use its best efforts,
after consultation with the other parties hereto, to respond promptly to all
such comments of and requests by the SEC and to cause (x) the Registration
Statement and Form 10 to be declared effective by the SEC at the earliest
practicable time and to be kept effective as long as is necessary to consummate
the Merger and the transactions contemplated hereby, and (y) the Proxy Statement
to be mailed to the holders of Company Common Stock entitled to vote at the
meeting of the stockholders of the Company at the earliest practicable time.
6.03 Approval of Stockholders. The Company shall, through its
Board of Directors, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders' Meeting") for the purpose of voting on
the adoption of this Agreement (the "Company Stockholders' Approval") as soon as
reasonably practicable after the date hereof. Subject to the exercise of
fiduciary obligations under applicable law as advised in writing by outside
counsel (a copy of which will be provided promptly to Parent), the Company
shall, through its Board of Directors, include in the Proxy Statement the
recommendation of the Board of Directors of the Company that the stockholders of
the Company adopt this Agreement, and shall use its best efforts to obtain such
adoption.
6.04 Company Affiliates. At least thirty (30) days prior to
the Closing Date the Company shall deliver a letter to Parent identifying all
persons who, at the time of the Company Stockholders' Meeting, may, in the
Company's reasonable judgment, be deemed to be "affiliates" (as such term is
used in Rule 145 under the Securities Act) of the Company ("Company
Affiliates"). The Company shall use its best efforts to cause each Company
Affiliate to deliver to Parent on or prior to the Closing Date a written
agreement substantially in the form and to the effect of Exhibit A hereto (an
"Affiliate Agreement"). Parent shall be entitled to place legends as specified
in such Affiliate Agreements on the certificates evidencing any Parent Common
Stock to be received by such Company Affiliates pursuant to the terms of this
Agreement, and to issue appropriate stop transfer
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instructions to the transfer agent for the Parent Common Stock, consistent with
the terms of such Affiliate Agreements.
6.05 Stock Exchange Listing. Parent shall use its best efforts to
cause the shares of Parent Common Stock to be issued in the Merger in accordance
with this Agreement to be approved for listing on the NYSE, subject to official
notice of issuance, prior to the Closing Date.
6.06 Outstanding Indebtedness. The Company shall establish a
separate segregated account (the "Segregated Account") into which the Company
shall deposit borrowings under its line of credit with Seafirst Bank for the
purpose of funding (i) the satisfaction of the outstanding options to purchase
Company Common Stock as contemplated herein, and (ii) payments in respect of
Dissenting Shares. Repayments of those borrowings shall be made by the Company
exclusively from funds generated by its operations. Parent and its affiliates
(other than the Company) will not pay, guarantee or secure the Segregated
Account indebtedness. Parent hereby agrees it will cause all borrowings of the
Company under its line of credit with Seafirst Bank (other than borrowings for
the Segregated Account) to be repaid as soon as practicable following the
Closing Date.
6.07 Regulatory and Other Approvals. Subject to the terms and
conditions of this Agreement and without limiting the provisions of Sections
6.02 and 6.03, each of the Company and Parent will proceed diligently and in
good faith to, as promptly as practicable, (a) obtain all consents, approvals or
actions of, make all filings with and give all notices to Governmental or
Regulatory Authorities or any other public or private third parties required of
Parent, the Company or any of their Subsidiaries to consummate the Merger and
the other matters contemplated hereby, and (b) provide such other information
and communications to such Governmental or Regulatory Authorities or other
public or private third parties as the other party or such Governmental or
Regulatory Authorities or other public or private third parties may reasonably
request in connection therewith. In addition to and not in limitation of the
foregoing, each of the parties will (x) take promptly all actions necessary to
make the filings required of Parent and the Company or their affiliates under
the HSR Act, (y) comply at the earliest practicable date with any request for
additional information received by such party or its affiliates from the Federal
Trade Commission (the "FTC") or the Antitrust Division of the Department of
Justice (the "Antitrust Division") pursuant to the HSR Act, and (z) cooperate
with the other party in connection with such party's filings under the HSR Act
and in connection with resolving any investigation or other inquiry concerning
the Merger or the other matters contemplated by this Agreement commenced by
either the FTC or the Antitrust Division or state attorneys general.
6.08 Employee Benefit Plans. The Company shall institute, and the
Surviving Corporation shall continue for at
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least two years following the Closing Date, a severance policy for the benefit
of key employees of the Company, who shall be chosen by the Chief Executive
Officer of the Company and agreed to by Parent, pursuant to which such key
employees who continue in the employ of the Surviving Corporation shall become
eligible for enhanced severance benefits in the event of their subsequent
termination of employment.
6.09 Company Option Plans. The Company shall take all actions as may
be necessary so that the Company Option Plans shall be terminated, and
outstanding options and other rights to acquire capital stock of the Company are
satisfied in full, prior to the Effective Time, pursuant to Section 2.01(d).
6.10 Directors' and Officers' Indemnification and Insurance. (a) The
Company, and from and after the Effective Time the Surviving Corporation (each,
an "Indemnifying Party"), shall, for a period of not less than the applicable
statute of limitations (and thereafter, for so long as any claims, actions or
proceedings commenced prior to such time are pending), indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, a director, officer or
employee of the Company or any of its Subsidiaries (the "Indemnified Parties")
against (i) all losses, claims, damages, costs and expenses, liabilities,
judgments and settlement amounts that are paid or incurred in connection with
any claim, action, suit, proceeding or investigation (whether asserted or
claimed prior to, at or after the Effective Time) that is based in whole or in
part on, or arises in whole or in part out of, the fact that such Indemnified
Party is or was a director, officer or employee of the Company or any of its
Subsidiaries and relates to or arises out of any action or omission occurring at
or prior to the Effective Time ("Indemnified Liabilities"), and (ii) all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
hereby, including the execution and performance of the voting undertaking
contemplated by Section 3.17(b), in each case to the full extent a corporation
is permitted under applicable law to indemnify its own directors, officers or
employees, as the case may be; provided that no Indemnifying Party shall be
liable for any settlement of any claim effected without its written consent,
which consent shall not be unreasonably withheld. Without limiting the
foregoing, in the event that any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Party (whether arising prior to
or after the Effective Time), (w) the Indemnifying Parties will, except for a
claim arising or based upon the gross negligence or willful misconduct of the
Indemnified Party, pay expenses in advance of the final disposition of any such
claim, action suit, proceeding or investigation to each Indemnified Party to the
full extent permitted by applicable law; provided that the person to whom
expenses are advanced provides any undertaking required by
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applicable law to repay such advance if it is ultimately determined that such
person is not entitled to indemnification; (x) the Indemnified Parties shall
retain counsel reasonably satisfactory to the Indemnifying Parties; (y) the
Indemnifying Parties shall pay all reasonable fees and expenses of such counsel
for the Indemnified Parties (subject to the final sentence of this paragraph)
promptly as statements therefor are received; and (z) the Indemnifying Parties
shall use all commercially reasonable efforts to assist in the vigorous defense
of any such matter. Any Indemnified Party wishing to claim indemnification under
this Section, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify the Indemnifying Parties, but the failure so to
notify an Indemnifying Party shall not relieve it from any liability which it
may have under this paragraph except to the extent such failure irreparably
prejudices such party. The Indemnified Parties as a group may retain only one
law firm to represent them with respect to each such matter unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
(b) The Surviving Corporation shall, until the second (2nd)
anniversary of the Effective Time, cause to be maintained in effect, to the
extent available, the policies of directors' and officers' liability insurance
maintained by the Company and its Subsidiaries as of the date hereof (or
policies of at least the same coverage and amounts containing terms that are no
less advantageous to the insured parties) with respect to claims arising from
facts or events that occurred on or prior to the Effective Time; provided that
if, such insurance is not available or in the business judgment of the then
Board of Directors of the Surviving Corporation, either (a) the premium cost for
such insurance is substantially disproportionate to the amount of coverage, or
(b) the coverage provided by such insurance is so limited by exclusions that
there is insufficient benefit from such insurance, then and in that event, the
Surviving Corporation shall not be required to maintain such insurance, but
Parent shall and hereby agrees to the full extent permitted by law to hold
harmless and indemnify the indemnified parties or provide coverage for such
indemnified parties under Parent's directors and officers liability insurance
maintained at such time to the fullest extent of the coverage which would
otherwise have been provided herein.
(c) In the event the Surviving Corporation or any of its successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers a substantial portion of its properties and assets to
any person, then and in each such case, proper provision shall be made so that
the successors and assigns of the Surviving Corporation, or at Parent's option,
Parent shall assume the obligations set forth in paragraph (a) of this Section
6.10.
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6.11 Expenses. Except as set forth in Section 8.02, whether or not
the Merger is consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such cost or expense.
6.12 Brokers or Finders. Each of Parent and the Company represents,
as to itself and its affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any broker's
or finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, other than Roger D. Williams &
Company, whose fees and expenses will be paid by Parent in accordance with
Parent's agreement with such firm, and each of Parent and the Company shall
indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any other such fee or commission or
expenses related thereto asserted by any person on the basis of any act or
statement alleged to have been made by such party or its affiliate.
6.13 Takeover Statutes. If any "fair price", "moratorium", "control
share acquisition" or other form of antitakeover statute or regulation shall
become applicable to the transactions contemplated hereby, the Company and the
members of the Board of Directors of the Company shall grant such approvals and
take such actions as are reasonably necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and thereby and otherwise act to eliminate the effects of
such statute or regulation on the transactions contemplated hereby and thereby.
6.14 Conveyance Taxes. The Company and Parent shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications,
affidavits or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated by this Agreement
(collectively, "Conveyance Taxes") that are required or permitted to be filed on
or before the Effective Time. The Company shall pay all Conveyance Taxes arising
out of or in connection with the transactions contemplated by this Agreement.
6.15 Certain Tax Matters. (a) Parent and the Company shall not take
or fail to take any action if the taking or failure to take such action would
cause Parent, the Company or their respective stockholders (except to the extent
that any stockholder of the Company may receive cash in lieu of fractional
shares or is the owner of Dissenting Shares) to recognize gain or loss for
federal income tax purposes as a result of the consummation of the Merger or the
Spinoff.
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(b) In no event will Parent permit the Company to liquidate or merge
into Parent or into any Subsidiaries of Parent at any time within one year after
Closing. The Company shall secure any indebtedness used to purchase the
Company's options as contemplated herein only with assets held by it immediately
prior to the Closing.
(c) Parent has no plan or intention to liquidate the Company; to
merge the Company with or into another corporation; to cause the Company to sell
or otherwise dispose of any of its assets, except for dispositions made in the
ordinary course of business; or to sell or otherwise dispose of any of the
Company shares acquired in the Merger, except for transfers of stock to
corporations controlled by Parent.
ARTICLE VII
CONDITIONS
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have been approved by
the requisite vote of the stockholders of the Company under the WBCA and the
Company's Articles of Incorporation.
(b) Registration Statement; Form 10; State Securities Laws. The
Registration Statement and the Form 10 shall have become effective in accordance
with the provisions of the Securities Act and the Exchange Act, and no stop
order suspending each such effectiveness shall have been issued and remain in
effect and no proceeding seeking such an order shall be pending or threatened.
Parent shall have received all state securities or "Blue Sky" permits and other
authorizations necessary to issue the Parent Common Stock pursuant to this
Agreement.
(c) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated.
(d) No Injunctions or Restraints. No court of competent jurisdiction
or other competent Governmental or Regulatory Authority shall have enacted,
issued, promulgated, enforced or entered any law or order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making
illegal or otherwise restricting, preventing or prohibiting consummation of the
Merger, the Spinoff or the other transactions contemplated by this Agreement.
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(e) Governmental and Regulatory and Other Consents and Approvals.
Other than the filing provided for by Section 1.03, all consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
or any other public or private third parties required of Parent, the Company or
any of their Subsidiaries to consummate the Merger, the Spinoff and the other
matters contemplated hereby, the failure of which to be obtained or taken could
be reasonably expected to have a material adverse effect on Parent and its
Subsidiaries or the Surviving Corporation and its Subsidiaries, in each case
taken as a whole, or on the ability of Parent and the Company to consummate the
transactions contemplated hereby shall have been obtained, all in form and
substance reasonably satisfactory to Parent and the Company.
7.02 Conditions to Obligation of Parent and Sub to Effect the
Merger. The obligation of Parent and Sub to effect the Merger is further subject
to the fulfillment, at or prior to the Closing, of each of the following
additional conditions (all or any of which may be waived in whole or in part by
Parent and Sub in their sole discretion):
(a) Representations and Warranties. The representations and
warranties made by the Company in this Agreement shall be true and correct, in
all material respects (except with respect to the representation and warranty by
the Company set forth in Section 3.22, which shall be true and correct in all
respects), as of the Closing Date as though made on and as of the Closing Date
or, in the case of representations and warranties made as of a specified date
earlier than the Closing Date, on and as of such earlier date, except as
affected by the transactions contemplated by this Agreement, and the Company
shall have delivered to Parent a certificate, dated the Closing Date and
executed in the name and on behalf of the Company by its Chairman of the Board
and Chief Executive Officer, to such effect.
(b) Performance of Obligations. The Company shall have performed and
complied with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by the Company at
or prior to the Closing, and the Company shall have delivered to Parent a
certificate, dated the Closing Date and executed in the name and on behalf of
the Company by its Chairman of the Board and Chief Executive Officer, to such
effect.
(c) The Spinoff. The Spinoff shall have been completed on or prior
to the Closing Date to the satisfaction of Parent, and the Spinoff Agreements
shall have been entered into on or prior to the Closing Date to the reasonable
satisfaction of Parent.
(d) Tax Opinion. Parent and Sub shall have received the opinion,
based on appropriate representations of the Company,
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Parent, Spinoff Sub, Sub and certain significant shareholders of the Company, of
Milbank, Tweed, Hadley & McCloy, special counsel to Parent, dated the Closing
Date, to the effect that (i) the Spinoff qualifies as a tax-free distribution
described in Code Section 355 and (ii) the Merger qualifies as a reorganization
described in Code Section 368(a).
(e) Dissenting Shares. The aggregate number of Dissenting Shares
shall not exceed 10% of the total number of shares of Company Common Stock
outstanding on the Closing Date.
(f) Proceedings. All proceedings to be taken on the part of the
Company in connection with the transactions contemplated by this Agreement and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Parent, and Parent shall have received copies of all such documents
and other evidences as Parent may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
(g) Outstanding Indebtedness. Immediately prior to the Effective
Time, the outstanding indebtedness of the Company shall be at least $15 million.
7.03 Conditions to Obligation of the Company to Effect the Merger.
The obligation of the Company to effect the Merger is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by the Company
in its sole discretion):
(a) Representations and Warranties. The representations and
warranties made by Parent and Sub in this Agreement shall be true and correct,
in all material respects, as of the Closing Date as though made on and as of the
Closing Date or, in the case of representations and warranties made as of a
specified date earlier than the Closing Date, on and as of such earlier date,
except as affected by the transactions contemplated by this Agreement, and
Parent and Sub shall each have delivered to the Company a certificate, dated the
Closing Date and executed in the name and on behalf of Parent by its Chairman of
the Board and Chief Executive Officer, and in the name and on behalf of Sub by
its Chairman of the Board, President or any Vice President, to such effect.
(b) Performance of Obligations. Parent and Sub shall have performed
and complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied with by
Parent or Sub at or prior to the Closing, and Parent and Sub shall each have
delivered to the Company a certificate, dated the Closing Date and executed in
the name and on behalf of Parent by its Chairman of the Board and Chief
Executive Officer, and in the name and on behalf of Sub by
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its Chairman of the Board, President or any Vice President, to such effect.
(c) Parent Rights Agreement. On or prior to the Closing Date, the
Parent Rights shall not have become exercisable or transferable apart from the
associated shares of Parent Common Stock.
(d) Tax Opinion. The Company shall have received the opinion, based
on appropriate representations of the Company, Parent, Sub, Spinoff Sub, and
certain significant shareholders of the Company, of Perkins Coie, special
counsel to the Company, dated the Closing Date, to the effect that (i) the
Spinoff qualifies as a tax-free distribution described in Code Section 355 and
(ii) the Merger qualifies as a reorganization described in Code Section 368(a).
(e) Proceedings. All proceedings to be taken on the part of Parent
and Sub in connection with the transactions contemplated by this Agreement and
all documents incident thereto shall be reasonably satisfactory in form and
substance to the Company, and the Company shall have received copies of all such
documents and other evidences as the Company may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether prior to or after the Company Stockholders' Approval:
(a) By mutual written agreement of the Board of Directors' of the
parties hereto;
(b) By either the Company or Parent upon written notification to the
non-terminating party by the terminating party:
(i) at any time after December 31, 1996 if the Merger shall not have
been consummated on or prior to such date and such failure to consummate
the Merger is not caused by a breach of this Agreement by the terminating
party;
(ii) if the Company Stockholders' Approval shall not be obtained by
reason of the failure to obtain the requisite vote upon a vote held at a
meeting of such stockholders, or any adjournment thereof, called therefor;
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(iii) if there has been a material breach of any representation,
warranty, covenant or agreement on the part of the non-terminating party
set forth in this Agreement, which breach is not curable or, if curable,
has not been cured within thirty (30) days following receipt by the non-
terminating party of notice of such breach from the terminating party; or
(iv) if any court of competent jurisdiction or other competent
Governmental or Regulatory Authority shall have issued an order, judgment
or decree (other than a temporary restraining order) making illegal or
otherwise restraining, preventing or prohibiting the Merger or the Spinoff
and such order, judgement or decree shall have become final and
nonappealable and such terminating party shall have used all reasonable
effects to remove such order, judgement or decree;
(c) By Parent, by written notice to the Company:
(i) if the Board of Directors of the Company or any committee
thereof, (A) at any time after the Company or any of its Subsidiaries has
become aware of any event which would require that notice be given to
Parent pursuant to Section 5.02, shall withdraw or modify in any manner
adverse to Parent its approval or recommendation of this Agreement or the
Merger, (B) shall approve or recommend any Alternative Proposal (including
approving of, expressing no opinion or remaining neutral as to a third
party tender offer for shares of the Company Common Stock when expressing
the position of the Company to any such tender offer in complying with
Rule 14e-2 promulgated under the 1934 Act), or (C) shall resolve to take
any of the actions specified in clauses (A) or (B);
(ii) if the Company or any of its Subsidiaries announces, or enters
into a definitive agreement or a letter of intent for, an Alternative
Proposal or the Board of Directors of the Company or any committee thereof
shall resolve to take such action;
(iii) if any person or group (within the meaning of Section 13(d)(3)
of the 1934 Act) other than Parent shall acquire a number of shares of
capital stock of the Company entitled to cast at least 35% of the total
number of votes entitled to be cast in an election of directors of the
Company, or the directors of the Company currently in office shall cease
to represent a majority of the directors of the Company; or
(iv) if the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent its
approval or recommendation of this Agreement or the Merger.
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(d) By the Company, by written notice to Parent, if the Board of
Directors of the Company or any committee thereof determines to, subject to the
last sentence of Section 5.02, enter into a definitive agreement or an agreement
in principle for an Alternative Proposal.
8.02 Effect of Termination. (a) If this Agreement is validly
terminated by either the Company or Parent pursuant to Section 8.01, this
Agreement will forthwith become null and void and there will be no liability or
obligation on the part of either the Company or Parent (or any of their
respective Representatives or affiliates), except (i) that the provisions of
Sections 6.11, 6.12 and this Section 8.02 will continue to apply following any
such termination, (ii) that nothing contained herein shall relieve any party
hereto from liability for wilful breach of its representations, warranties,
covenants or agreements contained in this Agreement and (iii) as provided in
paragraph (b) below.
(b) In the event that (A) Parent terminates this Agreement pursuant
to Section 8.01(c)(i), (ii) or (iii), (B) the Company terminates this Agreement
pursuant to Section 8.01(d) or (C) either party terminates this Agreement
pursuant to Section 8.01(b)(ii) and any of the events described in Section
8.01(c)(i)(B) or Section 8.01(c)(ii) shall have occurred within six months after
such termination, the Company shall pay to Parent $3,000,000 plus an amount
equal to all out-of-pocket expenses and fees, not to exceed $1,000,000 in the
aggregate, (including, without limitation, fees and expenses payable to all
legal, accounting and other professional advisory firms) incurred by Parent in
connection with or related to this Agreement and the transactions contemplated
hereby, by wire transfer of same day funds, not later than five days after
notice of termination pursuant to Section 8.01 was provided. The Company agrees
that if it fails to pay timely the termination payment due pursuant to this
Section, the amount not timely paid shall bear interest at the rate of 10% per
annum accruing from the date such payment was due and continuing until the
termination payment is paid in full. In the event that it is necessary for
Parent to institute proceedings to seek collection of the termination payment
and it is entitled to receive any of the amounts sought in the collection
proceeding, in addition to paying such amount the Company shall reimburse Parent
for the attorneys' fees and other costs and expenses incurred by Parent in
connection with such collection.
8.03 Amendment. This Agreement may be amended, supplemented or
modified by action taken by or on behalf of the respective Boards of Directors
of the parties hereto at any time prior to the Effective Time, whether prior to
or after the Company Stockholders' Approval shall have been obtained, but after
such adoption and approval only to the extent permitted by applicable law. No
such amendment, supplement or modification
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shall be effective unless set forth in a written instrument duly executed by or
on behalf of each party hereto.
8.04 Waiver. At any time prior to the Effective Time any party
hereto, by action taken by or on behalf of its Board of Directors, may to the
extent permitted by applicable law (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other parties hereto
contained herein or in any document delivered pursuant hereto or (iii) waive
compliance with any of the covenants, agreements or conditions of the other
parties hereto contained herein. No such extension or waiver shall be effective
unless set forth in a written instrument duly executed by or on behalf of the
party extending the time of performance or waiving any such inaccuracy or
non-compliance. No waiver by any party of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or construed as a
waiver of the same or any other term or condition of this Agreement on any
future occasion.
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements contained
in this Agreement or in any instrument delivered pursuant to this Agreement
shall not survive the Merger but shall terminate at the Effective Time, except
for the agreements contained in Article I and Article II, in Sections 6.08,
6.10, 6.11, 6.12, 6.14, 6.15, 8.02 and this Article IX and the agreements of the
"affiliates" of the Company delivered pursuant to Section 6.04, which shall
survive the Effective Time.
9.02 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
If to Parent or Sub, to:
Crane Co.
100 First Stamford Place
Stamford, CT 06902
Facsimile No.: 203-363-7274
Attn: Chairman and Chief Executive Officer
with a copy to:
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Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, NY 10005
Facsimile No.: 212-530-5219
Attn: Larry Lederman, Esq.
If to the Company, to:
Interpoint Corporation
10301 Willows Road
P.O. Box 97005
Redmond, WA 98073-9705
Facsimile No. 206-869-7402
Attn: Peter van Oppen
with a copy to:
Perkins Coie
1201 Third Avenue, 40th Floor
Seattle, Wa 98101
Facsimile No.: 206-583-8500
Attn: Linda A. Schoemaker, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other parties hereto.
9.03 Entire Agreement; Incorporation of Exhibits. (a) This Agreement
supersedes all prior discussions and agreements among the parties hereto with
respect to the subject matter hereof, other than the Confidentiality Agreement,
which shall survive the execution and delivery of this Agreement in accordance
with its terms, and contains, together with the Confidentiality Agreement, the
sole and entire agreement among the parties hereto with respect to the subject
matter hereof.
(b) The Company Disclosure Letter, the Parent Disclosure Letter and
any Exhibit attached to this Agreement and referred to herein are hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
9.04 Public Announcements. Except as otherwise required by law or
the rules of any applicable securities
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exchange or national market system, so long as this Agreement is in effect,
Parent and the Company will not, and will not permit any of their respective
Representatives to, issue or cause the publication of any press release or make
any other public announcement with respect to the transactions contemplated by
this Agreement without the consent of the other party, which consent shall not
be unreasonably withheld. Parent and the Company will cooperate with each other
in the development and distribution of all press releases and other public
announcements with respect to this Agreement and the transactions contemplated
hereby, and will furnish the other with drafts of any such releases and
announcements as far in advance as practicable.
9.05 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and except as otherwise expressly
provided for herein, it is not the intention of the parties to confer
third-party beneficiary rights upon any other person.
9.06 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto and any attempt to
do so will be void, except that Sub may assign any or all of its rights,
interests and obligations hereunder to another direct or indirect wholly owned
Subsidiary of Parent, provided that any such Subsidiary agrees in writing to be
bound by all of the terms, conditions and provisions contained herein. Subject
to the preceding sentence, this Agreement is binding upon, inures to the benefit
of and is enforceable by the parties hereto and their respective successors and
assigns.
9.07 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define, modify or limit
the provisions hereof.
9.08 Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law or
order, and if the rights or obligations of any party hereto under this Agreement
will not be materially and adversely affected thereby, (i) such provision will
be fully severable, (ii) this Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, and (iii) the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.
9.09 Governing Law. Except to the extent that the WBCA is
mandatorily applicable to the Merger and the rights of the stockholders of the
Constituent Corporations, this Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to a contract
executed and
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performed in such State, without giving effect to the conflicts of laws
principles thereof.
9.10 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specified terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of competent
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
9.11 Certain Definitions. As used in this Agreement:
(a) except as provided in Section 6.04, the term "affiliate," as
applied to any person, shall mean any other person directly or indirectly
controlling, controlled by, or under common control with, that person; for
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by" and "under common control with"), as
applied to any person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
person, whether through the ownership of voting securities, by contract or
otherwise;
(b) a person will be deemed to "beneficially" own securities if such
person would be the beneficial owner of such securities under Rule 13d-3 under
the Exchange Act, including securities which such person has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time);
(c) the term "business day" means a day other than Saturday, Sunday
or any day on which banks located in the State of New York are authorized or
obligated to close;
(d) the term "knowledge" or any similar formulation of "knowledge"
shall mean the knowledge of any executive officer of the Company or Parent, as
the case may be.
(e) any reference to any event, change or effect being "material" or
"materially adverse" or having a "material adverse effect" on or with respect to
an entity (or group of entities taken as a whole) means such event, change or
effect is material or materially adverse, as the case may be, to the business,
financial condition or results of operations of such entity (or of such group of
entities taken as a whole), provided that with respect to the Company, such
determination shall be made as if the Spinoff had occurred and Spinoff Sub and
the Company were deconsolidated at such time;
(f) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups
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(which term shall include a "group" as such term is defined in Section 13(d)(3)
of the Exchange Act);
(g) the "Representatives" of any entity means such entity's
directors, officers, employees, legal, investment banking and financial
advisors, accountants and any other agents and representatives;
(h) the term "Significant Subsidiaries" means, with respect to any
party, the Subsidiaries of such party which constitute "significant
subsidiaries" under Rule 405 promulgated by the SEC under the Securities Act;
and
(i) the term "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which more than fifty percent (50%) of either the equity interests in, or the
voting control of, such corporation or other organization is, directly or
indirectly through Subsidiaries or otherwise, beneficially owned by such party;
provided that with respect to the Company, unless otherwise expressly indicated
herein, Spinoff Sub shall not be deemed a Subsidiary of the Company solely for
purposes of Article III of this Agreement.
9.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
55
<PAGE> 62
IN WITNESS WHEREOF, each party hereto has caused this Agreement to
be signed by its officer thereunto duly authorized as of the date first above
written.
Attest: CRANE CO.
/s/ Augustus I. duPont By: /s/ David S. Smith
- ------------------------ ------------------------------
Secretary Name: David S. Smith
Title: Vice President
Attest: CRANE ACQUISITION CORP.
/s/ Augustus I. duPont By: /s/ David S. Smith
- ------------------------ ------------------------------
Secretary Name: David S. Smith
Title: Vice President
Attest: INTERPOINT CORPORATION
/s/ Leslie S. Rock By: /s/ Peter van Oppen
- ------------------------ ------------------------------
Secretary Name: Peter van Oppen
Title:
56
<PAGE> 63
EXHIBIT A
[Form of Affiliate's Agreement]
[Date]
Crane Co.
100 First Stamford Place
Stamford, CT 06902
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be
an "affiliate" of Interpoint Corporation, a Washington corporation (the
"Company"), as that term is defined for purposes of paragraphs (c) and (d) of
Rule 145 of the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"). Neither my entering into this agreement, nor
anything contained herein, shall be deemed an admission on my part that I am
such an "affiliate".
Pursuant to the terms of the Agreement and Plan of Merger dated as
of July 1, 1996 (the "Merger Agreement"), among Crane Co., a Delaware
corporation ("Parent"), Crane Acquisition Corp., a Washington corporation
("Sub"), and the Company providing for the merger of Sub with and into the
Company (the "Merger"), and as a result of the Merger, I may receive shares of
Parent's common stock, par value $1.00 per share (the "Parent Securities"), in
exchange for the shares of common stock, without par value, of the Company owned
by me at the Effective Time (as defined in the Merger Agreement) of the Merger.
I represent and warrant to Parent that in such event:
A. I shall not make any sale, transfer or other disposition of the
Parent Securities in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Merger Agreement and
discussed its requirements and other applicable limitations upon my ability to
sell, transfer or otherwise dispose of Parent Securities, to the extent I felt
necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of Parent Securities to me
pursuant to the Merger will be registered with the Commission under the Act on a
Registration Statement on Form S-4. However, I have also been advised that,
since at the time the Merger was submitted for a vote of the stockholders of the
Company I may have been deemed to have been an affiliate of
<PAGE> 64
the Company and a distribution by me of Parent Securities has not been
registered under the Act, the Parent Securities must be held by me indefinitely
unless (i) a distribution of Parent Securities by me has been registered under
the Act, (ii) a sale of Parent Securities by me is made in conformity with the
volume and other limitations of Rule 145 promulgated by the Commission under the
Act or (iii) in the opinion of counsel reasonably acceptable to Parent, some
other exemption from registration is available with respect to a proposed sale,
transfer or other disposition of the Parent Securities by me.
D. I understand and agree that Parent is under no obligation to
register the sale, transfer or other disposition of Parent Securities by me or
on my behalf or to take any other action necessary in order to make compliance
with an exemption from registration available.
E. I also understand and agree that stop transfer instructions will
be given to Parent's transfer agents with respect to the Parent Securities and
that there will be placed on the certificates for the Parent Securities, or any
substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
____________, ____, BETWEEN THE REGISTERED HOLDER HEREOF AND PARENT (THE
"CORPORATION"), A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF THE CORPORATION."
F. I also understand and agree that unless the transfer by me of my
Parent Securities has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Parent reserves the right to put the
following legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND WERE ACQUIRED FROM A
PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER SUCH ACT APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE
HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF SUCH ACT AND MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT."
It is understood and agreed that the legends set forth in paragraph
E and F above shall be removed by delivery of substitute certificates without
such legend if the undersigned
<PAGE> 65
shall have delivered to Parent a copy of a letter from the staff of the
Commission, or an opinion of counsel reasonably acceptable to Parent to the
effect that such legend is not required for purposes of the Act.
Very truly yours,
____________________________________
Name:
Accepted this ____ day of
__________, ____, by:
CRANE CO.
By____________________________
Name:
Title:
<PAGE> 1
Contact: Peter van Oppen
(206) 882-3100 Ext. 110
Chuck Stonecipher
(206) 881-8004 Ext. 430
Internet address: [email protected]
INTERPOINT TO SPIN OFF ADIC DATA STORAGE UNIT,
REMAINING BUSINESS TO BE ACQUIRED BY CRANE CO.
SHAREHOLDERS TO RECEIVE STOCK
OF ADIC AND CRANE CO.
REDMOND, WASHINGTON -- July 1, 1996 -- INTERPOINT CORPORATION (NASDAQ/NMS
Symbol:INTP) today announced that it intends to spin off its Advanced Digital
Information Corporation (ADIC) data storage subsidiary as a separate
Nasdaq-listed company, the shares of which will be distributed to Interpoint
shareholders. Interpoint also announced that it has signed a definitive merger
agreement with Crane Co. (NYSE:CR) of Stamford, CT, whereby Crane will acquire
the non-ADIC business of Interpoint Corporation in a stock transaction for $59
million, payable in Crane stock and assumed debt. The acquisition is expected to
close immediately following the spin off of ADIC.
As a result of the proposed spinoff and merger, for each share of Interpoint
stock held (after giving effect to Interpoint's recent 2-for-1 stock split), it
is anticipated that Interpoint shareholders will receive one share of ADIC,
together with shares of Crane Co. having a value of approximately $4.00 on the
date the transactions are completed. The number of Crane shares to be issued in
the merger will be based on the average trading price of the Crane Co. stock for
the ten trading days prior to the closing. The expected value of the Crane
shares to be issued in the merger is based on Interpoint's anticipated debt
levels at the closing and could be more or less than such amount depending upon
actual debt levels. Upon the completion of the spinoff, ADIC is expected to be
debt free and to have adequate financing available to fund its ongoing business.
<PAGE> 2
(MORE)
All forward-looking statements made by the Company involve risks and
uncertainties, including technical and competitive factors, which could cause
results to differ materially. Such risks are detailed in Interpoint's report on
Form 10Q filed with the SEC.
ADIC is among the world's leading producers of automated tape data libraries
using DLT and 4mm DAT tape technologies. For the most recent quarter ended April
30, ADIC reported sales of $13.8 million, an increase of 106 percent as compared
to the same period last year. Earnings from ADIC sales represented approximately
one-half of the $1.5 million total Interpoint earnings for the period.
The merger is subject to approval of the Interpoint shareholders and the
satisfaction of customary conditions. A proxy statement/prospectus describing
the merger is expected to be mailed to all Interpoint shareholders within
approximately 60 days. The transactions are expected to close in late September,
1996.
Headquartered in Redmond, Washington, INTERPOINT CORPORATION is a leader in the
production of specialized data storage products and microelectronic components.
Automated tape data libraries for network and workstation markets are
manufactured by its Advanced Digital Information Corporation (ADIC) subsidiary
while the components unit makes high-density DC-to-DC power supplies as well as
custom medical and aerospace microelectronics. Production facilities are located
in Redmond and Kaohsiung, Taiwan with sales offices at various sites in the
United States, the United Kingdom, France and Germany.
All forward-looking statements made by the Company involve risks and
uncertainties, including technical and competitive factors, which could cause
results to differ materially. Such risks are detailed in Interpoint's report on
Form 10Q filed with the SEC.
# # #
